SG Banks: Sector could see positive sentiments, after Bank lending in SG reached another high in May at $363.27b, +3.5% mom and a new peak since 1989, according to data released by MAS. Domestic banking units loan growth accelerated to 24.2% yoy in May, its strongest since Sept08, while the mom growth rate for industry consumer loans picked up at 2.5%. In terms of yoy growth, consumer loan growth soared to a new multi yr record high of 20.3%....
Among key business loan subsectors, manufacturing loan growth accelerated sharply at 26.8% yoy, while building and construction loans registered their tenth consecutive mth of positive yoy growth. Loans to non-bank financial institutions continued to power ahead to a record high of 34.9% yoy and general commerce loan growth swelled to 46.1% yoy. Car loans remained the weakest of all consumer loans, shrinking for 26 mths in a row…
BNP Paribas note that business loans will should continue to remain robust for the next three mths given the strong syndicated loan pipeline and at current levels, SG banks are priced at historical P/E means. We note that sector has highly varying views on top pick, with BNP Paribas touting OCBC as house top pick with $11 TP, while Deutsche favours DBS and Macquarie favours UOB (TP $23.16)
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