Singapore Banking Sector -...

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MCI (P) 194/11/2012 Ref. No.: SG2013_0014 1 of 12 Singapore Banking Sector 4Q12 Pre-results Updates Phillip Securities Research Pte Ltd 21 January 2013 Report type: Update Sector Overview The Singapore Banking Sector provides traditional lending and depository functions, as well as other services in the areas of commercial banking, financial advisory, asset management, insurance broking and capital market services. The three local banks will be announcing their 4Q12 results in the upcoming weeks NIMs are expected to decrease slightly q-q, while loan balances to be within FY12 banks’ guidance Fees and commission and Non interest income are expected to decrease q-q due to weaker year-end market activities, and from a high base respectively. We upgrade DBS to “Accumulate”, while maintaining “Accumulate” on UOB, and “Reduce” on OCBC based on current share price. What is the news? The 3 local banks will be announcing their 4Q12 results, with DBS on 6 Feb, OCBC on 15 Feb, and UOB on 27 Feb. How do we view this? We expect the banks to post lower q-q results in 4Q12 results as we expect weaker year-end market activities, and base effects from a strong 3Q12. Y-y, DBS and UOB are expected to post higher core net profits, while OCBC is expected to post lower core net profits due to high non- interest income in 4Q11. Net interest margin is expected to be slightly lower on NIMs pressure. Loans growth is expected to be within managements’ guidance. Fees and commission may be lower q-q due to weaker market activities, while non-interest income is expected to decrease q-q from a high base. For FY2013, we expect the banks to register stable income, while non-interest income may further surprise on the upside with the improving economy. We expect the banks’ overseas contributions to be a growth driver, as the banks gain further traction and benefit from the gradually improving market sentiments. Investment Actions? Since the last results season, the banks have generally traded in-line with the STI. Share prices declined sharply in Jan 2013, likely due to the announcements of further property cooling measures. Fundamentally, the banks remain strong, as presented above. We see upside potential for DBS and UOB, based on current share price, while noting the attractive dividend yields of these counters. We upgrade DBS to “Accumulate”, while maintaining our “Accumulate” rating on UOB and “Reduce” rating on OCBC, based on current share price. We present a more detailed analysis of DBS in our report dated 21 Jan 2013. We maintain our preference for UOB over DBS and OCBC. Singapore Banking Sector Com pany Rating Price TP Upside M.Cap. (S$) (S$) (%) (US$'mn) DBS Group Holdings Ltd Accumulate 14.38 16.10 12.0% 28,554 Overseas Chinese Banking Corp Reduce 9.64 8.30 -13.9% 26,953 United Overseas Bank Accumulate 18.76 20.95 11.7% 24,074 Source: Bloomberg, PSR Analyst Ken Ang Kenangw [email protected] Tel : (65) 6531 1793

Transcript of Singapore Banking Sector -...

Page 1: Singapore Banking Sector - PhillipCapitalinternetfileserver.phillip.com.sg/.../SG/bank20130121.pdf · 2013. 1. 21. · Singapore Banking Sector Singapore Equities Research 21 January

MCI (P) 194/11/2012 Ref. No.: SG2013_0014 1 of 12

Singapore Banking Sector

4Q12 Pre-results Updates

Phillip Securities Research Pte Ltd

21 January 2013

Report type: Update

Sector Overview The Singapore Banking Sector provides traditional lending and depository functions, as well as other services in the areas of commercial banking, financial advisory, asset management, insurance broking and capital market services. The three local banks will be announcing their 4Q12

results in the upcoming weeks NIMs are expected to decrease slightly q-q, while loan

balances to be within FY12 banks’ guidance Fees and commission and Non interest income are

expected to decrease q-q due to weaker year-end market activities, and from a high base respectively.

We upgrade DBS to “Accumulate”, while maintaining “Accumulate” on UOB, and “Reduce” on OCBC based on current share price.

What is the news? The 3 local banks will be announcing their 4Q12 results, with DBS on 6 Feb, OCBC on 15 Feb, and UOB on 27 Feb.

How do we view this? We expect the banks to post lower q-q results in 4Q12 results as we expect weaker year-end market activities, and base effects from a strong 3Q12. Y-y, DBS and UOB are expected to post higher core net profits, while OCBC is expected to post lower core net profits due to high non-interest income in 4Q11. Net interest margin is expected to be slightly lower on NIMs pressure. Loans growth is expected to be within managements’ guidance. Fees and commission may be lower q-q due to weaker market activities, while non-interest income is expected to decrease q-q from a high base.

