DBS Group: We Expect Good News And Potentially Some Bad News For 2023

Seeking Alpha2023-01-16

SummaryDBS Group Holding like many other banks enjoys strong net interest rate margins and higher total income from this.Some concerns are linked to potential non-performing assets in 2023.Some ...

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2023-01-16
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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nDBS Group: We Expect Good News And Potentially Some Bad News For 2023\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-01-16 16:10 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4570112-dbs-group-stock-mixed-risk-reward-reiterate-hold><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryDBS Group Holding like many other banks enjoys strong net interest rate margins and higher total income from this.Some concerns are linked to potential non-performing assets in 2023.Some ...</p>\n\n<a href=\"https://seekingalpha.com/article/4570112-dbs-group-stock-mixed-risk-reward-reiterate-hold\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"D05.SI","symbol_name":"星展集团控股","start_time":0,"source_url":"https://seekingalpha.com/article/4570112-dbs-group-stock-mixed-risk-reward-reiterate-hold","article_id":"1193596513","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1193596513","pubTimestamp":1673856652,"sourceInfo":{"source_id":"seekingalpha_fund","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"SummaryDBS Group Holding like many other banks enjoys strong net interest rate margins and higher to","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"D05.SI":"星展集团控股"},"translate_title":"星展集团：我们预计2023年会有好消息，也可能有坏消息","themeId":"","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"D05.SI":0.9},"content_text":"SummaryDBS Group Holding like many other banks enjoys strong net interest rate margins and higher total income from this.Some concerns are linked to potential non-performing assets in 2023.Some analysts are too optimistic about DBS's ability to pay a substantially higher dividend, or they expect the share price to drop considerably.ClaudineVM/iStock Editorial via Getty ImagesDBS logo (DBS investor relation)Investment thesisIf you were invested in DBS Group Holdings last year, it would not have been a bad place to park your money when we take into accounthow the market faired.DBS Group 1-year share price versus JPM and SPY (SA)South East Asia's largest bank DBSDY is due to come out with its FY 2022 financial results on the 13th of February and here is what we might expectWhat we know before Q4Interest incomeWe at Tudor Investment Holding had repricing on a commercial property mortgage from DBS in Q4 and as expected the interest rate rose from 1.7% to 3.98% fixed for a 2-year period.As the bank is repricing thousands of other loans each quarter, we know that their total interest income is going to go up.During the Q&A session with analysts at the Q2 presentation, their CFO Chng Sok Hui stated that:We have tested the model extensively, which is why we are quite confident that taking all these factors into account, the interest rate sensitivity is between $18 million and $20 million per basis point of Fed Fund Rate. The sensitivity will work up to a Fed Funds Rate of around 3.5% but it might come down a little bit beyond that\"On the positive side, they do have a large portion of their funding from cash accounts that do not generate any interest expense to them.FeesDealogic noted earlier that corporate merger and acquisition deal value in Singapore fell 72%, from USD 64.6 billion in 2021 to USD 18 billion in 2022, while volume dropped 36%.It is hard to tell how DBSDY's investment banking division did but market insiders said that the level of Singapore-based M&A activity was still largely in line with pre-pandemic levels, though much of it was focused on larger conglomerates, especially Temasek-linked entities.We would think that DBSDY got some of these deals as it is controlled by the sovereign wealth fund Temasek.Analysts estimatesData from Yahoo Finance tells us that 15 analysts have given an average estimate for EPS for 2022 of SGD 3.08.Their average estimate for 2023 is an EPS of SGD 3.75.There are some analysts who seem to have very high expectations for DBSDY going forward.JPMorgan (JPM) and their team of 5 analysts that covers the banking sector here in Singapore seem to believe that both their earnings and in particular their dividend are going to be higher.Unless they think that the share price is going to fall significantly, they will have to earn a lot more. Because their estimate is for a dividend yield of 6% for FY 2022.DBS dividend data from Q3 of 2022 (DBS CFO Q3 of 2022 presentation )Right now, when we look at the TTM dividend yield up to, and including, Q3 it is only a dividend of SGD 1.44 which gives us a yield of 4.14%. In order for us to end up with