Reuters: Hot Stocks: STOCKS NEWS SINGAPORE-CIMB upgrades Singapore banks to overweight

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STOCKS NEWS SINGAPORE-CIMB upgrades Singapore banks to overweight May 17th 2012, 03:32 Wed May 16, 2012 11:32pm EDT CIMB Research has upgraded its rating on Singapore's banking sector to overweight from neutral, citing better-than-expected first quarter results due to higher trading income and lower credit provisioning. "All posted results that exceeded expectations, boosted by record interest income, decent fee income growth and, most of all, strong trading and insurance performance," CIMB said. Oversea-Chinese Banking Corp's net profit beat expectations by 25 percent, while DBS Group Holdings exceeded expectations by 19 percent and UOB beat net profit forecasts by 10 percent, CIMB said in a report. It added that the asset quality of banks remain sound, as provisions fell in January-March with non-performing loans as a proportion of total loans were flat. DBS, Southeast Asia's largest lender, remains CIMB's top pick as it believes the bank has the highest earnings quality in the sector. DBS posted the strongest growth in fee income in the first quarter, which is more recurring and higher in quality as compared to the more volatile trading and insurance contributions. UOB is CIMB's second pick in the sector, and it has an outperform rating with a target price of S$20.17. CIMB also has an outperform rating on OCBC with a target price of S$10.35. DBS shares were 0.15 percent higher at S$13.60, and have risen about 18 percent since the start of the year. UOB shares were 0.7 percent up at S$18.13, and have climbed 18.7 percent since the start of the year. Shares of OCBC rose 1.2 percent to S$8.70, and have gained 11 percent since the start of the year. The benchmark Straits Times index has risen about 7.5 percent this year. For related story click 1029 (0229 GMT) (Reporting by Charmian Kok in Singapore; Editing by Ramya Venugopal; charmian.kok@thomsonreuters.com) Link this Share this Digg this Email Reprints

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