3M-SOR and 3M-SIBOR up in June
Interest rates continued to increase in June. The 3M-SOR was up 33bps MoM to 1.80%, while the 3M-SIBOR was up 28bps MoM to 1.49%. It is the highest interest rates have been since Feb 2020. The 3M-SOR is 36bps higher than its 2Q22 average of 1.44% and has improved by 156bps YoY. The 3M-SIBOR is 27bps higher than its 2Q22 average of 1.22% and has improved by 106bps YoY (Figure 1).
Loans growth on par with nominal GDP growth
Loans growth over the past two years was a CAGR of 7.5% is on par with the two-year CAGR of nominal GDP at 7.5%. This is unlike the 2008 global financial crisis (GFC) provisioning cycle, when loans growth was outpacing nominal GDP growth. The two-year CAGR of loans at 25.3% compared to nominal GDP at 20.9%. We believe it is indicative of excessive lending by the banks. In the 2016 (oil and gas) provisioning cycle, loans growth also exceeded nominal GDP growth, with the two-year CAGR of loans at 1.99% compared to nominal GDP at -1.15%.