Let us look at the Earnings Growth, Dividend Growth, Share Price Growth and Business Drivers; the 4 factors that determine the attractiveness of DBS as an investment.
1. Earnings Growth
The Earnings growth for DBS dropped twice from 2006 to 2020.
Source: DBS Annual Report
The earnings per share declined by 35% from 2007 to 2009. This is due to the cyclical growth nature of DBS which caused it to be negatively affected by the economy. It took an additional 5 years for the earnings to rebound back to its pre-crisis state.
The second time the earnings per share fell was from 2005 to 2006, whereby the economy slowed down and interest rates fell. From this, we can conclude that slow growth leads to both interest rates and earnings following the trend and falling.
We must also look at Return of Equity (ROE) as it is an indicator of the DBS’ growth rate. ROE is the...