a 6% yield, they would have to pay out SGD 1.01 as a dividend for Q4.That would be a whopping increase of 180%.DBS does not want to have a dividend that goes up and down like a Jojo from quarter to quarter. Any increase to the dividend will most likely be 4 Singapore cents to SGD 0.40 for Q4.Here is our estimate versus JPM's:Estimate of DBS dividend (Author and JPM)For JPM's thesis to play out, we would need to see the share price back to March 2020 at the height of the Covid-19 panic. At that time the share price was in the low SGD 20 level. We would also need to see the dividend jump to levels close to SGD 2.00 per share.This is highly unlikely in our opinion.ValuationWe know that the price is what we pay and the value is what we get.Therefore, the value should matter.If we use the average EPS of SGD 3.08 for 2022, which seems reasonable, the P/E is still quite attractive at 11.3.DBS's net tangible book value is SGD 20.78 per share. To buy one share, you need to fork out SGD 34.81 as of Friday 13th January 2023.This gives us a P/NAV of 1.68.Risks to the thesisThere are concerns about the quality of their loan books and that we might be seeing an increase in non-performing assets in 2023 for all the 3 Singapore main banks. This was also pointed out by JPM in their latest report.Management of DBS did state at Q1 conference calls said that they are quite comfortable with their loan book. At that time, their CEO Piyush Gupta said that they had run stress tests on mortgages with an interest rate of 3.5% and that he was confident that their loan book was secure.We are not so confident that 3.5% will be the upper range on mortgages.They had at the time a loan to value for private properties of 49%, which is quite low.Our other concern is the SME sector, although this is not a large part of DBS's loan book.As we know, Singapore SMEs' have come off 2 to 3 years of belt-tightening. During this time, cash flows were impacted, revenues were constrained, and customer activity was curtailed. Now that the pandemic is mostly in the rear-view mirror, they are faced with inflation which for some will be hard to pass on to their customers.This could lead to a pick-up in delinquencies.ConclusionWe would say that in terms of risk/reward, we do see a mixed picture here.The positive side is that higher NIM will boost their earnings.Uncertain economic data will most likely lead to fewer activities for the investment banking division and also from wealth management as many customers want to sit on the sideline reducing their risk exposure.All in all, we choose to hold our position.If we knew that the share price would go down followed by a return to its present level, we could simply sell now.We all know that this is pure speculation as the market fluctuates and we simply take the view that it is better to focus on time in the market than trying to time the market.DBS is a good company. Based on our average price of SGD 20.70 we get paid well to ride out the bumps in the market. We would only add to our position if we do see the share price go below SGD 30.Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.This article is written by Tudor Invest Holdings for reference only. Please note the risks.","kind":null,"is_publish_news":null,"is_publish_highlight":null,"is_publish_live":null,"is_publish_wemedia":null,"editions":null,"symbols":[],"gpt_button":1},"commentList":[{"id":9956051594,"gmtCreate":1673857893618,"gmtModify":1676538895246,"author":{"id":"3582969710070724","authorId":"3582969710070724","name":"OO_898","avatar":"https://static.tigerbbs.com/9fb3c360d5d7711641a868a144192fc7","vip":1,"crmLevel":4,"crmLevelSwitch":1},"htmlText":"Like&nbsp;","listText":"Like&nbsp;","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9956051594","repostId":1193596513,"repostType":2,"repost":{"id":"1193596513","pubTimestamp":1673856652,"share":"https://www.laohu8.com/m/news/1193596513?lang=&edition=full","pubTime":"2023-01-16 16:10","market":"sg","language":"en","title":"DBS Group: We Expect Good News And Potentially Some Bad News For 2023","url":"https://stock-news.laohu8.com/highlight/detail?id=1193596513","media":"Seeking Alpha","summary":"SummaryDBS Group Holding like many other banks enjoys strong net interest rate margins and higher to","content":"<html><head></head><body><h2>Summary</h2><ul><li>DBS Group Holding like many other banks enjoys strong net interest rate margins and higher total income from this.</li><li>Some concerns are linked to potential non-performing assets in 2023.</li><li>Some analysts are too optimistic about DBS&#39;s ability to pay a substantially higher dividend, or they expect the share price to drop considerably.