Should you trade DBS shares?

• DBS Group Holdings Ltd (SGX: D05) share price closed higher on Tuesday (13 September 2022)
• Singapore’s largest lender plans to reduced financed emissions to net zero by 2050
• UOB’s equity research team has reiterated a ‘buy’ rating on the stock
• Keen to trade DBS shares? Open an account with us to start today.

DBS stock price: what’s the latest?

DBS shares rose after it announced plans to reduce its financed emissions to zero by 2050.

This included interim decarbonisation targets set for 2030, as well as a series of sectoral targets that are aligned with science-based decarbonisation glidepaths in its report, ‘Our Path to Net Zero – Supporting Asia’s Transition to a Low-carbon Economy’.

The blue-chip counter has rallied as much as 3% in the last one month. On a year-to-date basis, the stock is up by roughly 2.5%.

In terms of stock outlook, the latest analyst sentiments published by SGX StockFacts show a consensus rating of ‘outperform’, alongside a price target of S$38.20 on the stock.

The price target equates to a 13.6% upside potential from DBS’ last traded price of S$33.62.

How do analysts view DBS shares?

UOB analyst Jonathan Koh recently reiterated a ‘buy’ call and price target of S$43.60 on the bank’s shares.

He forecasted that DBS’ net interest margin (NIM) will expand by 28 basis points (bps) to 1.73% in 2022 and 44bps to 2.17% in 2023.

‘DBS is the most sensitive to higher interest rates due to its high current and savings account (CASA) ratio of 72%, which is the highest among the three Singapore banks,’ he wrote.

Koh also predicted that the bank will achieve earnings growth of 11.5% in 2023 and 18.9% in 2024, along with dividend per share (DPS) of S$1.44 in 2022 and S$1.68 in 2023.

The DPS amounts will represent dividend payout ratios of 49.5% and 48.5%, as well as dividend yields of 4.4% and 5.2% in 2022 and 2023 respectively.

‘Our target price of S$43.60 is based on 1.86 times 2023 price-to-book ratio,’ he wrote. This is derived from the Gordon Growth Model at a return on equity of 15.4%, cost of equity of 8.5%, and growth of 0.5%.

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