DBS' profits to increase by up to 4% on the back of a stronger USD

It has the largest USD loan exposure at 33%.

As the USD continues to strengthen, regional currencies have depreciated and the SGD is no exception. Whilst Maybank Kim Eng expects more volatility for ASEAN currencies ahead, its analysts note that DBS should be a key beneficiary of USD strength as it has the largest USD loan exposure at 33% vs peers’ 19-23%.

"We assess the FX translation impact on banks’ profits on the basis of some broad assumptions based on banks’ pretax profits by regions. For translational FX gains alone, we estimate DBS’s FY16-17E pretax profits will increase the most by 2-4% vs OCBC’s 0.8-1.7% and UOB’s 0.7-1.4%. OCBC’s and UOB’s gains are partly offset by their relatively bigger exposure in ASEAN," says Maybank Kim Eng.