For FY2013, we expect the banks to register stable income, while non-interest income may further surprise on the upside with the improving economy. We expect the banks’ overseas contributions to be a growth driver, as the banks gain further traction and benefit from the gradually improving market sentiments.

Investment Actions? Since the last results season, the banks have generally traded in-line with the STI. Share prices declined sharply in Jan 2013, likely due to the announcements of further property cooling measures. Fundamentally, the banks remain strong, as presented above. We see upside potential for DBS and UOB, based on current share price, while noting the attractive dividend yields of these counters. We upgrade DBS to “Accumulate”, while maintaining our “Accumulate” rating on UOB and “Reduce” rating on OCBC, based on current share price. We present a more detailed analysis of DBS in our report dated 21 Jan 2013. We maintain our preference for UOB over DBS and OCBC.

Singapore Banking SectorCom pany Rating Price TP Upside M.Cap.

(S$) (S$) (%) (US$'mn)DBS Group Holdings Ltd Accumulate 14.38 16.10 12.0% 28,554Overseas Chinese Banking Corp Reduce 9.64 8.30 -13.9% 26,953United Overseas Bank Accumulate 18.76 20.95 11.7% 24,074Source: Bloomberg, PSR

AnalystKen AngKenangw [email protected] : (65) 6531 1793

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NIMs under pressure –Fixed deposits, Housing loans Fixed deposit rates stay up, OCBC may incur higher funding cost in 4Q12 – Based on SGD fixed deposit rates published on the banks’ website, UOB and OCBC offer on-going promotional rates of up to 1.00%. DBS is less aggressive with no comparable promotional rates. This portrays the less aggressive stance taken by DBS. Based on MAS data, we note a steeper increase in DBU Fixed deposits, and a decrease in CASA deposits in Q4 as of Nov 2012, compared to previous quarters. This likely signifies an increasing shift towards fixed deposits, and may indicate higher funding pressure in 4Q12. For 4Q12, we expect OCBC’s customer deposits cost to increase, reversing from a previous 5bps decline in 3Q12, as the bank is expected to reduce the outflow of fixed deposits. UOB’s cost of customer deposits is expected to increase marginally, due to a possible further increase in fixed deposit balances. While less aggressive as per above, DBS’s funding cost may increase slightly as the full impact of the Aug 2012 deposit rate increase is felt this quarter.

Fig 1: Q-Q Fixed Deposits to Total Deposits (%)

30%

35%

40%

45%

50%

55%

60%

3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12

OCBC DBS UOB

Fig 2: CASA Deposits to Total Deposits (%)

35%

40%

45%

50%

55%

60%

65%

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

OCBC DBS UOB

Fig 3: CASA Deposits Y-Y growth (%)

FY09 FY10 FY11 9M12OCBC 32.1% 34.9% 24.9% 3.8%DBS 21.2% 7.6% 13.9% 5.9%UOB 29.6% 12.3% 9.4% 3.7%

Source: Company data, Phillip Securities Research

OCBC and DBS to benefit from higher proportion, stronger growth, of CASA deposits – A higher proportion of the cheaper CASA deposits (Fig 2), together with higher CASA deposits growth (Fig 3) in the last two years, may reduce the need to compete for higher deposit balances. This decreases NIMs pressure by maintaining or limiting the increase in funding cost. With the largest proportion of CASA deposits and adequate SGD liquidity, DBS is likely to

have the least NIMs pressure from its Singapore operations, while UOB, the highest NIMs pressure. Continued refinancing of mortgage loans may pressure NIMS – Although the volume is likely reduced by the Oct 2012 cooling measures, refinancing of mortgage loans may continue to decrease NIMs due to the rollover of loans from a higher interest rate in 4Q12, and possibly till FY2013 as guided by OCBC’s management during the previous 3Q12 analyst briefing. Mitigated by some upward relief – Pricing power There are however possible upward potential for NIMs in 4Q12, from improved pricing power. Pricing power of loans may possibly increase in some geographical region from higher loans demand. Pricing power may also increase should the banks take on higher risk. This risk may be liquidity risk from longer tenure loans, or credit risk from marginally lower credit quality customers. The downward pressure is however expected to be slightly higher than the upward relief. We therefore expect NIMs for the three banks to be slightly lower on a q-q basis. Loans growth expected to meet FY12 guidance UOB and OCBC maintained loans guidance in 3Q12, while DBS guided for high single digit growth in constant currency terms. As at 9M12, DBS’s loans grew 4.0%, UOB at 5.9%, and OCBC at 3.5%. We expect the three banks to register positive q-q loans growth in 4Q12. While DBS loan balance was affected by the appreciation of the SGD, we note that the SGD has stayed largely the same relatively to HKD (3Q: +3.1%, 4Q:+0.3%), USD (3Q:+3.1%, 4Q:+0.3%) and IDR (3Q:+5.1%, 4Q:+1.0%) this quarter.

