P. 1
Singapore Commercial Banking Report Q2 2012

Singapore Commercial Banking Report Q2 2012

|Views: 273|Likes:
Published by benserene

More info:

Published by: benserene on Jul 08, 2012
Copyright:Attribution Non-commercial

Availability:

Read on Scribd mobile: iPhone, iPad and Android.
download as PDF, TXT or read online from Scribd
See more
See less

01/16/2013

pdf

text

original

Sections

  • Executive Summary
  • SWOT Analysis
  • Singapore Commercial Banking SWOT
  • Singapore Political SWOT
  • Singapore Economic SWOT
  • Singapore Business Environment SWOT
  • Business Environment Outlook
  • Commercial Banking Business Environment Rating
  • Table: Commercial Banking Business Environment Ratings
  • Commercial banking business environment rating 82
  • Commercial Banking Business Environment Rating Methodology
  • Table: Asia Commercial Banking Business Environment Ratings
  • Global Commercial Banking Outlook
  • Asia Banking Sector Outlook
  • Three Threats To Asia's Banks In 2012
  • Asia Banking Sector Forecast Overview
  • Table: Banks' Bond Portfolios
  • Table: Comparison of Loan/Deposit & Loan/Asset & Loan/GDP ratios
  • Table: Anticipated Developments in 2012
  • Table: Comparison of Total Assets & Client Loans & Client Deposits (US$bn)
  • Table: Comparison of US$ Per Capita Deposits (2011)
  • Table: Interbank Rates and Bond Yields
  • Singapore Banking Sector Outlook
  • Loan Growth Seen Hampering Profits In 2012
  • Economic Outlook
  • Table: Singapore – Economic Activity
  • Competitive Landscape
  • Market Structure
  • Protagonists
  • Table: Protagonists In Singapore's Commercial Banking Sector
  • Definition Of The Commercial Banking Universe
  • List Of Banks
  • Table: Licensed Commercial Banks In Singapore
  • Company Profiles
  • Bangkok Bank
  • Table: Key Statistics For Bangkok Bank, 2006-2008 (THBmn)
  • Hong Leong Bank
  • Table: Key Statistics For Hong Leong Bank, 2007-2009 (MYRmn)
  • Maybank
  • Table: Key Statistics For Maybank, 2007-2009 (MYRmn)
  • Islamic Bank of Asia
  • Bank of China
  • DBS Bank
  • Singapore Stock Market Indicators
  • Singapore Balance Sheet (LCYmn)
  • Singapore Balance Sheet (US$mn)
  • Singapore Key Ratios (%)
  • Oversea-Chinese Banking Corporation
  • United Overseas Bank
  • Table: Singapore Stock Market Indicators
  • Table: Singapore Balance Sheet (LCYmn)
  • Table: Singapore Balance Sheet (US$mn)
  • Table: Singapore Key Ratios (%)
  • Citibank Singapore
  • BMI Banking Sector Methodology
  • Commercial Bank Business Environment Rating
  • Table: Commercial Banking Business Environment Indicators And Rationale
  • Table: Weighting Of Indicators

www.businessmonitor.

com

Q2 2012

Singapore

commercial Banking report
INCLUDES BMI'S FORECASTS

iSSn 1747-8723
published by Business monitor international ltd.

SINGAPORE COMMERCIAL BANKING REPORT Q2 2012
INCLUDES 5-YEAR INDUSTRY FORECASTS TO 2016

Part of BMI’s Industry Report & Forecasts Series
Published by: Business Monitor International Copy deadline: March 2012

Business Monitor International 85 Queen Victoria Street London, EC4V 4AB UK Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 Email: subs@businessmonitor.com Web: http://www.businessmonitor.com

© 2012 Business Monitor International. All rights reserved. All information contained in this publication is copyrighted in the name of Business Monitor International, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic, electronic or mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher.

DISCLAIMER All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained.

Singapore Commercial Banking Report Q2 2012

© Business Monitor International Ltd

Page 2

........................................................... 37 Market Structure .................................................................................................................................................................................................................................................................................... 5 Table: Levels At January 2012 .............................................................................................................................................................. 37 Protagonists............................... 38 Table: Licensed Commercial Banks In Singapore .................... 7 Singapore Economic SWOT ................................................................ 29 Economic Outlook ................................................................................................................................................ 17 Asia Banking Sector Forecast Overview ............. 6 Table: Projected Levels (US$bn) ........................................................................ 12 Global Commercial Banking Outlook............................................................................ 24 Table: Anticipated Developments in 2012 ........................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 37 List Of Banks ................................................................................ 22 Table: Banks' Bond Portfolios .................................................................................................................................................................................................................................................... 28 Singapore Banking Sector Outlook............ 10 Table: Commercial Banking Business Environment Ratings .......................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................... 5 Table: Annual Growth Rate Projections 2012-2016 (%) ........................................................................................................................................................................................................................................................ 8 Singapore Business Environment SWOT ..... 29 Loan Growth Seen Hampering Profits In 2012 .................................................................................................................................... 10 Commercial Banking Business Environment Rating ................. 34 Table: Singapore – Economic Activity .......................................... 37 Table: Protagonists In Singapore's Commercial Banking Sector ........................................................................................................................................................................................... 22 Table: Asia Commercial Banking Business Environment Ratings ................................................................................................................................................................................................... 38 Company Profiles ........ 5 Table: Levels (SGDbn) ................................................................................................................................................................................................................ 6 Table: Projected Levels (SGDbn) ............................................................................................................................................................................................................................... 37 Definition Of The Commercial Banking Universe.......................................................................................................................... 5 Table: Levels (US$bn) ............................................................................................................................................................................................................................................... 11 Table: Asia Commercial Banking Business Environment Ratings ................................................................................................................................................... 7 Singapore Political SWOT .................. 7 Singapore Commercial Banking SWOT .......................................................Singapore Commercial Banking Report Q2 2012 CONTENTS Executive Summary ........................... 42 © Business Monitor International Ltd Page 3 ............................................................................................................................................................................................................................................................................................................................................................... 26 Table: Comparison of US$ Per Capita Deposits (2011) .............................. 27 Table: Interbank Rates and Bond Yields .................................................................................................................................................... 13 Asia Banking Sector Outlook .............................................................................................................................................................................. 10 Commercial Banking Business Environment Rating Methodology .................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. 9 Business Environment Outlook ................................................................................................................................................................................................................................................................. 23 Table: Comparison of Loan/Deposit & Loan/Asset & Loan/GDP ratios .............. 5 Table: Ranking Out Of 59 Countries Reviewed In 2011 ............................................................... 6 SWOT Analysis ....................................................... 36 Competitive Landscape ........................................... 25 Table: Comparison of Total Assets & Client Loans & Client Deposits (US$bn) ............................ 17 Three Threats To Asia's Banks In 2012...........................................................................................................................

.................................................... 62 Commercial Bank Business Environment Rating ...................................... 2004-2009 .................... 48 Bank of China .............. 46 Table: Key Statistics For Maybank.............................. 2004-2009............................................................................................................................................................................................................................................................................................................................................................................................................................................................................................. 52 Singapore Balance Sheet (LCYmn) .................................................................................................................................................................................................................... 54 Table: Stock Market Indicators............................................. 64 Table: Weighting Of Indicators ........... 53 Singapore Key Ratios (%) .....................................................................................................................................Singapore Commercial Banking Report Q2 2012 Bangkok Bank ............................................................................................................................................. 51 Singapore Stock Market Indicators ................................ 49 DBS Bank............................................................................................................................. 43 Hong Leong Bank .......................................................... 56 United Overseas Bank . 58 Table: Singapore Balance Sheet (LCYmn) ............................... 2007-2009 (MYRmn)....................................................................................... 53 Oversea-Chinese Banking Corporation ............................................................................................. 47 Islamic Bank of Asia ........ 60 BMI Banking Sector Methodology ........................................ unless stated)........................................................................................................ 63 Table: Commercial Banking Business Environment Indicators And Rationale.......................................................................................................................................................................................................................................................................................................................................................................................................................................... 59 Table: Singapore Key Ratios (%) ................................................................................................................................................................................................................................................................................................................................................................................................................... 2006-2008 (THBmn) .............................. unless stated).............................................................................. 58 Table: Singapore Balance Sheet (US$mn) ................................................................................. 42 Table: Key Statistics For Bangkok Bank................................................................... 45 Maybank ............................................................................................................................................................................................... 44 Table: Key Statistics For Hong Leong Bank................................................... 56 Table: Key Ratios (%)............................................................................................................................................................................................................................... 53 Singapore Balance Sheet (US$mn) ............................................................................................................................................. 57 Table: Singapore Stock Market Indicators................................................................................................................................................................................................................................... 55 Table: Balance Sheet (US$mn............. 2007-2009 (MYRmn) .......................................................................................................... 55 Table: Balance Sheet (SGDmn....... 59 Citibank Singapore ............................................................................................................................................................. 2004-2009...................................................................................... 65 © Business Monitor International Ltd Page 4 ................................................................................................................................................................................................................................................................................................................................................................................................. 2004-2009 ..................................................................................................

Central banks.7 9% Capital 66.8 867.6 0. US$ 74.0000 -100% Other 290. Regulators Table: Levels At January 2012 Loan/deposit ratio 86.0 445.3 11% Other 295.4 689. Regulators © Business Monitor International Ltd Page 5 .65% Falling Loan/GDP ratio 123.7 9% Client loans 328. US$ 37.0 -100% Other 372.3 5% Client deposits 342.1 0.72% Rising GDP Per Capita.075 Deposits per capita. Central banks.6 20% Liabilities and capital 798.1 22% Liabilities and capital 624.8 867.5 31% Bond portfolio 76.0 387.62% Falling Loan/asset ratio 48.4 689.Singapore Commercial Banking Report Q2 2012 Executive Summary Table: Levels (SGDbn) Date January 2011 January 2012 Change.6 248.759 Source: BMI.0 312.4 3% Client deposits 437.5 487.3 13% Other 230.8 354.3 68. Central banks. Regulators Table: Annual Growth Rate Projections 2012-2016 (%) Assets Annual Growth Rate CAGR Ranking 2 3 56 Loans 0 2 57 Deposits 9 8 31 Source: BMI.0 8% Source: BMI. % Total assets 798.6 10% Client loans 257.6 10% Capital 51.8 54.8 422. Regulators Table: Levels (US$bn) Date January 2011 January 2012 Change.0 335. % Total assets 624. Central banks.0 6% Source: BMI.1 28% Bond portfolio 98.

Singapore Commercial Banking Report Q2 2012

Table: Ranking Out Of 59 Countries Reviewed In 2011

Loan/deposit ratio 38 Local currency asset growth 38

Loan/asset ratio 46 Local currency loan growth 30

Loan/GDP ratio 10 Local currency deposit growth 34

Source: BMI; Central banks; Regulators

Table: Projected Levels (SGDbn)

2008 Total assets Client loans Client deposits 668.30 272.18 347.51

2009 705.76 281.27 391.40

2010 781.61 322.74 433.76

2011e 867.58 419.57 459.78

2012f 915.30 444.74 494.27

2013f 951.91 453.64 536.28

2014f 980.47 455.90 581.86

2015f 995.18 456.82 631.32

2016f 1,010.11 457.73 684.98

e/f = estimate/forecast. Source: BMI; Central banks; Regulators

Table: Projected Levels (US$bn)

2008 Total assets Client loans Client deposits 466.49 189.99 242.57

2009 502.39 200.22 278.61

2010 609.01 251.48 337.98

2011e 669.23 323.64 354.66

2012f 709.54 344.76 383.15

2013f 806.71 384.44 454.47

2014f 860.06 399.92 510.41

2015f 921.46 422.98 584.56

2016f 952.93 431.82 646.21

e/f = estimate/forecast. Source: BMI; Central banks; Regulators

© Business Monitor International Ltd

Page 6

Singapore Commercial Banking Report Q2 2012

SWOT Analysis
Singapore Commercial Banking SWOT

Strengths

The general macroeconomic environment and prospects remain favourable. Singapore's monetary policymakers have built a track record of low inflation and stable growth, by guiding the exchange rate to offset inflationary pressures. Strikes and labour protests will remain rare, or absent, in the foreseeable future due to the government's insistence on a business-friendly environment. Policymakers will continue to use heavy-handed tactics so unions remain pliant.

