DBS expects $1.4b net profit for Q4 2019: analyst

Quarterly earnings report will be out by 13 February.

DBS Group Holdings is forecasted to post a net profit of $1.405b for Q4 2019, up 5.5% YoY but down 13.8% QoQ due to a seasonal pullback, reports UOB Kay Hian.

DBS is seen as a beneficiary of the partial trade deal between the US and China, with greater China accounting for 30.4% of its total loans and 27.1% of total income in Q3 2019, noted UOB Kay Hian analyst Jonathan Koh.

However, the bank’s net interest margin (NIM) is sighted to narrow by 1bp YoY and 4bp QoQ to 1.86% over the same period. Loan yield had eased as the 3-month Singapore Interbank Offered Rate (SIBOR) and swap offer rate (SOR) receded 11bp and 14bp QoQ to 1.77% and 1.54% respectively. Further, competition for housing loans has intensified.

Also read: DBS Group profits up 15% $1.63b in Q3

Meanwhile, loan growth is forecasted to moderate at 3.7% YoY and 1.2% QoQ, driven by growth in corporate loans, trade loans and housing loans. These resulted from strong bookings in Q2 and Q3 2019. However, loan-related fees would likely be muted.

DBS’ wealth management fees maintained its growth momentum, with DBS’ assets under management (AUM) in the sector continuing to grow. Credit card fees will also see a seasonal up-tick, added Koh.

Also read: Credit card revenues threatened as Singaporean travellers shun usage

Overall, fees and commissions are predicted to increase 23.6% YoY but recede 3.6% QoQ, with

net trading income coming in lower at $230m resulting from a seasonal effect.

Meanwhile, quarterly dividend is sighted to increase 6.7% to $0.032.

“We expect DBS to raise DPS to $1.28 for 2020 ($0.32 per quarter), which represents dividend payout ratio of 54.5%. DBS provides attractive dividend yields of 4.7% for 2019F and 5% for 2020F,” said Koh.

DBS is expected to post its quarterly earnings by 13 February.