Singapore Banks - RHB Invest 2017-03-10: Impact of Property Measures Tweak on ~ BUY UOB

Singapore Banks Property Cooling Measures UNITED OVERSEAS BANK LTD U11.SI OVERSEA-CHINESE BANKING CORP O39.SI DBS GROUP HOLDINGS LTD D05.SI

Singapore Banks - Impact of Property Measures Tweak on - BUY UOB

This relates to the Singapore government’s today-announced tweaks to the residential property cooling measures, which includes
1. the reduction in Sellers Stamp Duties (SSD) holding period,
2. relaxation of Total Debt Service Ratio (TDSR) for retirees, and
3. alignment of stamp duties on transfer of equity interest in entities whose primary tangible assets are Singapore residential properties.

Whilst the tweaks are minor, in our view, the benefits to the three banks will vary as their exposure to property loans differ a fair bit.
1. OCBC & UOB’s exposure to housing loans stands at 27% each, whilst DBS’ is a lower 21%.
2. UOB has the highest percentage exposure to building & construction loans at 23%.
3. All three banks recorded 4Q16 low single-digit housing loans and building & construction loans sequentially.

Our view is that UOB will be the key beneficiary as it has the largest exposure to property-related loans.
In addition, we also like UOB for its higher general provisioning to loan ratio, which provides scope for write-back of general provisions in the quarters ahead.
UOB is our only buy recommendation within the Singapore banking space – our TP of SGD23.90 is pegged to 1.2x 2017F P/B. This is the link to our recent UOB report UOB : Lower Overall Provisions Due To GP Write-back .
We have NEUTRAL recommendations on DBS and OCBC.

Leng Seng Choon CFA RHB Invest | http://www.rhbinvest.com.sg/ 2017-03-10

RHB Invest SGX Stock Analyst Report BUY Maintain BUY 23.900 Same 23.900

NEUTRAL Maintain NEUTRAL 8.900 Same 8.900

NEUTRAL Maintain NEUTRAL 19.800 Same 19.800