Housing loans in Singapore grew at 6.4 percent year-on-year in October – or its slowest pace in seven years – on the back of a weak property market as well as a higher base, said Maybank Kim Eng and reported in the media.
“Industry domestic banking unit (DBU) loans grew nine percent year-on-year in October, down from 10.6 percent a month earlier. Business and consumer loans grew at their slowest pace in four and seven years respectively. The former’s slowdown was led by lending to general commerce (+12.3 percent year-on-year), transport, storage & communication (+13.5 percent) and financial institutions (+15.4 percent),” it said.
“The latter’s deceleration came about as property-market sentiment remained poor. But as we had toned down our loan-growth expectations after Q3 2014 results, especially for DBS, there is no need to revise numbers just yet.”
Looking ahead, Maybank Kim Eng does not expect 2015 to be any better as demand will mainly come from drawdowns for newly completed houses sold in 2012 to 2013.
“As Singapore deposits grew just 0.2 percent month-on-month and 1.5 percent year-on-year, Singapore loan-to-deposit ratio (LDR) may not stir next year. This is because loan growth could decelerate further. Deposits may not grow strongly as holding cash remains unappealing amid low interest rates. October’s SGD LDR was 86.4 percent,” it added.
With this, Maybank Kim Eng expects loan growth to average nine percent in 2015.
“On the domestic front, home loans should expand just four to six percent, without a property-market revival. However, we believe their slack will be taken up by better business loan growth of 10 to 12 percent.”