Bank lending up: Record debts?

I refer to the article “Bank lending up 6.2% to $640.68b in September” (Straits Times, Nov 1).

It states that “Total lending hit $640.68 billion, up 6.2 per cent compared with September last year, according to preliminary data from the Monetary Authority of Singapore yesterday.

Bank loans have been rising year on year since October last year with growth hitting 7.6 per cent in June, the fastest in more than two years. Momentum slowed in July and August, mainly because of slower growth in business loans.

On a month-on-month basis, September lending rose 1 per cent from the $634.41 billion recorded in August, when growth of 0.3 per cent was racked up.

Business lending in September expanded year on year for the 10th straight month to $383.29 billion, up 8 per cent from a year earlier.

Meanwhile, consumer borrowing in September rose 3.6 per cent year on year to $257.4 billion, lower than August’s 3.9 per cent growth. Mortgages and bridging loans increased 4.2 per cent to $197.03 billion.”

In this connection – Singapore’s “debt ratios – total liabilities as a percentage of total assets – are still relatively high at 73.7 per cent”.

According to the Allianz Global Wealth report – “Singapore with highest per capita debt (in Asia) – Debt per capita 2016 by country, in EUR”.

Singapore’s debt per capita at 36,075 euros is a whopping 49 per cent higher than second ranked South Korea’s 24,200 euros.

So, is there something wrong with the Straits Times news report “S’pore is No. 1 in Asia for gross financial assets” (Sep 28) – which said that “Singapore’s per capita liabilities was €36,075 at the end of last year, among the highest in Asia” – when in fact according to the report – Singapore’s debt is actually the highest in Asia?

Is Singapore’s high household debt to income ratio alarming?

According to the article “Household debt: The no-longer-managings” (The Economist, Aug 26).

UK 2008-09 household debt to income ratio 150%

It states that “On the eve of the financial crash of 2008-09, households were up to their necks in debt. On average they owed 150% of their income, with three-quarters of liabilities in the form of mortgages.

UK household debt to income ratio is now at 135%

Following the bust, households paid down much of what they owed. After falling to 130% of income, borrowing has more recently risen to 135%, with consumer lending leading the charge.”

S’pore economic growth hampered by high household debt to income ratio?

In this connection, according to the article “Steep household debt is the biggest speed bump ahead for Singapore: report” (Singapore Business Review, Mar 14, 2016) – “A report by ICAEW showed that the pace of consumer spending in Singapore has slowed compared to its long-term average, suggesting that steep household leverage are crimping the city-state’s growth prospects.

S’pore 2016 household debt to income ratio 150%?

“In our view, consumer debt is probably the greatest danger area. Rising household debt has been prominent in driving up overall private debt ratios in many countries in recent years, and household debt ratios look high in several countries – especially debt/disposable income ratios. Debt/income ratios are close to or above 150% in Singapore and Malaysia and are well above 100% in Thailand,” said ICAEW … the high debt-to-income ratios of close to 150% in Singapore may already be hampering the country’s growth potential,” the report noted”.

UK personal loan % 4% vs S’pore 13%?

As to “In 2012-17 the average advertised interest rate on a £10,000 personal loan fell from 8% to around 4%” – in contrast, the EIR (Effective Interest Rate) of personal loans in Singapore are now at around 13% per annum.

 

Leong Sze Hian

 

 

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11 Responses to “Bank lending up: Record debts?”

  • LIONS:

    Think individual/personal LOAN$ is directly proportional to HOME PRICES.
    Sin City’s is the MOST EXPENSIVE TITLE-HOLDER FOR THE 4th YEAR n thistells a $tory.

    COL INDEX N LOAN RATION ARE INTERLINKED.

    The beneficiarie$ are the GAHMEN,the RICH develiper$ N greedy BANK$ters like weecho yaw.

    The LOSERS are ordinary sgs.
    Even FTs/PRs benefit from DAFT AH LONG’s POLICIE$$$$?

