Singapore's financial sector is among the strongest in the world, yet in terms of share performance, the sector has been underperforming other banks in the region.
Shares of OCBC are down 4 percent so far this year, on the other hand, DBS shares have risen 4.8 percent and UOB shares have risen 7 percent. Compare that to gains of 9 percent for Indonesia's Mandiri and 13 percent for Indonesia's largest lender BCA .
"Only one country which has been so consistenly underperforming Asian banks in times of good Asian growth, and that's Singapore," CLSA's Head of Regional Banks Research, Daniel Tabbush told CNBC.
CLSA is underweight banks in Singapore, and overweight the sector in Malaysia, Indonesia, Thailand and India.
"Compared to the very high growth that you see in Indonesia or India, and the very strong levels of returns on assets or returns on equity, the Singapore banks don't really compare well," Tabbush explained.
According to CLSA's data, Singapore banks' return on average assets (ROAA) in 2010 was 0.97 percent, lower than Indonesia's 2.22 percent and India's 1.51 percent.
That's because record low interest rates in Singapore mean banks aren't able to enjoy big margins despite healthy loan growth. UOB, which is Southeast Asia's third-largest lender, recently reported a 20 percent rise in customer loans, but net interest margins were just 1.9 percent and the bank's net profit actually fell 13 percent from a year earlier.
In addition, Singapore banks keep aside higher amounts of capital than peers in the region, partly because of stronger regulations. For example, DBS has a Tier 1 capital ratio of 15 percent, while OCBC's Tier 1 capital ratio is 16 percent. Indonesia's BCA, on the other hand, has a capital ratio of 12 percent.
According to CLSA, it's those strong balance sheets that attract investors to Singapore banks during times of crisis.
"During the Asian crisis in 1997/98, they were outperforming by far all the other banks in Asia, with the exception of Australia. People were hiding in these places," Tabbush pointed out. During that period, Singapore's non-performing loan (NPL) ratio was around 9 percent, much lower than the 40 percent ratios for banks in Thailand and Malaysia.