Singapore Banks: Feb-11 loan growth at 17% y-o-y; 3.5% YTD

Loan growth remained strong on m-o-m basis at 1.6%. Y-o-y, loans grew by a strong 17.1%, keeping up with the pace in Jan 11 (16.1% y-o-y; 1.9% m-o-m). 2011 YTD loan growth stood at 3.5%.

M-o-m, business loans continued to accelerate at 13.8% y-o-y, 2.3% m-o-m( Jan-11: 16.1% y-o-y; 2.3% m-o-m). Consumer loans growth remained stable at 18.9% y-o-y but a slower m-o-mentum m-o-m at 0.9% (Jan-11: 18.7% y-o-y; 1.3% m-o-m). Housing loans growth remained relatively flat at 23.1% y-o-y (Jan-11: 23.0%) but was lower m-o-m at 1.0% (Jan-11: 1.6%)

We believe that banks have yet to feel the impact of the recent property measures. From previous experience in Aug-10 when property cooling measures were stepped up, banks faced a 20-30% decline in mortgage loan applications. But as the draw down pipeline remained strong, mortgage loan growth was not affected. Similar trends are expected this time around. There is still sufficient mortgage loan draw downs to ensure mortgage loans remain fairly strong although we believe the m-o-mentum achieved in 2010 may not be repeated (mortgage loan growth in 2010 was 23%).

Deposit growth remains strong at 11.9% y-o-y and 0.3% m-o-m (Jan-11: 11.2% y-o-y; 0.9% m-o-m), still driven by current and savings deposits, which collectively comprise 57% of total deposit base.

Loan-to-deposit ratio is gradually inching up to 76% but still low compared to 2008 (average at 78%) and significantly lower than levels recorded in 2005 (>80%). We view that liquidity remains ample and banks will continue to strive for low cost deposit growth.

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