UOB / OCBC

UOB / OCBC: Credit Suisse says its Long UOB , Short OCBC trade is looking increasingly crowded near-term after OCBC underperformed its Spore peers ytd. Notes OCBC is looking attractive on relative valuations after losing its entire premium over UOB; even from a PB-ROE adjusted metric, OCBC's premium over UOB is now at a one-year low. But the house says, OCBC's earnings momentum and profitability profile aren't weaker, with OCBC's consensus earnings cuts actually less severe than UOB, with similar near-term earnings expectations. Believes "Long OCBC, short UOB" looks an attractive short-term trade going into 2Q12 results. Notes UOB appears priced for perfection and is a crowded long. With asset quality issues unlikely to show up near term and push up credit costs (main reason for Underperform rating on OCBC on a 12-month time frame), says risk-reward is tilted in favor of this trade. UOB is down 0.9% at $19.41; OCBC is up 1.6% at $9.45.