Table of Contents
This report profiles Singapore's banking and finance industry, covering market data and trends up to August 2015 as well as outlook for 2015 and beyond. The report also highlights leading players in the sector including United Overseas Bank Ltd (UOB), DBS Group Holdings Ltd (DBS) and Overseas China Banking Corporation Ltd (OCBC).
Singapore's economy recorded moderate growth in 2014, and is expected to grow slowly in 2015 and 2016. Both domestic banking units and Asian currency units hence showed slightly lower loan growth in 2015. Loans for purchase of residential property dominated the portfolio of most of the domestic banking units. However, with a sluggish property market, loan growth remained slow.
Fixed deposits and savings deposits continued to dominate the total deposits of banks. Nearly three quarters of the deposits were in these two segments. The banking system remained stable with ample liquidity to meet demand for deposit withdrawals and other liquidity obligations. The MAS has kept the lending rates consistent to drive domestic consumption in the country as well as to help the small and medium enterprises.
The profitability of banks in the sector has taken a hit and is expected to stay the same in the coming year due to rising credit costs and sluggish loan growth weigh on margins. However, the outlook for Singaporean banking and financial services sector is stable owing to the strong financials of companies and stable economic environment. The country's rating as a top-ranked international financial center bode well for the growth of this sector. Additionally, capital buffers are expected to stay strong and the three major banks in Singapore have healthy financial fundamentals.
o The asset base of domestic banking units (DBUs) in Singapore grew at a CAGR of 10.3% during 2004-14. The total assets of the system grew by 8.9% y/y in August 2015.
o The asset base of Asian Currency Units (ACUs) grew at a CAGR of 7.4% during 2004-14. The total assets of ACUs grew by 2.4% y/y in August 2015.
o Total loans and advances of DBUs grew by 5.7% y/y in August 2015, which was lower than its long term growth trend of 13.0%. Dip in economic growth and slow domestic property market led to a slight decrease in loan growth.
o Finance and insurance sector emerged as the fastest growing sector of the economy in June 2015, recording a growth of 9.5% y/y. However, this growth was much lower than that recorded during the last two quarters of FY14.
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