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DBS has quite a few things going for it.
1. It is operating in a highly-regulated industry with high barriers to entry. And this industry will not go the way of dvd movie rentals.
2. The industry is open to competition, but its competitors, even though they are big name international players, frequently get into some sort of trouble in other markets or their own home market, which creates a poor impression in the minds of SG depositors. Trust is the most important to depositors. And so foreign banks in SG, because of their tendency to always get into some sort of trouble somewhere, will always have to attract depositors at a higher costs. And also take more risks, lower prices, and increase customer benefits, to acquire more customers. It is thus highly unlikely that any foreign bank, whether new or existing, will pose a threat to DBS. I will argue instead that more foreign banks actually enhances DBS' position over the long term.
3. Among the local banks, DBS stands out as the most progressive in terms of tech adoption. Compared to the other two, they are more frequently introducing new features and products. It is also often more competitive in terms of pricing than them.
So I see DBS continuing to be the market leader for the next decade. Whether p/b at 1.5x is expensive or not today depends on how fast they can grow their profits, or your own modelling of their future profits. But I think even if an investor buys at current prices, he or she is likely to be better off in 10 years time.
1. It is operating in a highly-regulated industry with high barriers to entry. And this industry will not go the way of dvd movie rentals.
2. The industry is open to competition, but its competitors, even though they are big name international players, frequently get into some sort of trouble in other markets or their own home market, which creates a poor impression in the minds of SG depositors. Trust is the most important to depositors. And so foreign banks in SG, because of their tendency to always get into some sort of trouble somewhere, will always have to attract depositors at a higher costs. And also take more risks, lower prices, and increase customer benefits, to acquire more customers. It is thus highly unlikely that any foreign bank, whether new or existing, will pose a threat to DBS. I will argue instead that more foreign banks actually enhances DBS' position over the long term.
3. Among the local banks, DBS stands out as the most progressive in terms of tech adoption. Compared to the other two, they are more frequently introducing new features and products. It is also often more competitive in terms of pricing than them.
So I see DBS continuing to be the market leader for the next decade. Whether p/b at 1.5x is expensive or not today depends on how fast they can grow their profits, or your own modelling of their future profits. But I think even if an investor buys at current prices, he or she is likely to be better off in 10 years time.