Weaknesses

The effect of slowing global demand on exports will weaken the sector. Singapore faces a number of long-term economic problems. Productivity is low, competition from low-cost neighbouring countries is on the increase and structural unemployment is placing a growing burden on the economy.

Opportunities

Due to the lack of progress at the WTO, the Singaporean government has committed the country to sign 19 bilateral free trade agreements (FTAs). Talks are ongoing for an FTA with Gulf Cooperation Council countries. In the face of regional competition for both exports and investment, the government is encouraging diversification. Areas promoted are biomedical sciences, tourism, medical and financial services, and there are plans to develop two casino resorts.

Threats

While liberalisation has been necessary in order to strengthen the big three domestic banks, it has brought increased competition from foreign lenders. Exporters will need to adapt to competition from regional low-wage economies.,

Singapore Political SWOT

Strengths

Singapore enjoys a very stable political system, following the country's second change of leadership in 40 years, which saw Lee Hsien Loong – son of the nation's founder Lee Kuan Yew – take over as prime minister in 2004. Official promises have been made to eradicate Singapore's reputation as an overprotective nanny-state, with efforts to enhance freedom of expression.

Weaknesses

Singapore is not a properly functioning democracy. The ruling People's Action Party has won all but six seats in parliament and the opposition is restricted from campaigning through tight control over political debate and frequent use of libel laws. The government has yet to improve the situation for the less well off in Singapore and there is a rising wage gap between the top earners and the lowest paid.

Opportunities

Lee is proving himself a capable leader, moving away from the shadow of his father by repeatedly calling for more openness. Singapore is leading its regional neighbours in signing free trade agreements. Increased regional integration is likely to give the country more influence in Asia. .

Threats

There are fears that Singapore's foreign policy alignment with the US will cause the city-state to become a target for terror attacks launched by Muslim extremists. The last election showed that segments of the electorate are becoming disenchanted with the People's Action Party and its repression of opposition voices.

© Business Monitor International Ltd

Page 7

Singapore Commercial Banking Report Q2 2012

Singapore Economic SWOT

Strengths

Singapore's monetary policymakers have gained credibility by guiding the exchange rate to offset inflationary pressures while ensuring stable growth. Singapore's current account surplus remains about 20% of GDP and its external finances are in good shape. This is reflected by the world's credit rating agencies, which continue to award Singapore top marks for external strengt

Weaknesses

The trade-dependent economy remains exposed to global trends in demand for electronic goods, which account for around half of Singapore's non-oil exports. Singapore faces a number of long-term economic problems. Competition from lowcost neighbouring countries is on the increase and its population is ageing rapidly.

Opportunities

In the face of regional competition for both exports and investment, the government is encouraging economic diversification to boost competitiveness. New areas being promoted include biomedical sciences, medical services, financial services and tourism. There may be increased prospects for Singapore to expand its investments in the Iskandar Malaysia project (a government-directed economic corridor initiative) in Johor, following a cordial visit by Malaysian Prime Minister Najib Razak in May 2009.

Threats

There is significant state involvement in the private sector, with the government refusing to disclose the assets of the Government of Singapore Investment Corp (GIC). The GIC is one of the world's largest institutional investors, managing foreign exchange reserves and government funds worth more than US$100bn. Without increased openness, investor confidence could be damaged and domestic growth hindered. Singapore's exporters will need constantly to adapt to competition from low-wage economies such as China and India.

© Business Monitor International Ltd

Page 8

India and Australia. Weaknesses Political and economic stability has come at a price. Singapore has already signed agreements with several countries. the government has committed the country to sign 18 bilateral free trade agreements with 24 trading partners. Japan. Singapore's adjacency to the Malacca Straits means its trade is vulnerable to international piracy. Owing to the lack of progress at the WTO. Policymakers will continue to use heavy-handed tactics to ensure unions stay pliant. The government censors the media and limits the distribution of foreign publications. © Business Monitor International Ltd Page 9 . This is reflected by its second place in the Index of Economic Freedom league table compiled by Heritage Foundation and the Wall Street Journal. including the US. for the foreseeable future owing to the government's autocratic insistence on a business-friendly environment. according to Transparency International's 2010 Corruption Perceptions Index. The city-state has previously been identified as a target by Islamist militants from neighbouring Indonesia and elsewhere. The judiciary's record of siding with prominent politicians calls into question the true extent of its neutrality in any contract dispute involving a politically sensitive issue. Strikes and labour protests will remain rare. Opportunities Threats Singapore is potentially at risk of a terrorist attack.Singapore Commercial Banking Report Q2 2012 Singapore Business Environment SWOT Strengths Singapore is the least corrupt country in the world. if not absent. Singapore has one of the best business operating environments in Asia.

US$bn Per-capita GDP 2012 Tax GDP volatility Financial infrastructure Risks to realisation of returns Regulatory framework and development Regulatory framework and competitive landscape Moody's rating for local currency deposits Long-term financial risk Long-term external risk Long-term policy continuity Legal framework Bureaucracy Commercial banking business environment rating Data 609 243.7 9.0 8.0 8.4 87.8 Score out of 10 7 7 6 10 9 10 9 Ratings score out of 100 Market Structure 67 Country Structure 95 10.0 10 9 10 8 9 9 8 9 Market Risk 97 Country Risk 86 82 Source: BMI © Business Monitor International Ltd Page 10 .4 9.0 9.Singapore Commercial Banking Report Q2 2012 Business Environment Outlook Commercial Banking Business Environment Rating Table: Commercial Banking Business Environment Ratings Limits of potential returns Total assets end-2012.8 0.9 8.132.0 10. US$bn Growth in total assets 2012-2016.0 8. US$bn Growth in client loans 2012-2016.1 52.7 8.

© Business Monitor International Ltd Page 11 . Within the 70% of the CBBER that takes into account the 'Limits of potential returns'. within the 30% of the CBBER that take into account the risks. these elements are weighted 40% and 60%.Singapore Commercial Banking Report Q2 2012 Commercial Banking Business Environment Rating Methodology Since Q108.e. However. They account for 60% of 70% (or 42%) of the overall CBBER. Second. In general. how regulations affect the development of the sector. Third. stability and financial infrastructure in the country. Conversely. it usually implies that the banking sector is (very) large and/or developed relative to the general wealth. within the 'Risks to the realisation of returns' category. The evaluation of the 'Risks to realisation of returns' also includes banking elements and country elements (specifically. It is weighted 70% to the former and 30% to the latter. though. We do this through our Commercial Banking Business Environment Rating (CBBER). it usually means that the banking sector is small and/or underdeveloped relative to the general wealth. which is likewise now a feature of our insurance reports. the market elements have a 60% weighting and the country elements have a 40% weighting. if the market elements are significantly lower than the country elements. respectively. and Moody's Investor Services' ratings for local currency deposits) can be markedly different from BMI's long-term risk rating. the CBBER takes into account the limits of potential returns and the risks to the realisation of those returns. Like the Business Environment Ratings calculated by BMI for all the other industries on which it reports. stability and financial infrastructure in the country. how regulations affect competition within it. three aspects need to be borne in mind in interpreting the CBBERs. if the market elements are significantly higher than the country elements of the 'Limits of potential returns'. The evaluation of the 'Limits of potential returns' includes market elements that are specific to the banking industry of the country in question and elements that relate to that country in general. we have described numerically the banking business environment for each of the countries surveyed by BMI. The first is that the market elements of the 'Limits of potential returns' are by far the most heavily weighted of the four elements. Further details on how we calculate the CBBER are provided at the end of this report. the market elements (i. a measure that ensures we capture the latest quantitative information available. BMI's assessment of long-term country risk). It also ensures consistency across all countries and between the inputs to the CBBER and the Insurance Business Environment Rating.

7 93.1 81.5 80.3 53.1 77.7 83.7 33.8 88.0 46.5 95.8 55.5 82.3 76.0 77.0 74.0 55.0 66.0 42.4 69.0 74.0 48.0 76.0 52.0 62.5 72.5 65.5 65.0 96.0 80.3 70.0 92.7 63.3 40.3 80.0 68.6 44. with 100 the highest.0 52.0 55.5 57.0 Risks to Potential Returns Market Risks 43.6 68.3 73.0 90.0 84.7 83.0 Ranking 54 13 6 28 24 37 11 55 46 7 57 9 12 27 38 2 Scores out of 100.3 83.5 80.0 56.0 80.3 86.0 50.0 66.0 Country Risks 44.4 58.0 50.3 76.7 23.5 57.0 78.3 63.7 76.7 36.3 73.0 55.7 86. Source: BMI © Business Monitor International Ltd Page 12 .7 100.0 86.3 60.0 Country Structure 45.0 80.0 82.Singapore Commercial Banking Report Q2 2012 Table: Asia Commercial Banking Business Environment Ratings Limits of Potential Returns Market Structure Bangladesh China Hong Kong India Indonesia Japan Malaysia Pakistan Philippines Singapore Sri Lanka South Korea Taiwan Thailand Vietnam United States 46.0 76.0 Overall Rating 45.0 85.0 80.7 37.3 60.7 33.3 75.

there are none that would be unaffected by a major deterioration in the European crisis. a renewed escalation to the crisis would pose significant risks to our regional banking outlooks. loan standards continue to ease. the eurozone crisis remains the biggest risk to the global banking sector. and banks are looking increasingly to profit-making opportunities. albeit only after significant zone-wide macroeconomic and fiscal reforms. Among other positive factors: lending growth is picking up. with the monetary bloc surviving. But Real Estate Lending Still Trailing US – Loans By Category. Developed State And Emerging Market Commercial Banking Overview US: While the US banking sector recovery remains tentative. which will hurt profitability. there are several reasons why we believe the US banking sector has turned the corner.Singapore Commercial Banking Report Q2 2012 Global Commercial Banking Outlook Europe Is Still The Main Event With BMI's core macroeconomic forecasts pointing toward a sustained if weak economic recovery. namely whether the European Central Bank (ECB) would intervene to stave off a short-term credit crunch and expand support to peripheral bond markets (it has. and we continue to project fairly robust lending and asset growth in 2012. We retain our core view that the eurozone is set to 'muddle through' the current crisis. Signs Of Life. the long end of the yield curve is set to remain low-yielding for years. However. in increasingly bold fashion). but some questions have been addressed since that time. We covered this closely in the Q1 2012 report ('Europe On The Brink'). rather than merely ensuring their survival. % chg y-o-y Source: BMI. Looking at the outlook region-byregion. Federal Reserve © Business Monitor International Ltd Page 13 . However. and the regulatory regime is increasingly restrictive. the European crisis poses a major threat to the US banking sector.

the impact on NPL is likely to be exacerbated. lead by a hard landing in China and a slowdown in trade growth driven by a recession in the eurozone. However. an expansion of the Securities Market Programme (which has already purchased EUR213bn in government debt) and a reduction in collateral requirements for securities repoed at the ECB. this masks increasing disparity between the relatively prosperous core and crumbling periphery. However. growing stresses in the banking system will require the ECB to intervene still further. We cannot discount the possibility of a major credit crunch should the debt crisis reach its meltdown moment. as well as stresses in traditional bank funding markets across the region. hampered by foreign funding constraints. will be a resurgence in non-performing loans (NPLs). These factors alone are likely to lead to an uptick in NPLs. and Australia to see a surge in bad debts in 2012. Hong Kong. One corollary of the surge in credit growth seen in 2010 and 2011. this masks deep divisions at the national level.Singapore Commercial Banking Report Q2 2012 Eurozone: From an aggregate level the eurozone banking sector would seem to be recovering well from the turmoil of 2008 and 2009. and higher non-performing loans. While we expect continued industry growth in aggregate. This will likely take the form of additional cuts to the refinancing rate. Going forward. We look for the likes of China. We still expect the central bank to have to significantly ramp up its intervention in the sovereign debt markets from 2012 given the enormous refinancing demands of the region's issuers. Emerging Asia: In 2012 we expect weaker earnings. Leveraged On FX Loans Asia – Foreign Exchange Loans Of Asian Banks Source: BMI © Business Monitor International Ltd Page 14 . and the inevitable slowdown in 2012. Our core view is for a sharp slowdown in real GDP growth across the board this year. slower credit growth. when we combine this with the impact of weakening housing markets across the region and tighter availability of credit.