Fig 4: Q-Q Loans growth momentum

-2%

0%

2%

4%

6%

8%

10%

12%

14%

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

OCBC DBS UOB MAS Loans

Source: Company data, Phillip Securities Research

With a weak FY13 Singapore GDP forecasted growth of 1%-3%, there may be a drag on loans growth in FY13 – Furthermore, the latest cooling measures may reduce FY13 loans growth further by 0.4% - 0.5% as per our estimations. Banks may therefore need to rely more on overseas loans growth. With its greater focus on growth in the ASEAN countries, we expect UOB to benefit with stronger loans growth relative to DBS and OCBC. DBS, with significant presence in HK and Greater China, may face fierce competition from mainland Chinese and HK banks. UOB may further benefit from the higher interest margins associated with these ASEAN loans.

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Fees and Commission – 4Q12 likely weaker on lower market activities Based on Bloomberg data for Asia-pacific ex-Japan, disclosed debt instrument issuances weakened q-q in 4Q12. Equity markets activities were relatively high for DBS in 4Q12. We therefore expect fees from debt issuance to decline for all three banks, while DBS’s investment banking fee is expected to be supported by the stronger Equities market performance. Fees and Commission are also expected to decrease q-q for the three banks due to seasonally lower market activities in the 4th quarter.

Fig 5: Bond issuance figures of the three banks DBS UOB OCBC

1Q12 3,967 876 781 2Q12 2,624 627 889 3Q12 3,510 758 1,801 4Q12 595 336 247

1Q12 26 15 35 2Q12 15 21 11 3Q12 35 17 10 4Q12 12 5 5

Bond Amount USD (Mln)

Number of Issues

Fig 6: FY12 figures at record levels DBS UOB OCBC

2008 2,865 489 3,6552009 2,142 75 9942010 8,384 345 1,9912011 6,061 1,117 1,4932012 10,696 2,596 3,717

2008 31 5 222009 32 7 182010 66 5 252011 73 50 702012 88 58 61

Bond Amount USD (Mln)

Number of Issues

Fig 7: 4Q12 equity markets – DBS strong DBS UOB KH OCBC

1Q12 473 12 nil2Q12 145 32 93 3Q12 939 3 135 4Q12 449 52 31

1Q12 7 1 nil2Q12 3 1 1 3Q12 10 1 2 3Q12 7 3 2

Equity Amount USD (Mln)

Number of Issues

Source: Bloomberg, Phillip Securities Research

Fees and commission to be revenue driver in FY2013 – While the issuance of debt instruments deliver lower fees as compared to equity market activities, this enables the banks

to build better relationships with the debt issuer. Other lucrative sources of revenue may then be tapped on, such as providing transaction banking services, including trade financing and cash management services. Based on Bloomberg data on disclosed debt transactions, we note that UOB participated in debt issuances in Thailand amounting to approximately USD 440.9 million in FY12. This possibly indicates the growing traction, and stronger demand, that UOB has in Thailand. We expect UOB to build on this, translating to stronger revenue growth from Thailand moving forward. DBS continues to show strength with high debt issuance volume, and a geographically diversified presence.

Fig 8: 2012 Debt issuance by Country of risk ex self-led (% of bank’s Total debt issuance) – UOB shows strength in Thailand, DBS diversified Country of risk OCBC DBS UOBSingapore 64% 68% 67%Malaysia 23% 1% 4%Hong Kong 8% 18% 5%China 5% 5% - Indonesia - 3% - Thailand - - 24%Australia - 1% - India - 4% - Total (USD mn) 1,991 8,487 1,821

2011 Debt issuance by Country of risk ex self-led Country of risk OCBC DBS UOBSingapore 28% 55% 89%Malaysia 67% 3% 5%Hong Kong 3% 29% 6%China - 9% - Indonesia 2% 3% - Thailand - - - Australia - 1% - India - 2% - Total (USD mn) 1,202 5,861 638

Source: Bloomberg, Phillip Securities Research

Fees and Commission from Wealth management, Trade-related and Loan-related fees are expected to continue growing in FY2013, as the three banks increase their touch points and establish stronger relationships. The wide range of products and expertise will also allow greater cross selling capabilities.

