Why DBS' failed Danamon bid is not a 'crippling' issue

But drawbacks are still challenging.

According to CIMB, the results season did not change analysts' order of preference. Analysts do not see the end of its Danamon opportunity as a crippling development.

Yes, it does mean that DBS will not be able to compete with its Singapore and Malaysian competitors on building an ASEAN platform.

Here's more from CIMB:

However, DBS has enough opportunities and challenges in 1) riding the momentum of its Greater China franchise after recently turning around DBS HK, 2) managing the problems in India, and 3) taking advantage of its SG/HK position and geographical coverage to benefit from an internationalising Rmb.

2Q results have soothed our fears that treasury will be volatile when markets fall; treasury has proven a lot more resilient than expected, on the back of customer flows.

The potential negative impact in the future would be a major slowdown in global trade (hitting trade and loan fees) or a sudden escalation of US$ funding costs (US$ trade loans are funded by commercial papers now).

Without any of these coming on, we see DBS as a stable-growth franchise at an attractive 1.2x CY13 P/BV.

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