DBS (SGX:D05) reported 9M23 core-earnings ahead of expectations. Net interest income continues to be robust from supportive net interest margins.
Dividends growth sustainable
While margins seem to have peaked, higher for longer rates should continue to support net interest income, while green-shoots in wealth management could boost non-interest income.
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Stable net interest income
DBS's 3Q23 net interest income (NII) expanded 16% y-o-y – the slowest pace since 2Q22. This was mostly supported by higher net interest margins (NIMs) (+29bps y-o-y). The pace of growth is decelerating (+3bps 3Q23, +4bps 2Q23, +7bps 1Q23) as interest rate hikes slow.
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We expect these trends to persist into 2024E from a slower China and higher for longer interest rates.
We lower 2023-25E loans by 3-6%. Overall 2024E net interest income should be at similar levels to 2023E.
Improving non-interest income
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Above is an excerpt from a report by Maybank Research. Clients of Maybank Securities may be the first to access the full PDF report @ https://www.maybanktrade.com.sg/.
