Singapore Banking Monthly - Phillip Securities 2024-12-09: Banks Share Price Performance Surges

• Upgrade Singapore banking sector to OVERWEIGHT from Neutral. Our target prices for singapore bank stocks have been raised 7-11% as we roll over into FY25e book value.
• Banks' share price performance was up 10% in November from a strong set of 3Q24 results and lowered rate cut expectations.

3-month SORA & 3-month HIBOR dip further

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• Hong Kong interest rates fell in November. The 3-month HIBOR was down 5bps m-o-m to 4.31%, reversing the 29bps increase in October. Furthermore, November’s 3-month HIBOR dipped by 113bps y-o-y and is 5bps lower than the 3Q24 3-month HIBOR average of 4.36%. We expect the 3-month HIBOR to trend downwards following the Fed rate cuts.

Singapore loan growth is stable at low-single-digit

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• Business loans rose by 2.4% y-o-y in October. Loans to the building and construction segment, the single largest business segment, rose 3.3% y-o-y to S$174bn, the largest increase since Oct 2022, while loans to the manufacturing segment fell 5% y-o-y in October to S$20bn.
• Consumer loans grew 3.3% y-o-y in October to S$321bn, the tenth consecutive y-o-y increase recorded since December 2023. Housing loans, which comprise ~70% of consumer lending, grew 2.6% y-o-y in October to S$230bn.
• Total deposits and balances—which include deposits in all currencies made by non-bank customers—grew by 3.9% y-o-y in October to S$1,867bn. In the Current Account and Savings Account, or CASA, the proportion rose slightly to 18.6% (Sep24: 18.4%) of total deposits or S$347bn. We expect the CASA ratio to increase as the higher-interest fixed deposits mature and funds get shifted back to CASA.

Hong Kong loan growth dips back down

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Glenn Thum Phillip Securities Research | http://www.poems.com.sg/ 2024-12-09 SGinvestors.io

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