while South Africa should see slow but stable expansion. those sectors which have greater foreign participation tend to be the most attractive from a growth perspective. Kenyan and Ghanaian banking sectors is mixed. © Business Monitor International Ltd Page 15 . We also caution that Southeastern European banking sectors are showing some worrying risk indicators. with any serious threats to sector stability coming mainly from domestic factors. In addition. while reaffirming our negative outlook for the Hungarian and Ukrainian banking. % of Total Assets Source: BIS. Indeed.Singapore Commercial Banking Report Q2 2012 Emerging Europe: We maintain our wary view towards Central and Eastern European (CEE) banking sectors on the back of continued macroeconomic and financial headwinds emanating from the eurozone sovereign debt crisis. Nigerian. driven by stable fundamentals and the use of monetary stimulus in those markets where credit cycles are slowing. and Kenya will likely struggle amid various macroeconomic challenges. respectively. we do not view the prevalence of European banks operating in the Latin American region as a risk to regional banking sector stability. We also hold to our preference for the Czech Republic and Poland's banking sectors on the grounds of stability and growth potential. CE Generally Better Placed Despite High Foreign Claims On Assets CEE – European Banks' Claims. BMI Latin America: We believe asset and loan growth will remain strong in 2012. Sub-Saharan Africa: The outlook for the South African. We see Nigeria and Ghana as having the strongest growth potential over the coming year.

the recent spike in interbank lending rates from Saudi Arabia to Jordan would suggest that risks of a broad-based tightening in credit conditions cannot be ruled out. whilst risks of currency devaluations and a spike in non-performing loans tempers our outlook on financial institutions in Egypt and the Levant. particularly given rising regional tensions and ongoing concerns surrounding the fate of the eurozone. BMI Middle East And North Africa: The outlook for banks across the Middle East and North Africa (MENA) continues to diverge. with oil-fuelled spending in the Gulf facilitating a slight improvement in lending conditions.For Some MENA – Banking Sector Credit.. Credit Conditions Improving. % chg y-o-y Source: Central Banks.. Although the region is by no means homogenous.Singapore Commercial Banking Report Q2 2012 Diverse Regional Picture Africa – Total Banking Sector Loans. % chg y-o-y Source: BMI/Respective Central Banks © Business Monitor International Ltd Page 16 .

Asian banking equities suffered a difficult year in 2011. only Indonesian financial equities gained in 2011.7 percentage point decline in the P/E ratio. In 2012. % Source: BMI This weakness in equity prices came despite an impressive earnings display on the whole. This is most starkly shown in the case of the MSCI India Financials index. While the market lost 29% thorough 2011. with the loss coming from a staggering 10. the vast majority of countries saw banking sector earnings hit a new high. although we highlight key technical areas to watch. The Bloomberg Asian Banking Index saw its earnings increase by an impressive 27%. equity losses were recorded across the board. slower credit growth. earnings were actually up 25%. as weaker earnings. While the index is heavily weighted towards Chinese banks. led by India. taking prices back to mid-2009 levels. accompanied by new highs in book values. Only Indonesia In The Black Asia – 2011 Returns For MSCI Financial Indices. The Bloomberg Asia Banking Index recorded a 13% fall. On balance. we retain our bearish bias. As the accompanying chart shows. © Business Monitor International Ltd Page 17 .Singapore Commercial Banking Report Q2 2012 Asia Banking Sector Outlook Three Threats To Asia's Banks In 2012 BMI View: In 2011 Asian banking stocks weakened substantially as earnings multiples collapsed amid record earnings. with the price fall coming entirely via a collapse in multiples. to be offset by multiple expansion. we expect the reverse. hampered by foreign funding constraints. In fact. taking P/E and P/B multiples to very low levels. with the rest posting varying degrees of losses. and higher non-performing loans (NPLs).

we believe that another price low in on the cards this year in the Bloomberg Asia Banking Index. Prices Down India – MSCI India Financials Index. quite substantially is some cases. however (greatly in countries such as Hong Kong. On the whole we should see earnings weaken. The big question is whether prices will manage to mount a sustainable increase in the face of weakening earnings or continue their slide from the April 2011 peak. Singapore. which would both hit earnings and raise equity risk premiums. and Australia. although this is contingent upon a continued deterioration in the regional economy. we expect to see a reversal of trends seen in 2011. © Business Monitor International Ltd Page 18 . led by China.Singapore Commercial Banking Report Q2 2012 Earnings Up. P/E Ratio & Earnings Per Share Source: BMI In 2012. and further global economic dislocation. which run serious risks of losses). and book values follow suit. Multiples should expand. when we voiced our concerns surrounding Asian banks. On the whole.

With US dollar funding conditions tightening over recent months (despite easing somewhat following the ECB's measures to improve funding conditions). making it more difficult to meet loan repayments. Asian banks have rapidly expanded their foreign currency-denominated loan books in recent years. with growth hitting new highs in the likes of Hong Kong and Singapore. This will act as a clear and direct drag on earnings growth. Secondly. with not a single country in the region expected to see an acceleration in credit. the recent increase in the value of the US dollar in Q411 will have raised the local currency value of borrowings. long- © Business Monitor International Ltd Page 19 . this is likely to have negative implications for Asian banks. We could perhaps see the lagged impact of this show up in greater non-performing foreign currency loans in the coming months. with the FX loans-to-deposit ratio now in excess of 100% as corporates and speculators have looked to take advantage of low US dollar interest rates versus local currency rates. Leveraged On FX Loans Asia – Foreign Exchange Loans Of Asian Banks Source: BMI Shrinking Credit Growth One major supportive factor for banking sector earnings in 2011 was the rise in the amount of credit banks extended. Net interest margins are also unlikely to offer much help as. In 2012 we see credit growth falling across the board. Firstly. despite our expectations that short-term interest rates will fall. it will reduce net interest margins (NIM) on FX-denominated loans as funding costs increase. Our expectation of another bout of US$ strength suggests this problem is also likely to reoccur later in the year.Singapore Commercial Banking Report Q2 2012 Foreign Funding Difficulties To Continue We recently articulated the risks faced by Asian financial systems from the reduced availability of overseas funding amid growing global risk aversion and deleveraging in the European banking system.

These factors alone are likely to lead to an uptick in NPLs. The gap left by the break-out in 2009 is a potential downside target. and the inevitable slowdown in 2012. when we combine this with the impact of weakening housing markets across the region and tighter availability of credit. Technical Levels To Watch The technical chart of the Bloomberg Asia Banking Index shows tough resistance lies ahead in the near term at the 150 level. led by a hard landing in China and a slowdown in trade growth driven by a recession in the eurozone. and a break of this level could trigger a run at the 2011 high.Singapore Commercial Banking Report Q2 2012 term interest rates should also fall. the impact on NPL is likely to be exacerbated. and Australia to see a surge in bad debts in 2012. We look for the likes of China. we believe these dynamics are sure to hurt banks' bottom lines in 2012. However. will be a resurgence in NPLs. we would see any move to this area as a long-term opportunity. we would turn outright bearish given the prospect of weaker earnings in 2012. and a region-wide recession could see prices return to this level. however. With credit growth weakening and NIMs potentially falling. However. Given our bullish longterm outlook on regional growth. In the event of weakness. Hong Kong. © Business Monitor International Ltd Page 20 . we identify the 115 level. Malaysia Leading The Way Asia – Foreign Exchange Loan Growth By Country. should prices approach this level. Our core view is for a sharp slowdown in real GDP growth across the board this year. % chg y-o-y Source: BMI Rising NPLs One corollary of the surge in credit growth seen in 2010 and 2011.

Singapore Commercial Banking Report Q2 2012 Right On Resistance Asia – Bloomberg Asia Banking Index Source: BMI © Business Monitor International Ltd Page 21 .

5 526.4 Year-on-year growth % 8.8 37.1 22.6 Source: Central banks.7 60.7 26.2 73.0 28.4 24.6 19. US$bn Bangladesh China Hong Kong India Indonesia Japan Malaysia Pakistan Philippines Singapore Sri Lanka South Korea Taiwan Thailand Vietnam United States 16.9 3.573.2 -1.7 9.8 11.1 192.9 14.008.2 21.8 338.8 Bond as % total assets 23.4 19.5 6.3 14.8 21.3 -1.2 11.8 17.0 12.1 14.2 14.Singapore Commercial Banking Report Q2 2012 Asia Banking Sector Forecast Overview Table: Banks' Bond Portfolios Bond Portfolio.6 28. BMI © Business Monitor International Ltd Page 22 .8 15.2 266.3 2.6 29.2 7.6 1.9 4.4 16.2 4. regulators.4 68.4 26.4 12.0 10.4 308.6 10.8 15.0 40.

7 76.3 70.3 83.7 63.1 81.0 Overall Rating 45.0 48.3 80.0 68.0 92.0 78.0 Country Structure 45.7 93.4 69.7 100.3 40.5 80.4 58.0 96.0 52.0 76.0 80.5 65.5 82.0 80.7 83.0 85. Source: BMI © Business Monitor International Ltd Page 23 .3 60.5 95.0 46.7 36.0 55.0 80.3 73.3 86.Singapore Commercial Banking Report Q2 2012 Table: Asia Commercial Banking Business Environment Ratings Limits of Potential Returns Market Structure Bangladesh China Hong Kong India Indonesia Japan Malaysia Pakistan Philippines Singapore Sri Lanka South Korea Taiwan Thailand Vietnam United States 46.0 66.3 76.0 42.3 63.8 88.3 60.0 80.5 57.7 33.0 74.0 50.0 77.0 50.7 23.0 82.0 56.0 55.5 72.5 57.0 66.6 68.6 44.7 33.1 77.8 55.7 83.7 86.3 73.3 75.0 52.3 76.0 Risks to Potential Returns Market Risks 43.0 84.0 62. with 100 the highest.3 53.0 Ranking 54 13 6 28 24 37 11 55 46 7 57 9 12 27 38 2 Scores out of 100.0 76.0 55.0 86.0 Country Risks 44.7 37.0 90.0 74.5 65.5 80.

1 24.1 91.3 62.0 260.2 60.3 81.6 117.3 73.1 51.6 74.6 70.1 45.6 118.7 52.5 118.3 83.1 Rank 29 54 57 50 45 53 48 56 55 38 49 17 51 28 6 20 Trend Falling Falling Rising Rising Rising Rising Rising Falling Rising Rising Rising Falling Falling Falling Rising Falling Loan/ Asset ratio % 67.2 63.3 65.3 113.1 80.3 68.4 60.0 147.6 60.1 Rank 11 41 57 27 32 44 26 42 47 46 31 7 29 24 1 3 Trend Falling Falling Rising Falling Falling Rising Rising Falling Rising Rising Rising Falling Falling Falling Falling Falling Loan/ GDP ratio % 52.1 36.7 123.8 75. regulators.6 111.0 32.3 80.7 Rank 39 13 2 48 51 23 11 58 52 10 54 16 6 32 8 34 Trend Rising Falling Rising Rising Rising Rising Rising Falling Rising Rising Rising Falling Falling Falling Rising Falling Source: Central banks.4 29.8 102.Singapore Commercial Banking Report Q2 2012 Table: Comparison of Loan/Deposit & Loan/Asset & Loan/GDP ratios Loan deposit ratio % Bangladesh China Hong Kong India Indonesia Japan Malaysia Pakistan Philippines Singapore Sri Lanka South Korea Taiwan Thailand Vietnam United States 96.7 61.7 89.6 66.1 80.8 54.3 73.2 98.1 30.6 125. BMI © Business Monitor International Ltd Page 24 .9 47.0 72.3 48.4 60.

3 54. % Bangladesh China Hong Kong India Indonesia Japan Malaysia Pakistan Philippines Singapore Sri Lanka South Korea Taiwan Thailand Vietnam United States 96.4 66.8 2.0 511.2 -3.9 -73.1 82.1 521.3 35.3 65.2 -213.3 27.4 -0.5 -8.3 -47.1 76.7 162.3 344. Source: Central banks.0 79. US$bn 5.2 44.6 675.6 NB Incorporates estimated economic data and projected banking data.4 -1.1 Deposit Growth.3 79.1 2.6 Trend Falling Falling Falling Falling Rising Falling Falling Falling Falling Falling Falling Falling Rising Falling Rising Falling Loan Growth.6 1.7 -10. regulators.Singapore Commercial Banking Report Q2 2012 Table: Anticipated Developments in 2012 Loan/Deposit Ratio.4 461.3 31.2 9.2 -120.5 75.9 -7.2 125.1 27.7 21.2 3.4 19.9 65. US$bn 5.1 223.1 -1.6 28.7 110. BMI © Business Monitor International Ltd Page 25 .4 -25.2 58.0 33.5 17.9 -4.1 90. US$bn -0.8 2.0 111.4 -129.5 4.0 69.4 -8.4 Residual.3 68.4 -0.0 29.3 -291.6 6.2 97.

