OCBC's treasury earnings to revert to historical averages for the next 3 years

Potential turnaround in NIMs is also a catalyst.

According to Nomura, last year saw record contribution from the life & general insurance business, which surged to 29% of non-interest revenue from 23% in FY11.

This was premised on tightening credit spreads even as bond yields were trending lower, resulting in strong investment performance for its nonparticipating fund. 

Here's more from Nomura:

As the bond yield cycle reverses, we expect a normalisation of treasury-related earnings. We forecast treasury and returns on its insurance assets to revert closer to historical averages for the next three years.

The sharp build-up in Singapore’s household debt is not expected to affect asset quality materially, at least for the near term, as most mortgages have LTVs less than 80%.

Our property analyst’s base case assumption of a 15% fall in property values still leaves a 5-10% margin for the banks before having to set aside higher provisions.

Catalyst: Potential turnaround in NIMs
The past four quarters have been disappointing, in our view, from a margin perspective. With the steepening of the yield curve, we think the sector NIM is close to its inflexion point.