Sky-high credit card rates pose bigger threat to the banking industry

Bank loans and deposits moderated in April but It's the credit card charge-off rates now inching closer to their 10-year average of 5% that concern analysts more.

Here's from Kenneth Ng, an analyst at CIMB:

System loan growth slowed to 1.4% in 4Q12 from a year ago (6.1%). Sequentially, loans shrank 0.3%, largely led by a 1.4% mom dip in ACU loans. Credit demand in Singapore, too, showed signs of exhaustion, with DBU loans growing 3.5% in 4Q12 (2011: 8.8%) and 0.6% mom. LDR ratios held steady (DBU: 88.9%; ACU: 103.5%; S$ LDR: 72.6%). Property-related loans once again led the growth (+1% mom), forming 75% of Apr’s lending. 4Q12 business loans slowed to 3.1% (2011: +14.8%) on loan repayments in commerce (-1.1% mom) and other business loans (-1.7% mom), offset transport-related loan growth (+6.2% mom). Consumer loans grew 2.1% in 4Q12 (+1% mom), with the aid of share financing (+10.8% mom) and other consumer loans (+1.2% mom). Credit-card charge-off rates continued to climb in Apr, to 4.53% (Mar: 4.46%).

The moderation in loan demand is in fact in sync with our 12-15% growth expectation for 2012. The decline in ACU loans should have stemmed from fewer trade-financing opportunities in the region. Our biggest concern remains asset quality. Asset quality continued to deteriorate with Apr credit-card charge-off rates inching closer to their 10-year average of 5%.

If you've been wondering whether SBR could work for your company — yes, probably.

A lot of the companies we partner with started as readers. They'd been following our coverage for a while, saw their own customers and competitors in it, and eventually asked the obvious question: could we do something with you? The answer is usually yes. The shape of it depends on what you're trying to do.

The options are broader than most people assume — thought leadership articles, sponsored content, industry summits across Southeast Asia, regional awards programmes, podcasts, and media placements in print and digital. Some partners use one channel; most use a mix. We figure out the right combination by starting with your brief, not with our rate card.

So if the question has been on your mind, here's the easy way to ask it.

We'll tell you honestly whether we can help, and how. It's a better use of everyone's time.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia