[Update on 19 February 2019 - There seem to be a mistake with the valuation which I've extracted from the Shares Investment website - http://www.sharesinv.com/D05/ yesterday. I checked back again today and the valuations have been updated, and I've also since updated the post accordingly.]

$DBS(D05.SI) DBS needs no introduction - I'm sure as Singaporeans, we all have a savings account with the bank. 

This morning, the bank have released their 4th quarter and FY2018 results and, in my opinion, it's a positive one both quarter-on-quarter, as well as year-on-year. 

Let us have a look at the results:

  • Total income grew 6.2% q-o-q to $3,245 million (and grew 9.4% y-o-y to $13,183 million)
  • Net profit also saw a 8.4% improvement q-o-q to $1,328 million (and a 25.5% y-o-y improvement to $5,653 million)
  • Consequently, net profit attributable to shareholders also saw a q-o-q increment to $1,319 million (and a y-o-y increment to $5,577 million)
  • Compared to 31 December 2017, the bank's Net Asset Value improved 1.5% from $17.85 to $18.12
  • Earnings Per Share also saw a 8.6% improvement q-o-q to $2.01 (and a 27.8% y-o-y improvement to $2.16)
  • Net Interest Margin improved 5.1% q-o-q to 1.87% (and 6.0% y-o-y to 1.85%)
  • Return on Assets too, also grew 1.1% q-o-q to 0.95% (and grew 17.6% y-o-y to 1.05%)
  • Return on Equity (ROE) for the bank also improved 7.6% q-o-q to 11.3% (and improved 24.7% to 12.10%)
  • As at 31 December 2018, the bank's Non-Performing Loans (NPL) rate also saw an improvement of 11.8% from 1.7% (as at 31 December 2017) to 1.5% (as at 31 December 2018)


Valuations:

Needless to say, the bank's share price spiked due to the positive results - as I am writing this post, the bank is currently trading at $25.24 - and it's current valuations are as follows:

P/E: 11.5

P/B: 1.31

Dividend Yield: 4.8%

Comparing the above to the bank's 7-year average (from FY2012 - FY2018), P/E is trading at about the same as the average (11.5 currently vs. 11.3 on average), P/B is also trading at a premium (1.31 currently vs. 1.1 on average), and the dividend yield, which is also trading at a slight discount compared to the average (4.8% currently vs. 4.5% on average). 


Chart Analysis:

Based on my charting analysis, the share price broke out of the red downward resistance line and moving upwards - and from the looks of the MACD and also the RSI, it certainly seems like the share price is going to continue to head upwards in the near-term:


Dividend for Shareholders:

The bank has also declared a dividend of $0.60 (which is the same as 4Q FY2017, if you strip out the $0.50 special dividend) - with the ex-dividend date on 2 May 2019 (meaning you'll have to invest in the company before this date in order to be entitled to the dividend), and dividends will be received on 17 May 2019.


My Thoughts:

I currently own shares to the bank (since July last year) and I'm still holding on to them. 

As to whether or not you should invest in the bank now. if you're looking to invest in the bank for the dividend, my personal feel is that, there's still some time to go (as the ex-dividend is on 2nd May), so if I do not own any shares of DBS and would like to invest in the bank for the dividend, I'll go in closer to the ex-dividend date. 


The above is just my personal analysis and opinion. I hope you'll find it useful. However, as always, please do your own due diligence prior to investing in the bank. :)

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19 likes
39 comments
RotiBlata

wait for below $17.50 ... hehehe

blissfulrk

Reply to @RotiBlata : I also waiting for so long...

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Bobbilipuli

Amongst the three banks as well as other minor players, DBS offers the lowest rates on short term as well as other fixed deposits. Their NIM ,with these as well as large CASA base , is subsequently better "protected".
My simple observation- most of the time in public places having ATMs of all three banks, the crowd waiting for the DBS machine is always the biggest! This shows the depth of its CASA account base. A proxy indicator of being flush with funds to lend and make money on!!

Bobbilipuli

It is fairly priced in my opinion and it is s buy at 24 and under. Although the historical P/E ratios as well as P/BV ratios are looking higher, the Higher dividends would offer a floor under the price. Of course, Global recessions and short term corrections that may not be predictable, will offer us better buying opportunities. I will buy at 24$.

ljunyuan

Reply to @Bobbilipuli : Ya agree with you that based on the current valuations, the bank is fairly priced currently. I personally feel it'll drop - especially if Trump suddenly does any U-turn on the trade war situation, or if UK leaves Euro without any deal. In fact, any funny deals that Trump may have with Kim Jong Un may also send the stock market down. Let's see... :)

Incognito

If dividend for full year is $1.2 and share px is $26. Then yield is 4.6%, which is one of the highest amongst the blue chips including other regions. This is a good counter with good management n corporate governance.

Bobbilipuli

Reply to @ljunyuan : That applies to all the good ones! Will buy the index then

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frank50

All 3 banks are good. More upside to them. But fundamentally, OCBC and UOB are slightly better than DBS. Good luck,

ljunyuan

Reply to @Bobbilipuli : Yeap, that's for sure! :)

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ceang2001

Thanks for sharing..:))

ljunyuan

Reply to @ceang2001 : You’re most welcome! :)

tanmingwang

your ratio and figures seems funny. Simple math to divide Share price over EPS to get P/E or even dividned yield. Where got so bad one? LOL.

ljunyuan

Reply to @tanmingwang : Just did another check today on the Shares Investment website for the company, it certainly looks like they've made a mistake yesterday, as today's valuation is the correct one (based on the share price of $25.24), with the P/E at 11.5, P/B at 1.31, and Dividend Yield at 4.8%.

Thanks for pointing that out to me yesterday. :)

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shuhming

Hi, may i know how you derived dividend yield 3.7%? FY is S$1.20?

ljunyuan

Reply to @shuhming : I think there is probably a mistake with the Shares Investment Website - I just checked in today and the valuations (based on the current trading price of $25.24), is accurate:

P/E: 11.5
P/B: 1.31
Dividend Yield: 4.8%

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lyndonwong

My first bank account since birth

ljunyuan

Reply to @lyndonwong : Haha! Same here! :)

Hanzo

Dbs bank good for premier. Normal customer is not so good. Just close mine LOL

ljunyuan

Reply to @Hanzo : Interest? You mean the interest of their savings account?

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