Singapore Banks

Singapore Banks: Industry domestic banking unit (DBU) loans grew 7.5% y/y in Nov (Oct: +9%). Business and consumer loans grew at their slowest in more than four and sevcen years respectively. Growth was weak across the board, except for building and construction (+13.9%). Consumer loans remained weighed down by property-market weakness (+6.2% y/y) and fast-shrinking car loans (-19.4% y/y) As SGD deposits grew only 0.3% m/m and 2% y/y, SGD LDR may not stir this year, because loan growth could decelerate further. Deposits may not growth strongly as holding cash remains unappealing amid low interest rates. Loan growth is expected to average 9% in 2015 for SG banks (2014 projection: +9.3%). Business loans growth may not reach the 12% target due to the local pace of slowdown, but can be rescued by general commerce loans if the global economy strengthens in 2H15. DBS remains top sector pick (Buy, TP $23.50), followed by UOB (Buy, TP $26.70). Maybank-KE advises to stay cautious on OCBC (Hold, TP $10.70)