Following the release of 3rd quarter business update, it seems to me that DBS Group Holdings share price is set for a much-anticipated rebound. The latest report showed that total allowances for 3rd quarter shrank to $554 million. This amount is significantly lower than the $1.94 billion recorded for the 1st half.
The drop in allowances could spark the revival for DBS Group Holdings share price as the bank navigates the fallout from COVID-19. In my opinion, this is the best window of opportunity to invest in this counter as Singapore’s GDP expanded by 7.9% on quarter in the third quarter of 2020. As DBS is the biggest lender in Singapore, DBS Group Holdings share price will be among the first stocks to benefit from the country’s recovery.
The latest financial result is certainly impressive as third quarter’s net profit jumped 4% on quarter to $1.30 billion while fee income rises 17% to pre-COVID levels. The improved business momentum could set the stage for a buoyant DBS Group Holdings share price in the coming months. However, taking some shine off the result is the 4% drop in total income to $3.58 billion. This is due to the 6% drop in net interest income to $2.2 billion.
Indeed, the longer-term impact for DBS Group Holdings share price should be the ultra-low interest rates environment. As a bank, DBS makes money from charging customers interests on loans. Therefore, interest income is a major revenue source for the bank. On a yearly basis, the Net Interest Margin (NIM) collapsed to 1.53%. The current NIM is one of the lowest I have seen for DBS in many years.
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 DBS Group Holdings share before. Whether DBS Group Holdings 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 Holdings share price seeing light?
Time flies and we are entering the end of the year soon. While Singapore has brought the COVID-19 pandemic under control, many countries like USA and India are still struggling to cope with the rising infections. But as Singapore starts to enter Phase Three of the Circuit Breaker, we are seeing concrete signs that the economy is showings signs of recovery. And this will bode well for DBS Group Holdings share price.
The latest financial result was released against the backdrop of a nail-biting US Presidential Election. Will the election result set fire on DBS Group Holdings share price? In my previous article, I had made a prediction that DBS Group Holdings share price is expected to be trading at [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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