Singapore Banks

UOBKayhian on 1 Aug 2013

Banking- Jun 13: Slight easing in loan growth.
DBS Group Holdings (BUY/S$16.70/Target: S$20.80)
Oversea-Chinese Banking Corp (BUY/S$10.56/Target: S$12.02)

A slight easing in pace of expansion. Loans grew at a moderated pace of 17.7% yoy and 0.7% mom. Loan growth has eased over the past two months but the magnitude of easing is mild.

Maintain OVERWEIGHT. We expect loan growth of 10-15% for the Singapore banks. Economic growth should strengthen gradually in 2H13 driven by externally oriented sectors, which should sustain growth in loans for businesses. Our top pick is DBS due to strong execution capabilities and attractive valuation. We also like OCBC for its ASEAN-centric footprint.