Singapore Banks - DBS Research 2019-06-28: Strong Loan Growth Momentum Continues

Singapore Banks - DBS Group Research | SGinvestors.io OVERSEA-CHINESE BANKING CORP (SGX:O39) UNITED OVERSEAS BANK LTD (SGX:U11) DBS GROUP HOLDINGS LTD (SGX:D05)

Singapore Banks - Strong Loan Growth Momentum Continues

  • Industry loan growth momentum maintained (+4.7% y-o-y; +1.3% m-o-m); YTD loan growth at 3.1%.
  • Business loans growth (+5.9% y-o-y) continues to lead consumer loans (+1.2%).
  • Mortgages loan book declined for fourth consecutive month.
  • Deposit growth outpaced loan growth; cost of deposits unlikely to come down significantly in near-term.



Industry growth momentum maintained.

  • According to the latest statistics released by the Monetary Authority of Singapore (MAS), industry loan growth (DBU + ACU1) for May 2019 grew 4.7% y-o-y and 1.3% m-o-m (Apr 2019: +4.0% y-o-y/ +1.0% m-o-m), as business loans growth (+1.6% m-o-m) offset sluggish consumer loans growth (+0.5% m-o-m).
  • Year-to-date, loans grew 3.1%, in line with our full year expectations of c.5% growth.


Business loans led by manufacturing, building and construction, and transportation.

  • Manufacturing, building and construction, and transportation loans continued grow strongly by 16.6%,15.2% and 9.1% y-o-y respectively, against shrinking general commerce and financial institutions loans of 1.5% and 2.4% y-o-y.
  • Meanwhile, consumer loans growth is still slowing, by c.1.2% y-o-y due to a slight 0.3% y-o-y contraction in mortgages. At its peak, mortgage loans grew 4.7% y-o-y in May 2018.


Mortgages book declined for fourth consecutive month.

  • For the fourth consecutive month, Singapore’s mortgages book declined m-o-m, registering 0.1% m-o-m drop in May 2019. We continue to track the sales progress of new residential development projects, seeing more new launches in May-Jun 2019.
  • We do not expect the mortgage book to see a deep contraction unless there is an accelerated slowdown in the economy with massive unemployment.


Deposits’ growth outpacing loan growth; cost of deposits unlikely to come down significantly in near-term.

  • Overall deposits recorded strong growth of 7.4% y-o-y, outpacing loan growth, led by fixed deposits as depositors sought higher fixed deposit rates currently on offer.
  • Our channel checks across various banks indicate that SGD fixed deposits are still in demand by both local and foreign banks with competitive interest rates offered and decent interest from recent issues of Singapore Savings Bonds.





Rui Wen LIM DBS Group Research | https://www.dbsvickers.com/ 2019-06-28
SGX Stock Analyst Report HOLD MAINTAIN HOLD 11.500 SAME 11.500
BUY MAINTAIN BUY 29.200 SAME 29.200
NOT RATED MAINTAIN NOT RATED 99998.000 SAME 99998.000



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