DBS' 3Q net profit poised to beat market expectations

Despite a possible dip by 1%.

CIMB expects DBS to report 3Q13 net profit of S$880m (-1% qoq), higher than consensus expectations of S$823m. 2Q13 earnings (S$887m) were slightly inflated because of the one-off gains from the sale of certain Hong Kong properties, which results in a high base effect that makes it harder for 3Q13 net profit to beat that of 2Q13.

Here's more from CIMB:

Back then, the tailwinds from 2Q13 that was supposed to carry over to 3Q13 include a recovery in trade finance loan growth, along with the associated trade fees and treasury income.

Although management guidance earlier in 3Q stated that these trade drivers were still valid, we believe that the slowdown in Asian trade means that DBS is likely make a less sanguine guidance of its trade finance activity.

On credit costs, we factor in similar levels of provisioning (40bp of loans). We are keen to see if stresses in the small Indian SME segment have affected the rest of its Indian loan book.