You are here
Update: OCBC's 2015 loan growth to dive on weak demand, says CEO
OCBC Bank expects full-year loan growth to be "middle single digit" as loan demand is weak, said its chief executive Samuel Tsien.
It would be lower than last year's 18 per cent, said Mr Tsien on Thursday at a press briefing after OCBC posted Q1 results.
DBS Group, which released Q1 results on Tuesday, revised 2015 loan growth lower to 6 per cent from previous 8 per cent.
"Loan demand is indeed lower, especially for indigenous activities," said Mr Tsien.
He said local investments in manufacturing and infrastructure and regional flow activities have been "quite weak".
China-related trade loans fell sharply. OCBC's Q1 2015 bills receivables fell 27 per cent or S$5.3 billion year on year and more than 70 per cent were China-related, said Mr Tsien.
OCBC is working hard to book more regional activities in Singapore, he added.
The bank is also targeting offshore Greater China loans or those of Chinese companies which are investing in South-east Asia, he said.
China has a policy to get its companies to invest overseas, and South-east Asia; particularly in infrastructural projects like toll roads, power plants and railways, he said.
"With our presence in Malaysia and Indonesia, we stand a good opportunity to capture these when they materialise," he said.
OCBC said gross total loans were up 20 per cent to S$210 billion year on year. Its Hong Kong unit, OCBC Wing Hang, contributed S$28.6 billion to the year-on-year growth of S$34.9 billion. Excluding Wing Hang, loans growth of 4 per cent came from home loans, and loans to building and construction.
The first-quarter results included the consolidation of Wing Hang, which became a subsidiary in the third quarter of 2014.
Singapore bank lending in March fell for the fourth straight month compared to a month earlier, though consumer loans grew slightly in the period, preliminary data from the Monetary Authority of Singapore (MAS) showed on Thursday.
Loans through the domestic banking unit - which essentially captures lending in all currencies but mainly reflects Singapore-dollar lending - stood at S$601 billion in March. This was a dip of 0.4 per cent from S$604 billion in February, compared with the fall of 0.6 per cent in February.
Business loans were down 0.8 per cent to S$364 billion from a month ago, as lending to most sectors fell. But the exception included loans to construction firms, which make up the single-largest lending segment.
Consumer lending was up 0.2 per cent at S$238 billion, compared to February. A month ago, growth was flat.
On OCBC's Singapore housing loan business, Mr Tsien said it was quiet in January and February but "March was good".
"We do not feel our market share has been eroded," he said.
DBS Group said earlier this week that it has managed to grow its Singapore housing loan business by taking some market share from selling refinancing deals to home buyers who want to move to fixed rate loans from floating rate packages.
Refinancing loans do not make up a lot of new loans for OCBC, said Mr Tsien.
The majority of home buyers are still looking at floating rate loans because the interest rates are lower, he said.
OCBC reported an 11 per cent increase in net profit to S$993 million for the first quarter of 2015.