BNP Paribas remains positive on Singapore banks; says MAS’ Financial Stability Review.

Study shows household (HH) wealth +29.1% vs 1Q09 trough to record $1,156 billion 3Q10, driven by rising residential property, equity prices; as HH asset growth has outpaced HH debt growth for past four quarters, HH leverage ratio now 14.6%, below long-term average of 18%.

“Such a solid HH balance sheet tells us that property prices will be well-supported with more upside bias;” recent property measures may have marginal impact on residential market, but “the positive spinoff is that bankers should face few household-related NPL issues even if we go through any rough economic patches.”

At current levels, Singapore banks trading at 12x 2011E P/E, “slight discount” to long-term rolling average of 14x, barring any unforeseen external shocks, says price downside limited; reiterates Buys on OCBC (O39.SG), UOB (U11.SG), DBS (D05.SG), in order of preference.