According to DBS Group, Southeast Asia’s biggest bank, demand for home and car loans in Singapore has plunged in 2013, following government measures to stifle inflation. Piyush Gupta, DBS Group’s Chief Executive Officer said new home loan demand fell by 50 to 60 per cent in February this year. Piyush said lending this year is unlikely to match that of 2012’s.

“March volumes are down but I think they will be down more liek 15 to 20 per cent relative to what they were, and that is consistent with my view that the latest set of measures will probably bring volumes down in terms of incremental growth. What that means is last year we grew five billion, this year we will grow 3 – 4 billion,” he added.

Car loans halved last month, after the Monetary Authority of Singapore (MAS) restricted borrowing to 60 per cent of the vehicle’s value.

Analysts have said that auto loans account for less than 4 per cent of DBS’ total loan book.

In other news, DBS has been waiting for a year for Indonesia’s approval for its US$6.8 billion bid for Bank Danamon. Gupta is positive that DBS will soon acquire Danamon’s almost-600 Indonesian branches. Indonesia’s central bank said it will approve the deal if its lenders get equal access to the Singapore market.

Jonathan Koh, associate director at UOB Kay Hian Research, said DBS may abandon takeover plans of it cannot control branding and technology. “If they do not obtain majority control, they are not allowed to possess more than 50 per cent stake in Bank Danamon and DBS may have to work out an alternative arrangement and in the worst case scenario may even choose to abort the deal,” he said.



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