OCBC downgraded shares of UOB to Hold from Buy, saying that after the stock’s around 13 percent year-to-date rally.
The stock is trading around its fair value estimate of S$28.90, which was raised from S$28.30 before UOB reported earnings Friday, OCBC said in a note.
It advised buying at lower levels, saying it would acquire at S$27.30 or lower.
UOB reported its first quarter net profit increased 8 percent on-year to S$1.05 billion as strong loan growth of 12 percent offset a drop in its net interest margin.
OCBC said the results were slightly above consensus forecasts for S$1.0 billion, but added it was expecting UOB to report low single digit net earnings growth for the year after the first quarter earnings came in at around 25 percent of its full year forecast.
The note also pointed to management guiding for a flat margin amid a slow repricing of loans.
“While there were opportunities to re-price some mortgage loans earlier in 2019, the situation is still fairly competitive as the mortgage loans market has contracted,” OCBC said. “With the projected softness in the property market in the months ahead, competition could intensify
and the opportunity to re-price would likely diminish.”
Shares of UOB ended Friday down 0.29 percent at S$27.77.
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