OCBC

OCBC: falls 1.0% to $8.62, underperforming UOB's and DBS's 0.3% rises, likely as both CIMB and Macquarie downgrade it to Neutral. Macquarie says momentum from 1Q12's standout earnings is unlikely to continue amid loan volumes' moderate slowdown, mild NIM pressure and a likely reduction in investment income, insurance profit. Notes the stock tends to outperform during sustained periods of capital market strength due to the earnings impact of its insurance business and the sentiment impact of its private bank subsidiary, but observes the reverse is also true. Adds, while macro headwinds aren't a reason to panic, they are likely to limit upside. Notes the stock has lagged peers, partly on unfamiliarity with new mgt, but also on its valuation premium. Views UOB's 1.3X 2012 P/BV offers better relative value vs OCBC's 1.4X despite similar 11%-12% forward ROE outlook and OCBC's greater earnings volatility. Cuts OCBC's TP by 6% to $9.02.