Crisis? What crisis? On 11 November 2019, DBS Group confounded investors by delivering a surprisingly better-than-expected 3rd quarter financial results. Many investors had feared the worst for DBS Group share price due to the unfolding Hong Kong civil unrests, Singapore property cooling measures and the cuts in US Federal Reserves’ interest rates. Notwithstanding these challenges, the management navigated the storm relatively well and continued to post great results.
Question now is: will DBS Group share price recapture the height seen in 2018? Make no mistake, the slew of headwinds in 2019 had taken some shine off DBS Group share price as the market deals with the onslaught of uncertainties.
While DBS Group cannot control macro-economic conditions, the bank continued to power ahead with its business front. Compared to a year ago, total income for 3rd quarter surged 13% to $3.82 billion while net profit stormed 15% to $1.63 billion. Interestingly, against the backdrop of declining US interest rates, DBS Group actually increased its Net Interest Margin (NIM) to 1.9% from 1.86% a year ago. Return on equity (ROE) also reached a high of 13.4%. Given such stellar results, where will DBS Group share price go from here?
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in this counter before. Whether DBS Group share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
DBS Group share price on ice and fire
According to a DBS Group article, Hong Kong millionaires are moving cash to Singapore. DBS private bankers were experiencing four times the inquiries of Hong Kong millionaires seeking to shift their assets. That article was written in July 2019. With the worsening of the Hong Kong protests, the level of inquiries should have surged. This could explain why the net interest income from DBS Hong Kong unit had increased to $525 million in 3QFY2019 from $487 million in 3QFY2018. However, DBS Group share price was moderated by the additional allowances of $61 million as a result of the ongoing political and economic uncertainty.
As banks are the bellwether of the economy, DBS Group share price will always be weighed by market sentiments. While DBS Group’s business fundamentals remained intact, the market sentiments remains cautious. It is still unknown if the unfolding trade war between US and China would cause a hard landing for Singapore economy and lead to a full-scale recession. But one thing for sure is that DBS Group still derives the bulk of its income from Singapore market. So a recession in Singapore will definitely hit DBS Group share price as well.
By and large, the latest financial results were good for DBS Group and investors should [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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