2 5.8 305.5 1.1 1.8 354.1 148.8 16.1 245.275.3 690.0 64.6 16.3 7. regulators.8 990.154.1 10.592.0 2010 Client Loans 48.8 47.474.606.5 381.1 8.6 73.9 Total Assets 72.3 775.7 11.477.0 Client Deposits 57.9 12.6 915.267.867.1 247.083.3 196.5 260.4 8.050.523.2 27. BMI.7 5.0 56.2 780.147.7 669.7 154.4 1.1 110.1 151.8 127.1 1.2 86.4 361.1 Client Deposits 50.5 338.1 391.5 13.1 8.5 Source: Central banks.0 17.5 Client Loans 55.581.1 882.7 20.8 650.7 76.7 609.6 385.3 176.2 560.8 140.6 322.884.532.9 1.5 12.8 11.2 404.1 243.9 690.4 967.0 9.3 247.5 11.1 1.2 304. © Business Monitor International Ltd Page 26 .081.5 7.2 1.406.0 23.6 1.0 1.3 113.2 485.609.567.7 103.588.2 323.129.971.9 913.0 62.3 9.9 7.3 1.8 251.2 14.7 286.5 126.1 46.772.8 503.527.256.0 998.1 931.Singapore Commercial Banking Report Q2 2012 Table: Comparison of Total Assets & Client Loans & Client Deposits (US$bn) 2011 Total Assets Bangladesh China Hong Kong India Indonesia Japan Malaysia Pakistan Philippines Singapore Sri Lanka South Korea Taiwan Thailand Vietnam United States 81.115.150.2 952.147.6 244.

020 256.091 239 4.Singapore Commercial Banking Report Q2 2012 Table: Comparison of US$ Per Capita Deposits (2011) GDP Per Capita Bangladesh China Hong Kong India Indonesia Japan Malaysia Pakistan Philippines Singapore Sri Lanka South Korea Taiwan Thailand Vietnam United States 734 5.919 9.724 22.374 91.696 159.044 195 314 16.383 51.303 560.614 3.116 5.331 35.808 1.679 108. BMI © Business Monitor International Ltd Page 27 .268 34.842 1.301 88 292 17.670 30.232 52. per capita 368 6.004 46.642 3.451 3.850 9.130 2.448 5.903 1.850 14. regulators.563 1.133 2.281 Client Deposits.597 269 772 62.947 21.039 3. per capita 1.387 10.357 48.529 37.806 Source: Central banks.357 29. per capita 96 2.539 4.832 78.623 52.260 Rich 20% Client Deposits.383 779 22.309 624 1.902 Poor 80% Client Deposits.136 1.991 903 355 6.405 4.711 3.672 273.

0 -4.7 -3.41 10.3 -9.00 7.Singapore Commercial Banking Report Q2 2012 Table: Interbank Rates and Bond Yields 3 Month Interbank Rate % Current Account % of GDP.9 -3.3 5. na=not available.10 4.5 1. 2011f -4.1 2.35 NB Incorporates actual financial markets data. estimated economic data and projected banking data.6 3.1 -2.5 0.6 -8.6 -8.2 2.00 0.71 0.70 12.9 -6.1 -0. BMI © Business Monitor International Ltd Page 28 .50 7.6 18.56 9.6 -2.8 -3.8 -5.25 0.1 Budget balance % of GDP.9 3.7 -10.7 1.3 10. Source: Central banks.48 1.70 0.2 0.1 2. 2011f Bangladesh China Hong Kong India Indonesia Japan Malaysia Pakistan Philippines Singapore Sri Lanka South Korea Taiwan Thailand Vietnam United States 0.4 -1.58 4.2 8.44 0.2 2.5 -7.0 -2.24 2.6 End H1 2010 n/a 1. regulators.

1%. combined with continued low net interest margins. credit growth has likely peaked in the city-state.5% expansion in 2010. We expect that the trend going forward will be one of softening credit growth amid more moderate economic growth. we therefore see private consumption expanding by a slower 5. we forecast that Singapore's economy will grow by just 2. is likely to affect negative profits growth for the sector in 2012.3% in January.7% in 2011. and we forecast that it will decline from its current 28. Following an extended period of expanding credit growth that began in Q309. Having peaked in September at 31. but we believe they will find it progressively harder going forward to grow profits.9% growth in 2011 and a 14. MAS © Business Monitor International Ltd Page 29 . Against growth of 6. Indeed. following 4. hitting business conditions at home despite a generally strong domestic outlook.3% in 2012. the metric remained elevated in the range of 30% for the remainder of 2011 before dropping to 28.0% by the end of the year.3% y-o-y clip to 6. The forecast reflects our view that weak external demand will hit Singapore's export sector. This.Singapore Commercial Banking Report Q2 2012 Singapore Banking Sector Outlook Loan Growth Seen Hampering Profits In 2012 BMI View: Singaporean banks ended 2011 on a strong note. On the back of a cooling housing market and a tepid overall economic outlook for 2012. A View From The Top Singapore – Total Outstanding Loans. loan growth appears to finally be ready to take a breather.6% in 2012. % chg y-o-y Source: BMI.

marking their worst quarter since Q309. Moreover. Singapore's real estate market is in bubble territory and due for a correction. Given historical trends in Singapore's real estate market. As we have pointed out numerous times since mid-2011.7% run-up that we've seen since Q309. © Business Monitor International Ltd Page 30 .Singapore Commercial Banking Report Q2 2012 Real Estate Correction Playing Out These conditions will inevitably weigh on credit growth. or a little less than half of the 54.0%. URA Private property prices edged up by a mere 0.2% q-o-q in Q411. considering the Additional Buyer's Stamp Duty of 10% imposed upon foreign buyers by the government at the beginning of that month. which has seen both considerable loan and price growth since Singapore's recovery following the global financial crisis. we may now see a correction as large as 25. with consumers less likely to look to credit to fund their expenditures amid a less stable economic environment. the flash Singapore Residential Price Index published by the National University of Singapore indicates that home prices actually fell by 1. This correction now appears to be playing out. Supply And Demand Singapore – Private Property Price Index (RHS) & Total Supply In The Pipeline Source: BMI. This will be particularly true for the real estate sector.0% in December and 0.4% in January. That prices began to fall in December is not surprising.

making them the greatest single contributor to the category. URA Housing loans have constituted 28. the correcting real estate sector will likely lead credit growth downwards over the course of 2012. SGDmn. Momentum Waning Singapore – Total Housing Loans. MAS © Business Monitor International Ltd Page 31 . With prices now beginning to turn over following a 54.2% of new non-bank loans since January 2011. we expect demand for housing loans to do the same.7% runup. & % growth y-o-y (RHS) Source: BMI. As such.Singapore Commercial Banking Report Q2 2012 Correction Time Singapore – Private Property Price Index Source: BMI.

and OCBC are 1.000 in mid-January before quickly recovering to SGD57. as the market is artificially depressed by both COEs and extremely high vehicle taxation. But Domestic Risks Contained Net Interest Margins (NIMs) fell across the board for Singapore's three largest banks in 2012. After more than two years of monthly y-o-y contractions. DBS reported a 2011 NIM of 1. this was likely due to a rare decrease in certificate of entitlement (COE) prices. This is a trend that we see being exacerbated in 2012 as support from the latter fades.86 and 2. we also see auto loan growth remaining weak. While DBS reported net profit growth of 86% for FY2011.92.9%. Challenges Ahead. the sector remains sound.77 versus 1.7%. while OCBC 's and UOB 's fell from 1. as indicated by its best in the region Commercial Banking Risk rating of 90.0% in January. We expect to see total credit growth decline somewhat precipitously from its current rate of 28. total automobile loans finally posted positive growth in December of 8.000 by mid-February.84 in 2010.09 to 1. we do not foresee a material impact on NPLs from a fall in prices. Indeed. Given tight lending restrictions in Singapore. UOB. Non-performing loans among DBS.98 to 1. Our core view remains for weak auto loan growth over the medium term in Singapore. as we wrote in November. Despite the pressure that declining credit growth will exert on bank earnings. respectively.7% despite strong loan portfolio growth. and again of 8. COE Cat A prices briefly collapsed to around SGD47. OCBC saw its net profit stagnate and UOB saw its net profit decline by 13. and 0. 1.4%.3%. However. respectively.0% by end 2012. © Business Monitor International Ltd Page 32 . as well as the tendency for homeowners to make large down payments.3% to 6.Singapore Commercial Banking Report Q2 2012 Auto Loans To Remain Depressed Despite a recent upwards tick.3. Singapore remains one of the safest banking sectors in the world.

Although NPLs among mainland loans have not yet shown a marked rise. the developing hard-landing in China combined with a major housing correction already under way could present considerable challenges. © Business Monitor International Ltd Page 33 .Singapore Commercial Banking Report Q2 2012 King Of The Hill Asia – BMI Commercial Banking Risk Rating Source: BMI Risks To Outlook We continue to be wary regarding loans to China. which the three banks have grown strongly over the past year in order to build market share in the credit scarce mainland.

with a property bubble about to burst. and an extremely undervalued exchange rate. which has resulted in large scale malinvestment. it is a combination of artificially low interest rates. the situation looks very precarious. with business lending up 40. an artificially inflated savings rate.6%. private consumption growth is set to outperform. New export orders also remain below the crucial 50 level.6% of GDP in 2011 (versus China's 34. With exports accounting for well over 200% of GDP.Singapore Commercial Banking Report Q2 2012 Economic Outlook External Rebalancing A Necessary Evil BMI View: Singapore is set to enter technical recession In H112 and register growth of just 2. We have already seen signs that the economy is likely to contract in Q112.7 in January. In the case of China. and new orders underperforming at just 47. extreme figures in either direction can point to underlying structural economic problems.6%). These factors have signalled to businesses to direct resources towards export goods and. Singapore comes in a very close second at 38. investment goods. we expect to see continued signs of Singapore © Business Monitor International Ltd Page 34 . below consensus expectations of 3. much like that of China. This has created an unhealthy reliance on fragile external demand. which has been driven by artificially low interest rates and a funnelling of capital towards housing and state-led infrastructure. This will result in full-year real GDP growth of just 2. Private Consumption Artificially Depressed While China deservedly grabs the limelight when it comes to its low share of private consumption in GDP. a slump in global trade and financial services will obviously take its toll on growth.6%. but the transition to a more balanced economy will come at the expense of weaker headline expansion. Although credit metrics suggest that domestic businesses continues to be enthusiastic about prospects for 2012. and see continued weakness in H212. this is manifest in the excessive share of investment.7. we expect external factors to dominate growth as weakness in exports feeds through into domestic demand. with risks heavily weighted to the downside. In the case of Singapore. The Singapore economy. is desperately in need of rebalancing more towards domestic consumption. Although there is nothing necessarily wrong with a low (or high) share of consumption in GDP. Going forward.7% y-o-y in December. In 2012. We continue to see Singapore entering technical recession as the economy contracts in Q112. though. to a lesser extent. The country's overarching reliance on overseas demand and the domestic investment in property have depressed private consumption's share of GDP to extreme levels.6%. Even on the domestic front. with the purchasing mangers' index (PMI) falling to 48.6% in 2012. The rebalancing process will likely mean much slower growth going forward than we have seen over the past few years. versus consensus expectations of 3.

the largest threat to household consumption in 2012 comes from a bursting of the local property bubble. a one percentage point fall in external demand can have serious negative consequences for economic growth. Indeed.3%. consumer sentiment will be damaged. as we saw in 2009.0 percentage points off of headline © Business Monitor International Ltd Page 35 . Naturally. this is a negative sign for future construction. even as private consumption's share of GDP rose. meaning a vicious spiral will likely be avoided. the Singaporean government is likely to boost spending in 2012. Net Exports With total exports equivalent to twice GDP. and this will remain the case for the foreseeable future. Education subsidies are one area that the government has shown a willingness to increase spending in recent downturns.9% in 2011. However. versus 3. as the domestic property bubble bursts.7% we have pencilled in for 2011. As a share of GDP. residential units under construction surged to a new record high in Q411. Given that property prices look to be peaking and residential vacancy rates are ticking up. public consumption is unlikely to deviate from its long-term average of 10% of GDP. With price momentum declining according to the Urban Redevelopment Authority.0% from an estimated 1. the trend is expected to be the same and. which will keep businesses on the back foot for much of the year. the business community faces an addition threat from the potential for a collapse in housing investment in 2012. but also investment. With exports forecast to grow by just 1. this represents an expected decline from the 6. Aside from a slowdown in the external sector. primarily at the expense of net exports.7% in 2011. this narrowing trade surplus is set to take 2. we believe prices are set to drop in excess of 10% this year on average. with the drop off explained by both a weaker external outlook and property price declines. falling export demand had seriously negative knock-on effects on consumption. While we do not envisage a similar shock this time around. and private data already reporting price falls in response to government measures such as limiting second mortgages. again. from an estimated 11. As the accompanying chart shows.1% growth of imports. Private Consumption Although we expect private consumption to hold up strongly relative to overall GDP growth in 2012. however. with public consumption set to rise by 5.3% in 2012. and there remains scope for further action here. Singapore's investment and inventory cycle is highly dominated by global conditions. the risks seems weighted to the downside.Singapore Commercial Banking Report Q2 2012 embarking on its path towards greater consumption in GDP terms.8%. Government Consumption With a wealth of financial assets at their disposal in the event of a growth slump. Gross Fixed Capital Formation We are forecasting gross fixed capital formation to rise by 6. Although Singaporean consumers are only minimally leveraged to the housing market in terms of mortgage debt-to-income and loan-to-value ratios. expanding by 5.

