Singapore banks' diversified portfolio beats ASEAN banks

June loan growth is on track to meet CIMB's full-year estimate of 13-14%.

Here's more from CIMB:

Healthy credit demand in 2HCY12 should support loans volume for net interest income growth. Singapore banks have the most diversified portfolio among ASEAN banks. Strong capital positions and stringent credit control will also be valuable in times of uncertainty.

What Happened
Total sector loans (DBU+ACU) grew 5.2% YTD in June (May: 4.1%). DBU loans grew 7.6% YTD to S$452.6bn.New DBU loans grew S$7.7bn mom, driven by demand for business loans.New business loans added S$4.4bn(+2.4% mom) accounting for 58.2% of June’s loans.

Property loans took 34.5% share of new loans, growingS$2.6bn (+1.2% mom). While DBU LDR edged up 1.6% pts mom to 91.2%, S$ liquidity remains comfortable with S$ LDR at 73.8%.ACU LDR remained stable at 104.4%.Credit card charge off rates fell 18bps mom to 4.35%.

What We Think
June loan growth appears on track to meeting our full-year estimate of 13-14%. This is further affirmed by the stable 2HCY12 business climate guidance from EDB.

The card charge-off rate (leading indicator of asset quality) declined mom due to a larger-than-proportionate increase in credit card rollover (+4.8% mom)on top of bad debt write-offs (+1.6%). This is possibly a consequence ofincreased card usage during the Great Singapore Sale in June. Asset quality remains a concern.