Singapore loan growth might slow to ASEAN-4 low

CIMB predicts a marked deceleration for bank loan growth as last year's torrent of trade-finance loans dries up.

Singapore banks are attempting to make headways in Asian trade finance and capital markets, but as European banks get back on their feet, growth in these areas could slow due to heightened competition.

Here's more from CIMB:

Across ASEAN-4, loan growth had already slowed at end-2011, early 2012; we expect that to continue. We expect loan growth to decelerate the most in Singapore, largely because the big surge in trade-finance loans in 2011 will not recur. We expect Singapore loan growth to taper off to 15%. Indonesia should post the strongest loan growth (20-22%) this year as banking penetration is still low and liquidity constraints have improved. Again, the pace will not be the same as 2011, as most big banks have met their 78% LDR requirements and will not be as hungry for loan growth. Malaysia and Thailand are in the 10% growth range.

Malaysia and Singapore have been trying to deflate their property prices. Bank Negara has tightened residential mortgages while Singapore has had two years of progressively tighter property controls. The difference is that Malaysia has weaker business-loan momentum, congruent with its economic slowdown while Singapore has gone on to prosper as one of Asia's funding centres even as primary transaction volumes stay at bubbly levels. We expect Singapore banks to gain further market shares in Asian trade finance and capital markets as new corporate relationships are forged. That said, with Europe stabilising, the pace could slow in 2012 as European banks attempt to reclaim their positions.