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RBS upgrades OCBC (O39.SG) to Buy from Hold, and raises its target to $12 from $11; the house continues to like OCBC, “mainly for its diverse earnings drivers.”
It says these include
- the recent acquisition of ING Private Bank, “which gives OCBC a good platform to grow its premium banking business;”
- the insurance business, which continues to grow strongly and offers an additional outlet for cross-sales;
- good regional footprint in Indonesia, Malaysia and
- its gradually growing SME business in Singapore.
“In addition to these...we also like OCBC's solid risk management, with its historical NPL ratio the lowest in the Singapore banking sector under our coverage.”
It adds, while the outlook for FY11F pre-impairment profit growth remains weak (5.6% on-year) vs peers, “we expect a sharp rebound in FY12 to 14.6%.”
Its share rise 0.6% to $10.16.
