Chart of the Day: Here’s why banks would scramble to muster decent loan growth in 2016

It’s expected to hover within low single digits.

Customers would continue to think twice before loaning from banks next year, as analysts are still pessimistic of a loan growth rebound.

According to analysts from DBS, load growth will likely drift down and stay below the 5% level in 2016 as potential borrowers get spooked by the expectations of a lacklustre GDP growth.

DBS adds that struggling regional economies are another factor which will likely drag loan growth across the mud.

“Forex translation may just add an additional 1-2bps to overall loan growth, bringing our modelled loan growth forecast close to 5%,” DBS said.

“Note that earnings momentum is not sensitive to movements in loan growth. Our sensitivity indicates that every 1ppt rise in loan growth only results in 0.5-0.7% increase in earnings, holding other variables constant,” DBS added.