DBS Group: Yielding to Expectations
DBS Group, Singapore’s largest bank, recorded a core net profit of S\$2.6 billion in Q4 2024, reflecting a 13% quarter-on-quarter (qoq) decline but a 10% year-on-year (yoy) growth. This result was closely aligned with analysts’ expectations, achieving 96% and 105% of CGS International and Bloomberg consensus estimates, respectively.
The bank raised its quarterly dividend to S\$0.60 per share in Q4 2024, up from S\$0.54 in Q3 2024. Additionally, DBS introduced a S\$0.15 quarterly capital return dividend for FY25, potentially elevating the total dividend to S\$3.06 per share, representing a yield of approximately 6.8%. DBS has further guided for a similar capital return in FY26-27, supported by its robust excess capital position of S\$4 billion after accounting for its S\$3 billion share buyback program initiated in Q3 2024.
Net interest margins (NIM) for Q4 2024 exceeded expectations at 2.15%, slightly above the forecasted 2.13%. Loan growth of 3% and a 4 basis point (bp) improvement in NIM drove a 9% qoq increase in net interest income (NII). However, the bank reported higher provisions of S\$209 million for the quarter, translating to a credit cost of 19bp, primarily due to increased specific provisions stemming from reduced recoveries in Greater China.
With an unchanged target price (TP) of S\$43.00, DBS is rated as a “Hold.” Key areas of focus include its non-interest income outlook and the strategic direction under the new CEO, Tan Su Shan. Upside risks include stronger-than-expected recovery in wealth management, while downside risks revolve around deteriorating asset quality.
OCBC: Positioned for Moderate Growth
OCBC, another major Singaporean bank, has been given an “Add” recommendation with a target price of S\$17.70, implying a 5% upside from its current price of S\$17.33. The bank demonstrates a strong recurring return on equity (ROE) of 14.3% for CY24F, expected to marginally decline to 13.3% and 12.8% for CY25F and CY26F, respectively.
The bank is projected to deliver a steady dividend yield of 4.9% across the next three years, supported by its prudent cost structure and efficient capital management. Its price-to-book value (P/BV) is expected to improve marginally from 1.39x in CY24F to 1.21x in CY26F.
United Overseas Bank (UOB): Steady Growth Prospects
UOB is rated as “Add” with a target price of S\$39.50, offering a 5.5% upside from its current price of S\$37.38. UOB is forecasted to maintain a robust recurring ROE of 13.4% in CY24F, marginally improving to 13.0% and 12.8% over the next two years.
The bank is also expected to deliver a stable dividend yield of 4.9%, with a consistent improvement in its P/BV ratio from 1.27x in CY24F to 1.10x in CY26F. UOB’s strategic focus on regional expansion and digital innovation continues to support its growth potential.
Indonesia: Key Banks in Focus
Bank Mandiri (BMRI): A Strong Performer
Bank Mandiri is rated as “Add” with a target price of IDR 7,500, reflecting a 7.5% upside. The bank boasts industry-leading ROE metrics, projected at 20.7%, 20.2%, and 20.9% for CY24F, CY25F, and CY26F, respectively. Its dividend yield is expected to rise from 7.1% in CY24F to 8.5% in CY26F. The P/BV is forecasted to improve from 1.69x to 1.40x over the same period, highlighting strong fundamentals.
Bank Rakyat Indonesia (BBRI): Stable Outlook
BBRI receives an “Add” rating with a target price of IDR 5,450, offering a modest upside of 1.3%. Its ROE is projected to remain resilient, improving from 18.8% in CY24F to 19.4% in CY26F. Dividend yield is expected to rise steadily from 8.1% to 9.3%, while its P/BV is forecasted to improve from 1.87x to 1.74x over the same period.
Malaysia: Key Players in the Banking Sector
Malayan Banking (MAY): Consistent Performer
Malayan Banking is rated as “Add” with a target price of MYR 12.80, reflecting a 7.6% upside. Its dividend yield is projected to increase from 5.9% in CY24F to 6.4% in CY26F. The bank maintains a consistent ROE of approximately 10.5%, supported by steady growth in earnings and a robust P/BV ratio of 1.09x in CY26F.
Public Bank (PBK): A Reliable Option
Public Bank receives an “Add” rating with a target price of MYR 5.57, offering a 6.1% upside. Its ROE is forecasted to remain strong at 11.9%, with a stable dividend yield of 4.5% by CY26F. The bank’s P/BV ratio is expected to improve marginally from 1.46x in CY24F to 1.28x in CY26F.
Thailand: Banking Sector Insights
Bangkok Bank (BBL): Growth Potential
Bangkok Bank is rated as “Add” with a target price of THB 193.0, offering a 7.5% upside. The bank exhibits steady ROE of 8.1% to 8.3% over the next three years, with a consistent dividend yield of 4.9%. Its low P/BV of 0.47x in CY26F highlights undervaluation and growth potential.
SCB X (SCB): A Resilient Performer
SCB X is rated as “Add” with a target price of THB 130.0, indicating a 3.3% upside. The bank’s ROE is forecasted to improve from 8.8% in CY24F to 9.4% in CY26F, with a stable dividend yield of 8.9%. Its P/BV is expected to remain consistent at 0.84x by CY26F.
