DBS Group - CGS-CIMB Research 2023-11-06: Holding Steady Into FY24

• DBS (SGX:D05) recorded 3Q23 core net profit of S$2.63bn (-2% q-o-q, +18% y-o-y). This was in line with our expectations but 7% above Bloomberg consensus’ S$2.5bn estimate. 9M23 core net profit formed 76%/78% of our/Bloomberg consensus full-year forecasts.
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3Q23: Steady NIM, fees; higher credit costs

• Net interest margins (NIM) and fee trends were largely in line, though stronger-than-expected treasury income offset the heftier ~20bp credit costs in 3Q23.
  • NIM expanded 3bp q-o-q to 2.19% in 3Q23. 3Q23 net interest income (NII) was flattish q-o-q (+16% y-o-y) as loan growth stayed soft at ~1% q-o-q. The contraction (S$4bn) in consumer, trade loans and non-trade corporate loans in 3Q23 was offset by the consolidation of Citi Taiwan (+S$10bn in loans).
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  • Rise in treasury customer boosted overall treasury income in 3Q23 (+12% y-o-y).
  • Opex rose 6% q-o-q (+12% y-o-y) in 3Q23 due to higher staff costs and consolidation of Citi Taiwan.
  • 3Q23 credit costs were higher than we expected at 20bp– 18bp for specific provisions (allowances taken for anti-money-laundering case in Singapore) and 2bp for general provisions.

Positive income growth drivers to sustain net profit y-o-y in FY24F

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Andrea CHOONG CGS-CIMB Research | LIM Siew Khee CGS-CIMB Research | https://www.cgs-cimb.com 2023-11-06 SGinvestors.io

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