DBS Group: Modest Earnings and Dividend Prospects

DBS Group is projected to post a net profit of approximately S\$2.7 billion for 4Q24, reflecting an 11% decline quarter-on-quarter (qoq) but a 13% growth year-on-year (yoy). The bank’s wealth management and treasury income are expected to have softened due to seasonal factors like year-end festivities and leisure travel. However, net interest margin (NIM) likely rose by 2 basis points (bp) qoq to 2.13%, driven by reduced accounting asymmetry in interest income booking.

DBS has maintained its full-year FY24 loan growth within the low-single-digit range, with a modest 0.5% qoq increase in 4Q24. The bank also boasts excess capital of approximately S\$6 billion, which will be partially utilized to redeem Additional Tier-1 capital securities. The remaining funds are expected to be directed towards shareholder returns, with an anticipated dividend per share (DPS) increase to S\$0.60 from 4Q24 onwards.

DBS continues to hold a “Hold” recommendation with a target price of S\$43. Key upside risks include stronger treasury income and wealth management fees, while downside risks involve asset quality deterioration due to high interest rates.

OCBC: Promising Growth Amid Market Volatility

OCBC, trading at S\$17.10 with a target price of S\$17.70, receives a “Add” recommendation from CGS International. The bank is expected to achieve stable returns with promising growth metrics. Its price-to-book ratio (P/BV) is projected at 1.37x for CY24F, declining to 1.28x in CY25F. With recurring return on equity (ROE) forecasted at 14.3% for CY24F and improving to 13.3% in CY25F, OCBC demonstrates robust financial health.

The bank’s dividend yield of 5.0% across CY24F, CY25F, and CY26F ensures consistent returns for investors. Its steady balance sheet and focus on sustainable growth underwrite its positive outlook.

United Overseas Bank (UOB): Solid Financials, Moderate Upside

UOB, with a current price of S\$36.82 and a target price of S\$39.50, also receives an “Add” recommendation. The bank’s P/BV is forecasted at 1.25x for CY24F, dropping to 1.17x in CY25F, signaling an attractive valuation. UOB’s ROE stands at 13.4% for CY24F and is projected to dip slightly to 13.0% in CY25F.

Investors can expect a consistent dividend yield of 5.0% across CY24F, CY25F, and CY26F. UOB’s focus on maintaining healthy loan growth and efficient capital management contributes to its solid financial standing.

Bank Central Asia (BBCA): Leading the Indonesian Market

Bank Central Asia, with a price of IDR 9,725 and a target price of IDR 11,800, is rated “Add.” The bank’s exceptional performance is reflected in its high P/BV of 4.60x for CY24F, decreasing to 4.23x in CY25F. With an impressive ROE of 22.1% for CY24F, BBCA leads the Indonesian banking sector.

Though its dividend yield is relatively modest at 3.0% for CY24F, BBCA’s strong growth potential and market dominance make it a preferred choice for investors seeking long-term returns.

Bank Mandiri (BMRI): Strong Growth and Attractive Valuation

Bank Mandiri, trading at IDR 5,600 with a target price of IDR 8,000, is another “Add” recommendation. The bank’s P/BV is forecasted at 1.84x for CY24F, declining to 1.68x in CY25F, while its ROE stands at a robust 20.8% for CY24F. Investors can expect a dividend yield of 6.5% in CY24F, increasing to 7.1% in CY25F.

Bank Mandiri’s diversified revenue streams and strong management underpin its promising outlook.

Bank Rakyat Indonesia (BBRI): Consistent Growth and High Dividends

Bank Rakyat Indonesia, priced at IDR 4,010 with a target price of IDR 6,000, also receives an “Add” recommendation. The bank’s P/BV is projected at 1.85x for CY24F, decreasing to 1.76x in CY25F, and its ROE is forecasted at 19.5% for CY24F, improving to 19.6% in CY25F.

BBRI offers an attractive dividend yield of 8.2% for CY24F, rising to 8.7% in CY25F, making it an appealing option for income-focused investors.

Other Regional Banks: Performance Highlights and Recommendations

Bank Islam Malaysia (BIMB): Sustainable Growth

BIMB is rated “Add,” trading at MYR 2.48 with a target price of MYR 3.13. It offers a P/BV of 0.76x for CY24F, improving to 0.72x in CY26F, with a dividend yield of 5.0%-5.9% across the forecast period. Its focus on Islamic banking and sustainable growth underpins its positive outlook.

Bangkok Bank (BBL): Stable Prospects

Bangkok Bank, trading at THB 152.0 with a target price of THB 195.0, is rated “Add.” The bank offers a P/BV of 0.52x for CY24F, improving to 0.46x in CY26F, and an ROE of 8.2% for CY24F. Its dividend yield remains steady at 4.6%-4.9% over the forecast period.

Kasikornbank (KBANK): Promising Upside

Kasikornbank is rated “Add,” trading at THB 159.5 with a target price of THB 188.0. The bank’s P/BV is projected at 0.67x for CY24F, declining to 0.60x in CY26F, with an ROE of 8.9% for CY24F. Its dividend yield remains consistent at 4.7% across the forecast period.

ESG Performance: DBS Group Leading the Way

DBS Group scored a B- for its ESG Combined Score by LSEG in 2024, with an A- excluding environmental controversies. The bank has actively contributed to developing best practices through its Responsible Financing Standard and has set ambitious goals, such as achieving zero thermal coal exposure by 2039.

However, DBS faces challenges with environmental controversies related to palm oil plantation financing. The bank has implemented stringent policies to align new clients with its No Deforestation, No Peat, and No Exploitation (NDPE) standards, which could bolster its ESG standing in the future.