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Banks Budding shoots of growth
■ System loan growth of +3.7% in 2M21 is encouraging, especially vs. the 1.1% contraction in FY20. On a mom basis, Feb 21 growth slowed slightly. ■ Loans for general commerce and FIs led the overall expansion in Feb 21. Domestic mortgage growth held steady; credit card balances contracted mom. ■ DBU deposits contracted 0.4% mom in Feb 21 as FD balances continued rolling off. The DBU-CASA ratio rose to 67% — an all-time high. ■ Reiterate sector Overweight. We think that improving business sentiment and ample liquidity conditions set the stage for credit growth momentum.
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REITs – Singapore S-REITs Bi-Weekly Updates (16-31 Mar 21)
S-REITs gained 1.9% during 16-31 Mar. We recommend a diversified portfolio of SREITs that are benefitting from recovery and re-opening. BUY office REITs KREIT (Target: S$1.49), CICT (Target: S$2.42) and SUN (Target: S$1.72) as they will benefit from employees returning to work from office. AREIT (Target: S$3.82) and MINT (Target: S$3.50) offer exposure to decentralised offices, while LREIT (Target: S$0.97) benefits from recovery in shopper traffic at downtown malls. Maintain OVERWEIGHT.
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UOB KAYHIAN |
DBS VICKERS |
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Manulife US REIT (MUST SP) US Recovery In Motion
While 2020 has seen softer occupancy rates, we are optimistic of MUST’s prospects given the speedy US vaccination programme as well as the US$1.9t stimulus package to boost the US economy. Employers continue to prefer a hybrid model of work from office and work from home, which bodes well for the resiliency in MUST’s quality office portfolio. Maintain BUY with an attractive yield of 8.2%. Target price: US$0.87.
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Singapore Banks What is next for dividends?
• MAS likely to ease its stance on dividend cap imposed as Singapore banks have preserved sufficient capital • We expect higher dividends for FY21F on gradual relaxation of dividend caps; a two-stage relaxation seems to be a more likely scenario • Banks may adjust high capital buffers through some special dividends from FY22F, subject to asset quality and corporate actions • Maintain BUY on OCBC and UOB as recovery plays
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Check out our compilation of Target Prices