Chart of the Day: This graph shows Singapore banks are suffering pressure on customer loan yields

Even on investment securities.

According to CIMB, loan growth came in higher than expected, triggering full-year loan growth guidance upgrades.

Singapore system loans slowed but 2Q loan growth for Singapore banks accelerated on the back of US$ loans. Singapore banks’ S$ loans rose only 2-3% qoq. US$ loans were taken for trade finance or to finance large corporates’ overseas business needs.

Here's more from CIMB:

Margins for these tend to be tighter than average but there is the opportunity to make it up in fees, and fees did hold up. Margins for all three came in flat; the banks indicated that margins are finally stabilising after falling for more than three years.

Comparison of customer loan spreads, interbank and investment securities spreads suggests that there is still some pressure on customer loan yields and investment securities. These were offset by higher interbank spreads.

Following the rise in long-end rates, all the banks said they were unwilling to shift to longer-duration securities just yet as there is scope for interest rates to rise further (and they want to avoid losses). Only DBS said that it saw an opportunity to extend the net duration of its customer loan book by taking more fixed-rate loans.

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