DBS to splurge $200m to boost digital banking business

Teams up with A*Star and IBM Watson.

According to OCBC Investment Research, DBS continued to enjoy good growth from several of its key businesses; SME (income CAGR of 8% from 2009-2013), Wealth (18% and AUM of about S$69b) and Transactional Banking (21%).

Management is stepping up its investment in digital banking in a collaboration with A*Star and IBM Watson to enhance the customer experience. This is likely to involve investment of about S$200m over three years.

Here's more:

4Q13 below expectations; raised full year payout to 58 cents DBS posted 4QFY13 net earnings of S$973m (including one-off item of S$221m from the divestment of its stake in the Bank of Philippine Islands and less S$50m for the DBS Foundation), giving full year net earnings of S$3.672b (or S$3.5b before one-off items). This is slightly below market expectations of S$3.6b, according to Bloomberg.

The main variance in our projection versus the actual result was lower Non-interest Income, which came in below our expectations if not for the one-off items. Loans growth was broad-based and grew 18% to S$248.6b by end 2013. Singapore accounted for the bulk or 47%.

Net Interest Margin (NIM) improved slightly from 1.60% in 3Q13 to 1.61% in 4Q13. Cost-to-income ratio eased slightly from 44.8% in FY12 to 43.9% in FY13. NPL ratio was stable at 1.1%. For 4Q13, the key improvement in fee and commission income came from Investment Banking (+59%), Wealth Management (+25%) and Cards (+15%).

Management has declared final dividend of 30 cents, up from 28 cents previously. This brings total full year dividend to 58 cents. DBS shares will trade ex-dividend on 12 May 2014.