Higher growth potential of ASEAN countries to drive growth – Based on our economists’ forecast, the ASEAN countries are expected to experience strong real GDP growth in FY2013. Indonesia is expected to grow 4.5%, Thailand by 4.5%, and Malaysia by 4.0%. China is also expected to grow 8.0% and Hong Kong at 3.0%. Singapore is expected to grow at 2.0%, faster than 2012’s expected 1.4%. Competition may however be stiffer in China. With the higher growth potential in ASEAN and China, we expect the banks to focus more on growth in its ASEAN offices in FY2013, especially in establishing intra-ASEAN trades and trades flows with China.

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Non-interest income to decline q-q after sharp rise We expect non-interest income to remain within range in 4Q12. Q-Q, we expect a decline from a strong 3Q12. Due to its volatile nature, non-interest income remains a wild card, although a rather low quality market-dependant earnings.

Fig 9: Q-Q Non-interest Income

0

100

200

300

400

500

600

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

OCBC DBS UOB

Q-Q Non-interest income momentum

-100%

-50%

0%

50%

100%

150%

200%

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

OCBC DBS UOB

Source: Company data, Phillip Securities Research

While the strong performance of non-interest income has led to positive earnings surprise in Q1 and Q3 of FY2012, there is potential for further positive surprises in FY2013. While bond markets may have limited potential for another rally, our economists forecast for Equity markets to improve further as the global economy improves. Downside threats to this include uncertainty over the US debt ceiling and worsening in the Euro zone. Non-interest income is, minimally, expected to grow from normalized levels, driven by higher profits from customer flows for all three banks. Other matters Impact of Jan 2013 property cooling measures The government rolled out additional cooling measures, both for the residential property, and for industrial property. Unlike previous measures, this round of cooling measures is more aggressive, increasing stamp duty for all buyers with existing properties. More details can be found in our Property Sector Update dated 14 Jan 2013. Based on MAS preliminary data for Q3 2012, we estimate that 27.6% of new housing loans were for investment purposes. These data do not reflect the previous round of cooling measures introduced in Oct 2012. Due to the long loan approval process, the effects of the latest Jan 2013 cooling measures may only be reflected in the later part of 1Q13 and 2Q13. Based on the respective third quarter company disclosure, UOB and DBS have the largest market share of housing loans at approximately 29.7% of total system loans each, while OCBC has a smaller market share at approximately

24.3%. Housing loans make up the largest proportion of total loans as at 3Q12 for UOB at 29.1%, while making up 25.9% and 21.5% of total loans for OCBC and DBS respectively. YTD, Housing loans have grown 13.0%, 6.8% and 9.1% for OCBC, DBS, and UOB respectively.

Fig 10: Q-Q Housing loans growth – Strong driver

0%

1%

2%

3%

4%

5%

6%

7%

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

OCBC DBS UOB Total

Source: Company data, Phillip Securities Research

As the changes are not applied retrospectively, we expect existing loans balance to be relatively stable. However, we expect a decline in FY2013 loans growth, noting that housing loans was expected to be one of the main drivers of loans growth. Based on an estimated 29.7% of loans being for investment purposes, and assuming that 20% of these investors will continue to invest, this would imply a 23.8% decline in previously expected housing loans growth. For example, a previous growth forecast of 10% would be revised downward to 7.62% instead. We therefore revise our FY13F total loans growth forecast marginally by 0.5% for UOB and OCBC, and 0.4% for DBS. In addition, increasing competition, coupled with the likely decline in mortgage volumes, may lead to further decreases in mortgage rates for new loans, thus tightening NIMs further. However, the further tightening of Loan-to-value ratios for individuals with at least one outstanding loan, and non-individual borrowers, may reduce the attractiveness of refinancing. Pressure on mortgage interest rates arising from refinancing of existing loans may therefore ease, thus providing NIMs relief to the banks. Furthermore, should a loan not be refinanced, the expiry of promotional rates given in the first few years of a housing loan would add further upsides to NIMs. Further impacts of property cooling measures Potential increase in proportion of riskier assets – Should the banks maintain their total loans growth target, they may increase loans growth in the other segments. As the housing loans segment have one of the lowest NPL ratio across all three banks, and are historically more resilient during bad times, an increase in other segment loans may increase the proportion of riskier assets. These riskier loans may however also be higher yielding, thus improving NIMs. Potential new measures may be unfavorable to banks – Should housing prices continue to increase, the government

