Singapore banks' loans to keep outstripping deposits

Loan growth to hover around 10%.

The gap between Singapore’s loan and deposit growth figures will remain wide, with loan growth expected to remain around 10% level while deposit growth is likely to languish near to zero.

According to a research note from DBS, this is more or less unchanged from 10.8% and -0.01% respectively in July.

With the gap between loan and deposit growth expected to remain wide, total loan value will continue to stay above deposit value.

This implies that the loan to deposit ratio will continue to stay above parity and could possibly approach the historical peak of 1.17 recorded during the Asian financial crisis in the coming months.

Here’s more from DBS:

The Monetary Authority of Singapore introduced the Total Debt Servicing Ratio (TDSR) in June last year in a bid to contain the rapid increase in household leverage.

And this coincides with the loan to deposit ratio hitting parity in the same month.

So, as long as the loan to deposit ratio remains elevated and global interest rates remain low, it is unlikely that the authority will unwind on the property market cooling measures introduced in recent years.