SG Banks by Macquarie: Loan growth accelerates in Jan. SG loans grew by 16% YoY and 2% MoM in January, led by mortgages (+23% YoY / 2% MoM). House remains OverWeight on SG banks, given their defensiveness, reasonable valuations, and strong capital positions. Note that banks offering differentiation are based on their regional presence and ability to generate non-interest income….
OCBC remains as top Outperform pick in the sector given its attractive regional presence and non-interest income story. House also have an Outperform on UOB which also offers the ASEAN exposure. UOB has been a laggard due to its relatively conservative growth last year,
but management has offered more aggressive guidance of mid-teen loan growth in 2011,
which could allow for some valuation reversion this yr…..
Retain Neutral rating on DBS given the structural issues of its exposure to low margin markets, as well as the M&A uncertainties.
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