Local banks' loan growth came to a standstill in Q3

Blame it on the slowing Chinese economy.

Singapore’s three biggest banks are becoming increasingly dependent on clients in the Mainland and Hong Kong. Third quarter results were adversely impacted by a slowdown in loan growth, as China trade finance remained impacted by the slowing Chinese economy and falling in commodity prices.

According to CIMB, loan growth was a measly 1.4-1.7% quarter-on-quarter for OCBC, DBS, and UOB in the third quarter. Looking ahead at 2015, loan growth appears to be muted, but will be lifted by a return of China trade finance if commodity prices normalise.

“The 3Q14 earnings season featured a slowdown in loan growth, as the key driver, China trade finance, was impacted by a slowing Chinese economy and the fall in commodity prices. In Singapore, property transactions remain weak, while mortgage applications are low. The latter is expected to worsen in 2H15 as interest rates rise, which is likely to lower approval rates for mortgages,” noted CIMB.