DBS Group Holdings share price in China war
LIFETIME MEMBERSHIP It seems that DBS Group Holdings share price may have peaked. During the report of 1QFY2021 financial result, DBS Group reported first quarter net profit doubled from the previous quarter. That feat set DBS Group Holdings share price on fire. However, recent 2QFY2021 financial revealed 15% decline of net profit on quarter-to-quarter basis. In this regard, is this the end of an era for DBS Group Holdings share price?
Make no mistake. The local bank is not facing any crisis. In fact, DBS Group is still raking in healthy level of profit. Year-to-date, DBS Group Holdings share price had also increased by a whopping 21.35%. Notwithstanding these, it should be noted that the powerful surge of DBS Group Holdings share price was built upon the bank’s recovery from the low “base effect” seen in the first half of FY2020 – the onset of the pandemic.
As we enter the second half of FY2021, that “base effect” will gradually reduce. Moving forward, investors will be examining how the bank fares in comparison to pre-pandemic. Against this backdrop, whether DBS Group Holdings share price could sustain its bullish run in the coming months will be a big question mark.
Just like OCBC, DBS’ first half stellar performance was largely due to lower amount of allowances, which dropped to just $89 million in comparison to the staggering $1.94 billion in last year. The lower allowances enabled DBS Group to clock in higher profits. As we shift toward endemic, the level of allowances will likely to continue falling.
Of more concern for investors should be the dismal performance of net interest income, which fell 12% year-on-year to $4.2 billion. The low interest rate environment continued to roil top-line from the interest income. If not for the strong performance from its wealth management segment, the result would have been less flattering.
Nonetheless, all is not lost on DBS Group Holdings share price. Like OCBC, DBS Group has jumped on the bandwagon in seeking the next growth from China’s Greater Bay Area (The former has a 20% stake in Bank of Ningbo). In April 2021, DBS Group acquired 13% stake in Shenzhen Rural Commercial Bank Corporation Limited for $1.1 billion.
While DBS Group Holdings share price is expected to remain volatile in the short-term due to the COVID-19 pandemic, this is a growth stock that investors should consider holding for the long-term. In my previous article in 2019, I have shared that my vision that DBS Group Holdings share price could reach $50 in the future. In this article, I will share more insights on the outlook for DBS Group Holdings share price in 2021.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in DBS Group Holdings share before. Whether DBS Group Holdings share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
DBS Group Holdings share price in China pivot
China becomes the first major economy to recover from the pandemic. For DBS Group Holdings share price, the [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]LIFETIME MEMBERSHIP
Congratulations on your first step to becoming part of SG Wealth Builder community! For a one-off payment of $200, you can get full access to all the articles and enjoy the benefits of SG Wealth Builder Membership.
The full benefits and privileges of SG Wealth Builder Membership:
- Access to the latest premium articles of SG Wealth Builder
- Email notifications of latest blog articles
- Request for coverage on stocks, insurance and other personal financial topics
- Comment in articles
Note: After payment is made, you will be prompted with registration form to create your user-id and personal password.