Singapore banks' loan to deposit ratio rose to 99.8%

It's another record high since 1999.

According to Barclays, the MAS’s May monetary statistics showed that system loan to deposit ratio rose to 100%, another record high since 1999, and we see deposit competition and margin pressure to persist in the near-term.

Here's more from Barclays:

Despite tighter system liquidity, we believe that Singapore banks are resilient to potential capital outflows compared to EM Asia banking peers. We maintain our preference for UOB (UOB SP, OW, S$24) which is defensive to any liquidity tightness with the lowest S$/US$ LDR at 90% (vs 92-94% for peers).

The MAS May monetary statistics showed steady underlying loan growth momentum in May, with system loans rising by 1.2% m/m and 7.7% ytd on a constant currency basis. Taking into account a 2% appreciation of the US$ against the S$ in May, system loans rose by 2.2% m/m and 3.2% ytd.

Loan growth was driven by the general commerce and business sector (i.e. trade finance) up 6.4%, while housing loan growth slowed to 0.4% m/m in May. On 28 June 2013, The MAS introduced a Total Debt Servicing Ratio (TDSR) 60% limit on property loans to individuals and fine tuned loan to value (LTV) limits on housing loans to prevent circumvention of tighter LTV limit on second and subsequent housing loans.

We believe the latest measures will further strength credit underwriting standards of the banks.

As loan growth (1.2% m/m) again outpaced deposit growth of (0.5% m/m), system (ACU+DBU) loan to deposit ratio rose to 99.8%, another record high since 1999. ACU LDR reached 109.8% while DBU LDR reached 97.8%. Despite the high LDR, we believe Singapore is still one of the most resilient markets in EM Asia to liquidity outflows.

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