How Risky Is DBS Group Holdings Ltd Stock Now?

Singapore’s largest bank, DBS Group Holdings Ltd (SGX: D05), released its 2016 fourth quarter results just a week ago.

Last December, I published an article that looked at how risky the bank was for investors using its financials for the third quarter of 2016. I thought the bank was not particularly risky back then, based on my assessment of four important numbers: the leverage ratio; the loans-to-deposits ratio; the efficiency ratio; and the price-to-book ratio.

(You can read about the importance of the four ratios and what to look out for with them in an article I wrote on the risk-profile of DBS Group’s industry peer, Oversea-Chinese Banking Corp Limited (SGX: O39).)

With new numbers from DBS Group available now, I thought it would be interesting and useful for investors to reassess the bank’s risk.

So, here are how the four financial ratios have changed for DBS Group since the publication of my aforementioned December article on the bank:

  • The leverage ratio: From 10.5 to 10.8
  • The loans-to-deposits ratio: From 89.5% to 86.8%
  • The efficiency ratio: From 40.9% to 44.1%
  • The price-to-book ratio: From 1.05 to 1.09

You can see that the only ratio that has improved is the bank’s loans-to-deposits ratio. Given this, I think it’s fair to say that the risk associated with DBS Group has increased since December 2016.

But, DBS Group is currently still not a very risky bank stock. Its leverage and efficiency ratios remain at healthy levels, and its price-to-book ratio, while having grown a little, is currently still near a five-year low.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing owns shares in Oversea-Chinese Banking Corp.