Banks

Banks: CLSA reckons 3Q13 results are likely underwhelming. NIMs are expected to be stable but slower loan growth, subdued non-interest income and bad debts are expected to weigh on the bottom line. OCBC’s headline numbers will look particularly weak on a y/y basis given the material gain in 3Q12. CS’ order of preference is: UOB, OCBC, DBS. UOB (5th Nov) – forecast 3Q13 NPAT of $634m (-3% y/y, - 13% q/q) on the back of exceptional gains in both 3Q12 and 2Q13. There will be gains in 3Q13. However, these are expected to be lower than previous periods. Recommendation: Buy, TP: $24.20 OCBC (1st Nov) – forecast 3Q13 NPAT of $655m (-65% y/y, +4% q/q) as 2Q13 was particularly weak, while there was a $1.1bn gain in 3Q12. On an underlying basis, 3Q is expected to be down 10% y/y on subdued non-interest income and higher bad debts. Recommendation: Outperform, TP: $11.30 DBS (1st Nov) – forecast 3Q13 NPAT of $847m (-1% y/y, -4% q/q) on slower loan growth momentum, smaller fees & commissions and lower trading income. 2Q13 was an exceptionally strong quarter for non-interest income. Recommendation: Underperform, TP: $18.5