Impact of low interest rates on margins of DBS (D05.SG), OCBC (O39.SG), UOB (U11.SG) already reflected in their share prices, which now look attractive after underperforming Singapore market year to date, says UBS; “we believe they are inexpensive, are well prepared for Basel III, and are beneficiaries of strong regional growth.” 

DBS down 6.8% year to date, OCBC down 1.1%, UOB down 4.6% vs STI +9.0 over same period. Says while Singapore’s economic growth next year expected to moderate, loan growth could still surprise on upside given strength of Asian economies, especially China, India; “another favourable factor for the Singapore banks is their strong capital position, plus the fact that they operate in markets that are robust in terms of liquidity and balance sheet.” 

 

Rates DBS, OCBC at Buy with respective targets of $16.60, $9.80; rates UOB at Neutral with $20.55 target.