8 51. eop e f 4.998 5. Given the European Union represents Singapore's main export destination.Singapore Commercial Banking Report Q2 2012 expansion.3 Real GDP growth.3 69.4 5.7 2.3 6. as the new export orders component of the PMI and total cargo arrivals suggest. % of labour force.291 5.1 2. % change y-o-y GDP per capita.3 4.8 337. Table: Singapore – Economic Activity 2011e Nominal GDP.5 3.5 2016f 429.9 301.3 5. Ministry of Manpower/BMI.359 5. real effective exchange rate strength will play a part in this external adjustment.0 400.6 56. Sources: 3 4 5 Statistics Singapore/IMF/BMI.4 5.3 63.6 52. mn 4 3 Industrial production index.3 6.9 3.8 2.8 3.3% annually over the next three years. US$bn 3 3 3 2012f 355. Seasonally-adjusted figures used.8 3.9 266. An outright sequential contraction in exports looks highly likely in Q112. Manufacturing data used.2 1. we expect export growth to average just 3. As well as weaker global growth. Indeed.5 2015f 410.0 2. US$ Population. 1 © Business Monitor International Ltd Page 36 .6 2.2 2.4% averaged over the past decade.8 2.4 73. % y-o-y. BMI forecasts.7 273. which would mark a sharp turn of events from the 8. SGDbn Nominal GDP. World Bank/UN/BMI.5 Notes: BMI estimates.5 2014f 391.879 5. we do not expect to see a V-shaped recovery even if the eurozone can avoid a series of sovereign defaults.1 372.5 2 2013f 373. ave Unemployment.051 5.5 334.3 2.339 5.

but are otherwise able to do everything else performed by full banks.siba.gov. Since 1981. Seven of the 31 full banks in Singapore are local entities under the three main domestic banking groups: one is a locally incorporated subsidiary of a foreign bank and 26 are branches of foreign banks.sg The ABS was founded in 1973.abs. It also provides 'a channel for consultation. Principal banking regulator: Monetary Authority of Singapore (MAS) www. Unlike other full banks.org.sg SIBA acts as a forum for Singapore's investment banks. the MAS was given powers to act as a banker to.sg The central bank is the Monetary Authority of Singapore. Aside from being the banking regulator. Initially. Banking trade association: The Association of Banks in Singapore (ABS) www. It has regular dialogue with the MAS to discuss industry issues and promote a sound financial system in Singapore. the association was headed by the Oversea-Chinese Banking Corporation.Singapore Commercial Banking Report Q2 2012 Competitive Landscape Market Structure Protagonists Table: Protagonists In Singapore's Commercial Banking Sector Central bank: Monetary Authority of Singapore (MAS) www.sg The MAS has been responsible for regulation of the banking sector since its inception in 1971. wholesale banks or offshore banks. and financial agent of. the 'big four') every two years.mas. Offshore banks that operate through their Asian currency units (ACUs) can carry out the same operations as full banks and wholesale banks. the MAS has also been responsible for issuing currency. established in 1971. Since its merger with the Board of Commissioners of Currency in October 2002. advice and feedback with the relevant authorities'. Banking trade association: Singapore Investment Banking Association (SIBA) www. leadership of the ABS has rotated between the 'big three' domestic banks (prior to 2001. Wholesale banks cannot carry out Singapore dollar retail banking activities. and to promote monetary stability and credit and exchange policies conducive to economic growth.mas. the government.org. The ABS represents the interests of its members and sets standards of good practice. For its first nine years. Definition Of The Commercial Banking Universe Commercial banks in Singapore can operate as full banks. Full banks can provide the full range of banking businesses approved under the Banking Act. foreign banks are only allowed to operate in up to 25 locations in Singapore. the MAS has also been the insurance regulator since 1977 and the securities regulator since 1984. It works closely with the MAS and government bodies to promote the development of Singapore as a financial centre. Their Singapore dollar © Business Monitor International Ltd Page 37 .gov.

Many of the merchant banks are commercial affiliates of the wholesale or offshore banks. which are subject to more restrictions than local operations. are conducted through their domestic banking units (DBUs). Merchant banks carry out investment banking activities through their ACUs.Singapore Commercial Banking Report Q2 2012 businesses. Within their DBUs. and are carried out by full banks and wholesale banks. All offshore and wholesale banks are structured as branches of foreign banks. they may only deal with other financial institutions.und Vereinsbank BNP Paribas BNP Paribas Securities Services BNP Paribas Wealth Management Calyon Type of licence Full Bank Offshore Bank Offshore Bank Wholesale Bank Wholesale Bank Full Bank Offshore Bank Wholesale Bank Full Bank Offshore Bank Full Bank Offshore Bank Full Bank Full Bank Offshore Bank Offshore Bank Wholesale Banks Full Bank Offshore Bank Full Bank Wholesale Bank Wholesale Bank Full Bank Wholesale Bank Wholesale Bank Full Bank © Business Monitor International Ltd Page 38 . List Of Banks Table: Licensed Commercial Banks In Singapore Bank ABN AMRO Bank Agricultural Bank of China Arab Bank Australia & New Zealand Banking Group BBVA Bangkok Bank Bank Hapoalim (Switzerland) Bank Julius Baer Bank of America Bank of Baroda Bank of China Bank of Communications Bank of East Asia Bank of India Bank of New York Mellon Bank of New Zealand Bank of Nova Scotia Bank of Singapore Bank of Taiwan Bank of Tokyo-Mitsubishi UFJ Barclays Bank Bayerische Hypo.

Singapore Commercial Banking Report Q2 2012 Table: Licensed Commercial Banks In Singapore Canadian Imperial Bank of Commerce Cathay United Bank Chang Hwa Commercial Bank China Construction Bank Corporation Chinatrust Commercial Bank CIMB Bank Citibank Citibank Singapore Clariden Leu Clearstream Banking Commerzbank Commonwealth Bank of Australia Credit Agricole (Suisse) Credit Industriel et Commercial Credit Suisse DBS Bank Deutsche Bank Dexia Banque Internationale a Luxembourg DnB NOR Bank DZ Bank Fare Eastern Bank First Commercial Bank First Gulf Bank Fortis Bank Global Clearing Fortis Bank Fortis Bank (Nederland) Habib Bank Hana Bank Hang Seng Bank HL Bank HSBC HSBC Private Bank (Suisse) HSH Nordbank Hua Nan Commercial Bank Offshore Bank Offshore Bank Offshore Bank Offshore Bank Wholesale Bank Full Bank Full Bank Full Bank Offshore Bank Offshore Bank Wholesale Bank Wholesale Bank Offshore Bank Wholesale Bank Wholesale Bank Full Bank Wholesale Bank Offshore Bank Offshore Bank Wholesale Bank Full Bank Wholesale Bank Wholesale Bank Wholesale Bank Wholesale Bank Wholesale Bank Wholesale Bank Offshore Bank Offshore Bank Full Bank Full Bank Wholesale Bank Offshore Bank Offshore Bank © Business Monitor International Ltd Page 39 .

Singapore Commercial Banking Report Q2 2012 Table: Licensed Commercial Banks In Singapore ICICI Bank Indian Bank Indian Overseas Bank Industrial and Commercial Bank of China ING Asia Private Bank ING Bank Intesa Sanpaolo Islamic Bank of Asia JPMorgan Chase Bank KBC Bank Korea Development Bank Korea Exchange Bank Krung Thai Bank plc Land Bank of Taiwan Landesbank Baden-Wurttemberg Lloyds TSB Bank Malayan Banking Mega International Commercial Bank Mitisubishi UFJ Trust & Banking Corporation Mizuho Corporate Bank National Australia Bank National Bank of Kuwait Natixis Norddeutsche Landesbank Girozentrale Nordea Bank Finland Norinchukin Bank Northern Trust Company Oversea-Chinese Banking Corporation Philippine National Bank PT Bank Mandiri PT Bank Negara Indonesia Qatar National Bank Rabobank Raiffeisen Zentralbank Oesterreich Offshore Bank Full Bank Full Bank Wholesale Bank Wholesale Bank Wholesale Bank Wholesale Bank Full Bank Full Bank Wholesale Bank Offshore Bank Wholesale Bank Offshore Bank Offshore Bank Wholesale Bank Offshore Bank Full Bank Wholesale Bank Offshore Bank Full Bank Wholesale Bank Wholesale Bank Wholesale Bank Wholesale Bank Offshore Bank Offshore Bank Wholesale Bank Full Bank Offshore Bank Offshore Bank Full Bank Wholesale Bank Wholesale Bank Offshore Bank © Business Monitor International Ltd Page 40 .

Singapore Commercial Banking Report Q2 2012 Table: Licensed Commercial Banks In Singapore RHB Bank Royal Bank of Canada Royal Bank of Scotland Shinhan Bank Siam Commercial Bank Skandinaviska Enskilda Banken Societe Generale Societe Generale Bank & Trust Standard Bank Standard Chartered Bank State Bank of India State Street Bank and Trust Sumitomo Mitsui Banking Corporation Sumitomo Trust & Bank Svenska Handelsbanken Toronto-Dominion Bank UBS UCO Bank Union de Banques Arabes et Francaises United Overseas Bank VTB Capital Wachovia Bank WestLB Westpac Banking Corporation Woori Bank Full Bank Offshore Bank Wholesale Bank Offshore Bank Offshore Bank Offshore Bank Wholesale Bank Wholesale Bank Offshore Bank Full Bank Full Bank Wholesale Bank Full Bank Offshore Bank Offshore Bank Offshore Bank Wholesale Bank Full Bank Offshore Bank Full Bank Wholesale Bank Wholesale Bank Wholesale Bank Wholesale Bank Offshore Bank Source: MAS © Business Monitor International Ltd Page 41 .

including a wholly owned subsidiary in London and a representative office in New York.26% in ACL Bank. Weaknesses Exposure to a weaker Singaporean market could weigh on the bank's overall performance. The bank's capital adequacy ratio was 15. the rapidly slowing economy will put pressure on margins.51bn and Tier 1 capital of THB153. which is contracting due to oversupply and falling demand. It is the market leader in corporate and small. Company Overview Bangkok Bank was established in 1944 and is the largest commercial bank in Thailand.and medium-enterprise (SME) banking. By September 2009 the bank had capital reserves of THB188. High level of deposits. Strong balance sheet and capital adequacy ratio. The bank has an overseas network of 19 branches. In Thailand. Singapore is an important centre for Bangkok Bank. The executive chair of Bangkok Bank. © Business Monitor International Ltd Page 42 . for US$105mn to the Industrial and Commercial Bank of China. 250 business centres and desks and a nationwide network of approximately 900 branches. Bangkok Bank agreed to sell its stake of 19. Opportunities Threats Relative strength enables acquisition opportunities during the downturn.7%. In December 2009. The bank is able to tender loans in several currencies. with the ratios exceeding regulatory requirements.76bn. which is the world's largest bank in terms of market value.Singapore Commercial Banking Report Q2 2012 Company Profiles Bangkok Bank Strengths Regional strength and a strong brand name. It is the fifth largest regional bank in South East Asia. Its Singapore branch provides full commercial banking services. Slowdown of regional economies.500 ATMs and cash deposit machines. Kosit Panpiemras. where it offers loans to foreigners and demand is increasing. with total assets of approximately US$43bn. in line with Thailand's expected economic growth. a Thai financial institution. a phone banking facility and an internet banking service. including American and Singaporean dollars.5% and the Tier 1 capital ratio was 12. said the bank had a target for lending growth of 3-4% in 2010. and has the country's largest retail customer base with over 16mn accounts (including business and retail customers). These capital indicators demonstrate the well capitalised nature of the bank. Exposure to the Thai real estate market. The bank's self-service network includes more than 6.

