Dah Sing Banking pops the champagne on robust numbers

Healthy revenue growth seen for the bank.

Dah Sing Banking's loan growth is expected to range from 7-8 percent HoH in the first half of 2014, and that it was mainly driven by cross-border trade finance and Macau housing loans.

Further, according to a research note from Maybank Kim Eng, Dah Sing Banking has passed on the rising funding cost to its commercial loan customers.

The report also noted that it forecasts Dah Sing Banking's NIM to stay flat at 1.82% during the second half of 2014. DSB also benefited from cross-selling of wealth management, securities brokerage, bancassurance and corporate treasury products and services to customers in 1H14.

Overall, Maybank Kim Eng said that it maintains its forecast total income CAGR for Dah Sing Banking at 10.2% during 2013-16.

Here's more from Maybank Kim Eng:

Making efforts to improve operating efficiency. Management maintained a cautiously optimistic outlook for its cost-to-income ratio.

This is mainly due to its tight control of staff cost, branch opening as well as administrative and marketing expenses. We maintain our view DSB's cost-to-income ratio will improve gradually from 51.8% in 2013 to 50-51% during 2014-16.

Potential rise in credit cost. We understand DSB’s total NPLs continued to rise in 1H14 (+HKD22m HoH in 2H13 and +HKD76m HoH in 1H13).

This was mainly related to steel trading loans and SME loans in China. DSB has hired a new chief credit officer to review its loan book and it stopped growing direct China loans in 1H14.