UOB - Capital raising concerns diminish

Monday, May 25, 2009

UOB reported a significant improvement in its Tier 1 ratio, from Q4’s 10.9% to 12.3%. We believe this will erase concerns about the bank wanting to raise any capital. Equally important, in our view, the book value did not deteriorate as it had in the last four quarters because of lower write downs of AFS securities and a recovery in equity securities.

Q1 earnings were 9% below our estimate but 6% above consensus. Margins were impressive at 2.41%, an indication of the on-going repricing of its loan book. We were also encouraged by its low cost-to-income ratio of 35.5%. Provisioning was high, but expected. 46% of it was general provisioning.

We intend reviewing our estimates and price target once all three local banks have reported their results.

The stock trades at 11.7x earnings and 1.5x book 09E. Our price target is derived by using the Gordon growth model with the key assumption being an ROE of 11% and COE of 8.6%.


Click here for more Banks and Financial Institutes Technical Analysis

Sponsored Links



Related Posts by Categories



Labels:

Comments

No response to “UOB - Capital raising concerns diminish”
Post a Comment | Post Comments (Atom)

Post a Comment

Disclaimers

These articles are neither an offer nor the solicitation of an offer to sell or purchase any investment. Its contents are based on information obtained from sources believed to be reliable and we make no representation and accepts no responsibility or liability as to its completeness or accuracy. We share them here as they are very informative, we claim no rights to these articles. If you own these articles, and do not wish to share it here, please do inform us by putting a comment and we will remove them immediately. We do not have any intentions to infringe any copyrights of yours. This is a place to keep record on the analyst recommendation for our own future references. We hope this serves as a record in the future, also make them searchable. We bear no responsibility for any profit, loss generated from these reports.
 
Citrus Pink Blogger Theme Design By LawnyDesignz Powered by Blogger