DBSGroup's Earning to Surge

Thu, 20 Oct 2005 15:34:24 +0800


SINGAPORE (XFN-ASIA) - Goldman Sachs said it expects DBS Group's
earnings
to surge in the next two years on the back of rising interest rates
and
demand for home mortgage financing.

While DBS's net profit will likely dip to 1.83 bln sgd this year
from
2. 02 bln last year, Goldman said the bank's net profit should rise to
2.15 bln in 2006 and to 2.40 bln in 2007.

"We expect margins to track up in the fourth quarter and in 2006
on
rising Singapore interbank rates and better mortgage pricing in
Singapore," Goldman said, adding that DBS is the most exposed to the
interbank market among local banks.

Given its lower loans to deposit ratio among Singapore banks, DBS
should also benefit from rising property demand, it said.

Goldman reaffirmed its "buy" rating for DBS as it believes the
bank's
stock is grossly undervalued vis-a-vis Goldman's fair value of 18.50
sgd
per share.

"The current valuation is unjustified especially given that DBS's
core return on equity has been steadily rising," Goldman said.

DBS ended the morning session up 0.10 sgd or 0.64 pct at 15.80
with
1.73 mln shares traded.