Singapore Banking Monthly - Phillip Securities 2025-01-13: Banks' Share Price Surges

• December’s 3-month SORA was down 15bps m-o-m to 3.14%, the lowest since Jan 2023 and 15bps lower than the 4Q24 average. We expect the 3-month SORA to decline in tandem with the Fed Rate cuts of 100bps.
• Banks rallied 34% in 2024 from strong results, lowered rate cut expectations, and possibly higher dividends/share buybacks.

3-month SORA continues decline, 3-month HIBOR inches up

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• Hong Kong interest rates inched up in December. The 3-month HIBOR was up 4bps m-o-m to 4.36%, reversing the 5bps decline in November. However, December’s 3-month HIBOR dipped by 102bps y-o-y but is 2bps higher than the 4Q24 3-month HIBOR average of 4.34%. We still expect the 3-month HIBOR to trend downwards following the Fed rate cuts.

Singapore loan growth recovers steadily

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• Business loans rose by 3.3% y-o-y in November. Loans to the building and construction segment, the single largest business segment, rose 4.7% y-o-y to S$177bn, the largest increase since August 2022, while loans to the manufacturing segment fell 7% y-o-y in November to S$20bn.
• Consumer loans grew 3.4% y-o-y in November to S$323bn, the eleventh consecutive y-o-y increase recorded since December 2023. Housing loans, which comprise ~70% of consumer lending, grew 2.6% y-o-y in November to S$231bn.
• Total deposits and balances—which include deposits in all currencies made by non-bank customers—grew by 5.2% y-o-y in November to S$1,887bn. In the Current Account and Savings Account, or CASA, the proportion fell slightly to 18.3% (October 2024: 18.6%) of total deposits or S$346bn. 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 again

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Glenn Thum Phillip Securities Research | https://www.poems.com.sg/ 2025-01-13 SGinvestors.io

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