UOB - UOB target raised to $19.70 by OCBC; Keeps Hold rating

Stock Name: UOB
Company Name: UNITED OVERSEAS BANK LTD
Research House: OCBC

OCBC keeps United Overseas Bank (U11.SG) at Hold with fair value of $19.70, up from $19.40; says 3Q earnings higher than expected, helped by better non-interest income, lower costs, says Dow Jones.



OCBC cautiously optimistic, notes management remains comfortable with quality of portfolio, NPLs remain stable. “However, margin appears to be under pressure and looks likely to stay so, especially in the current low interest rate environment.”

Research house raises FY10 earnings to $2.642 billion from $2.485 billion, ups FY11 earnings to $2.786 billion; expects interest income to remain relatively flat, non-interest income to grow about 9.5% in FY11.



“Overall, we are expecting cost ratio to move up from a projected 39.7% in FY10 to about 40.6% in FY11. Together with lower impairment charges of about $250 million, we expect the bottomline to grow about 5.4%.”



House says will turn buyers at $18.40 or lower. Shares +0.5% at $18.74.