DBS earnings growth pegged to hit 6.5% in 2013

It's the highest among Singapore's banks.

According to CIMB, DBS was the firm's top pick for most of 2012 and remains as our top pick for 2013.

CIMB said in a report that strong IB fee trends seen recently can sustain into 2013 as Asian debt capital markets develop. "While we anticipate a slowdown in net interest income growth (c.1.8% in 2013), we think that fee income drivers from trade and loan financing (Chinese trade financing loans), wealth management and the aforementioned investment banking fees should prop up earnings growth," it added.

Here's more from CIMB:

We expect earnings growth of around 6.5% in 2013–highest in the Singapore banks sector.

Our target price of S$17.39 is based on 1.27x CY13 P/BV (GGM-r:9.8%, g: 4.2%, ROE11.3%). The stock is the cheapest among the three banks at 1.1x CY13 P/BV.

Catalyst for further upside comes from using freed-up capital (from RWA optimisation) to acquire and enlarge the regional platform.