Tuesday, November 30, 2010


Banks: UBS sees Spore banks continuing to underperform market & Asian peers as interest rates expected to remain low in coming months with risk of more property-market curbs adding pressure to lenders. House says banks' performance hinges largely on US interest rates, which it expects to rise only around end-3Q11. Picks OCBC for its strong loan appetite & credible wealth mgt franchise, which would lift growth & profitability.

Likes DBS on valuation grounds, market laggard with limited downside but stock is very sensitive to interest rates, unlikely to outperform in near term. Tips banks' net profits to fall 3.3% for every 25% decline in Spore housing loan growth. Rates OCBC, DBS as Buys with respective $9.80, $16.60 targets; UOB at Neutral with $20.55 target.

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