The three local banks and the SGX account for about 40% of the STI Index. One of them OCBC has been in my stock pick list since March 10, 2009 when the share was S$4.08. Looking at their current price to book (from Bloomberg). DBS was the cheapest at about 1.2 while UOB and OCBC were trading at 1.6 to 1.7 times. I asked our banking analyst if DBS could go to 1.5 and OCBC and UOB to 2.0.
She was cautious and said that 1.5 and 2.0 times book were where these banks traded at during the peak of the bull market in 2007. She remains concerned about rising NPLs which have not increased significantly and no where near their peak and voiced caution. Bearing this in mind, I looked at each of the stocks to find out more.