The Singapore research team at RHB Group Research has maintained its ‘buy’ rating on DBS with an unchanged target price of $40.40 after the bank was asked to set aside an additional $930 million in regulatory capital by the Monetary Authority of Singapore (MAS).
The imposition by the central bank was due to the disruption of its digital banking services in November 2021.
DBS has been asked to apply a multiplier of 1.5 times to its risk-weighted assets for operational risk. “MAS has also directed DBS to appoint an independent expert to conduct a comprehensive review of the incident, including the bank’s recovery actions, where DBS must rectify all shortcomings identified,” write the analysts.
MAS said it had noted “deficiencies in DBS’s incident management and recovery procedures”, resulting on the “prolonged duration” of the disruption, according to the analysts. During the outage, many DBS and POSB customers were unable to access online banking services.
DBS had attributed the disruption to an issue with its access control servers and said that it was not a cyber attack.
In a statement released on the evening of Feb 7, DBS says the resulting 40 basis point (bp) impact on capital ratios will not affect its dividend policy as its proforma common equity tier 1 (CET-1) of 13.4% remains at the upper end of target range
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At 11:59am, shares in DBS are trading 14 cents lower and 0.38% down at $36.34.