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may introduce more measures, leading to a further decrease in loans growth. We deem it unlikely for the government to impose interest rate floors, as this would unfairly increase profits for banks. Basel III – Liquidity requirements postponed The Basel Committee amended the Liquidity Coverage Ratio (LCR), delaying its implementation and expanding the range of assets eligible as High Quality Liquid Assets (HQLA). These changes would better enable the Singapore banks to meet these LCR requirements without massive changes to their balance sheet. The LCR will now be introduced on 1 Jan 2015 with a lower requirement at 60%, and increasing gradually every year by 10%, before reaching 100% on 1 Jan 2019. In addition, certain equities, corporate debt securities, and residential mortgage-backed securities would now be eligible as HQLA. FY2013 outlook – Stable revenue, Non-II potential surprise, Overseas contributions to drive growth As at 9M12, the banks have successfully retained most of the short termed FY2011 loans that expired, and further grew their loans balance. The higher loans balance mitigated the decreasing NIMs as the banks face stiff competition, both from an increase in funding cost, and a decrease in pricing power. Y-y, growth in profit before tax (PBT) for 9M12 was observed across most geographies, including all key ASEAN markets. As mentioned above, non-interest income was exceptional strong in FY2012. In FY2013, loans are expected to grow, although we expect headwinds from property cooling measures that may reduce housing loans growth, while Singapore’s forecasted FY2013 GDP growth continues to be below normalized levels, causing a drag on business loans growth. Non-interest income may further surprise on the upside due to an improving economy. While the economic environment faced numerous headwinds previously, we have seen some improvements in market sentiments, though slow, in FY2012. With the strong GDP growth forecast, we expect increasing contributions from the ASEAN regions to drive growth. The deleveraging of the foreign banks has provided opportunities to the Singapore banks, especially in the large and medium SME segments. The banks may grow even more aggressively in the ASEAN region, further building up on these new relationships, as the demand for transaction banking and other banking services increases. DBS is expected to further establish itself in Greater China, while the potential acquisition of Bank Danamon may add further growth potential to the bank. UOB may benefit from its more diversified ASEAN presence and strong focus on its overseas offices, growing its fees and commission while NIMs pressure may ease from the higher NIMs that the ASEAN countries have. OCBC, armed with huge liquidity from the sale of its investments in FNN and APB, would be

able to invest heavily in growing its operations. We however do not have much clarity on the use of these proceeds.

Fig 4: DBS, UOB and OCBC trade below STI since last results season, OCBC most resilient

11 Nov 12 rebased

-4

-2

0

2

4

6

8

10

11Nov

18Nov

25Nov

02Dec

09Dec

16Dec

23Dec

30Dec

06Jan

13Jan

OCBCDBSUOBSTI

6 months rebased

-10-8-6-4-202468

19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec

OCBCDBSUOBSTI

1 Year rebased

-5

0

5

10

15

20

25

Jan 12 Mar 12 May 12 Jul 12 Sep 12 Nov 12

OCBCDBSUOBSTI

Source: Company data, Phillip Securities Research

Valuations Since the last results season, the banks have generally traded in-line with the STI. Share prices declined sharply in Jan 2013, likely due to the announcements of further property cooling measures. We forecast q-q declines for the three banks due to seasonality effects, and a strong 3Q12. Fundamentally, the banks remain strong, as presented above. We see upside potential for DBS and UOB, based on current share price, while noting the attractive dividend yields of these counters. We upgrade DBS to “Accumulate”, while maintaining our “Accumulate” rating on UOB and “Reduce” rating on OCBC, based on current share price. We present a more detailed analysis of DBS in our report dated 21 Jan 2013. We maintain our preference for UOB over DBS and OCBC.

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Company Rating FYE Price TP UpsideMarket price as of:18-Jan-13 (%) (S$'mn) (US$'mn) FY10 FY11 FY12E FY10 FY11 FY12E FY10 FY11 FY12EDBS Group Holdings Ltd Accumulate Dec 14.38 16.10 12.0% 35,041 28,554 13.2 11.5 10.3 1.3 1.2 1.1 3.9% 3.9% 3.9%Overseas Chinese Banking Corp Reduce Dec 9.64 8.30 -13.9% 33,077 26,953 14.7 14.5 12.3 1.8 1.6 1.4 3.1% 3.1% 3.3%United Overseas Bank Accumulate Dec 18.76 20.95 11.7% 29,543 24,074 11.9 12.7 10.8 1.5 1.4 1.3 3.7% 3.2% 3.5%Source: Bloomberg, PSR est.

Market Cap.

Market Cap.

