DBS jumps 3.5% after O&G cleanup

DBS Group Holdings on Tuesday jumped over 3.5 per cent following the cleanup of its oil & gas support services exposure.

At 1.20 pm, DBS was up 3.5 per cent or 80 cents to S$23.59. It had earlier touched a high of S$23.69.

Year-to-date, Southeast Asia's biggest bank has gained 36 per cent.

DBS on Monday reported a 25-per cent fall in third quarter earnings S$802 million from a year ago, as the bank almost doubled its specific provisions for oil and gas bad debts. The step removes uncertainty over asset quality, enabling investors to refocus on operating performance and the bank's digitalisation agenda, DBS said.

Its smaller rivals, United Overseas Bank and OCBC Bank, also rose on Tuesday as investors looked ahead to the lenders' higher earnings on the back of faster economic growth in the region.

UOB was up 1.6 per cent to S$25.15 and OCBC was 1 per cent higher to S$11.84. UOB and OCBC have risen 23 per cent and 33 per cent respectively since the beginning of 2017.

A slew of analyst reports have outperform or overweight calls on DBS:

Morgan Stanley: Increased earnings estimates 10 per cent ahead of consensus, credit overhang removed.

Berstein: Large oil & gas cleanup to 'remove uncertainty'; core numbers and thesis intact, buy.

Credit Suisse: Asset quality overhang removed, poised to deliver robust 2018 growth.