Hi, there is a difference between ' above book value' vs ' above valuation' . While DBS is paying above book value, it does not mean they pay above valuation. In fact, they can never pay above valuation, because whatever price they agree, it is their valuation, they need to justify it.
anyway, as it is above book value, while DBS own share price is below book value, the price to book value will increase a little bit, not significant. For the other impacts, refer below forecast fr DBS.
Transaction to be completed progressively over 15 months, beginning with Singapore
Expected to add $200m to Group income in 2017 and $600m in 2018
Projected earnings of $200m within three years with ROE > 15%
This is a small acquisition but we dont know whether it will be accretive since DBS is paying above valuation.
News from CNASYDNEY: DBS Group, Singapore' s biggest lender, said on Monday (Oct 31) it has agreed to buy Australia and New Zealand Banking Group' s (ANZ) wealth and retail businesses in five Asian countries for S$110 million above book value.
The portfolio of businesses being acquired is in Singapore, Hong Kong, China, Taiwan and Indonesia, representing total deposits of S$17 billion, loans of S$11 billion, investment assets under management of S$6.5 billion and total revenue of S$825 million for FY2016.
The ANZ units serve about 1.3 million customers in total, of which more than 100,000 are affluent or private wealth customers and 1.2 million are retail customers.
With the acquisition, DBS will add S$23 billion in wealth assets under management to its books, with high net-worth clients accounting for S$6 billion. This will take its total wealth assets under management to S$182 billion.
In Indonesia, DBS will gain about 410,000 customers, effectively increasing its base by six times. In Taiwan, DBS will add around 530,000 customers, expanding its base by 2.5 times.
The transaction is expected to be completed progressively from the second quarter of 2017, with the target for full completion in all markets by early 2018.
If you look at the details, high net worth clients make up a very small proportion. How many of them will not jump ship bearing in mind that lately many of DBS high net worth customers have suffered from the collapse of bonds promoted by DBS.
Noted the added $23B ADDED wealth assets ?? How much do you think the wealth mgt team can make out of this ?
I guess it can easily pay for the 110M very soon if not wrong. Anyway DYODD.
This is a small acquisition but we dont know whether it will be accretive since DBS is paying above valuation.
I am NOT asking anyone to buy ...DYODD.
But when I see concern on bad loans....I too look into their report ( CEO do give a presentation detail on this ...in SGX website)
I am very simple LOL....with average simple $1.2B profit a qtr.....even losing one qtr profit to cover all these bad loan ? ( how about this)
But what about the large provision taken > what about the asset onbook by this swiber , Erza......well cld be affected by OnG but I dont think DBS is not better aware then us . One thing I am certain DBS will continue w its 4% dvidend.
As for its current share price is 0.9 times its book value. ( for a bank ! Largest in SEA and profitable w close to $5B profit a year )
:)) happy investng.
Tempting but no mention about provision for Ezra and other oil and gas counters. With Perisai default, it will be hard for Ezra to survive. Too many uncertainties including US election. But long term I think its a good counter. Dyodd
Wow totally agreed that its a luxury and envy of other banks that DBS can provide * if not wrong a 100% in crease in provision.
( if even 10% OK super worry 50% of this come true.....this balance will go back to the balance sheet some day ...wow)
Dividend 4.03% and DBS can easily maintian ,,,,,very surprise that fund would not be buying into this Gem .
OH DYODD
Tempting but no mention about provision for Ezra and other oil and gas counters. With Perisai default, it will be hard for Ezra to survive. Too many uncertainties including US election. But long term I think its a good counter. Dyodd
Wow totally agreed that its a luxury and envy of other banks that DBS can provide * if not wrong a 100% in crease in provision.
( if even 10% OK super worry 50% of this come true.....this balance will go back to the balance sheet some day ...wow)
Dividend 4.03% and DBS can easily maintian ,,,,,very surprise that fund would not be buying into this Gem .
OH DYODD
Are you concerned about the non performing number which rose significantly?
Noted the added $23B ADDED wealth assets ?? How much do you think the wealth mgt team can make out of this ?
I guess it can easily pay for the 110M very soon if not wrong. Anyway DYODD.
This is a small acquisition but we dont know whether it will be accretive since DBS is paying above valuation.
