Brokers' take

DBS Group | Outperform Target price: S$23.30 Sept 20 close: S$20.52 Daiwa, Sept 20

DBS shares have outperformed for most of the year (up 18 per cent YTD versus a 12 per cent YTD rise for the STI), though slipping slightly from the recent peak in late July 2017. Despite its good run, DBS shares are still trading below the sector average on price-to-earnings ratio and price-to-book ratio, yet we also expect the company to achieve the strongest earnings per share (EPS) growth for 2017-2019, based on our forecasts. Hence, we believe its investment merits have not diminished.

Moreover, we are lifting our EPS by about 1-2 per cent for 2017-2019 after fine-tuning our core assumptions. We lower our net-interest margin (NIM) forecasts by 4-5 basis points for 2017-2019 and raise our credit-cost assumptions from 27-28 basis points to 30-32 basis points on a more protracted asset-quality recovery for its exposure to the oil and gas services segment, with the most vulnerable exposure of S$5.4 billion representing less than 2 per cent of total loans.