Singapore banks on track to post 6-8% earnings growth in FY12

DBS is Nomura's top pick.

According to Nomura, Singapore banks still appear on track to deliver 6-8% FY12F earnings growth on undershooting credit costs and resilient fee income growth.

Here's more from Nomura:

We think that our top pick DBS (Buy, TP: SGD18.3) is attractive due to its broad franchise momentum and overly discounted (c.1x book) valuation to peers; its bid for Bank Danamon faces regulatory uncertainty but organic growth drivers are strong.

UOB’s positive combination of NIM/LDR traction, coupled with solid capital and liquidity (especially USD), should reinforce its defensive attraction.

YTD deposit growth at 4.27% in September
System deposits grew 6.46% y-y in September (Aug: 7.66%), with deposits from Singapore residents growing 8.14% y-y (Aug: 8.93%) while deposits from non-residents expanded 3.77%y-y.

The yield curve flattened moderately in Aug-Oct, with the 10-year losing 4bps in Oct, while the shorter three-month interbank was stable.