News from CNASYDNEY: DBS Group, Singapore' s biggest lender, said on Monday (Oct 31) it has agreed to buy Australia and New Zealand Banking Group' s (ANZ) wealth and retail businesses in five Asian countries for S$110 million above book value.
The portfolio of businesses being acquired is in Singapore, Hong Kong, China, Taiwan and Indonesia, representing total deposits of S$17 billion, loans of S$11 billion, investment assets under management of S$6.5 billion and total revenue of S$825 million for FY2016.
The ANZ units serve about 1.3 million customers in total, of which more than 100,000 are affluent or private wealth customers and 1.2 million are retail customers.
With the acquisition, DBS will add S$23 billion in wealth assets under management to its books, with high net-worth clients accounting for S$6 billion. This will take its total wealth assets under management to S$182 billion.
In Indonesia, DBS will gain about 410,000 customers, effectively increasing its base by six times. In Taiwan, DBS will add around 530,000 customers, expanding its base by 2.5 times.
The transaction is expected to be completed progressively from the second quarter of 2017, with the target for full completion in all markets by early 2018.
This is a small acquisition but we dont know whether it will be accretive since DBS is paying above valuation.
News from CNASYDNEY: DBS Group, Singapore' s biggest lender, said on Monday (Oct 31) it has agreed to buy Australia and New Zealand Banking Group' s (ANZ) wealth and retail businesses in five Asian countries for S$110 million above book value.
The portfolio of businesses being acquired is in Singapore, Hong Kong, China, Taiwan and Indonesia, representing total deposits of S$17 billion, loans of S$11 billion, investment assets under management of S$6.5 billion and total revenue of S$825 million for FY2016.
The ANZ units serve about 1.3 million customers in total, of which more than 100,000 are affluent or private wealth customers and 1.2 million are retail customers.
With the acquisition, DBS will add S$23 billion in wealth assets under management to its books, with high net-worth clients accounting for S$6 billion. This will take its total wealth assets under management to S$182 billion.
In Indonesia, DBS will gain about 410,000 customers, effectively increasing its base by six times. In Taiwan, DBS will add around 530,000 customers, expanding its base by 2.5 times.
The transaction is expected to be completed progressively from the second quarter of 2017, with the target for full completion in all markets by early 2018.
I agree with yr assessment.
The way I look at it is this, the OG NPL is a legacy problem, so DBS will take time to digest it. Initially I hope DBS can address this once and for all by taking a one time big allowance. Instead DBS choose to spread it across. However market does not wait and price that in. As a result, the price is more than 10% discount to book value now. So I still think below $15 is good entry point.
Are you concerned about the non performing number which rose significantly?
Results
DBS posts flat 3Q earnings of $1.07 bil, in line with expectations......L i n k
DBS Group reported earnings of $1.07 billion for 3Q, little changed from a year ago.
The average forecast from five analysts polled by Reuters was for $1 billion in earnings.
Net book value per share : $ 16.68
News from CNA
SYDNEY: DBS Group, Singapore' s biggest lender, said on Monday (Oct 31) it has agreed to buy Australia and New Zealand Banking Group' s (ANZ) wealth and retail businesses in five Asian countries for S$110 million above book value.
The portfolio of businesses being acquired is in Singapore, Hong Kong, China, Taiwan and Indonesia, representing total deposits of S$17 billion, loans of S$11 billion, investment assets under management of S$6.5 billion and total revenue of S$825 million for FY2016.
The ANZ units serve about 1.3 million customers in total, of which more than 100,000 are affluent or private wealth customers and 1.2 million are retail customers.
With the acquisition, DBS will add S$23 billion in wealth assets under management to its books, with high net-worth clients accounting for S$6 billion. This will take its total wealth assets under management to S$182 billion.
In Indonesia, DBS will gain about 410,000 customers, effectively increasing its base by six times. In Taiwan, DBS will add around 530,000 customers, expanding its base by 2.5 times.
The transaction is expected to be completed progressively from the second quarter of 2017, with the target for full completion in all markets by early 2018.
Chng Kays opening big splash .... have fun !!!!!
The way I look at it is this, the OG NPL is a legacy problem, so DBS will take time to digest it. Initially I hope DBS can address this once and for all by taking a one time big allowance. Instead DBS choose to spread it across. However market does not wait and price that in. As a result, the price is more than 10% discount to book value now. So I still think below $15 is good entry point.
