All eyes on dividend cap review

 Singapore loans were up 0.2% YoY in May. Business loans contracted for
ninth straight month by 0.5% YoY. Consumer loans were up for 10th straight
month, by 0.3% YoY, aided by housing.
 MAS is assessing whether to extend current dividend restrictions on banks.
We continue to see the potential for a removal of the dividend cap.
 Maintain OVERWEIGHT. Loans remain on path of recovery on stable
interest rates. Catalysts to come from a relaxation of dividend caps on
banks. We believe MAS could ease the dividend cap as Singapore banks
have kept sufficient capital buffers. We prefer DBS (DBS SP, ACCUMULATE,
TP: S$31.40) for sector exposure on account of its wealth-management and
investment banking franchises.