DBS BUY Target Price $18.00 by RBS

RBS has raised its target price on Singapore’s DBS (DBSM.SI), Southeast Asia’s largest bank, to $18.00 from $16.50 and maintained its buy rating.

DBS posted a record quarterly profit, thanks to falling bad-debt charges and a surge in trading income, and signalled that an erosion in interest rate margins in its core markets may be coming to an end.

RBS said it had revised its earnings estimates for DBS’ 2011-2013 financial years by 9.4% given the bank’s solid first quarter results.

DBS remains its top Singapore bank pick, reflecting the strong revenue trends, improving margins and attractive valuation relative to other lenders under its coverage, RBS said.