Update: DBS Bank Ltd.

DBS is well-positioned to take advantage of high interest rates. The majority of the bank's floating rate loans have repriced upward, while funding costs remain contained, thanks to a sticky base of low-cost deposits. We believe DBS' NIM will peak at about 2.2% in 2024, before moderating to about 2% in 2025. The potential deterioration in asset quality should be manageable, in our opinion. DBS has covered substantial ground in building up loan loss reserves over the past few years post COVID-19. Its provision coverage ratio is notably higher at 125% as of Sept. 30, 2023, compared with the pre-COVID level of 94% as of Dec. 31, 2019. The stable outlook on DBS reflects our expectation that the bank will

...DBS Bank Ltd. has good profit momentum on the back of higher-for-longer interest rates. Net interest margins (NIMs) look set to benefit from elevated interest rates, which we believe will persist into the first half of 2024. The bank's interest margins have risen for seven consecutive quarters to reach 2.19% as of the third quarter of 2023. This has been a boon for interest revenue from the core lending and earning assets portfolio. DBS is well-positioned to take advantage of high interest rates. The majority of the bank's floating rate loans have repriced upward, while funding costs remain contained, thanks to a sticky base of low-cost deposits. We believe DBS' NIM will peak at about 2.2% in 2024, before moderating to about 2% in 2025. DBS will likely have muted loan growth on reduced appetite from corporates. The bank's loans growth has been tepid, and we believe full-year 2023 growth will likely be around 3%. Companies have become more circumspect about...

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