Singapore banks' loan growth to be 'relatively subdued'

That is despite a slight recovery in February.

According to BMI Research, Singapore's banking sector continues to face multiple challenges, despite a slight recovery in loans growth (those denominated in Singapore dollars) to 5.2% y-o-y in February, from a low of -2.7% y-o-y in June 2016.

Here's more from BMI Research:

We expect Singapore's economic growth to continue to be undermined by a shortage of skilled labour as a result of the government's restructuring efforts while external conditions remain uncertain due to the structural slowdown in the Chinese economy.

All these factors will therefore keep Singapore's loan growth relatively subdued over the coming months. In addition, the NPL ratios of Singapore's three big banks are still on an uptrend, and we expect asset quality to remain under pressure due to their oil and gas exposures.

The financials of small and medium-sized companies in the oil and gas sector are still feeling the negative effects from the significant decline in oil prices, and it is likely that banks will have to raise their allowances further.

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