Equity Multiple (X) Dividend Yield (%)Net Income Book Value

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Oversea-Chinese Banking Corp – Insurance “wildcard”

0

500

1,000

1,500

2,000

2,500

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

DBS Group Holdings – Most stable Non II earnings

0

500

1,000

1,500

2,000

2,500

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

United Overseas Bank Ltd – Strong Fees and Commission

0

500

1,000

1,500

2,000

2,500

4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12

OCBC - PB ratio

1.33

SD+1 1.47

1.30SD-1

1.13

0.80.91.01.11.21.31.41.51.61.71.8

Jan-08 Sep-08 May-09 Jan-10 Sep-10 May-11 Jan-12 Sep-12

DBS - PB ratio

1.15

SD+1 1.24

1.06

SD-10.89

0.40.50.60.70.80.91.01.11.21.31.4

Jan-08 Sep-08 May-09 Jan-10 Sep-10 May-11 Jan-12 Sep-12

Source: Company data, Bloomberg, Phillip Securities Research

- Higher y-y growth of Non interest income

01,0002,0003,0004,0005,0006,0007,0008,000

FY2009 FY2010 FY2011 FY2012

Non Int Inc

Fees andComm

NII

Net Profit

PPOP

- Increasing y-y earnings from Net II, High net profit growth

01,0002,0003,0004,0005,0006,0007,0008,000

FY2009 FY2010 FY2011 FY2012

Non Int Inc

Fees andComm

NII

Net Profit

PPOP

- Strong y-y rebound in Non Interest inc. from weaker FY11

01,0002,0003,0004,0005,0006,0007,0008,000

FY2009 FY2010 FY2011 FY2012

Non Int Inc

Fees andComm

NII

Net Profit

PPOP

OCBC - PE ratio

SD+114.78

13.22SD-1

11.65

7.0

9.0

11.0

13.0

15.0

17.0

19.0

Jan-08 Sep-08 May-09 Jan-10 Sep-10 May-11 Jan-12 Sep-12

UOB - PB ratio

1.34

SD+11.54

1.37

SD-1 1.21

0.80.91.01.11.21.31.41.51.61.71.8

Jan-08 Sep-08 May-09 Jan-10 Sep-10 May-11 Jan-12 Sep-12

Source: Company data, Bloomberg, Phillip Securities Research

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DBS - PE ratio

SD+115.08

12.16SD-1 9.24

-2.04.06.08.0

10.012.014.016.018.020.0

Jan-08 Sep-08 May-09 Jan-10 Sep-10 May-11 Jan-12 Sep-12

13 Aug 12 rebased

-10

-8

-6

-4

-2

0

2

13Aug

20Aug

27Aug

03Sep

10Sep

17Sep

24Sep

01Oct

08Oct

15Oct

22Oct

29Oct

OCBCDBSUOBSTI

1 month rebased

-8-7-6-5-4-3-2-10123

29 Sep 07 Oct 15 Oct 23 Oct

OCBCDBSUOBSTI

3 months rebased

-10

-8

-6

-4

-2

0

2

4

31 Jul 20 Aug 09 Sep 29 Sep 19 Oct

OCBCDBSUOBSTI

Source: Company data, Bloomberg, Phillip Securities Research

UOB - PE ratio

SD+114.50

12.60SD-1

10.70

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

Jan-08 Sep-08 May-09 Jan-10 Sep-10 May-11 Jan-12 Sep-12

2 Year rebased

-25-20-15-10

-5

05

101520

Oct 10 Mar 11 Aug 11 Jan 12 Jun 12

OCBCDBSUOBSTI

1 Year rebased

-20-15-10

-505

10152025

Oct 11 Dec 11 Feb 12 Apr 12 Jun 12 Aug 12

OCBCDBSUOBSTI

6 months rebased

-15

-10

-5

0

5

10

01 May 01 Jun 01 Jul 01 Aug 01 Sep 01 Oct

OCBCDBSUOBSTI

Source: Company data, Bloomberg, Phillip Securities Research

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Important Information This publication is prepared by Phillip Securities Research Pte Ltd., 250 North Bridge Road, #06-00, Raffles City Tower, Singapore 179101 (Registration Number: 198803136N), which is regulated by the Monetary Authority of Singapore (“Phillip Securities Research”). By receiving or reading this publication, you agree to be bound by the terms and limitations set out below. This publication has been provided to you for personal use only and shall not be reproduced, distributed or published by you in whole or in part, for any purpose. If you have received this document by mistake, please delete or destroy it, and notify the sender immediately. Phillip Securities Research shall not be liable for any direct or consequential loss arising from any use of material contained in this publication. The information contained in this publication has been obtained from public sources, which Phillip Securities Research has no reason to believe are unreliable and any analysis, forecasts, projections, expectations and opinions (collectively, the “Research”) contained in this publication are based on such information and are expressions of belief of the individual author or the indicated source (as applicable) only. Phillip Securities Research has not verified this information and no representation or warranty, express or implied, is made that such information or Research is accurate, complete, appropriate or verified or should be relied upon as such. Any such information or Research contained in this publication is subject to change, and Phillip Securities Research shall not have any responsibility to maintain or update the information or Research made available or to supply any corrections, updates or releases in connection therewith. In no event will Phillip Securities Research or persons associated with or connected to Phillip Securities Research, including but not limited its officers, directors, employees or persons involved in the preparation or issuance of this report, (i) be liable in any manner whatsoever for any consequences (including but not limited to any special, direct, indirect, incidental or consequential losses, loss of profits and damages) of any reliance or usage of this publication or (ii) accept any legal responsibility from any person who receives this publication, even if it has been advised of the possibility of such damages. You must make the final investment decision and accept all responsibility for your investment decision, including, but not limited to your reliance on the information, data and/or other materials presented in this publication. Any opinions, forecasts, assumptions, estimates, valuations and prices contained in this material are as of the date indicated and are subject to change at any time without prior notice. Past performance of any product referred to in this publication is not indicative of future results. This