Lo­cal banks’ loan growth to weaken: Sur­vey

The New Paper - - NEWS -

Sin­ga­pore banks will strug­gle to lift lend­ing in the months ahead, ac­cord­ing to Fitch So­lu­tions yes­ter­day.

The re­search and con­sul­tancy com­pany has cut its loan growth fore­casts from 5 per cent to 4 per cent for this year, and down from 4.5 per cent to 3 per cent for next year. Fitch noted that loan growth for the lo­cal banks soft­ened to 4.5 per cent year on year in Septem­ber, the low­est level since Fe­bru­ary.

“The sub­dued trend is likely to per­sist in the light of the global eco­nomic head­winds stem­ming from ris­ing US-China trade ten­sions and an up­swing in in­ter­est rates,” it said in its re­port.

“Do­mes­ti­cally, tighter curbs on the res­i­den­tial prop­erty mar­ket will act as a head­wind to over­all credit growth over the com­ing quar­ters.

“Given that eco­nomic con­di­tions are likely to worsen over the com­ing months, we ex­pect busi­ness loan growth to slow fur­ther.”

Fitch ex­pects con­sumer loan growth will be dragged down, mainly by weak­ness in hous­ing and bridg­ing lend­ing due to tighter reg­u­la­tions. These loans ac­count for about 76.7 per cent of all con­sumer bor­row­ing.

Since prop­erty cool­ing mea­sures were in­tro­duced in July, “the growth of hous­ing and bridg­ing loans trended lower to 3.5 per cent year on year in Septem­ber from a high of 4.8 per cent year on year in May, and a fur­ther slow­down is likely, as seen from pre­vi­ous episodes when prop­erty curbs were tight­ened”, the re­port said.

Over­all mort­gage growth seems set to weaken de­spite de­mand from first-home buy­ers and those with col­lec­tive sale pro­ceeds to spend.

Fitch said: “De­spite signs of a cool­ing hous­ing mar­ket, the Mon­e­tary Au­thor­ity of Sin­ga­pore stated on Oct 11 it will con­tinue to keep a close watch over the prop­erty mar­ket and the im­pli­ca­tions of the tight­en­ing mea­sures. This sug­gests should the hous­ing mar­ket reignite, ad­di­tional curbs would be forth­com­ing, mean­ing risks to mort­gage de­mand re­main weighted to the down­side...” – THE STRAITS TIMES

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