Nomura: This is our top Singapore bank pick

DBS ATM in SingaporeDBS ATM in Singapore

Nomura said that DBS remains its top Singapore bank pick despite the stock’s recent rise in valuation.

”While upside potential has tapered as DBS’s valuation has improved since January 2018, dividend yield of 4.3 percent will increase total upside,” the investment bank said in a note this week.

With reforms to Basel rules removing uncertainty, Nomura said it expected DBS to gradually raise its leverage to 11.5 times from 2017’s 11.2 times by using a 50 percent average dividend payout ratio over the next five years.

“This should support stronger ROE [return on equity] and better capital management,” it said.

Nomura tweaked its target price to S$32.10 from S$32.00 and kept a Buy call.

The stock was down 0.14 percent at S$28.36 at 10:09 A.M. SGT.