DBS 01 (May 08 - Jul 10)

[millionairemind]

DBS warns of lower Q4 net earnings
Net profit before one-time charges could be moderately lower than in Q3
By CONRAD TAN

DBS Group Holdings' net profit is expected to slide further in the fourth quarter, the bank warned yesterday as it announced plans to raise some $4 billion in new capital from a rights issue.

'Our fourth-quarter net profit could end up moderately lower than in the third quarter, prior to one-time charges,' said DBS chief financial officer Chng Sok Hui.

That would make it the group's worst quarter since at least the end of 2005, when it reported a profit of $384 million, excluding goodwill charges and one-time gains.

As for dividend payment, DBS said it 'intends to declare and pay a final dividend for the quarter ending Dec 31, amounting to the same absolute cash amount as it would have done had there been no rights issue'.

In future, 'DBS' dividend policy will reflect its long-term sustainable earnings growth and capital requirements, as well as general prevailing financial and business conditions', it said.

'2009 will be a challenging year. We do expect our provisions and NPLs to be up but we don't expect a major spike.'

- DBS chief executive Richard Stanley

Including one-time charges, the Q4 results could be much worse. DBS is expected to take a charge of $45 million to pay compensation to the 900 staff it fired last month. It also expects a further impairment of its investment in Thailand's TMB Bank.

The bank is also reviewing the carrying value of its investment in Indian joint venture Cholamandalam DBS Finance - currently valued at $103 million - 'in view of the liquidity stress experienced by non-bank financial companies in India', it said.

'We will be reviewing the joint venture for possible impairment, but that has not been completed,' said DBS chief executive Richard Stanley in a conference call.

But Ms Chng said that DBS' total income has been 'relatively stable' compared with the third quarter. Net interest income increased, but fee income fell.

Pauline Lee, an analyst at Kim Eng Securities, said that the update by DBS was largely within her expectations. 'The earnings outlook is pretty gloomy for the next six to 12 months.'

Mr Stanley said that DBS doesn't expect a surge in bad loans despite the bleak economic outlook.

'2009 we all know will be a challenging year. We do expect our provisions and NPLs (non-performing loans) to be up somewhat but we don't expect there to be a major spike in these two measures.'

Ms Chng said NPLs have risen 'moderately' since the third quarter, while specific allowances for bad loans have increased 'largely from SME (small and medium enterprise) loans in Hong Kong and Greater China as well as private-banking loans'.

The bank does not expect any material charges for collateralised debt obligations or CDOs in the fourth quarter, she added.

As a result, 'overall allowance charges are expected to be modestly below the third quarter'.

In Q3, DBS's profit - excluding one-time charges - fell 38 per cent from a year earlier to $402 million, hit by a sharp rise in allowances for bad loans and a steep drop in fee income.

[lrsun]

Dear la papillion

Tks so much for your detailed reply. I am truely appriciated.

Sori, forgot to ask,

1) Do I have to pay the rights allocated to me using the $ from SRS only?

2) If I'd like to have some excess rights and suppose that will come true, do I have to pay the excess rights using SRS $ as well?

[la papillion]

Irsun, I think I didn't really answer your question, because I do not have SRS. I truly do not know!

[ucypmas]

Rights issue for stocks purchased through SRS have to be paid through SRS. If you are out of money in the SRS (i.e. fully invested or already hit the contribution limit), then jialat lor. However the timing of this rights issue means that you have a couple more days until the new year rolls around and with it 2009's contribution limit.

Excess rights applied through normal brokerage can be held and paid for independently.

As for my 2-cents on this, times are hard so it makes sense for banks to hold lots of capital and cash to meet funding commitments and cover potential losses. Remember our hero DBS bank have been aggressively expanding regionally, and dabbling in all sorts of exotic products part of which they have sold onto other investors. Usually deterioration in a bank's books and asset position do not happen until we are well into a recession (which is next year) and I think DBS got a bit of a cold feet when they looked at their books... and saw a pile of **** waiting to hit the fan.

Nothing new with this cheng-hu bank, they needed rescue after 1998 during which POSB was given away on the cheap to shore them up. Looks like history repeating itself to me.

[lrsun]

tks, ucypmas, merry xmas!

[millionairemind]

Something is not right with DBS. It has been going down 4 days in a row on higher than average volume, losing about 20% in 4 days.

Now the gap between UOB and DBS is widening to more than $4 now, with UOB being valued higher. Used to be the other way around.

I think retail investors who held on are in for a BIG surprise. Somebody knows something you don't and is selling out.

[winston]

Or were they pumping up the stock so that people will apply for the Rights ?

[millionairemind]

Time for DBS to move back up???

No exposure to Kuwait firm: DBS
By CONRAD TAN

DBS Group has no exposure to Kuwaiti investment firm Global Investment House, contrary to recent media reports and market speculation, the bank said in a statement after trading ended on Monday.

'DBS has maintained the strength of its balance sheet through careful management of credit, market and operational risks, and continues to vigilantly monitor credit trends in its loan portfolio,' it said.

DBS shares ended 3.7 per cent lower at $8.11.

[ucypmas]

No one is asking the question: What is DBS' exposure to Lehman Brothers? And what is their exposure in the credit defaault swap market?

[kennynah]

the most important question, imho, is what is DBS ? it is nothing more than a singapore bank...with some regional reach.... i snigger at it.... very obnoxiously...i guess....

frankly, we need to expand my horizon beyond our egoistic singapore is the best attitude...we are really nothing when we realize how small we are....

flame me if you like....but really, let's get real....