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Silver Point

Thomas J. Monaco

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

*Overstated 3Q21 Result: DBS Group Holdings (DBS.SP) [DBS] reported 3Q21 results of SGD 1.7 bn, flat linked quarter. When one accounts for the unnecessary negative loss provision of SGD 70 mn (down 188.6%) while credit was weaker, DBS’ results would appear to be grossly overstated;*Watch Your Credit: We struggle continue to believe that DBS’ due diligence had actually caught all of LVB’s risk (see discussion below), and remain unconvinced that the moratorium exits are anything more than additional reliance on government schemes and relief programs. DBS has disclosed absolutely nothing about Shenzhen Rural Commercial Bank’s (SRCB) fundamentals. We feel that reserves should be shored up in the neighborhood of SGD 1.1 bn – amounting now to about a half quarter of operating results; and *Deal Distractions Mount:  While SRCB dos not appear to be riddled with problems the way LVB is, no doubt there will be issues to contend with.  DBS apparently isn’t done with its shopping spree, being in the running for parts of Citigroup's (C.US) consumer business in Asia. Frankly, DBS needs to focus on improving its own legacy issues before it starts both taking on those of other financial institutions.

*Overstated 3Q21 Result: DBS Group Holdings (DBS.SP) [DBS] reported 3Q21 results of SGD 1.7 bn, flat linked quarter. When one accounts for the unnecessary negative loss provision of SGD 70 mn (down 188.6%) while credit was weaker, DBS’ results would appear to be grossly overstated;*Watch Your Credit: We struggle continue to believe that DBS’ due diligence had actually caught all of LVB’s risk (see discussion below), and remain unconvinced that the moratorium exits are anything more than additional reliance on government schemes and relief programs. DBS has disclosed absolutely nothing about Shenzhen Rural Commercial Bank’s (SRCB) fundamentals. We feel that reserves should be shored up in the neighborhood of SGD 1.1 bn – amounting now to about a half quarter of operating results; and *Deal Distractions Mount:  While SRCB dos not appear to be riddled with problems the way LVB is, no doubt there will be issues to contend with.  DBS apparently isn’t done with its shopping spree, being in the running for parts of Citigroup's (C.US) consumer business in Asia. Frankly, DBS needs to focus on improving its own legacy issues before it starts both taking on those of other financial institutions.

DBS Group Holdings – Pushing The Envelope