Fishing at the bottom

[seletar]

According to CIMB, the year-on-year decline in domestic deposits revealed in Singapore’s May banking statistics has not been seen since the SARS epidemic in 1Q03.

“A worrying trend that appeared in May is that DBU deposits shrank (-0.8% mom, -0.2% YTD), led by an outflow of fixed deposits. We have to go back to as far as Mar 03 (SARS) to find a yoy decline in system deposits. As loan growth continues to outpace deposit growth, DBU LDR is up (May:111%, Apr:109%), so is S$ LDR (May:84%, Apr: 83%),”

A shrinking deposit pool is worrying as banks will have to compete aggressively for a shrinking pie, hiking up funding costs for all. The concern is accentuated with the new LCR requirements, especially for the foreign banks who need to offer attractive rates to compete.


http://sbr.com.sg/financial-services....SXpPkkPA.dpuf
Published 04 July 2014

Chart of the Day: Look at how fiercely loan growth is outpacing deposit growth in Singapore banks





Singapore banks may be dealing with one of the biggest problems since 2003 as loan growth stomps on deposit growth in May.

According to CIMB, MAS banking data for May showed healthy YTD DBU loan growth of 4.1% (Apr: 2.9%), broadly in line with the banks’ guidance of high single-digit to low-teens loan growth for the full year.

Here's more from CIMB:

The 1.1% mom loan growth was led by business loans (+1.6% mom, +6.3% YTD), building and construction loans (+1.1% mom, +3.1% YTD) and mortgages (+0.7% mom, +2.5% YTD). Meanwhile, consumer loans shrank 0.2% mom and 0.2% YTD as demand for car loans and share financing continue to fall.

Deposits shrank, LDRs crept up. A worrying trend that appeared in May is that DBU deposits shrank (-0.8% mom, -0.2% YTD), led by an outflow of fixed deposits. We have to go back to as far as Mar 03 (SARS) to find a yoy decline in system deposits.

As loan growth continues to outpace deposit growth, DBU LDR is up (May:111%, Apr:109%), so is S$ LDR (May:84%, Apr: 83%).

A shrinking deposit pool is worrying as banks will have to compete aggressivelyfor a shrinking pie, hiking up funding costs for all. The concern is accentuated with the new LCR requirements, especially for the foreign banks who need to offer attractive rates to compete.

If higher rates merely poached time deposits from the local banks, it would not be a worry. However, recent CASA packages suggest that the local banks are equally wary of CASA slippage.

[seletar]

http://sbr.com.sg/economy/news/singa....qOe5ZXIu.dpuf
Published 02 July 2014

Singapore faces a credit meltdown



Debt levels higher than the US pre financial crisis.

Singapore and other Asian countries are facing an economic crisis of the same proportions as the US financial meltdown that put the world’s economies to its knees. Singapore and many Southeast Asian countries have already surpassed US debt-to-GDP ratio. There is no sign of that growth slowing down. This is eerily similar to the financial conditions that pre-dated the American collapse, and economists are deeply concerned.

According to Duncan Woolridge of UBS, “China, North Asia, Hong Kong, Singapore, Thailand, and Malaysia stand out based on levels of leverage alone as at risk. This trend appears unsustainable and a reversal on the horizon should be expected, though we do not claim to know the exact day that will unfold.”

Here’s more:

Liquidity risk matters as much as leverage. UBS expects the Fed to hike 25bps in mid-2015 and raise Fed Funds to 1.25% by end 2015.

Countries with current account deficits, high loan to deposit ratios, or completely open capital accounts should find it difficult to grow deposits fast enough to sustain the current pace of credit growth, in our view.

Aggressive reform is urgently needed, in our view, unless exports can bail out the region. Unit labor costs (ULCs) have been rising because of weak exports, which is mainly a function of weak DM economic growth.

Asian policies generally aim to prevent unemployment from rising and to sustain wage growth when exports slow. They have largely succeeded at this, but the result is rising ULCs and that means real effective exchange rates appreciate.

That's ok as long as DM demand recovers soon, exports return to strong growth, and ULCs stabilize. However, we still think that export growth on a volume basis will remain perhaps 40-50% below pre-crisis even assuming better exports to DM going forward.

This means no relief for ULCs and real exchange rates should appreciate, but of course they cannot appreciate ad nauseam without a loss of competitiveness and trade deficits.

[teddybear]

Singapore economy going to crash?

http://sbr.com.sg/economy/news/singa....qOe5ZXIu.dpuf
Published 02 July 2014

Singapore faces a credit meltdown



Debt levels higher than the US pre financial crisis.

Singapore and other Asian countries are facing an economic crisis of the same proportions as the US financial meltdown that put the world’s economies to its knees. Singapore and many Southeast Asian countries have already surpassed US debt-to-GDP ratio. There is no sign of that growth slowing down. This is eerily similar to the financial conditions that pre-dated the American collapse, and economists are deeply concerned.

According to Duncan Woolridge of UBS, “China, North Asia, Hong Kong, Singapore, Thailand, and Malaysia stand out based on levels of leverage alone as at risk. This trend appears unsustainable and a reversal on the horizon should be expected, though we do not claim to know the exact day that will unfold.”

Here’s more:

Liquidity risk matters as much as leverage. UBS expects the Fed to hike 25bps in mid-2015 and raise Fed Funds to 1.25% by end 2015.

Countries with current account deficits, high loan to deposit ratios, or completely open capital accounts should find it difficult to grow deposits fast enough to sustain the current pace of credit growth, in our view.

Aggressive reform is urgently needed, in our view, unless exports can bail out the region. Unit labor costs (ULCs) have been rising because of weak exports, which is mainly a function of weak DM economic growth.

Asian policies generally aim to prevent unemployment from rising and to sustain wage growth when exports slow. They have largely succeeded at this, but the result is rising ULCs and that means real effective exchange rates appreciate.

That's ok as long as DM demand recovers soon, exports return to strong growth, and ULCs stabilize. However, we still think that export growth on a volume basis will remain perhaps 40-50% below pre-crisis even assuming better exports to DM going forward.

This means no relief for ULCs and real exchange rates should appreciate, but of course they cannot appreciate ad nauseam without a loss of competitiveness and trade deficits.

[invigorated]

Just my opinion.. u might not agree with the relevance or my own theory.

Crash is when car coe drop to $20k...

Generally people now is still very cash rich and they can afford to hold.

Put it simply, people still have big disposable income on hand.

Coe dips are guided by the supply and demand of coe certs. When I bought my car years back, coe was very low as govt was loose on car population. Housing market pretty much as healthy.