</li></ul><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/c2b8f8e1b0ac04ae635ffdff61c73360\" tg-width=\"1080\" tg-height=\"711\" referrerpolicy=\"no-referrer\"/><span>ClaudineVM/iStock Editorial via Getty Images</span></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/e6323c7c94ea99b91d182113c362d690\" tg-width=\"260\" tg-height=\"120\" referrerpolicy=\"no-referrer\"/><span>DBS logo (DBS investor relation)</span></p><h2>Investment thesis</h2><p>If you were invested in DBS Group Holdings last year, it would not have been a bad place to park your money when we take into accounthow the market faired.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/83f8c50da3e17ceb110777a3f323b2b3\" tg-width=\"640\" tg-height=\"410\" referrerpolicy=\"no-referrer\"/><span>DBS Group 1-year share price versus JPM and SPY (SA)</span></p><p>South East Asia&#39;s largest bank DBSDY is due to come out with its FY 2022 financial results on the 13th of February and here is what we might expect</p><p>What we know before Q4</p><ul><li><b>Interest income</b></li></ul><p>We at Tudor Investment Holding had repricing on a commercial property mortgage from DBS in Q4 and as expected the interest rate rose from 1.7% to 3.98% fixed for a 2-year period.</p><p>As the bank is repricing thousands of other loans each quarter, we know that their total interest income is going to go up.</p><p>During the Q&amp;A session with analysts at the Q2 presentation, their CFO Chng Sok Hui stated that:</p><blockquote>We have tested the model extensively, which is why we are quite confident that taking all these factors into account, the interest rate sensitivity is between $18 million and $20 million per basis point of Fed Fund Rate. The sensitivity will work up to a Fed Funds Rate of around 3.5% but it might come down a little bit beyond that&#34;</blockquote><p>On the positive side, they do have a large portion of their funding from cash accounts that do not generate any interest expense to them.</p><ul><li><b>Fees</b></li></ul><p>Dealogic noted earlier that corporate merger and acquisition deal value in Singapore fell 72%, from USD 64.6 billion in 2021 to USD 18 billion in 2022, while volume dropped 36%.</p><p>It is hard to tell how DBSDY&#39;s investment banking division did but market insiders said that the level of Singapore-based M&amp;A activity was still largely in line with pre-pandemic levels, though much of it was focused on larger conglomerates, especially Temasek-linked entities.</p><p>We would think that DBSDY got some of these deals as it is controlled by the sovereign wealth fund Temasek.</p><h2>Analysts estimates</h2><p>Data from Yahoo Finance tells us that 15 analysts have given an average estimate for EPS for 2022 of SGD 3.08.</p><p>Their average estimate for 2023 is an EPS of SGD 3.75.</p><p>There are some analysts who seem to have very high expectations for DBSDY going forward.</p><p>JPMorgan (JPM) and their team of 5 analysts that covers the banking sector here in Singapore seem to believe that both their earnings and in particular their dividend are going to be higher.</p><p>Unless they think that the share price is going to fall significantly, they will have to earn a lot more. Because their estimate is for a dividend yield of 6% for FY 2022.</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/d51b2dc030eeabf3c9bd86ca882b3beb\" tg-width=\"640\" tg-height=\"361\" referrerpolicy=\"no-referrer\"/><span>DBS dividend data from Q3 of 2022 (DBS CFO Q3 of 2022 presentation )</span></p><p>Right now, when we look at the TTM dividend yield up to, and including, Q3 it is only a dividend of SGD 1.44 which gives us a yield of 4.14%. In order for us to end up with a 6% yield, they would have to pay out SGD 1.01 as a dividend for Q4.</p><p>That would be a whopping increase of 180%.</p><p>DBS does not want to have a dividend that goes up and down like a Jojo from quarter to quarter. Any increase to the dividend will most likely be 4 Singapore cents to SGD 0.40 for Q4.</p><p>Here is our estimate versus JPM&#39;s:</p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/24f990b55f8dedbbdbd15417e8dd4cb2\" tg-width=\"638\" tg-height=\"390\" referrerpolicy=\"no-referrer\"/><span>Estimate of DBS dividend (Author and JPM)</span></p><p>For JPM&#39;s thesis to play out, we would need to see the share price back to March 2020 at the height of the Covid-19 panic. At that time the share price was in the low SGD 20 level. We would also need to see the dividend jump to levels close to SGD 2.00 per share.</p><p>This is highly unlikely in our opinion.</p><h2>Valuation</h2><p>We know that the price is what we pay and the value is what we get.</p><p>Therefore, the value should matter.</p><p>If we use the average EPS of SGD 3.08 for 2022, which seems reasonable, the P/E is still quite attractive at 11.3.</p><p>DBS&#39;s net tangible book value is SGD 20.78 per share. To buy one share, you need to fork out SGD 34.81 as of Friday 13th January 2023.</p><p>This gives us a P/NAV of 1.68.</p><h2>Risks to the thesis</h2><p>There are concerns about the quality of their loan books and that we might be seeing an increase in non-performing assets in 2023 for all the 3 Singapore main banks. This was also pointed out by JPM in their latest report.