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Chart of the Day: Check out which Singapore bank would be most sensitive to a US 100bp rate hike
Its sensitivity increased alongside a rise in HKD and USD loans.
DBS has already outperformed the STI by 15% since 1H14.
According to a report by BNP Paribas, a 100bp rate hike would lift ROE by 18% for DBS, 11% for OCBC and 7% for UOB, in turn lifting 2015E P/Bs by 12- 26%.
DBS has outperformed the STI 15% since 1H14, so analysts from BNP Paribas think OCBC (at 1.2x FY15E P/B) has the most upside potential as the region’s second most rate-sensitive bank.
BNP Paribas adds that for OCBC, its sensitivity to US rate hikes should have increased after its acquisition of WHB given increased total HKD and USD loans.
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