DBS to remain unfazed unless there is sudden RMB devaluation by June

The bank's portfolio is performing well, say analysts.

Krishna Guha, equity analyst at Jefferies Singapore, notes that unless there is sudden RMB devaluation within June of this year, DBS should not have major negative impact. The bank has already taken most of the pain as RMB devalued from 6.0 handle to 6.5 handle.

"DBS was active in helping exporters hedge their RMB exposure and were not speculating in its appreciation. These client hedges are of 12-24 months duration and will roll off in the next three months. Litigation risks resulting from sale of RMB related structured products is negligible as all sales activities are well documented." 

Guha adds: "ALM risks are minimal as RMB loan book is match funded. While management recognized that China slowdown is challenging with associated tail risks, the bank's portfolio is performing well. Overall NPL ratio is 0.6%, well below group NPL ratio. China corporate book NPL ratio is 0.4% and China SME book NPL ratio is 2.7%."