Bank

Bank lending in May grew for the 7th straight mth on optimism over the economic outlook for Spore. Total SGD lending S$4.45bn +1.5% mom, but +8% yoy for the fastest expansion since Mar'09. Mainly driven by consumer lending (S$98.5bn +2% mom) on higher housing and bridging loans, as well as business lending (S$155bn +1.7% mom) due to increased loans to financial institutions and manufacturing firms, and rise in general commerce loans Deutsche expects double digit total credit growth in 2010. We think this possible, given that bank lending has historically lagged GDP, which has shown a strong rebound since start of this year. This is positive for bank earnings. Deutsche’s top pick is OCBC, with $10.40 target, given superior operating trends and recent share price underperformance relative to domestic peers.