- Loan growth across Singapore banks (DBS, OCBC, UOB) stayed weak in Jul 23, with system balances sliding 5.5% y-o-y. The decline was broad-based, cutting across both the resident (-6.1% y-o-y, mainly domestic loans) and non-resident (-4.4% y-o-y, primarily regional loans) segments as well as business (-6% y-o-y) and consumer (-4.2% y-o-y) loans.
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- In the consumer segment, personal loans continued to wind down, slipping 14.5% y-o-y in Jul 23.
Fixed Deposit (FD) growth cooled – this should alleviate funding cost pressures
- System deposit growth further cooled to +3.3% y-o-y in Jul 23 (vs. ~+5% y-o-y on average in 1H23). The deposit inflows were still primarily driven by foreign currency deposits (+S$38bn or +4.2% y-o-y in Jul 23). Local currency deposit growth was smaller at +S$17bn or +2.2% y-o-y in Jul 23. Notably, ~65% of these deposits were contributed by residents outside Singapore; we estimate that the bulk of these inflows originated from Europe and East Asia.
- With the slower pace of Fed rate hikes in 1H23, fixed deposit (FD) growth eased to +45% y-o-y in Jul 23 (vs. +66% y-o-y on average in 1H23). In tandem, CASA continued to shrink at a steady -20% y-o-y in Jul 23.
- Nonetheless, the proportion of system CASA to FDs was stable at 51:49 in Jul 23 for the 4th consecutive month (Dec 22: 55:45, Jul 22: 65:35).
- System liquidity remained ample, with all-currency loan-to-deposit ratio (LDR) of 72% in Jul 23. Of this, S$ LDR stood at 70% in Jul 23 (Dec 22: 74%) while foreign currencies LDR stood at 73% (Dec 22: 77%).
Reiterate NEUTRAL as risk-off sentiment remains an overhang
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Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
Andrea CHOONG CGS-CIMB Research | LIM Siew Khee CGS-CIMB Research | https://www.cgs-cimb.com 2023-09-04 SGinvestors.io
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Analyst Reports on Singapore Banking & Finance Sector