DBS closes 2013 with 7% drop in profits to $802m

But loan growth impressed everyone.

According to Maybank Kim Eng, DBS reported 4Q13 core PATMI of SGD802m (-7.0% QoQ, +5.5% YoY), in line with expectations for SGD803m but below the consensus estimate of SGD821m.

FY13 core PATMI of SGD3,672m (-3.6%) was driven by higher fee and commission income (+19.4%) and stronger loan growth (18.1%), lifting net interest income by 5.4% to SGD5.6b.

Here's more from Maybank Kim Eng:

We fine tune our FY14E-16E forecasts by 1% after incorporating FY13 data.

4Q13 NIM of 1.61% (+1bp QoQ, -1bp YoY) took FY13 NIM to 1.62%. Loan growth surpassed expectations, at 18.1% for 2013 vs our forecast of 15.0%.

On constant currency terms, loans grew 16% YoY. Loans were mainly driven by trade loans to Rest of Greater China, Singapore corporate loans.

Gross NPL ratio of 1.1% as at end-2013 (Sep 2013: 1.2%, Jun 2013: 1.2%). Balance sheet remained strong and liquid: 13.7% CET1 (Sep 2013: 13.3%, Dec 2012: 13.5%) with 75.3% SGD loan-deposit ratio (LDR). DBS Hong Kong posted stronger 4Q13 PATMI of SGD216m (+37% QoQ, +29% YoY), taking FY13 earnings to SGD821m (+18%).

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