Chart of the Day: Loans growth picks up pace in September

Slower loans growth however looms.

OSK-DMG does not foresee the growth momentum to continue into 4Q13, citing seasonality and property market cooling measures.

Here’s more from OSK-DMG:

September’s domestic banking unit (DBU) and Asian currency unit (ACU) loans growth gathers momentum. Loan growth picked up pace in September, with DBU and ACU loans expanding by 1.3% m-o-m (+16.4% y-o-y) vs August’s +0.7% m-o-m (+15% y-o-y).

Business and consumer loans improved slightly, with lending in the former rising by a quicker pace of +1.4% m-o-m (+17.9% y-o-y) vs August’s +0.8% m-o-m (+15.9% y-o-y). Consumer loans growth, meanwhile, ticked up 1.2% mo-m (+12.3% y-o-y) vs August’s +0.7% m-o-m (+12.3% m-o-m).

DBU business loan growth rebounds. DBU loan growth rose +1.1% m-o-m (+15.7% y-o-y) in September vs August’s +0.3% m-o-m (+15.4% y-o-y). This was mainly due to a rebound in DBU business loans (1.4% m-o-m; +18.6% y-o-y) vs August’s flat m-o-m (+17.4% y-o-y) – driven by a 3.4% m-o-m growth in loans to the general commerce segment.

Meanwhile, DBU consumer loans growth eased to +0.6% m-o-m (+11.7% y-o-y) vs August’s +0.8% m-o-m (+12.5% y-o-y), as housing loans growth continued to moderate (September: +0.7% m-o-m/+12.9% y-o-y; August: +0.9% m-o-m/+13.5% y-o-y). This, we believe, was largely attributed to the implementation of various cooling measures in the property market. We note that September’s y-o-y housing loans growth was the slowest in four years.

Loan growth continues to outpace deposit growth. September deposits declined by 0.3% m-o-m, but rose 6.5% y-o-y (August: flat m-o-m; +6.4% y-o-y). With loan growth still outpacing deposit growth, the loan-to-deposit ratio (LDR) surged further to hit a new high of 101.8%, as at end-September, compared with 100.5% at end-August. We shall await the upcoming 3Q13 results to see if banks are starting to face funding cost pressures due to the rising LDR.