Why DBS can be thankful that Danamon deal is off

Uncertainty over capital no longer hanging.

According to Barclays analyst Sharnie Wong, the lapse of the purchase agreement between DBS and Fullerton (Temasek) to purchase Bank Danamon is a near-term positive catalyst, "as it removes uncertainty over capital and could result in higher dividends going forward."

"Without Danamon, we believe DBS can pay higher dividends going forward and we revise our DPS estimates higher based on a 40% dividend payout ratio. In the longer term, DBS’s regional expansion organically in the ASEAN region will be slower relative to peers already with a greater presence," Wong added.

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