And this is driven by business loans which expanded 27.5% in May.
According to DBS, this is the highest growth rates since end-2008.
Here’s more from DBS:
Loans grew at its strongest rate in May-11 at 3.5% m-o-m, 8.7% q-o-q and 24.2% y-o-y. Business loans expanded 4.3% m-o-m, 12.2% q-o-q and 27.5% y-o-y, the highest growth rates achieved since end-2008; clear cycle of business loan growth from capacity expansion.
YTD loan growth stood at 12.6%, driven by business loans (+17.5% YTD). Consumer loans chugged along by 7% YTD while housing loans grew by 6.5%. Although gradually moderating, we believe that there is still sufficient mortgage loan draw downs to ensure mortgage loans remain fairly strong for at least another next 4-6 quarters although we believe the momentum achieved in 2010 would not be repeated (mortgage loan growth in 2010 was 23%).
Deposits grew strongly by 13% y-o-y but only at 0.5% m-om, still driven by current and savings deposits, which collectively comprise 58% of total deposit base. Loan-to-deposit ratio further inched up to 79%. While on the higher end of historical trends, we view that liquidity remains
Loans growth remains the variable for earnings surprise for the Singapore banks. Based on our estimates, every 1% increase in loans growth (holding other variables constant), earnings could increase by 2-3%. There is a significant upside to our loan growth assumption for 2011, which is currently at 13%.
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