OCBC's earnings momentum to come off in 2013

Net interest income growth of around 2.5% is expected.

According to CIMB, going into 2013, OCBC's earnings momentum is likely to come off on the back of a stellar 2012 performance, largely attributable to non-participating gains from GE and a favourable trading environment. 

Here's more from CIMB:

We expect net interest income growth of around 2.5% in 2013, driven by growth in overseas loans. Fee income is likely to grow around 9% yoy from wealth management as well as trade and loans related fees.

Provisioning is likely to grow around 8% as credit costs normalise. Group recurring ROEs should fall from 11.7% to 10.9%. Our target price of S$10.17 is based on 1.28x CY13 P/BV (GGM – r: 9.65%, g: 4.4%; ROE: 11.1%).

While we are anticipating a decline in EPS growth, we think that freed-up capital from F&N and APB divestments now gives the bank ammunition to grow the franchise after Basel III capital deductions (for GEH). A sound acquisition could catalyse share prices. Therefore, maintain Neutral.