DBS results strong; NIM, China are negatives: Bernstein

The standout negative from DBS’ results is the continued decline in NIM, says Kevin Kwek, an analyst at Sanford C. Bernstein.

“The reality is (it’s) a reflection of not being able to deploy assets in the face of slower loans growth.” He adds, another negative is from China. “Contribution from China is in fact very small. Still, no one wants to hear China is affecting the group.”

DBS CEO Piyush Gupta said he expected loans to grow about 10% both this year and next, down from 2011’s 28% growth, which was largely on opportunistic trade finance business in China; Gupta said DBS saw a trade-related slowdown, including China margin reduction.

But Kwek adds, “the results are still reflective of a pretty strong quarter for the bank, in so far as how it reflects their progress in the region.” In an email, he notes DBS’ healthy liquidity position is also a positive. The stock is down 0.7% at $13.81.

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