UOB

UOB: Maybank-KE downgrades UOB to Hold from Buy with TP $25.70. The house believes that UOB’s recent price surge has already priced in its safe haven status, and while UOB is likely to continue benefiting from lingering concerns surrounding DBS and OCBC, its impressive share price outperformance has reduced the risk-reward attractiveness of UOB. At current levels, UOB’s relative P/E and P/BV valuations versus sector peers is at the upper end of historical trading bands, despite its weaker three-year earnings per share CAGR of 11.3% (DBS: +15.9%, OCBC: +13.9%), and less exciting expansion in ROE. Among Maybank-KE’s coverage universe, the house opines that UOB stands to benefit the least from a rising interest rate environment considering its weakest deposit franchise, characterised by lowest cheaper funding ratio of 43.5% (DBS: 56.2%, OCBC: 47.3%) and highest SGD loan-to-deposit ratio of 95.4% (DBS: 72.8%, OCBC: 78.8%). At the house TP of $25.70, UOB is priced at an implied 1.6x FY14E P/B, close to one standard deviation above its historical mean. For exposure, Maybank-KE prefers DBS given its much stronger deposit franchise, making it the best positioned for higher interest rates. Separately, SGX has issued a "trade with caution" for UOB