banking 090111 ps update

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Singapore Banking Sector Phillip Securities Research Pte L1 September 20

Analyst

Magdalene ChoongTel : +65 6531 1791Fax : +65 6536 4435Email :[email protected]

Web : www.poems.com.sg

MICA (P) 004/01/2011 Ref No: SG2010_0251

The Monthly statistics bulletin released by the Monetary Authority of Singapore revealed theloan and deposit numbers ending July 2011.

Singapore’s total loans outstanding registered y-y growth of 28% to S$381.8 billion in J2011. Business loans and consumer loans reported growth of 36% y-y and 18.7% yrespectively.

YTD, total loans grew by 16%, business loans by 22.7% and consumer loans by 8.6%. M-m, total loans grew by 2%, business loans by 2.7% and consumer loans by 1.1%.

Fig 1: Y-Y growth in total loans, business loans and consumer loans

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

30.00%

35.00%

40.00%

Sep-

09

Nov-

09

Jan-

10

Mar-

10

May-

10

Jul-

10

Sep-

10

Nov-

10

Jan-

11

Mar-

11

May-

11

Jul-

11

YoY Total loansYoY Business loansYoY consumer loans

Source: MAS, Phillip Securities Research

Table 1: Singapore loan data

Loan Data (S$ mil) Jul-11 Jul-10 Jun-11 YoY MoMBusiness

Agriculture 1,559 567 1,205 175.05% 29.32%

Manufacturing 16,168 11,359 16,149 42.33% 0.12%

Building and construction 60,546 48,709 59,167 24.30% 2.33%

General commerce 41,008 28,370 40,330 44.54% 1.68%

Transport 10,489 8,777 10,474 19.51% 0.15%

Business Services 4,157 5,343 3,958 -22.19% 5.04%

Financial institutions 49,305 32,950 48,049 49.64% 2.61%

Professional and private

(business) 3,904 3,020 3,866 29.26% 0.99%

Others 27,843 19,066 26,168 46.03% 6.40%

Total Business Loans 214,978 158,162 209,363 35.92% 2.68%

Loan Data (S$ mil) Jul-11 Jul-10 Jun-11 YoY MoMConsumer

Housing 122,903 103,575 121,304 18.66% 1.32%

Car loans 11,482 11,779 11,524 -2.52% -0.36%

Credit Card 7,086 6,050 7,109 17.12% -0.33%

Share financing 1,191 1,067 1,203 11.57% -1.01%

Others 24,153 18,061 23,817 33.73% 1.41%

Total Consumer Loans 166,815 140,532 164,957 18.70% 1.13% Source: MAS, Phillip Securities Research



Singapore Banking Sector 1September 201

2

Fig 2: Business Loans in various Segments (in S$ millions)

Manufacturing Loans

0

2,0004,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

Jul-10 Sep-10 Nov-10 Jan-11 Mar-11 May-11 Jul-11

Agriculture, Mining and Quarrying Loans

0150300450600750900

1,0501,2001,3501,5001,650


Building & Construction Loans

0

20,000

40,000

60,000

80,000


General Commerce Loans

0

6,000

12,000

18,000

24,000

30,000

36,000

42,000

48,000


Transport, Storage and Comm unication

Loans

7,500

8,000

8,500

9,000

9,500

10,000

10,500

11,000


Business Services Loan

0

2,000

4,000

6,000


Financial Services Loans

0

10,000

20,000

30,000

40,000

50,000


Professional and Private individuals -

Business Purpose Loans

0

1,000

2,000

3,000

4,000


Loans to Others

0

5,000

10,000

15,000

20,000

25,000

30,000





Singapore Banking Sector 1September 201

3

Fig 3: Consumer Loans in various segments (in S$ million)

Housing and Briding Loans

0

30,000

60,000

90,000

120,000

Jul-10 Sep-10Nov-10 Jan-11 Mar-11 May-11 Jul-11

Car Loans

11,400

11,500

11,600

11,700

11,800


Credit Card Loans

5,500

6,000

6,500

7,000

7,500

Jul-10 Sep-10 Nov-10 Jan-11Mar-11 May-11 Jul-11

Share Financing

0

500

1,000

1,500

Jul-10 Sep-10 Nov-10 Jan-11 Mar-11May-11 Jul-11

Other Consumer Loans

0

5,000

10,000

15,000

20,000

25,000



Table 2: Singapore deposit data Deposits Data (S$ million) Jul-11 Jul-10 Jun-11 YoY MoM % of total loans

