Singapore Banks - CGS-CIMB Research 2024-01-02: Growth Remains Muted

• Although impending Fed rate cuts may boost some non-interest income segments, such as wealth management, steeper-than-anticipated cuts may present earnings downside risks to the Singapore banks, albeit at a lagged pace. UOB (SGX:U11) is our top pick for the Singapore banking sector.

System loans contracted 3% over Jan-Nov 2023

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• By segment, business loans (-3.4% y-o-y) remained the key driver of the decline, with the wholesale trade (-14.5% y-o-y) and manufacturing (-12% y-o-y) segments recording the largest dips in Nov 23.
• The shrinkage in the consumer loans segment was led by a reduction of personal loan balances (-9.2% y-o-y), while mortgages picked up slightly to +0.9% y-o-y in Nov 23.
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With Singapore banks’ 4Q23F loan growth shaping up to be a relatively soft showing, we think that FY23F full-year loan growth could be just marginally positive, which is on the lower end of the banks’ low-to-mid single-digit loan growth guidance for FY23F.

System deposit growth still strong, but fixed deposit inflows eased

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Andrea CHOONG CGS-CIMB Research | LIM Siew Khee CGS-CIMB Research | https://www.cgs-cimb.com 2024-01-02 SGinvestors.io

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