Are you concerned about the non performing number which rose significantly?
The way I look at it is this, the OG NPL is a legacy problem, so DBS will take time to digest it. Initially I hope DBS can address this once and for all by taking a one time big allowance. Instead DBS choose to spread it across. However market does not wait and price that in. As a result, the price is more than 10% discount to book value now. So I still think below $15 is good entry point.
Are you concerned about the non performing number which rose significantly?
In my view, if no more swiber-like skeletons fall out of the closet in 4Q, the possibility of DBS achieving the milestone 5 bil NPAT for FY 16 cannot be totally discounted - well, maybe at least tantalisingly close .....
Not really. Like DBS has explained, a large part of the provision has to do with the swiber debacle. They were also at pains to point out that they' d taken the opportunity to make the large provision out of otherwise healthy profit n profit growth. If not, they wld probably have offsetted some against the allowance reserve already prudently built up from prior profitable yrs. I think also that while their exposure to OnG is relatively high, there' d come a time when allowance provisioning wld taper off (ie, the weak players might largely have been tackled to quite a large extent already). Furthermore, DBS also highlighted that while provisions were being made, the exposure itself was well collateralised (see extract from press release highlighted below). In other words, they probably might not expect a lot of the provision to end up to be irrecoverable. What that also means is that going forward, it is possible that quite a lot of the provisions cld be written back. So, next few yrs, booming profits might not be that much of a wild dream. N, provided equity mkt improves, 21SGD per share within the next 18-24 mths appears to me highly possible. DYODD as always.
The non-performing loan rate rose from 1.1% in the previous quarter to 1.3%. The increase was due largely to the recognition of a well-collateralised exposure in oil and gas support services. For the third quarter, general allowances of SGD 169 million were taken as a prudent measure, compared with SGD 35 million a year ago. Specific allowances for credit exposures amounted to SGD 261 million as specific allowances for loans rose to 30 basis points compared to 20 basis points a year ago.
For the nine months, total allowances doubled to SGD 972 million due to higher specific allowances for credit exposures. A significant part of the increase in specific allowances was due to Swiber in the second quarter.
Are you concerned about the non performing number which rose significantly?
In my view, if no more swiber-like skeletons fall out of the closet in 4Q, the possibility of DBS achieving the milestone 5 bil NPAT for FY 16 cannot be totally discounted - well, maybe at least tantalisingly close .....
Wow totally agreed that its a luxury and envy of other banks that DBS can provide * if not wrong a 100% in crease in provision.
( if even 10% OK super worry 50% of this come true.....this balance will go back to the balance sheet some day ...wow)
Dividend 4.03% and DBS can easily maintian ,,,,,very surprise that fund would not be buying into this Gem .
OH DYODD
Are you concerned about the non performing number which rose significantly?
In my view, if no more swiber-like skeletons fall out of the closet in 4Q, the possibility of DBS achieving the milestone 5 bil NPAT for FY 16 cannot be totally discounted - well, maybe at least tantalisingly close .....
Are you concerned about the non performing number which rose significantly?
In my view, if no more swiber-like skeletons fall out of the closet in 4Q, the possibility of DBS achieving the milestone 5 bil NPAT for FY 16 cannot be totally discounted - well, maybe at least tantalisingly close .....
DBS is still making a lot of $$$ n its dominant position in local banking is to me unquestionable. Seems almost like a luxury in these challenging times that there' s so much headroom available for allowance provisioning.
In my view, if no more swiber-like skeletons fall out of the closet in 4Q, the possibility of DBS achieving the milestone 5 bil NPAT for FY 16 cannot be totally discounted - well, maybe at least tantalisingly close .....
DBS is still making a lot of $$$ n its dominant position in local banking is to me unquestionable. Seems almost like a luxury in these challenging times that there' s so much headroom available for allowance provisioning.
SINGAPORE, 31 October 2016 &ndash DBS Group reported net profit of SGD 1.07 billion for third quarter 2016, little changed from a year ago. An 8% rise in total income to SGD 2.93 billion as well as cost containment resulted in a 19% increase in profit before allowances to a record SGD 1.73 billion. The strong operating results provided substantial headroom for higher general allowances to be taken as a prudent measure.
