Singapore bank deposits 'anaemic'; loans 'lethargic'

Are Singapore banks feeling the squeeze of Euro crisis?

Here's from OCBC Investment Research:

Loan growth continues to moderate. The slower loan growth trend is expected. Loan growth in April 12 moderated further to 24.0% y-o-y and 0.6% m-o-m, bringing YTD loan growth to 3.5%. Momentum continued
to be driven by business loans albeit slower than previous months. Housing loan growth was further reduced to
15.3% y-o-y and 0.9% m-o-m with YTD growth at 3.8% as a result of the stricter property measures.

Deposit growth down to single digits. Deposit growth of 7.7% y-o-y in April 12 was the slowest since April 09. Such trends were evident in the 1Q12 bank results. Banks appear to be pacing deposits with loan growth. As we believe S$ liquidity remains ample, banks do not appear to be aggressively competing for deposits. Quarterly and monthly deposit growth rates were anaemic. With slower deposit growth vs loan growth, loan-to-deposit ratio
inched up to a high of 89% in April 12.

Projecting 12% loan growth 2012. 1Q12 bank results reaffirmed the slower loan pace. Overall, S$ corporate
loans drove growth. Banks continued to guide for low-teens loan growth in 2012. It is no surprise that loan growth momentum will continue to moderate for the rest of the year. However, we believe the Singapore banks remain well positioned to take advantage of extended credits given their liquidity position, similar to what we saw in the past when they benefitted from the pull-back of credits by the European banks. This would also provide Singapore banks an opportunity to price up loan spreads in view of a tighter supply market.

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