Kim Eng Lunch Bites

Looking at banks Looking at banks – The three local banks are due to announce their 4QFY10 results in February. Reporting dates: DBS Feb 10, OCBC Feb 18, UOB Feb 25. To recap, following the 3QFY10 results announced in November last year, we had a neutral-to-positive view on the sector, with our top pick being OCBC. Share price performance during this period was encouraging, OCBC was up 7.8%, UOB rose by 3.9%, and DBS improved by 4.4%, versus the STI’s 2.2% decline. We now expect the market to focus on the possible fallout from the government’s fourth round of property cooling measures, with UOB likely to face the spotlight here due to its higher proportion of mortgage loans. On the bright side, we think asset and earnings quality will remain good for all three banks. We could also start to see net interest margins bottoming out, with DBS CEO Piyush Gupta explicitly upbeat on this front.