Banks

Banks: SG bank lending in Feb +1.6% YoY to $334.1b, as business loans continued to expand rapidly even as consumer home loans grew more slowly. Total SGD bank loans outstanding at end Feb +17.3% YoY, the biggest increase since Nov08, led by broad-based growth in loans to businesses +2.3% MoM and +16.1% YoY to $179.3b at end Feb. Bldg and construction loans +3.6% MoM to $55.5b, the biggest jump since Jun08, while loans to non-bank financial institutions +2.7% MoM to $40.2b…..

Consumer loans expanded more slowly MoM in Feb, due mainly to a smaller rise in housing and bridging loans. Total consumer loans +0.9% MoM, while housing and bridging loans +1% MoM to $115.2b, the slowest mthly growth since Feb 10. Both car loans and credit card lending -0.6% mom to $11.6b and $6.79b respectively…..

BNP Paribas note that at current levels, SG banks are priced at historical P/E mean and rising SIBOR should catalyze share prices higher, a likely scenario towards the end of this yr. House preferred pick is OCBC, TP$11.05, due to its well-executed corporate strategy and consistent delivery….

Macquarie remains overweight on SG banks, citing reasonable valuations and strong capital positions. Have Outperform ratings on UOB and OCBC, citing attractive exposure to higher margins and growth Asean mkts. While recognizing the positive impact of DBS’s new management, retain Neutral rating on the stock given the structural issue of its exposure to low margin markets, as well as the M&A uncertainties.