Steady rise for DBS this week after selldown

A WEEK is a long time in terms of stock market corrections, as DBS Group Holdings shows.

The blue-chip bank took a pounding in the market mayhem last week when its shares plunged from $22.50 on Shanghai Tuesday to $20.10 on Manic Monday, a fall of 10.7 per cent. This was its lowest point since last November.

Things were a bit calmer for the remainder of this week, as the shares rose steadily to close at $21 yesterday, 90 cents up on Monday's close.

One difference this week was that the shares traded within a narrow band of between $20.10 and $21, while last week, the counter had gone into freefall, diving from $23 to $20.90.

Earlier this week, it was announced that chief executive Jackson Tai had received a 30 per cent pay increase, bringing his remuneration to between $7.5 million and $7.75 million for last year.

The percentage rise almost matched DBS's core net profits last year, which had risen 32 per cent to $2.18 billion.

DBS directors are also set to do better with fee increases of between 40 per cent and 75 per cent.

Since the start of the year, when the shares opened at $22.70, DBS has been on a roller-coaster ride - shooting up by as much as 3.5 per cent to a record high of $23.50 but also falling by 11 per cent to $20.10.

A report this week on Singapore banks said that the market correction has brought valuations more in line with fundamentals.

Analysts added that DBS could be prone to pressure in Hong Kong during the first quarter with a squeeze in the spread between the prime rate and the Hong Kong interbank offered rate, which affects the residential mortgage business.

However, with the growth in loans for use in China and higher wealth management fees, DBS Hong Kong's operations could prove positive overall.

sushyan@sph.com.sg