Chart of the Day: Singapore banks’ loan growth on a downhill tumble

Hitting a mid single-digit loan growth is unlikely.

Business and consumer spending sentiment has been down in the dumps as the global economy sinks down to alarming levels, reducing the hopes for a robust loan growth to almost nothing more than a pipe dream.

According to Barclays, analysts are pessimistic of the banks meeting their guidance of mid to high single-digit loan growth for the full year.

“System loan growth which reflects USD appreciation rose by 3.4% YTD August 2015 according to MAS statistics,” Barclays said.

Meanwhile, a silver lining is that the banks would benefit from currency translation in their USD and HKD loan books, as these currencies appreciated by 3.6% against the SGD in 3Q15.

“DBS and OCBC had a higher exposure to USD/HKD loans (44% and 38% total loans respectively in 2Q15) and should fare better than UOB (~17% of loans),” Barclays said.