</p><p>Management of DBS did state at Q1 conference calls said that they are quite comfortable with their loan book. At that time, their CEO Piyush Gupta said that they had run stress tests on mortgages with an interest rate of 3.5% and that he was confident that their loan book was secure.</p><p>We are not so confident that 3.5% will be the upper range on mortgages.</p><p>They had at the time a loan to value for private properties of 49%, which is quite low.</p><p>Our other concern is the SME sector, although this is not a large part of DBS&#39;s loan book.</p><p>As we know, Singapore SMEs&#39; have come off 2 to 3 years of belt-tightening. During this time, cash flows were impacted, revenues were constrained, and customer activity was curtailed. Now that the pandemic is mostly in the rear-view mirror, they are faced with inflation which for some will be hard to pass on to their customers.</p><p>This could lead to a pick-up in delinquencies.</p><h2>Conclusion</h2><p>We would say that in terms of risk/reward, we do see a mixed picture here.</p><p>The positive side is that higher NIM will boost their earnings.</p><p>Uncertain economic data will most likely lead to fewer activities for the investment banking division and also from wealth management as many customers want to sit on the sideline reducing their risk exposure.</p><p>All in all, we choose to hold our position.</p><p>If we knew that the share price would go down followed by a return to its present level, we could simply sell now.</p><p>We all know that this is pure speculation as the market fluctuates and we simply take the view that it is better to focus on time in the market than trying to time the market.</p><p>DBS is a good company. Based on our average price of SGD 20.70 we get paid well to ride out the bumps in the market. We would only add to our position if we do see the share price go below SGD 30.</p><p>Editor&#39;s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.</p><p><i>This article is written by Tudor Invest Holdings for reference only. Please note the risks.</i></p></body></html>","source":"seekingalpha_fund","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>DBS Group: We Expect Good News And Potentially Some Bad News For 2023</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nDBS Group: We Expect Good News And Potentially Some Bad News For 2023\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-01-16 16:10 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4570112-dbs-group-stock-mixed-risk-reward-reiterate-hold><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryDBS Group Holding like many other banks enjoys strong net interest rate margins and higher total income from this.Some concerns are linked to potential non-performing assets in 2023.Some ...</p>\n\n<a href=\"https://seekingalpha.com/article/4570112-dbs-group-stock-mixed-risk-reward-reiterate-hold\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"D05.SI":"星展集团控股"},"source_url":"https://seekingalpha.com/article/4570112-dbs-group-stock-mixed-risk-reward-reiterate-hold","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1193596513","content_text":"SummaryDBS Group Holding like many other banks enjoys strong net interest rate margins and higher total income from this.Some concerns are linked to potential non-performing assets in 2023.Some analysts are too optimistic about DBS's ability to pay a substantially higher dividend, or they expect the share price to drop considerably.ClaudineVM/iStock Editorial via Getty ImagesDBS logo (DBS investor relation)Investment thesisIf you were invested in DBS Group Holdings last year, it would not have been a bad place to park your money when we take into accounthow the market faired.DBS Group 1-year share price versus JPM and SPY (SA)South East Asia's largest bank DBSDY is due to come out with its FY 2022 financial results on the 13th of February and here is what we might expectWhat we know before Q4Interest incomeWe at Tudor Investment Holding had repricing on a commercial property mortgage from DBS in Q4 and as expected the interest rate rose from 1.7% to 3.98% fixed for a 2-year period.As the bank is repricing thousands of other loans each quarter, we know that their total interest income is going to go up.During the Q&A session with analysts at the Q2 presentation, their CFO Chng Sok Hui stated that:We have tested the model extensively, which is why we are quite confident that taking all these factors into account, the interest rate sensitivity is between $18 million and $20 million per basis point of Fed Fund Rate. The sensitivity will work up to a Fed Funds Rate of around 3.5% but it might come down a little bit beyond that\"On the positive side, they do have a large portion of their funding from cash accounts that do not