, Singapore

Why analysts fear Singapore banks' loan growth will slow in 2H13

Should they brace themselves for big-time plunges?

According to CIMBH, DBU LDR crossed the 100% mark in Jul, which means that the system is relatively stretched. 

While there is still excess S$ liquidity (S$ LDR was 79.0% in Aug), the rising S$ LDR means that funding pressure may show up in future if this trend continues.

Here's more from CIMB:

The main cause of this is the falling S$ deposits as investors seek higher returns elsewhere in a low interest rate environment.

We expect the loan growth to slow in 2H, which is in line with the three local banks’ guidance. System loan growth looks set to reach +12-14% by end-2013.

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