Demand deposits 112,051 92,755 110,869 20.80% 1.07% 24.09%

Fixed deposits 194,588 179,006 188,468 8.70% 3.25% 41.84%

Savings and other deposits 158,409 137,077 156,086 15.56% 1.49% 34.06%

Total Deposits 465,048 408,838 455,423 13.75% 2.11% 100.00%

Total Loans 381,793 298,693 374,320 27.82% 2.00%

LDR 82.10% 73.06% 82.19% 12.37% -0.11% Source: MAS, Phillip Securities Research

Singapore Banking Sector OutlookIn FY10, we saw strong growth from consumer loans due to demand for housing loans. In FYhousing loans growth has been overshadowed by exceptional strong demand from businesses.only in FY11 that strong loans growth showed through in banks’ net interest income. Despitepositive reflection, we maintain our neutral outlook for the banking sector. Macroeconomic risks sas the US and Europe debt overhang had resulted in massive sell off in the stock markets created a shadow of fear over businesses and consumers confidence. A crisis of confidence oexcessive fear may translate to lower demand for loans if such conditions persist long enough.hold the view that explosive loans growth in FY12 may be difficult to replicate and we are more lto see slower pace of loans growth. Furthermore, interest rates are not likely to rise as we initassumed. Fed will maintain low rates until 2013 which will continue to pressurize margins insector.

We only have Buy call for DBS as the stock is relatively undervalued compared to its peers. Comphas a clear growth strategy and is continuously proving its mettle for executing these plans.Statistics DBS OCBC UOB

Closing price on 31st Aug S$13.25 S$8.75 S$18.55

Fair valuation S$16.98 S$10 S$20.12

Expected return 28% 14.30% 8.50%

Rating Buy Hold Hold Source: Phillip Securities Research



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Contact Information

Singapore Research

Chan Wai CheeCEO, ResearchSpecial Opportunities+65 [email protected]

Lee Kok Joo, CFAHead of Research,S-chips, Strategy+65 [email protected]

Joshua Tan Strategy & MacroSingapore, US, China +65 6531-1249 [email protected]

Nicholas Low, CFAInvestment AnalystOffshore & Marine+65 [email protected]

Magdalene ChoongInvestment AnalystSG & US Financials, Gaming+65 6531-1791 [email protected]

Go Choon Koay BryanInvestment AnalystProperty+65 [email protected]

Derrick HengInvestment AnalystTransportation+65 [email protected]

Travis SeahInvestment AnalystREITS+65 6531 [email protected]



Regional Member Companies

SINGAPOREPhillip Securities Pte LtdRaffles City Tower 250, North Bridge Road #06-00

Singapore 179101Tel : (65) 6533 6001Fax : (65) 6535 6631Website: www.poems.com.sg

MALAYSIAPhillip Capital Management Sdn BhdB-3-6 Block B Level 3 Megan Avenue II,No. 12, Jalan Yap Kwan Seng, 50450

Kuala Lumpur Tel (603) 21628841Fax (603) 21665099Website: www.poems.com.my

HONG KONGPhillip Securities (HK) LtdExchange Participant of the Stock Exchange of Hong Kong11/F United Centre 95 QueenswayHong KongTel (852) 22776600Fax (852) 28685307Websites: www.phillip.com.hk

JAPANPhillipCapital Japan K.K.Nagata-cho Bldg.,8F, 2-4-3 Nagata-cho,Chiyoda-ku, Tokyo 100-0014Tel (81-3) 35953631Fax (81-3) 35953630Website:www.phillip.co.jp

INDONESIAPT Phillip Securities IndonesiaANZ Tower Level 23B,Jl Jend Sudirman Kav 33AJakarta 10220 – IndonesiaTel (62-21) 57900800Fax (62-21) 57900809Website: www.phillip.co.id

CHINAPhillip Financial Advisory (Shanghai) Co. LtdNo 550 Yan An East Road,Ocean Tower Unit 2318,Postal code 200001Tel (86-21) 51699200Fax (86-21) 63512940Website: www.phillip.com.cn

THAILANDPhillip Securities (Thailand) Public Co. Ltd15th Floor, Vorawat Building,849 Silom Road, Silom, Bangrak,Bangkok 10500 Thailand

Tel (66-2) 6351700 / 22680999Fax (66-2) 22680921Website www.phillip.co.th

FRANCEKing & Shaxson Capital Limited3rd Floor, 35 Rue de la Bienfaisance 75008Paris FranceTel (33-1) 45633100

Fax (33-1) 45636017Website: www.kingandshaxson.com

UNITED KINGDOMKing & Shaxson Capital Limited6th Floor, Candlewick House,120 Cannon Street,London, EC4N 6ASTel (44-20) 7426 5950Fax (44-20) 7626 1757Website: www.kingandshaxson.com

UNITED STATESPhillip Futures Inc141 W Jackson Blvd Ste 3050The Chicago Board of Trade BuildingChicago, IL 60604 USATel +1.312.356.9000Fax +1.312.356.9005

AUSTRALIAPhillipCapital AustraliaLevel 37, 530 Collins Street,Melbourne, Victoria 3000, AustraliaTel (613) 96298380Fax (613) 96148309Website: www.phillipcapital.com.au

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