Management’s guidance for 2017 loans and income growth is mid-single digit. Therefore we have revised our total income growth estimate from 2% to 5%. Management also provided guidance that the total allowance in 2017 would be similar to 2016 excluding provisions for Swiber. Based on the total allowance guidance and the divestment gains from the sale of the PwC Building, we estimate net profit growth to be more than 10%. However, we still think that a mid-single digit income growth may not be sufficient to secure growth of shareholder returns if non-performing loans escalates more than expected. Downgrade to “Reduce” from previous “Neutral” rating with a lower target price of S$16.73 (previously S$16.85), pegged at unchanged 0.95x FY17F book value (excluding perpetual capital securities).