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Phillip unfazed by DBS drop in 3Q earnings

PC Lee
PC Lee • 2 min read
Phillip unfazed by DBS drop in 3Q earnings
SINGAPORE (Nov 8): Phillip Capital is maintaining its “buy” rating on DBS Group with a higher target price of $26.83 despite 3Q17 PATMI of $0.8 billion missing its estimate by 38.5% due to accelerated provisions of $815 million.
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SINGAPORE (Nov 8): Phillip Capital is maintaining its “buy” rating on DBS Group with a higher target price of $26.83 despite 3Q17 PATMI of $0.8 billion missing its estimate by 38.5% due to accelerated provisions of $815 million.


See: DBS reports 25% lower 3Q earnings of $802 mil on higher net allowances

Among the positives, analyst Jeremy Teong says 3Q17 wealth management income came in 21% higher y-o-y at $546 million supported by a 19% rise in investment products. Wealth management AUM increased to $195 billion in 3Q17 compared to $175 billion in 2Q17. About $15 billion came from the ANZ integration and $5 billion from the DBS wealth management franchise.

In addition, 3Q17 saw higher volumes of cash management deposits and digital capabilities contributing to stronger Institutional Banking Group (IBG) cash/Securities and Fiduciary Services (SFS) income in 3Q17. Cash management deposits grew 7% YoY to reach S$134bn and the digital capabilities helped DBS Institutional Banking Group capture new clients.

Meanwhile, cash management deposits grew 7% y-o-y to reach $134 billion and the digital capabilities helped DBS IBG capture new clients.

Loans growth was also 8.5% higher y-o-y led by y-o-y double-digit percentage growth in Manufacturing, Building & Construction and Housing loans. Yields were also higher y-o-y for customer non-trade loans, trade assets and interbank loans.

Lastly, IB grew 18.5% y-o-y as debt capital markets were strong in 3Q17 and were supported by advisory fees from One Belt and One Road projects.

Shares in DBS are up 7 cents at $23.56 or 10.6 times FY18 forecast earnings.

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