DBS pops the champagne on 'splendid' 1Q13 performance

Fee income hit historical high at $507m.

According to UOB Kay Hian, DBS reported net profit of S$950m (+1.8% yoy, +34.4% qoq) for 1Q13, way above forecast of S$819m and consensus estimate of S$824m.

Loan growth boosted by trade finance. Loans expanded 6.2% qoq driven by Singapore (+8.8% qoq) and Greater China (+19.1% qoq).

Here's more from UOB Kay Hian:

Management estimated that two-thirds of new loans came from trade finance facilities. NIM reversed the declining trend and expanded 2bp qoq to 1.64%. The improvement was due to a higher loan-to-deposit ratio (LDR) and lower cost of funding from commercial paper.

Fees hit historical high. Fee income expanded 36.3% qoq to hit a historical high of S$507m with massive growth in excess of 40% qoq for stockbroking, wealth management and loans-related activities.

Fees from trade related activities also grew 16.5% qoq with the return of US$-denominated trade finance facilities for Chinese customers.

Net trading income increased 26.2% yoy to S$410m with customer flow accounting for 48% of treasury income.

This is a splendid set of results with growth in both interest and non-interest income and could finally trigger a re-rating for DBS.

DBS generated organic growth through its nine strategic priorities and has built up its global transaction service, wealth management and SME businesses on a
regional basis. It managed to stabilise NIM and benefitted from market-sensitive sources of fee income.

Management has raised its guidance for loan growth for 2013 from 10% to low double digit (said to be more than 12%).

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