For its private banking business, DBS’s acquisition of ANZ and Societe Generale has greatly enhanced its footprints in the region. Among the largest private banks in Asia Pacific, DBS has been the only Singapore bank to break into the top six since 2014.
“In our view, we believe the wealth management sector will continue to benefit from the growth of the private banking sector in Asia and we forecast total income from wealth management to grow at about 10% per annum from 2018-2020,” says Tan.
Meantime, uncertainty about asset quality outlook has subsided after the bank accelerated recognition of non-performing assets in 2017. While mortgage growth might be muted after the latest Additional Buyer’s Stamp Duty (ABSD) and Loan-to-Value (LTV) limits, Tan believes the loan book should be well cushioned due to existing drawdowns. For FY18, KGI expects NPL ratios to remain at 1.7%.
Year to date, shares in DBS are down 8% to $24.22 or 9.4 times FY19F earnings.
