DBS Bank Ltd.

DBS' core Singapore loan portfolio will likely remain healthy. The bank also has sizable exposure to Greater China which faces headwinds from a property downturn and strict COVID-19 curbs. These could weigh on asset quality. However, we still expect DBS to maintain overall resilience in asset quality. The stable outlook on DBS reflects our expectation that the bank will maintain its high systemic importance in Singapore and solid financial footing over the next 18-24 months. We believe both positive and negative rating actions are unlikely over the next one to two years. Our assessment of the bank's stand-alone credit profile (SACP) would need to decline by at least two notches for a downgrade. We may revise downward our assessment of

...DBS Bank Ltd.'s profitability will benefit from rising interest rates as the bank reprices loans upward. We expect its return on assets (ROA) to improve to 1-1.2% as interest margins expand after two consecutive years of contraction. Profitability has rebounded back to pre-COVID 19 levels. ROA increased to 1% in 2021 from 0.75% in 2020. Higher loan growth and the write-back of COVID provisions made in previous quarters underpinned the improvement. Asset quality should remain resilient. We forecast DBS' nonperforming loan (NPL) ratio will be in the range of 1.5%-1.8% over the next two years. Reported NPL ratio improved to 1.3% in 2021 from 1.6% in 2020. This reflected higher repayments and declines in new NPA formation as economic conditions improved. DBS' core Singapore loan portfolio will likely remain healthy. The bank also has sizable exposure to Greater China which faces headwinds from a property downturn and strict COVID-19 curbs. These could weigh on asset quality. However, we still...

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