Banks

Banks: Deutsche Bank notes that in wake of recent property measures, UOB appears more vulnerable to a housing credit slowdown, noting that although the latest action to cool the residential property market shouldn't come as a great surprise it will likely dampen sentiment towards the banks near term….

Add that In the mth following Aug10 measures, banks underperformed STI by 5%, with UOB the most affected, which is intuitive given the bank's greater reliance on housing to deliver credit growth. Given 22% mortgage growth, housee do not rule out further policy action, but assuming an 11% 2011estimated sector total credit growth, expects downside to current estimates to be limited….

Add that In the mth following Aug10 measures, banks underperformed STI by 5%, with UOB the most affected, which is intuitive given the bank's greater reliance on housing to deliver credit growth. Given 22% mortgage growth, housee do not rule out further policy action, but assuming an 11% 2011estimated sector total credit growth, expects downside to current estimates to be limited….

Highlight that system loan growth still rising with Nov statistics showing system loan growth still rising, now at 14.2% YoY and annualising at almost 20% over the past three mths, while consumer lending continues to drive growth, business credit has accelerated rapidly since the subdued outcomes of 2009 and early 2010….

Order of preference in banks is DBS, OCBC then UOB. Note that with margin headwinds likely to prevail in 4Q10 and the likely negative sentiment impact of further property measures, tips sector upside to be limited in the near term, especially if we see more peer-NIM-boosting policy rate tightening around the region as in Thailand….

Broker has Buy Ratings for DBS and OCBC with $17.20 TP and $10.40 TP, while has a Hold Call on UOB with $21 TP.