Here's why DBS' 1Q13 was mind-blowing for analysts

Loans rose by 6.2%.

According to CIMB, they were blown away by DBS’ 1Q13. Net interest income grew 2.6% qoq as NIMs unexpectedly expanded and loans grew 6.2% qoq. Fee income was strong all around, particularly trade-related and capital-markets related fees. DBS HK sustained its turnaround with profits up 35% qoq.

NII rose 2.6% qoq as loans grew 6% qoq and NIMs unexpectedly expanded 2bp. Some 30% of its loan growth (S$4bn) was led by short-term financing for a corporate client.

Here's more from CIMB:

That will reverse in the coming quarter. Underlying loan growth of 4% was powered by trade finance, which pushed up trade fees.

NIMs likely went up as LDRs rose (1Q: 89%, 4Q: 87%). Fee strength was evident all around, with loan fees (+47%), stockbroking (+41%) IB (+137%) and wealth management (+47%) all contributing.

Trading also shone (+201%) but that should not detract from core-revenue strength. Customer-related treasury flows doubled qoq.

With an 18% rise in its topline, operating jaws widened as cost ratio improved vastly to 41% (4Q: 48%).

Expenses were little changed. Asset quality remained healthy with NPL ratio stable at 1.2%. Loan provisions looked adequate as GPs doubled qoq while SPs stayed at 21-22bp of loans.

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