Chart of the Day: This is definitive proof that gloomy business loans are muddying loan growth

Loans will stay tepid until end of 2015.

Banks are scurrying to find takers for their business loans, but are finding none. A cautious business mood is devouring would-be borrowers, spooked by external and domestic headwinds.

According to a report by OCBC, bank loans for Jan-Sep of 2015 was a lukewarm +1.8% compared to +12.9% last year.

OCBC says loan growth will stay in the low single digit region for the rest of the year.

Meanwhile, business loans grew at a lackluster 0.4% yoy for the nine months of this year.

Analysts from Barclays concur that Singapore’s big three banks are conservative on loan demand, citing macro headwinds in Asia.

“DBS guided for 1.5% loan growth per quarter (previously 2% per quarter), while OCBC and UOB maintained their guidance for mid single-digit y/y loan growth on a constant currency basis. Margin is expected to remain stable over the next few quarters, with potential upside when US and Singapore interest rates rise, although partially offset by lower interest rates in China, in our view,” Barclays said.