report does not constitute, and should not be used as a substitute for, tax, legal or investment advice. This publication should not be relied upon exclusively or as authoritative, without further being subject to the recipient’s own independent verification and exercise of judgment. The fact that this publication has been made available constitutes neither a recommendation to enter into a particular transaction, nor a representation that any product described in this material is suitable or appropriate for the recipient. Recipients should be aware that many of the products, which may be described in this publication involve significant risks and may not be suitable for all investors, and that any decision to enter into transactions involving such products should not be made, unless all such risks are understood and an independent determination has been made that such transactions would be appropriate. Any discussion of the risks contained herein with respect to any product should not be considered to be a disclosure of all risks or a complete discussion of such risks. Nothing in this report shall be construed to be an offer or solicitation for the purchase or sale of any product. Any decision to purchase any product mentioned in this research should take into account existing public information, including any registered prospectus in respect of such product. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the preparation or issuance of this report, may provide an array of financial services to a large number of corporations in Singapore and worldwide, including but not limited to commercial / investment banking activities (including sponsorship, financial advisory or underwriting activities), brokerage or securities trading activities. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the preparation or issuance of this report, may have participated in or invested in transactions with the issuer(s) of the securities mentioned in this publication, and may have performed services for or solicited business from such issuers. Additionally, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the

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preparation or issuance of this report, may have provided advice or investment services to such companies and investments or related investments, as may be mentioned in this publication. Phillip Securities Research or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the preparation or issuance of this report may, from time to time maintain a long or short position in securities referred to herein, or in related futures or options, purchase or sell, make a market in, or engage in any other transaction involving such securities, and earn brokerage or other compensation in respect of the foregoing. Investments will be denominated in various currencies including US dollars and Euro and thus will be subject to any fluctuation in exchange rates between US dollars and Euro or foreign currencies and the currency of your own jurisdiction. Such fluctuations may have an adverse effect on the value, price or income return of the investment. To the extent permitted by law, Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the preparation or issuance of this report, may at any time engage in any of the above activities as set out above or otherwise hold a interest, whether material or not, in respect of companies and investments or related investments, which may be mentioned in this publication. Accordingly, information may be available to Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the preparation or issuance of this report, which is not reflected in this material, and Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited to its officers, directors, employees or persons involved in the preparation or issuance of this report, may, to the extent permitted by law, have acted upon or used the information prior to or immediately following its publication. Phillip Securities Research, or persons associated with or connected to Phillip Securities Research, including but not limited its officers, directors, employees or persons involved in the preparation or issuance of this report, may have issued other material that is inconsistent with, or reach different conclusions from, the contents of this material. The information, tools and material presented herein are not directed, intended for distribution to or use by, any person or entity in any jurisdiction or country where such distribution, publication, availability or use would be contrary to the applicable law or regulation or which would subject Phillip Securities Research to any registration or licensing or other requirement, or penalty for contravention of such requirements within such jurisdiction. Section 27 of the Financial Advisers Act (Cap. 110) of Singapore and the MAS Notice on Recommendations on Investment Products (FAA-N01) do not apply in respect of this publication. This material is intended for general circulation only and does not take into account the specific investment objectives, financial situation or particular needs of any particular person. The products mentioned in this material may not be suitable for all investors and a person receiving or reading this material should seek advice from a professional and financial adviser regarding the legal, business, financial, tax and other aspects including the suitability of such products, taking into account the specific investment objectives, financial situation or particular needs of that person, before making a commitment to invest in any of such products. Please contact Phillip Securities Research at [65 65311240] in respect of any matters arising from, or in connection with, this document. This report is only for the purpose of distribution in Singapore.

