UOB loan growth almost grinds to a halt

Weakening regional currencies are to blame.

Though the banking group’s industry loans grew by 1.1% in July and August, it did little to stop the stagnating loan growth of the bank, which has gradually slowed down to a standstill.

According to analysts from UOB Kay Hian, the weakening of regional currencies against the Singdollar is to blame.

“The ringgit, baht and rupiah depreciated by 9.4%, 1.9% and 3.5% respectively against the Singapore dollar in 3Q15,” UOB Kay Hian said.

“Loans denominated in ringgit, baht and rupiah accounted for 11.5%, 5.2% and 2.3% of total loans respectively. Thus, overall loan growth is expected to be flat for 3Q15,” they added.

However, UOB remains optimistic that non-interest income would pick up the slack from its weak loan growth.

“Growth would be driven by non-interest income with healthy increase in fees and net trading income. Contributions from wealth management have increased due to growth from private banking,” UOB Kay Hian said.