DBS's 2Q13 earnings predicted to slide 12% to $835m

Here are 3 reasons why.

According to CIMB, DBS’s 2Q13 net profit is expected (CIMB: S$835m vs. consensus S$887m) to ease down 12% qoq as 1Q13 was extremely strong on the back of: 1) investment banking and other capital markets-related fees being higher-than-usual because of huge fees earned from the Thai Bev deal; 2) wealth management fees showing up partly from DBS HK pursuing a successful wealth strategy; and 3) new POSB mortgage product helping to mitigate margin pressure. 

Here's more from CIMB:

We reckon that 2Q13 will see the toning down of some of the positives from the first two drivers. IB fees will likely ease down sequentially as it compares against a high base in 1Q, while 2Q debt-capital markets activity in June was muted and some equity capital market deals were pushed back into 3Q.

Providing some ballast for non-interest income is the presence of trade finance flows re-surfacing in 1Q. We think that DBS has done very well in this space and we hope to see its trade finance volumes hold up in the midst of rising competition from Chinese banks.