477 173.221.com Status: Full bank Table: Key Statistics For Bangkok Bank.311.Singapore Commercial Banking Report Q2 2012 Company Data Website: www.844 1.733 146.267.111.575.948 1.392 2008 1.351 886.659.392 1.484. 2006-2008 (THBmn) 2006 Total Assets Loans & Mortgages Total Deposits Total Shareholders' Equity 1.177 Source: Bangkok Bank 2008 annual report © Business Monitor International Ltd Page 43 .736 2007 1.913 1.799 968.bangkokbank.068 164.

up from 15. is part of the Hong Leong Group. Hong Leong Financial Group. Entering the Chinese banking sector though its stake in Bank of Chengdu. with the risk-weighted capital ratio standing at 16%.13bn while post-tax profits grew by 22% y-o-y to MYR163mn. The gross assets of the group amount to over SGD30bn. Hong Leong Islamic Bank. Hong Leong Assurance. which is a priority for the bank. a public listed company on the Bursa Malaysia stock exchange. Singapore. Customer deposits also grew. the group is well positioned as an integrated financial services provider. Narrow margins and high competitiveness of the local market.4bn. with total lending at MYR35. The group includes 14 listed companies worldwide with combined market capitalisation in excess of US$11bn.' © Business Monitor International Ltd Page 44 . Through its financial services arm. HLG Capital and Hong Leong Tokio Marine Takaful. The bank has more than 200 branches in Malaysia. Overview Hong Leong Bank. Growth in online trading. Weaknesses Opportunities Exposure to a weaker Singaporean market could weigh on overall performance. which includes Hong Leong Bank. Threats Slowdown of regional economies. risk management and investment products. Malaysia. Hong Leong Bank is a well recognised business franchise that can trace its history back to 1905 in Kuching.Singapore Commercial Banking Report Q2 2012 Hong Leong Bank Strengths High level of deposits. For FY09. which was incorporated as Kwong Lee Bank in 1934. The bank's asset quality remains strong. Additionally. by over 8% to MYR67. but despite this. the group's pre-tax profit stood at MYR1. Falling NPL ratio. in line with developments regionally and globally. The FY09 result is particularly flat. overall lending has not increased.6bn. The bank said it had 'the financial flexibility to grow and take advantage of market opportunities during these times'.9% in FY08. The strategy of increasing capitalisation has paid dividends. In Singapore.4%. Vietnam commercial banking licence approved. Group chief executive Yvonne Chia said: 'Hong Leong Bank has continued to post satisfactory results for the third quarter of its 2009 financial year despite the significant pressures on the economy and banking sector. Potential for acquisitions in downturn. as well as private banking.6bn. and the Kwong Lee Mortgage & Remittance Company. the bank's HL Markets division offers a range of treasury services.5% to MYR79. Hong Kong and Vietnam. the stability of the bank seems assured as in 2009 the gross NPL ratio decreased to 2. The total assets of the group increased by 2. Strong balance sheet and capital adequacy ratio. with one of the two lowest non-performing loan (NPL) ratios in the Malaysian banking sector. an improvement from FY08.

Company Data Website: www.com.966 51.319 Source: Hong Leong Bank 2009 annual report. 2007-2009 (MYRmn) 2007 Total Assets Loans & Mortgages Total Deposits Total Shareholders' Equity 66.923 2009 70.Singapore Commercial Banking Report Q2 2012 The bank obtained a commercial bank licence in Vietnam to set up a bank with charter capital of about MYR205mn in Q210.938 59.494 2008 69.733 30.467 4.993 30.306 56.161 27.my Status: Full bank Table: Key Statistics For Hong Leong Bank.719 5. BMI © Business Monitor International Ltd Page 45 .hlb.873 4.

Increased impairment of assets. Philippines. It is the largest financial services group in Malaysia and a major regional banking presence. A maximum of 20% is allowed by a foreign shareholder in a Vietnamese company. Uzbekistan. specifically aimed at businesses in 2010. Also in 2009 UOB Kay Hian upgraded Maybank's FY10 and FY11 earnings forecasts by 6%. asset management. Indonesia. Brunei. In 2008 the bank's total assets in Singapore amounted to SGD22. Vietnam banking licence approved. Bahrain. Threats Slowdown of South East Asian economies. Cambodia.6bn.Singapore Commercial Banking Report Q2 2012 Maybank Strengths Largest commercial bank in Malaysia and strong regional presence. In 2009. China. the UK and the US. offshore banking. while the assets of the bank worldwide totalled SGD112bn. Growth in the retail sector. investment banking. reaching to more than 140 ATMs of the five qualifying full banks. representing an important and positive reevaluation of the bank's future. one of the top five banks within the ASEAN. Exposure to falling returns from international operations. Potential for improvement in interest margins. Maybank Islamic aimed to provide MYR750mn in financing through its two Islamic financing facilities. factoring. trustee services.25mn. Company Overview State-owned Malaysian lender Maybank. Maybank said it would raise its stake in Vietnam's An Binh Bank (ABBank) up to 20%. venture capital and online banking. and 4%. Further pressure on margins. Malaysia and other countries. Vietnam. Hong Kong. nominee services. stock broking. respectively. Maybank has more than 450 offices in Malaysia. the bank has 22 branches and is part of the ATM network. insurance. indicating a comparatively large disconnect between the trade-tied fortunes of Singapore and the bank itself. started its Singaporean operations in 1960.7bn. Singapore. Potential for acquisitions during the downturn. to MYR3. The establishment of China-ASEAN free trade area provides an opportunity for a group with such a regional presence. Papua New Guinea. Its large products and services range includes commercial banking. a priority for the bank. Islamic banking. Extensive international network. In Singapore. Weaknesses Falling asset quality and lower demand for loans and services. At the end of 2009 Maybank signed a strategic alliance agreement with Mizuho Securities for the further development of markets in Japan. Opportunities Growth in online trading. Pakistan. The upgrade took into consideration improvements in net interest © Business Monitor International Ltd Page 46 . Maybank already has 15% of ABBank and plans to invest a further US$19. leasing and hire purchase. to MYR3bn.

Maybank had US$140mn exposure to Dubai debt.com.277 144.510 Source: Maybank 2008 and 2009 annual reports © Business Monitor International Ltd Page 47 .454 2008 219.sg Status: Full bank Table: Key Statistics For Maybank.Singapore Commercial Banking Report Q2 2012 margins and higher contributions from subsidiaries as well as the better-than-expected global economic recovery. Consumer loans were expected to grow by about 10% in FY10 as the bank expanded its retail arm. 2007-2009 (MYRmn) 2007 Total Assets Loans & Mortgages Total Deposits Total Shareholders' Equity 227.856 17.453 22.557 133.432 163.323 17.447 118.855 156. with one-third of it made up of direct exposure to Dubai World through a syndicated loan that was still performing in 2009.maybank.200 2009 238. Company Data Website: www.172 138.

It is based on the shari'a principle of murabaha. The banks' chair is Abdulla Hasan Saif. However.Singapore Commercial Banking Report Q2 2012 Islamic Bank of Asia Strengths Solid backing from DBS. providing access to new capital from the wealthy island. In 2009 IB Asia launched its first US dollar liquidity product. Company Data Website: www. a substantial proportion of this related to Dubai-owned firms with operations in Asia such as Labroy and South Beach. an adviser for economic affairs to Bahraini Prime Minister Khalifa ibn Salman al-Khalifa. IB Asia has its headquarters in Singapore and focuses on commercial banking. corporate finance. and is aimed at Muslim and non-Muslim customers. a short-term deposit instrument. DBS' total exposure to Dubai-owned businesses was US$1. IB Asia became one of the two lead arrangers of the country's first sovereign-rated sukuk. At the end of 2009 the repayment of a US$400mn bilateral loan from Dubai World Finance was suspended on a 'standstill notice' after the Dubai firm asked for a six-month freeze of its debt repayments. the US dollar Islamic placement.com Status: Full bank © Business Monitor International Ltd Page 48 . Its emphasis is on the provision of shari'acompliant wholesale banking services and the origination and distribution of wealth management and capital market instruments. Impressive contacts and investor base within the Gulf Cooperation Council countries. In 2009 after the MAS launched the SGD200mn Sukuk al-Ijara Trust Certificate Issuance Programme. families and business groups. Strong competition from Islamic banking operations in market-leading Malaysia. In 2008 the bank opened a representative office in Bahrain. Threats Continued weakness in the real estate market in some GCC countries. a cost-plus-profit sale contract. with strong links and investment from key Gulf Cooperation Council-based individuals. IB Asia's founding shareholders include DBS and 34 Middle Eastern investors.28bn. Opportunities Growth among the GCC countries. Growing interest in Islamic banking products for non-Muslim customers. Company Overview Islamic Bank of Asia (IB Asia) was established in May 2007 by DBS. Weaknesses The Islamic banking market is important but small.islamicbankasia. Increased competition for the relatively small pool of Islamic banking business. DBS holds a majority stake of 50%-plus-one-share. capital market and wealth management services.

Continuing along this expansion of international business.000 domestic branches. Bank of China was the sole banking partner of the 2008 Olympics in Beijing. China and the surrounding region. Strong remittance business. Bank of China announced plans to launch commercial banking operations in Myanmar. The People's Bank of China has allowed foreign lenders to offer trade financing to Chinese companies settling international transactions in yuan. Ideally placed to capitalise on trade financing deals to service China's economic stimulus. In 2009. Established in 1936. a programme that applies to Singapore and other countries. with more than 600 overseas branches and subsidiaries in 28 countries and regions. trade financing and international trade settlement (with specialised knowledge and expertise in Chinarelated trade financing and settlements) and remittance services. the Bank of China Singapore branch is the only Chinese bank with a full banking licence in Singapore. bringing additional kudos to the brand. Weaknesses Opportunities Constraints on expansion in the highly competitive Singaporean market. Trade financing expertise. including companies in Singapore. Threats Any stalling of growth in China. The Singapore branch provides a full range of financial services to customers in Singapore. © Business Monitor International Ltd Page 49 . Its business scope covers commercial banking.Singapore Commercial Banking Report Q2 2012 Bank of China Strengths The established presence in Singapore of a major player in China's market. The listings have enhanced its strength and influence in the international and domestic markets. It has been included in the Fortune Global 500 for 18 consecutive years and was ninth in the world's top 1. Company Overview Bank of China was established in 1912. The establishment of the China-ASEAN free trade area has the potential to accelerate economic growth and bring opportunities for ASEAN businesses. as well as over 10. retail banking.000 banks list compiled by The Banker magazine in 2007. It was dual listed on the Hong Kong Stock Exchange and Shanghai Stock Exchange in 2006. investment banking and insurance. The commercial hub of Yangon (Rangoon) was selected as the site for the bank's representative office. Increased remittance business potential. It has a network of five sub-branches and one subsidiary. The main business of the Singapore branch includes corporate banking. In August 2004. Bank of China was formally incorporated in Beijing as a state-controlled jointstock commercial bank. it became the first lender to undertake more than CNY1bn in cross-border yuan trade settlements. It is the most internationalised of China's four largest commercial banks.

Singapore Commercial Banking Report Q2 2012 Company Data Website: www.bocsg.com Status: Full bank © Business Monitor International Ltd Page 50 .

