OCBC

OCBC: PhillipCapital maintains a Neutral rating with $10.62 TP, given its vulnerability to volatility from GEH’s Non-Par Fund, which will impact its earnings. OCBC continues to be PhillipCapital's least preferred bank amongst the Singapore Banking Sector due to its volatile earnings profile. With the steepening of the yield curve in response to QE tapering by the US Fed, House expect their earnings for 4Q13 to feel the drag from mark-to-market losses on GEH’s Non-Par Fund and into FY14. Although OCBC has been able to grow their fees and commission at a good momentum, House remain cautious going into FY14 due to uncertainties on some ASEAN countries. PhillipCapital expect wealth-related fees to show increasingly stronger growth in FY14 as OCBC puts focus on increasing its AUM and its outlook of more favourable market conditions in FY14 with major markets showings signs of recovery. House see a potential for re-rating in the medium to longer term when GEH shows that the higher yields from the currently rising long-term interest rate environment generates more investment income and, NBEV and total weighted new sales from offering higher return products.