The worst may not be over for Singapore banks despite their strong 1Q10 earnings, says NRA Capital analyst Lynn Look, according to Dow Jones.

Look notes 1Q results driven by strong recovery in stock markets, which boosted non-interest income and by lower provisions but says non-performing loans may not have peaked. “NPL rates of less than 3% can’t be the worst to expect from a crisis that has sent the whole world into a tailspin,” she says.

The analyst says financial packages worth billions of dollars introduced by governments, central banks worldwide in bid to stop spread of financial crisis probably stemmed the bleeding for banks, but adds real consumer demand in US still lacking due to high unemployment rate.

She expects Europe’s debt crisis to stall US economic recovery by few years. “Although the larger Asian economies, particularly China and India, appear to be doing well, Singapore will not go unscathed if the US goes into a double-dip recession,” Look adds.

DBS (D05.SG) +2% at $13.56, OCBC (O39.SG) –0.12% at $8.27, UOB (U11.SG) +1.2% at $18.22.