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CGS-CIMB maintains 'add' on Singapore banks despite 10% earnings drop

Jovi Ho
Jovi Ho5/4/2022 09:33 AM GMT+08  • 4 min read
CGS-CIMB maintains 'add' on Singapore banks despite 10% earnings drop
OCBC has emerged as the CGS-CIMB analysts' top pick within the sector. Photo: Albert Chua/The Edge Singapore
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Despite a 10% drop in earnings reported by all three Singapore banks last week, CGS-CIMB Research analysts Andrea Choong and Lim Siew Khee are maintaining “overweight” on the banking sector here, with “add” calls on all three players.

In a May 3 note, Choong and Lim have a target price of $40.20 on DBS Group, up from $39.90; an unchanged $14.20 on Oversea-Chinese Banking Corporation (OCBC); and $35.60 on United Overseas Bank (UOB), slightly up from $35.40.

“Singapore banks recorded a relatively decent showing in 1QFY2022 despite market volatility, partly thanks to an inflection in net interest margins (NIMs) [between 2 and 3 basis points (bp) q-o-q] as Singapore dollar rates started pricing in expedited Fed rate hikes to come, while keeping credit costs contained as macroeconomic headwinds were moderated by an improving economic outlook across Asean,” write Choong and Lim.

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