The strategy saw its loan book jump by as much as 26% y-o-y as corporate credit dominated borrowing. a partnership between DBS and 34 investors from prominent families and industrial groups based within Gulf Cooperation Council. boosting the lender's total retail network. Its regional network includes over 200 branches and more than 1. compared to the same quarter in the previous year. with total exposure of US$1.28bn. In May 2007. particularly in SME segment.Singapore Commercial Banking Report Q2 2012 DBS Bank Strengths Powerful presence across South East Asia.and Aa1 credit ratings. AA. including cash deposits. Consumer fallout from unauthorised cash machine withdrawal scam. Bloomberg reports. Expansion in Chinese operation. © Business Monitor International Ltd Page 51 . Weaknesses Opportunities Depressed market for corporate financing. withdrawals and savings account openings. consumer and wholesale banking activities across Asia and the Middle East. Southeast Asia's largest bank managed to lift earnings for the quarter by boosting lending as interest margins tightened during the period.and Aa1 credit ratings that are among the highest in the Asia Pacific region. Threats Slowdown of regional economies. Strong capitalisation. DBS' branch network will effectively be expanded to 140 from 80 under the agreement. IB Asia's headquarters are in Singapore and it has a representative office in Bahrain. The bank's earnings for Q3 were in sharp contrast with rival United Overseas Bank's 24% y-o-y drop in profits. Potential to expand its customer base through government-backed loans. The bank surprised analysts by posting a 6% increase in net income to SGN762mn (US$597. Large corporate financing operations set to provide strong growth after economic recovery. DBS launched Islamic Bank of Asia (IB Asia). active in 16 markets and providing a full range of services in corporate. Access to lucrative deals in the GCC region through its IB Asia investment. Company Overview DBS Bank is one of the largest financial services groups in Asia. Well positioned to take advantage of the nascent economic recovery. The deal would see DBS offer a number of banking services through SingPost branches.000 ATMs in 50 cities. DBS was the most exposed among Singaporean lenders to Dubai's debt problems. DBS has AA. DBS partnered with Singapore Post (SingPost) in November 2011 to offer banking services at the latter's branches. DBS was established in 1968 and is a leading consumer bank in Singapore and Hong Kong with over 5mn retail customers. among the highest in the Asia Pacific region.93mn) in Q311. with its capital adequacy ratio well above statutory requirements. SME.

DBS will 'always be a buyer' at the right time and right place.149.06 11.73 13.84 12.303. have affected around 200 customers.976.63 25.249.67 48.11 2008 19.24 17.42 5.00 Source: BMI © Business Monitor International Ltd Page 52 . The thefts. The bank said in September 2011 that it intended to hire more private bankers to take advantage of favourable conditions in the Singaporean banking sector.85 2.16 1. Many of DBS' rivals in Europe and the US are decreasing hiring or cutting jobs as cost saving increasingly becomes a concern.96 14.758.52 8.140.17 2.98 1.339.061.sg Company Data Status: Full bank Singapore Stock Market Indicators 2006 Market Capitalisation LCY Market Capitalisation US$ Share Price LCY Share Price US$ Share Price.32 11. Gupta said as he used the bank's purchase of parts of Royal Bank of Scotland (RBS)' Chinese retail and commercial operations as an example of a desired deal.61 34.dbs.96 87.01 2010 33.90 19.40 10.25 22.08 20.com.19 15.209. which involved average withdrawals of about SGD1.373) in early January 2011.77 25. paving the way for a recruitment drive in the more settled Singaporean market.09 1.512. The bank said that it intends to reimburse affected customers.417.89 na 3.000 (US$772) most likely using cloned cards.755.842.810.40 -2.87 21.021. % change (eop) Change YTD (2011 only) Shares Outstanding (mn) 1.67 2.Singapore Commercial Banking Report Q2 2012 DBS customers were hit by unauthorised withdrawals that amounted to at least SGD200.42 2007 31. Chief executive Piyush Gupta said in November 2011 that the bank was interested in acquiring assets in Asia that may be divested by European lenders as the latter attempt to weather the region's sovereign debt crisis.45 12.77 27-Feb-12 26.74 2009 35.373.52 8.746.274.000 (US$154. Website: www.86 -52.

718 125.714511 16.05871 11.4 8.9 13.858 24.86755 70.694435 14 10.644 129.944 23.631.67487 72.329.044.0 123.90 2010 283.Singapore Commercial Banking Report Q2 2012 Singapore Balance Sheet (LCYmn) 2006 Total Assets Loans & Mortgages Total Deposits Total Shareholders' Equity Earnings per share (EPS) 197.710 158.710.51 Source: BMI Singapore Key Ratios (%) 2006 Return on Assets Return on Equties Loan Deposit Ratio Loan Asset Ratio Equity Asset Ratio Total Risk Based Capital Ratio Tier 1 Capital Ratio 1.2 2007 1.448 29.91234 9.114.60466 75.9293 43.6 16.499 0.959.29 2007 232.149 122.792065 9.723.695 33.412.982646 86.7 13.89 2009 184.29 2008 256.092 21.1 Source: BMI © Business Monitor International Ltd Page 53 .19516 49.046 1.72 0.11 0.753.493.520.027.158 1.3 16.4 15.75565 8.003 1.26 2009 258.567848 5.86 2008 178.252.5 10.838 187.70 Source: BMI Singapore Balance Sheet (US$mn) 2006 Total Assets Loans & Mortgages Total Deposits Total Shareholders' Equity Earnings per share (EPS) 128.1 2009 0.841 169.372 85.741 47.80 146.099.569.998.102 0.716.81 2007 161.288358 18.963 109.87603 9.9 2008 0.42504 51.2 87.5 92.68 106.912 152.34857 9.236.42 0.75304 7.8 76.608.3 20.60 118.201877 12.53 0.83 0.1 2010 0.4 55.78786 9.64 127.095568 74.35 79.790.428389 14.02573 56.973 178.763194 13.9 25.62 2010 221.

in operation since 1912. available to customers wanting to buy homes in prime sections of Sydney and Melbourne. Great Eastern Holdings. partly offset by a decrease of 13 basis points in net interest margins. China. Vietnam. Opportunities Underlying strength may lead to acquisition opportunities in downturn. This loss has been attributed to the instability of global financial markets and its direct influence on the bank's trading income. Threats Weaker regional and international economic climate. This network includes more than 400 branches and offices in Indonesia operated by its subsidiary Bank OCBC NISP. Australia. Brunei. is the largest insurance group in Singapore and Malaysia in terms of assets and market share. In November 2011. bolstered by loan growth of 27%. Its insurance subsidiary. Company Overview Oversea-Chinese Banking Corporation (OCBC) is the oldest Singaporean bank. Fees and commissions increased by 20% to SGD307mn after strong growth in wealth management. OCBC is one of the dominant players in the consumer and business banking segments in Singapore and Malaysia and the biggest home loans operator in Singapore. Australia. Taiwan. Dominant bancassurance and housing loan operations in Singapore. The Lion Global Investors subsidiary is one of the largest asset management companies in South East Asia. meaning customers will not be exposed to undulating foreign exchange risks. Japan. Net interest income increased 16% to SGD874mn. Myanmar. OCBC reported net profits of SGD513mn for Q311. Ranked by Bloomberg markets as on of the world's strongest banks. with group assets of approximately SGD267bn. The induction of OCBC Overseas Property Financing-Australia was confirmed after the success of a similar programme for the London property market six months previously. Weaknesses Higher provisions for NPLs and doubtful loans. It is one of the largest financial services groups and financial institutions in the Singapore-Malaysia market. OCBC announced the launch of a new mortgage loan. © Business Monitor International Ltd Page 54 . Indonesia. South Korea. a 10% drop on Q310's figure of SGD570mn. OCBC is also the 100% owner of Bank of Singapore. over 500 branches and representative offices in Singapore. Hong Kong. Lower costs and higher margins put OCBC in a good position to capitalise on the economic recovery. Thailand. the UK and the US. Insurance demand is rising. The facility is ringgit-based.Singapore Commercial Banking Report Q2 2012 Oversea-Chinese Banking Corporation Strengths Well established financial group with wide regional and international network. Malaysia.

547.07 52.73 2009 29.59 Source: OCBC.34 3.56 10.74 0.07 9.490.04 11.304.100.34 Source: OCBC.66 2008 181.20 16.309.70 4.04 0.607.788. % change (eop) Change. 2004-2009 2004 Market Capitalisation.70 59.343.63 25. SGD Share Price.79 18.47 100. Operating expenses were up 7% y-o-y. The non-performing loan ratio strengthened to 0.530.7%. from 1. 2004-2009 2004 Total Assets Loans & Mortgages Total Deposits Total Shareholders' Equity Earnings per share (SGD) 119. US$ Share Price.807.30 71.87 94.862.47 -39.778.731.50 80.881. US$ Share Price.861.108.53 13.234.492.689.385.29 5.601.60 21.76 14.632.21 9.22 3.00 75.03 25.99 3.299. unless stated).57 4.74 15.10 6.40 2006 151.63 -3.81 0.sg Status: Full bank Table: Stock Market Indicators.62 14.98 7.84 2006 24. Company Data Website: www.1% in the same period of 2010.19 0.Singapore Commercial Banking Report Q2 2012 loans and trade fees. reaching SGD611mn.55 2009 194.876. Bloomberg © Business Monitor International Ltd Page 55 .82 3.36 2005 134.03 2005 20.47 2010 33.159.838.86 0.53 57.021.134.72 17. SGD Market Capitalisation.49 10.887.40 55.078.42 18559.020.48 86.779.02 24.60 21. Bloomberg Table: Balance Sheet (SGDmn.90 0.962.54 2007 25.918.23 3. while allowances for loans and assets fell to SGD38mn from SGD43mn in Q310.ocbc.00 88.63 2007 174.219.99 12.79 3.39 16.68 5.66 6.114.230.86 2008 15.70 5.11 64.073.com.43 8.074.710. year-to-date Shares Outstanding (mn) 3.086.20 79.486.35 7.316.63 3.

434.5 2008 0.21 2005 81.30 0.41 0.82 42.444.416.6 2005 0.44 0.07 33.21 42.88 8.89 49.921.39 2009 138.1 14.731.46 8.398.019.20 57.1 2007 1.27 15.40 49.Singapore Commercial Banking Report Q2 2012 Table: Balance Sheet (US$mn. Bloomberg © Business Monitor International Ltd Page 56 .51 96.26 40.39 81.64 35.25 14.96 41.38 8.60 55.43 8.79 16.3 13.4 11.71 15. 2004-2009 2004 Total Assets Loans & Mortgages Total Deposits Total Shareholders' Equity Earnings per share (US$) 73.99 11.40 2007 121. Bloomberg Table: Key Ratios (%).556.95 11.552.06 81.10 11.184.277. 2004-2009 2004 Return on Assets Return on Equities Loan/Deposit Ratio Loan/Asset Ratio Equity/Asset Ratio Total Risk Based Capital Ratio Tier 1 Capital Ratio 1.47 12.27 0.8 13.98 12.9 Source: OCBC.68 8.84 7.37 16.561.48 11.63 17.37 46.41 7.7 12.311.07 8.24 2006 98.159.44 2008 126.02 0.41 Source: OCBC.97 38. unless stated).583.2 2006 1.093.52 71.39 38.4 15.89 81.634.031.01 0.80 15.42 32.00 12.9 2009 1.03 65.95 9.111.495.49 17.75 86.652.46 44.503.571.56 89.707.54 61.

UOB is rated among the world's top banks by Moody's. UOB officials are positive about the bank's resilience. capital market activities. In Singapore. Underlying strength may lead to acquisition opportunities in downturn. Head of Research and Investor Relations Jimmy Koh stated: 'Investors across the globe are still looking to Asia as a harbour of decent investment returns' and added that Asian economies have remained 'buoyant in choppy waters. largely attributed to lowered loan administration fees.Singapore Commercial Banking Report Q2 2012 United Overseas Bank Strengths Large established bank with wide regional and international network. including personal financial services. UOB predicted that growth levels in Asia will slow moderately in 2012. UOB's Chief Executive called the results: 'a resilient set of financials © Business Monitor International Ltd Page 57 . Dominant player in Singaporean credit card market. particularly with its subsidiaries in Singapore. Singapore's economy is estimated to gain 2. commercial and corporate banking. founded in 1935. has a well established regional presence. Weaknesses Opportunities Presence in home lending market in Singapore during the housing downturn. The establishment of China-ASEAN free trade area has a potential to accelerate economic development and provide opportunities for regional businesses. general insurance. Threats Weakness in overseas economies could lead to further NPL growth. Lower cost base since the crisis prepares way for strong growth in the eventual recovery. life assurance and stock broking services. Company Overview United Overseas Bank (UOB). asset management. down from 4. a 4% drop y-o-y. investment banking. treasury services. Thailand and China. UOB Asset Management. Aa1 for long-term bank deposits and Prime-1 for short-term bank deposits. a 1. Expenses rose 3%. Malaysia. futures broking.5% growth in 2012. However. reaching SGD631mn. In January 2012. Indonesia. Fees and commission income was SGD323mn. Strong balance sheet and capital adequacy ratio. UOB also has diversified interests in travel and leasing. reflecting the core performance of the bank. UOB's fund management arm. who gave it a B for financial strength. It is also a key player in loans to SMEs. UOB is the market leader in the credit card and private residential home loan sectors. while loans increased 7% in Q3 alone.' UOB reported post-tax net profits of SGD522mn for Q311. Western Europe and North America.8% in 2011. Net interest income reached SGD915mn. private banking. UOB has a network of over 500 offices in 19 countries and territories in Asia Pacific. venture capital management.89% from Q211. is one of Singapore's most highly regarded and award-winning fund managers. but net interest margin in Q311 dropped 3 basis points to 1. It provides a wide range of financial services. down significantly at 31% less than the previous year.2% rise from Q310. corporate finance. Trading and investment income was SGD56mn.

