Kim Eng on 3 Feb 2014
Industry loan data for 2013
Industry domestic banking unit (DBU) loans for 2013 were driven by stronger business loan growth of 22.9% (2012: +18.0) on the back of a strong growth in general commerce loans (2013: +32.4%; 2012: +17.5%) which picked up strongly in 4Q13. Dampening the effect was a decelerating consumer loan growth of 8.9% in 2013 (2012: +15.0), which was dragged down by a slowing housing loan growth of 9.5% (2012: +15.9%); slowest in 4.5 years.
SGD LDR higher but remains comfortable
The industry SGD deposit base has flattened out over the past 10 months. It only grew a meagre 3.6% in 2013; slowest since Apr 2005. Based on our estimates, SGD loan-to-deposit (LDR) remained comfortable at 83.3% at end-2013 (2012: 75.4%).
We expect industry loan growth to slow to 9-10% in 2014-15. We expect housing loans to grow at 4-6% in 2014-15 reflecting a slowing property market. This, however, will be compensated by a reasonably strong business loan growth of 12-14%. Lending to the general commerce sector is a wildcard that could surprise.
For exposure, DBS is our top sector pick as it is the best positioned to take advantage of a rising interest rate environment. We would stay cautious towards OCBC.
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