Shares of DBS Group, Singapore’s largest bank, saw a significant boost in early trade following the release of its quarterly results. The stock was up 2.8% at S$32.54 on Wednesday afternoon, marking its biggest one-day percentage gain since July of last year.
Despite being down approximately 2.6% for the year, in line with the city-state’s benchmark index, DBS managed to report a 2.0% increase in net profit for the fourth quarter compared to the previous year. This growth was supported by gains in card and wealth-management fees, resulting in a 9.0% climb in total income.
In an unexpected move, the bank announced that it would be issuing bonus shares instead of paying a special dividend to shareholders. The plan entails giving investors one bonus share for every 10 ordinary shares they hold.
The market had mixed reactions to the bank’s quarterly results. Jefferies analysts noted that the earnings fell short of expectations due to softer net interest income, higher costs, and one-off items. Given a “complicated macro environment and still muted corporate loan demand across the region,” they expressed uncertainty about the bank’s net interest margin going forward. Jefferies maintained a hold rating and a S$31.65 price target for DBS stock.
Citi, on the other hand, considered the results to be in line with their estimates. Analyst Yong Hong Tan expressed expectations that the market would view the bonus share issue positively. However, Citi kept a sell rating on the stock and set a target price of S$29.20.
Overall, DBS Group’s surprise plans for bonus shares have created intrigue among investors, resulting in a significant uptick in the stock’s value. The bank continues to navigate challenges and uncertainties in the banking landscape, with analysts divided on their outlook for the institution moving forward.
