DBS Bank’s 4Q11 profit seen to slip due to lower investment income

An analyst pencils in close to S$3b profit for the bank due to weaker net income on financial investments.

In a statement, DMG Research said its earnings forecast of S$2.9b for DBS included 4Q11F of S$640m, versus 3Q11’s S$762m.

The sequential decline is largely due to expectations of weaker net income on financial investments – 3Q11’s S$152m was S$70m higher QoQ.

DBS loans, meanwhile, is forecast to expand 2.4% QoQ, on the back of stronger business loans – MAS data showed Singapore systemic loans expanding 0.3% & 2.3% MoM in Oct and Nov 11, respectively.

The analyst said the bank’s 2012 income might be negatively affected by the subdued SIBOR and weak markets.

DMG Research forecasts a 4Q11 NIM of 1.77% and an FY12 NIM of 1.81% on the assumption of continued soft SIBOR.

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