What’s next for DBS Group shares?

• DBS Group Holdings Ltd (SGX: D05) share price fell on Thursday (4 August 2022)
• Singapore’s largest bank’s Q2 net profit rose 7% year-on-year
• UOB and CIMB analysts recently kept ‘buy’ and ‘add’ calls on the stock
• Keen to trade DBS shares? Open an account with us to start today.

DBS beats analysts’ Q2 estimates

DBS Group shares fell nearly 2% after it reported its financial results for the second quarter (Q2) of 2022.

The bank saw net profit rise 7% from a year ago to S$1.82 billion, the second highest in its history. This surpassed Refinitiv analyst estimates of S$1.69 billion.

Total income grew 6% year-on-year (YoY) to $3.79 billion, while net interest income increased 17% boosted by an accelerated increase in net interest margin to 1.58% in Q2.

This helped to offset non-interest income decline of 11% YoY due to weaker market conditions.

Asset quality continued to be ‘resilient’ with specific allowances at eight basis points of loans, DBS said.

The non-performing loans (NPL) ratio was also stable at 1.3% over the first six months of 2022, with new non-performing asset formation remaining low.

Looking ahead, DBS CEO Piyush Gupta said that while the macroeconomic outlook remains uncertain, the bank should ‘benefit from rapidly rising interest rates’.

‘The income growth will improve the cost-income ratio in the coming quarters even as we judiciously invest for the future,’ he added.

DBS stock price: what’s the latest forecast?

The bank’s stock has been in an uptrend for the last one month, increasing roughly 7% since 4 July 2022.

However, on a year-to-date basis, DBS shares are down slightly.

In terms of stock outlook, DBS shares have an average price target of S$38.20 and rating of ‘outperform’, based on the latest SGX StockFacts consensus data.

The price target represents a 18.3% upside potential from its last traded price of S$6.92.

The latest investment calls came from UOB and CIMB’s equity research teams, who reiterated ‘buy’ and ‘add’ ratings on DBS shares.

Both teams also raised their price targets, with UOB lifting their estimate from S$38.78 to S$39.50, and CIMB raising theirs from S$39.90 to S$40.20.

UOB had expected DBS’ Q2 net profit to come in at S$1.614 billion while CIMB had predicted a net profit of S$1.73 billion.

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