Why are DBS shares rising?

• DBS Group Holdings Ltd (SGX: D05) share price jumped up 1.4% on Monday morning (25 July 2022)
• Singapore’s largest lender will be reporting its Q2 2022 results on 4 August 2022
• UOB and CIMB analysts have lifted their price targets on the stock
• Keen to trade DBS shares? Open an account with us to start today.

DBS stock price: what’s the latest?

DBS Group shares have risen 5.5% since UOB and CIMB analysts raised their target prices on the stock.

Despite this latest rally, the blue-chip counter remains down by approximately 5% year-to-date, amid concerns of higher inflation and muted economic growth.

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 22.2% upside potential from DBS’ last traded price of S$31.26 on Monday (25 July 2022).

Why did UOB and CIMB lift their targets?

UOB and CIMB analysts recently reiterated ‘buy’ and ‘add’ calls on the bank’s stocks.

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

UOB forecasted that DBS' net profit will decline by 5% year-on-year (YoY) to S$1.614 billion in its upcoming Q2 2022 earnings.

It is also expecting ‘healthy loan growth’ of 5.2% YoY for the quarter, as net interest margin (NIM) has ‘expanded by a massive 7 basis points (bps) quarter-on-quarter to 1.53% with the US Fed hiking Fed Funds rate by 125bps to 1.5%’.

Meanwhile, contribution from wealth management is also expected to drop 10% YoY due to a full-quarter impact from the Russia-Ukraine war.

CIMB analysts also expect DBS' Q2 earnings to be affected by softer wealth management income. This is ‘given the continued risk-off sentiment amid market volatility, lower investment gains as interest rates rise, and (upwards) normalisation of credit costs’.

‘Nonetheless, we expect more significant NIM expansion to offset some of the weakness,’ the analysts added.

They expect the group’s net profit to come in 4% lower YoY at S$1.73 billion for the quarter, alongside a loan growth of around 1.5% and 10bp expansion in NIM.

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