An Investor’s Perspective On DBS Group Holdings Ltd

DBS Group Holdings Ltd (SGX: D05) is one of the three Singapore-based banks. It is also part of the Straits Times Index (SGX: ^STI), with a 12% weighting.

Over the past year, DBS has seen its share price drop 11.5% to its current level of S$15.43.

Let’s have a quick look at four different financial metrics for the bank.

They are namely the price to earnings (P/E) ratio, price to book (P/B) ratio, asset-to-equity ratio, and the dividend yield.

DBS has trailing twelve months (TTM) earnings per share of S$1.71. At its current price, this implies a P/E ratio of 9.13.

This is lower than P/E ratio of the SPDR STI ETF (SGX: ES3), an exchange-traded fund that tracks the fundamentals of the Straits Times Index. The ETF carries a P/E of 12.05.

Moving on to the P/B ratio, at the end of the first-half of 2016, DBS had a net asset value (NAV) per share of S$16.48. This gives the bank a P/B ratio of 0.93.

What this means is that investors are getting the assets owned by DBS at a discount to their market value.

Next, moving onto DBS’s total asset to shareholders’ equity ratio, this assists in assessing the bank’s leverage which sheds light on the risks the bank is undertaking. In general, the lower the number, the stronger a bank’s balance sheet is.

At the end of its latest quarter in June 2016, DBS had total assets of S$450.9 billion, while shareholder’s equity stood at S$42.4 billion. This results in a total asset to shareholders’ equity ratio of 10.6, which is an improvement from the ratio of 11.25 seen at end-June 2015.

Lastly, DBS has a dividend yield of 3.9% based on its TTM dividend of S$0.60 per share. This is higher than the SPDR STI ETF’s dividend yield of around 3.2%.

To sum it up, DBS has a P/E ratio and dividend yield that are better than the market’s average, the bank’s leverage has improved over the past year, and it is presently priced at a discount to the value of its net assets.

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