UOB

UOB: Showcased its Malaysian operations last week. UOB Malaysia is the seventh largest bank in Malaysia by loans and deposit, with a focus on consumer and SME segments, contributing 16% of group PBT. While loan growth is slowing, management expects efforts made years ago to deepen client relationships to show results. Management expects easing ROEs in Malaysia (17.6%/17.8%/18.9%, FY13/12/11) due to necessary franchise investments. There are limited excesses for pruning as its cost structure is already lean. The saving grace is potentially stronger NIM and fee-based income ahead. Maybank-KE highlights that as its hsare price has corrected recently, UOB’s P/E and P/B premiums over peers have largely reverted back to historical 10 year average. Nevertheless, Maybank-KE maintains Hold with TP of $25.30, or 12x FY15e P/E on absence of near-term re-rating catalysts.