Singapore banks face slower loan growth in H1 2020

The big three banks’ are expecting lower loan growth for FY20F on the back of the outbreak.

Singapore bank’s loan growth will slow further in H1 2020, extending the deceleration seen in H2 2019, reports DBS Group Research.

This is despite the fact that loan growth accelerated to 6.3% YoY in January 2020, noted DBS analyst Rui Wen Lim.

Lim sees the overall loan growth of Singapore banks to fall between 3-4% for FY20F, remaining
cognisant of downside risks should COVID-19 continue to affect more countries

“DBS has guided for a mid-single-digit loan growth, whilst OCBC and UOB have guided for low and low-to-mid single digit loan growth for FY20F, respectively,” he noted, on regards to DBS’ slower loan growth foresight.

However, share prices are expected to trade sideways and dividend yields and strong capital base should provide some support to counter this.