SG Banks: UBS note that SG bank share prices are just 10% shy of a recessionary level. If financial dislocation occurs, f/cast 40% downside to share prices, view current valuations as attractive, as do not expect a recession. House positive on DBS as it is inexpensive (1x 2011E P/BV) and like OCBC for its franchise power.
While SG banks cannot avoid global market volatility, believe investors will be reassured by their robust capital position, strong funding base and as they operate in Asia where economies are relatively healthy.
Over all rating are:
UOB: maintain N, TP $19.20 from $19.70, (strong loan growth, conversative bank.)
OCBC: maintain Buy, TP $10.70, (Premium franchise, strategy of building up the wealth management business will ensure higher profitability over time.)
DBS: maintain Buy, TP $15.90 from $16.60, (Strong capital position, and shares are inexpensive, and strong loan growth should drive earnings; and robust capital will likely be reassuring in uncertain times.)
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