“We see upside risk to our assumption if the momentum is sustained. We think it is feasible for Singapore banks to reach their guidance of mid-single digit loan growth for FY17,” says analyst Ng Li Hiang in a Monday report.
“DBS remains our preferred pick as we are positive on its ability to manage liability costs to drive pre-provision profits,” adds Ng.
In May, UOB’s system loan growth moderated to +5.1% y-o-y from +6.4% y-o-y in April which is in line with Maybank’s expectation.
Corporate loan growth moderated to +6.6% y-o-y in May led by lending to Financial Institutions (FI). Consumer lending also eased to +1% y-o-y from April’s +2.5% y-o-y.
Manufacturing loans contracted at -2.2% y-o-y while consumer lending eased to +1% y-o-y.
Despite some surprise revisions to property cooling measures by the government in March, housing loan growth has so far remained stable at +4.1% y-o-y.
System deposits grew 4.1% y-o-y in May. Domestic Banking Unit (DBU) deposit growth was driven by CASA (current and saving accounts) deposits.
As at 11.23am, shares in DBS are trading at $20.74.
