Singapore Banking Monthly – Singapore interest rates stagnate June 9, 2023 347

  • May’s 3M-SORA was up 1bp MoM to 3.61%, 3M-HIBOR was up 82bps MoM to 4.41%. HIBOR is down 88bps this year.
  • Singapore domestic loans dipped 5.86% YoY in April, below our estimates. Loans previously contracted at this magnitude was in 2016. The CASA balance dipped slightly to 18.8% (Mar23: 18.9%).
  • Maintain OVERWEIGHT. We remain positive on banks. Bank dividend yields are attractive at 5.7% with upside surprise in dividends due to excess capital ratios and push towards higher ROEs. SGX is another major beneficiary of higher interest rates (SGX SP, BUY, TP S$11.71).



3M-SORA growth flattens; 3M-HIBOR recovers in May

Singapore interest rates flattened in May. The 3M-SORA was up 1bp MoM to 3.61%; the MoM increase was the lowest recorded since Nov 2021’s MoM increase of 1bps. April’s 3M-SORA improved by 317bps YoY and was 41bps higher than the 1Q23 3M-SORA average of 3.20%.

Hong Kong interest rates surged and reversed the decline from the previous few months. The 3M-HIBOR was up 82bps MoM to 4.41%; the MoM increase was a reversal of the MoM decline of 21bps in April 2023. April’s 3M-HIBOR improved by 357bps YoY and was 59bps higher than 1Q23 3M-HIBOR average of 3.82% (Figure 1).



Singapore loans growth decline steepened further in April

Overall loans to Singapore residents – which captured lending in all currencies to residents in Singapore – fell by 5.86% YoY in April to S$792bn. This was below our estimate of low to mid-single digit growth for 2023 as the rise in interest rates started to be more fully felt by consumers.

Business loans fell by 8.44% YoY in April, as business loans dipped by 0.81% for the month. Loans to the building and construction segment, the single largest business segment, fell 2.77% YoY to S$169bn, while loans to the manufacturing segment fell 13.56% YoY in April to S$23.7bn and fell 3.93% MoM, slightly reversing the MoM increase of 10.21% in March.

Consumer loans were down 1.53% YoY in April to S$309bn, as dips in other segments were offset slightly by strong loan demand in the housing segment. Housing loans, which make up ~70% of consumer lending, grew 1.78% YoY in April to S$222bn for the month.

Total deposits and balances – which captured deposits in all currencies to non-bank customers – grew by 3.62% YoY in April to S$1,761bn. The Current Account and Savings Account (CASA) proportion dipped slightly to 18.8% (Mar23: 18.9%) of total deposits, or S$332bn, as there was a continued move towards Fixed Deposits due to the high interest rate environment.


Hong Kong loans growth continues to decline

Hong Kong’s domestic loans growth declined 3.28% YoY and declined 0.69% MoM in April. The YoY decline in loans growth for April was lower than the decline of 3.30% in March 2023, while the MoM decline of 0.69% was a reversal of the increase of 0.23% in March 2023.

Notify of
Inline Feedbacks
View all comments

About the author

Profile photo of Glenn Thum

Glenn Thum
Research Analyst

Glenn covers the Banking and Finance sector. He has had 3 years of experience as a Credit Analyst in a Bank, where he prepared credit proposals by conducting consistent critical analysis on the business, market, country and financial information. Glenn graduated with a Bachelor of Business Management from the University of Queensland with a double major in International Business and Human Resources.

Get access to all the latest market news, reports, technical analysis
by signing up for a free account today!