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Contact Information (Singapore Research Team)

Chan Wai Chee Joshua Tan Derrick Heng CEO, Research Head of Research Deputy Head of Research

Special Opportunities Global Macro, Asset Strategy SG Equity Strategist & Transport

+65 6531 1231 +65 6531 1249 +65 6531 1221 [email protected] [email protected] [email protected]

Magdalene Choong, CFA Go Choon Koay, Bryan Travis Seah

Investment Analyst Investment Analyst Investment Analyst Regional Gaming Property REITs +65 6531 1791 +65 6531 1792 +65 6531 1229

[email protected] [email protected] [email protected]

Ken Ang Ng Weiwen Roy Chen Investment Analyst Macro Analyst Macro Analyst

Financials, Telecoms Global Macro, Asset Strategy Global Macro, Asset Strategy +65 6531 1793 +65 6531 1735 +65 6531 1535

[email protected] [email protected] [email protected]

Nicholas Ong Research Assistant Investment Analyst General Enquiries

Commodities, Offshore & Marine +65 6531 1240 (Phone) +65 6531 5440 [email protected]

[email protected]

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Contact Information (Regional Member Companies)

SINGAPORE Phillip Securities Pte Ltd

Raffles City Tower 250, North Bridge Road #06-00

Singapore 179101 Tel +65 6533 6001 Fax +65 6535 6631

Website: www.poems.com.sg

MALAYSIA

Phillip Capital Management Sdn Bhd B-3-6 Block B Level 3 Megan Avenue II, No. 12, Jalan Yap Kwan Seng, 50450

Kuala Lumpur Tel +603 2162 8841 Fax +603 2166 5099

Website: www.poems.com.my

HONG KONG Phillip Securities (HK) Ltd

Exchange Participant of the Stock Exchange of Hong Kong 11/F United Centre 95 Queensway

Hong Kong Tel +852 2277 6600 Fax +852 2868 5307

Websites: www.phillip.com.hk

JAPAN

Phillip Securities Japan, Ltd. 4-2 Nihonbashi Kabuto-cho Chuo-ku,

Tokyo 103-0026 Tel +81-3 3666 2101 Fax +81-3 3666 6090

Website:www.phillip.co.jp

INDONESIA

PT Phillip Securities Indonesia ANZ Tower Level 23B,

Jl Jend Sudirman Kav 33A Jakarta 10220 – Indonesia

Tel +62-21 5790 0800 Fax +62-21 5790 0809

Website: www.phillip.co.id

CHINA

Phillip Financial Advisory (Shanghai) Co. Ltd No 550 Yan An East Road,

Ocean Tower Unit 2318, Postal code 200001

Tel +86-21 5169 9200 Fax +86-21 6351 2940

Website: www.phillip.com.cn

THAILAND Phillip Securities (Thailand) Public Co. Ltd

15th Floor, Vorawat Building, 849 Silom Road, Silom, Bangrak,

Bangkok 10500 Thailand Tel +66-2 6351700 / 22680999

Fax +66-2 22680921 Website www.phillip.co.th

FRANCE

King & Shaxson Capital Limited 3rd Floor, 35 Rue de la Bienfaisance 75008

Paris France Tel +33-1 45633100 Fax +33-1 45636017

Website: www.kingandshaxson.com

UNITED KINGDOM

King & Shaxson Capital Limited 6th Floor, Candlewick House,

120 Cannon Street, London, EC4N 6AS

Tel +44-20 7426 5950 Fax +44-20 7626 1757

Website: www.kingandshaxson.com

UNITED STATES

Phillip Futures Inc 141 W Jackson Blvd Ste 3050

The Chicago Board of Trade Building Chicago, IL 60604 USA

Tel +1-312 356 9000 Fax +1-312 356 9005

AUSTRALIA

PhillipCapital Level 12, 15 William Street,

Melbourne, Victoria 3000, Australia Tel +61-03 9629 8288 Fax +61-03 9629 8882

Website: www.phillipcapital.com.au