DBS Vickers says Singapore banks still “attractive proposition,” reiterates Overweight, adds, overall earnings +9.0% on-quarter, +31% on-year, driven by higher non-interest income, according to Dow Jones.

DBS Vickers says banks moving towards “normalised” year; for 2011 imputes slower loan growth of 8.0% (vs 17% projected in 2010), slightly lower NIM (as interest rate environment expected to remain low for most 2011).

“Compared to 30% earnings growth projected in 2010 as a recovery year, we expect Singapore banks to deliver a more normalized 11% earnings growth in 2011,” upside risks would be earlier-than-expected hikes in Sibor, outperformance from wealth management, private banking.

Still prefers OCBC (O39.SG) to UOB (U11.SG), likes OCBC’s promising potential in non-interest income, which could drive ROEs higher, sees limited catalysts for UOB in revenue drivers. Keeps both at Buy, raises OCBC target to $11.30 vs $10.70, lowers UOB target to $21.50 vs $22.80. OCBC +0.9% at $9.97, UOB +1.0% at $18.48.