SG Banks: CIMB note that Aug's system DBU loans grew 29.7% yoy (+3% mom), vs house expectations of a moderation in 2H11, in view of financial instability in Europe. While house believe the loan growth will not be sustainable, see potential upward pressure on interest rates from tightening liquidity as LDR ratios are now at a 6-yr high of 83.7%. This could provide some NIM uplift for local banks.
The bane will come from shrinking non-interest income and higher provisions as asset quality deteriorates, especially from overseas ventures. House still maintains neutral rating and top pick of the sector remains UOB (Neutral, TP: $18.02), which has the least downside to trough valuations, and have Underperform ratings for DBS (TP: $11.90) and OCBC (TP: $8.20).
No comments:
Post a Comment