SG Banks: DB sees limited near term upside for Spore banks despite undemanding valuations, citing recent 2Q results as not compelling while net interest margins remain under pressure. Notes interest rates in Asia generally rising, but Sibor likely to remain low for longer than prev expected as rates in Spore are linked to Fed policy; While NIMs should stabilise in 2011, the near term is challenging and risks are to the downside.
Highlights average 2Q10 NIM for all 3 banks at 1.98% vs 2.32% peak in 4Q08. Loan growth for 2H10 likely to remain positive given robust SG economy but loan expansion may slow in 2011 de to global economic conditions. In order of preference, likes DBS (Buy, TP: $17.20) best performer in 2Q with further earnings upside from loan loss normalisation, OCBC (Buy, TO: $10.40) & UOB (Hold; TP: $21.00).
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