Singapore banks could use the scepticism: Bloomberg Gadfly

SINGAPORE (Aug 1): It took an earnings announcement from the smallest of Singapore's banks to shake the edifice of optimism that investors had built around all three of them. 

United Overseas Bank Ltd.'s 5.5% profit growth in the June quarter was better than what analysts had expected. Yet UOB's shares fell 2.2% on Friday (they closed 0.3% lower on Monday), dragging down stocks of bigger rivals -- DBS Group Holdings Ltd. and Oversea-Chinese Banking Corp.

Chalk up the nervousness to exuberance. A year ago, investors weren't willing to pay even 1 time the consensus estimate of banks' book value. Now the lenders command premiums of 12 to 20% on the same metric. While that doesn't make Singaporean lenders as richly valued as their Hong Kong or Australian counterparts, the run-up in share prices has effectively sidelined investors' outsize concerns over asset quality.

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