Chart of the Day: Singapore banks' system loan growth pegged to hit 12-14%

That's by end of 2013.

According to CIMB, 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.

While MAS was concerned about the rising credit card debt and unsecured credit earlier this month, the credit card charge-off rates fell below the historical average of 4.95% in Aug – signaling that consumers’ credit quality remains sound.

We believe the domestic NPLs will not be a cause of concern for the local banks, but rather the small pots of NPLs arising out of India, Indonesia and Malaysia.

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