940.12 27-Feb-12 24.689. % change (eop) Change YTD (2011 only) Shares Outstanding (mn) 1.30 19.578.080.sg Status: Full bank Email: Vivian.19 18.8 99.026.27 11.726.uob.02 1.41 118.259.5 21.32 1.90 142.com Table: Singapore Stock Market Indicators 2006 Market Capitalisation LCY Market Capitalisation US$ Share Price LCY Share Price US$ Share Price.com.10 14.38 15.76 10.374.28 29.035.5 112.1 19.Singapore Commercial Banking Report Q2 2012 amidst volatile markets.299.16 1.155.719.61 106.80 13.55 1.840.65 2007 174.311.98 2009 30.54 22.394.60 13.59 95.45 45.506.33 1.19 2010 213.5 17.542.15 1.31 12.523.122.74 18.85 8.62 21.82 21.11 1.93 19.3 92.502.322.707.91 2010 28.668.201.95 55.551.439.950.49 2007 30.34 19.95 -34.541.70 Source: BMI © Business Monitor International Ltd Page 58 .7 76.778.4 99.25 2009 185.551.18 13.' Company Data Website: www.653.51 2008 19.512.967.78 na 8.08 121.62 na Source: BMI Table: Singapore Balance Sheet (LCYmn) 2006 Total Assets Loans & Mortgages Total Deposits Total Shareholders' Equity Earnings per share (EPS) 161.505.874.61 1.11 12.94 1.5 15.53 19.7 17.SongKY@UOBgroup.171.21 1.175.36 2008 182.

615.973055 11.3 10.1 50.0 11.07539 49.5 10 2008 1.82 2010 166.75 62.9 2009 0.0 87.85118 9.62 0.91 1.296988 14.11 110.559.870.74214 88.6 12.490.273.3 Source: BMI © Business Monitor International Ltd Page 59 .635.20906 9.604.64 0.072809 19 14 2010 1.424.04 2007 121.32351 80.25 Source: BMI Table: Singapore Key Ratios (%) 2006 Return on Assets Return on Equities Loan Deposit Ratio Loan Asset Ratio Equity Asset Ratio Total Risk Based Capital Ratio Tier 1 Capital Ratio 1.7737 7.893322 16.90139 53.8 15.64751 16.130.3 11 2007 1.1 70.90 2008 127.84985 83.2 10.06275 9.193.88 2009 132.048566 12.628.365.22988 12.43 0.3 16.Singapore Commercial Banking Report Q2 2012 Table: Singapore Balance Sheet (US$mn) 2006 Total Assets Loans & Mortgages Total Deposits Total Shareholders' Equity Earnings per share (EPS) 105.039459 19.507.6 69.4 64.34307 55.39 82.360.100.71 1.54208 86.337849 15.42214 54.103.78 74.943.868.429629 14.7 13.82523 9.269.323.79426 83.73829 54.80 86.

Citibank first established its operations in Singapore in 1902. Compared to Q410.Singapore Commercial Banking Report Q2 2012 Citibank Singapore Strengths Strong global network. Operating expenses increased by SGD465mn and tax provision was up by SGD470mn. © Business Monitor International Ltd Page 60 . On December 31 2011. it has grown into a formidable market player with major market share in key businesses such as unsecured lending.81. The bank has a shared ATM network with HSBC. Citibank's global consumer banking division started operations in Singapore in 1982. Weaknesses Opportunities Local operations perceived to be tainted by global exposure to toxic assets. Citibank incorporated the wholly owned subsidiary of Citigroup in Singapore. Citigroup's full year net income declined 11% from Q410 to SGD1. In 2009. Strong position in local institutional banking.8%.78 and tangible book value per share was SGD49. credit cost in Q411 decreased by 41% to SGD2. It was then called International Banking Corporation and was the first American bank to set up a branch in the city-state. reaching SGD12. Tier 1 Capital Ratio was 13. deposits and investments and secured assets. Standard Chartered and Maybank called atm5. increases of 8% and 12% respectively. Citibank was among the first foreign banks to be awarded a qualifying full bank licence by the MAS in 1999. Both these figures played a hand in largely offsetting a SGD2bn increase in credit cost from Q410.9bn after SGD557mn was spent on legal costs and SGD428mn on a repositioning charge.6% and Tier 1 Common Ratio was 11. This was part of Citibank's strategy to grow its international businesses and reaffirms the bank's long-term commitment to the city-state. Potential to leverage growth from the bank's strong client base of large corporations. Growing trade flow between the Middle East and the rest of Asia. with paid-up capital of SGD1.2bn decrease in y-o-y revenues. In June 2004.5bn. Threats Exposure to the weakness of regional markets.9bn. pension plans. Although a relative latecomer to the retail banking sector. Company Overview Citigroup has about 200mn customer accounts and operates in more than 140 countries. Citibank Singapore Ltd. ABN AMRO. In January 2012 Citibank was ordered to pay US$2. Operating expenses increased 4% from the fourth quarter of 2010. book value per share was SGD60. as well as in the consumer and high-net worth individual sectors.2bn in Q411. Citibank were arguing for compensation after CPC purchased complex options positions then refused to pay in full after the 2008 collapse in oil prices. insurance companies and sovereign wealth funds. Export collapse in the key markets such as Japan and the US.5mn to the Ceylon Petroleum Cooperation (CPC) to cover its legal fees over a dispute in oil hedging. The arbitration panel in charge of the case threw out Citibank's claim against CPC for US$192mn plus interest following a voided oil hedging deal. Citibank was the first bank to launch a mobile payment pilot service in Singapore in partnership with Visa. a SGD1.

sg Status: Full bank © Business Monitor International Ltd Page 61 .Singapore Commercial Banking Report Q2 2012 Company Data Website: www.com.citibank.

We collate our commercial banking databank from official sources (including central banks and regulators) wherever possible. Total assets are analogous to the combined balance sheet assets of all commercial banks in a particular country. However. They generally include deposits from public sector and state-owned enterprises. Client loans are loans to non-bank clients. We take into account capital items and bond portfolios. As such. client loans and client deposits. and only fall back on secondary sources where all attempts to secure primary data have failed. with central bank. The former include shareholders funds. they generally do not include loans to governments. Total assets = client loans + bond portfolio + other assets. © Business Monitor International Ltd Page 62 . government (or nongovernment) bonds held or loans to central banks. macroeconomic trends and financial markets. and subordinated debt that may be counted as capital. All of the risk ratings and forecasts within this report are a result of BMI's own proprietary research and do not in any circumstances include consensus or third party numbers. They do not incorporate the balance sheet of the central bank of the country in question. as well as our in depth view of each local market. Company data is sourced. the reports draw heavily on our extensive economic data set. in the first instance. They include loans to public sector and state-owned enterprises. How Our Data Set Is Structured The reports focus on total assets. Total liabilities and capital = capital items + client deposits + other liabilities. which includes up to 550 indicators per country. they only include government deposits if these are significant. In quantifying the collective balance sheets of a particular country.Singapore Commercial Banking Report Q2 2012 BMI Banking Sector Methodology BMI's Commercial Banking Forecast Report series is closely integrated with our analysis of country risk. However. we assume that three equations hold true: Total assets = total liabilities and capital. Client deposits are deposits from the non-bank public. from company reports. regulator or trade association data only used as a backup. The latter includes government and non-government bonds.

and also broader industry/state characteristics that may inhibit its development. client deposits include significant amounts that have been deposited by residents of another country. Overall. building societies/thrifts are an insignificant part of the banking landscape. offers an industry-leading insight into the prospects/risks for companies across the globe. In some cases. we have used BMI's proprietary Country Risk Ratings in a nuanced manner to ensure that the ratings accurately capture broader issues that are relevant to the industry and which may either limit market attractiveness or imperil future returns. Finally. other assets and other liabilities are analogous to inter-bank transactions. The US is the main exception to this. © Business Monitor International Ltd Page 63 . In some cases. the ratings system. Conceptually. First. total assets and client loans include significant amounts that are owned or that have been lent to customers in another country. other assets and other liabilities are balancing items that ensure equations two and three can be reconciled with equation one. we have explicitly aimed to assess the market attractiveness and risks to the predictable realisation of profits in each state. In constructing these ratings. the following indicators have been used. we have. the ratings system divides into two distinct areas: Limits of Potential Returns: Evaluation of industry's size and growth potential in each state. In practice. Almost all indicators are objectively based. identified objective indicators that serve as proxies for issues/trends within the industry to ensure consistent evaluate across states. where possible. which integrates with all the other industry Business Environment Ratings covered by BMI. In most countries for which we have compiled figures. such transactions are generally with foreign banks. Second. thereby capturing the operational dangers facing companies operating in this industry globally. In some cases. Commercial Bank Business Environment Rating In producing our Commercial Banking Business Environment Rating. the richer OECD countries and certain countries in Central and Eastern Europe. Risks to Realisation of Returns: Evaluation of industry-specific dangers and those emanating from the state's political/economic profile that call into question the likelihood of anticipated returns being realised over the assessed time period. Such cross-border business is particularly important in major financial centres such as Singapore and Hong Kong. our approach has been threefold.Singapore Commercial Banking Report Q2 2012 In terms of the equations. and we do not include them in our figures.

to denote strength of legal institutions in each state. Large markets are considered more attractive than small ones Indication of growth potential. Security of investment can be a key risk in some emerging markets Rating from CRR to denote ease of conducting business in the state Source: BMI Weighting: Given the number of indicators/datasets used. the following weights have been adopted. as a % of total population. 2012-2016 Country structure GDP per capita Active population Corporate tax GDP volatility Risks to Realisation of Returns Banking market risks Regulatory framework and industry development Regulatory framework and competitive environment BMI's Country Risk Ratings (CRR) Short-term financial risk Policy continuity Legal framework Bureaucracy Rationale Indication of overall sector attractiveness.Singapore Commercial Banking Report Q2 2012 Table: Commercial Banking Business Environment Indicators And Rationale Limits of Potential Returns Banking market structure Estimated total assets. 2012-2016 Estimated growth in client loans. evaluating currency volatility Rating from CRR. © Business Monitor International Ltd Page 64 . the higher the score Indication of the scope for expansion in profits through intermediation A proxy for wealth. High-income states receive better scores than low-income states Those aged 16-64 in each state. A high proportion suggests that the market is comparatively more attractive A measure of the general fiscal drag on profits Standard deviation of growth over seven-year economic cycle. 2012 Estimated growth in total assets. it would be inappropriate to give all subcomponents equal weight. Consequently. evaluating the risk of a sharp change in the broad direction of government policy Rating from CRR. The greater the likely absolute growth in total assets. A proxy for economic stability Subjective evaluation of de facto/de jure regulations on overall development of the banking sector Subjective evaluation of the impact of the regulatory environment on the competitive landscape Rating from CRR.

of which 40 60 Source: BMI © Business Monitor International Ltd Page 65 . of which: .Country Risk Weighting.Banking market structure . % 70.Country Structure Risks to Realisation of Returns. of which: . of which 60 40 30.Banking market risks .Singapore Commercial Banking Report Q2 2012 Table: Weighting Of Indicators Component Limits of Potential Returns.

.Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.

You're Reading a Free Preview

Download
scribd
/*********** DO NOT ALTER ANYTHING BELOW THIS LINE ! ************/ var s_code=s.t();if(s_code)document.write(s_code)//-->