generate any interest expense to them.FeesDealogic noted earlier that corporate merger and acquisition deal value in Singapore fell 72%, from USD 64.6 billion in 2021 to USD 18 billion in 2022, while volume dropped 36%.It is hard to tell how DBSDY's investment banking division did but market insiders said that the level of Singapore-based M&A activity was still largely in line with pre-pandemic levels, though much of it was focused on larger conglomerates, especially Temasek-linked entities.We would think that DBSDY got some of these deals as it is controlled by the sovereign wealth fund Temasek.Analysts estimatesData from Yahoo Finance tells us that 15 analysts have given an average estimate for EPS for 2022 of SGD 3.08.Their average estimate for 2023 is an EPS of SGD 3.75.There are some analysts who seem to have very high expectations for DBSDY going forward.JPMorgan (JPM) and their team of 5 analysts that covers the banking sector here in Singapore seem to believe that both their earnings and in particular their dividend are going to be higher.Unless they think that the share price is going to fall significantly, they will have to earn a lot more. Because their estimate is for a dividend yield of 6% for FY 2022.DBS dividend data from Q3 of 2022 (DBS CFO Q3 of 2022 presentation )Right now, when we look at the TTM dividend yield up to, and including, Q3 it is only a dividend of SGD 1.44 which gives us a yield of 4.14%. In order for us to end up with a 6% yield, they would have to pay out SGD 1.01 as a dividend for Q4.That would be a whopping increase of 180%.DBS does not want to have a dividend that goes up and down like a Jojo from quarter to quarter. Any increase to the dividend will most likely be 4 Singapore cents to SGD 0.40 for Q4.Here is our estimate versus JPM's:Estimate of DBS dividend (Author and JPM)For JPM's thesis to play out, we would need to see the share price back to March 2020 at the height of the Covid-19 panic. At that time the share price was in the low SGD 20 level. We would also need to see the dividend jump to levels close to SGD 2.00 per share.This is highly unlikely in our opinion.ValuationWe know that the price is what we pay and the value is what we get.Therefore, the value should matter.If we use the average EPS of SGD 3.08 for 2022, which seems reasonable, the P/E is still quite attractive at 11.3.DBS's net tangible book value is SGD 20.78 per share. To buy one share, you need to fork out SGD 34.81 as of Friday 13th January 2023.This gives us a P/NAV of 1.68.Risks to the thesisThere are concerns about the quality of their loan books and that we might be seeing an increase in non-performing assets in 2023 for all the 3 Singapore main banks. This was also pointed out by JPM in their latest report.Management of DBS did state at Q1 conference calls said that they are quite comfortable with their loan book. At that time, their CEO Piyush Gupta said that they had run stress tests on mortgages with an interest rate of 3.5% and that he was confident that their loan book was secure.We are not so confident that 3.5% will be the upper range on mortgages.They had at the time a loan to value for private properties of 49%, which is quite low.Our other concern is the SME sector, although this is not a large part of DBS's loan book.As we know, Singapore SMEs' have come off 2 to 3 years of belt-tightening. During this time, cash flows were impacted, revenues were constrained, and customer activity was curtailed. Now that the pandemic is mostly in the rear-view mirror, they are faced with inflation which for some will be hard to pass on to their customers.This could lead to a pick-up in delinquencies.ConclusionWe would say that in terms of risk/reward, we do see a mixed picture here.The positive side is that higher NIM will boost their earnings.Uncertain economic data will most likely lead to fewer activities for the investment banking division and also from wealth management as many customers want to sit on the sideline reducing their risk exposure.All in all, we choose to hold our position.If we knew that the share price would go down followed by a return to its present level, we could simply sell now.We all know that this is pure speculation as the market fluctuates and we simply take the view that it is better to focus on time in the market than trying to time the market.DBS is a good company. Based on our average price of SGD 20.70 we get paid well to ride out the bumps in the market. We would only add to our position if we do see the share price go below SGD 30.Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.This article is written by Tudor Invest Holdings for reference only. Please note the risks.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":52,"commentSize":0,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.22.4","shortVersion":"4.22.4","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/1193596513"}