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  • Amos humiliate L*L and PAP:

    Of course, household debt would be very high in Singapore because PAP made HDB a scam by increasing sharply (and continuously) the price of HDB flats. Price more than doubled since LHL became PM (while the wages of those who still have jobs – not yet taken by foreigners). He wanted to increase Government reserves – PAP “war chest” for elections. Billions are kept in SLA, not returned to MOF since Budget is already in surplus. LHL also wanted to “drain” the CPF accounts of Singaporeans (which they use to pay for their mortgage) to reduce CPF’s liability to Singaporeans from the balance in their CPF accounts. With a depleted CPF account Singaporeans will also think twice before “rocking-the-boat” (opposing PAP) and they will be more dependent on PAP’s “generosity” / “handouts”. PAP is a bunch of greedy pigs (apologies to the pig).

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  • Hacken:

    The average millennial of today does not derive his/her position from any serious lessons of economics and history but from the media, parents and peer cliches. They are brought up to believe that whatever the establishment happens to be supporting equates to free markets and individualism. What they seek to abolish is not the synthetic institutional framework that allows such borrowings to be expanded and traditionalized but the reality itself. This confusion has to stop. It’s time to sort out the men from the boys.

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  • Patriot of Temesak:

    The EVIL Bastard now DEAD created an ILLUSION of Richness and the Wooden Piece of Shit’s 5Cs made it WORSE…All these are BORROWED and LIVING in perpetual “HOCK” or Utang to Create an Illusion of SUCCESS!!!

    In REALTY the population’s CPF is tied to the Supposedly Modern Affordable Homes that will increase through Asset Enhancement???..

    Should catastrophe strike like the numerous meltdown and disastrous financial crisis…It is the Bank this time and NOT the CPF that will pull the carpet from underneath the BORROWERS…and Suicides & Bankruptcy will be the NORM

    How many Singaporeans remember the Holiday Magic…Chit-Funds and BubbleBusting in the 70s when OCBC reach a High of $70???

    History will REPEAT itself and God save the silly sheep from Suicide & Bankruptcy which is the Devil’s TOOL to wipe out the Greed & Selfishness of mankind

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  • Ong PC:

    Singapore has high household debts for some time now, nothing new. Nothing to worry about also because firstly, our debt is used to finance a strong underlying asset (ie. our property, which will not collapse in value). Also, our unemployment rate is very low at 2% and our wages are steadily increasing, so debt service is not an issue.

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  • Harder Truths:

    Thank you Mr Hian

    However – what happens when the $G banks are in trouble? DBS is already posting an NPA of 6% this year – which is huge. bad loads surged 87% last year.

    http://www.straitstimes.com/business/banking/dbs-q4-profit-falls-9-as-charges-for-bad-loans-surge-87

    https://asia.nikkei.com/Business/AC/Singapore-s-DBS-says-no-more-provisions-for-oil-and-gas

    (By the way DBS headed by Indian citizen. Is this one of the perks for India allowing DBS in India markets? How many more concessions in $G already given for jobs to Indian FT then? How many more to be given?)

    DBS is also barely making a profit in India in 2016 after heavy losses in 2015 but in India gives a 7% interest on deposits. In $G the interest is almost nil.

    http://www.livemint.com/Companies/Gngf3cAhNEmiAwSrszu08K/DBS-Bank-India-swings-into-profit-in-fiscal-2016-but-provisi.html

    So after letting in all the Indian FT into $G so as to get into the Indian market, DBS appears to be losing money.

    Hahaha – who’s laughing now? Yes – it’s the Indians!!!

    DBS will give easier loans as they look for leverage from small investors to fund their big risk ventures. DBS is getting in a bubble now, it cannot pay back their investors after the oil and gas slump.

    How much are $G taxpayers and savers subsidising banks like DBS which are going under?

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  • That Guy:

    Well … That b*tch ass guy writing and hiding in Australia has been posting doom ad gloom articles of premature warnings since almost a decade. All tis warnings so far expired wo any realization ?

    Does he even visit HLP and give some support ?

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  • RDB:

    It is all a Brick-And-Mortar” GDP dead end economic growth Ponzi Scheme of PM3 by more imports of foreigners for housing purchasers. Ran out of ideas.

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  • What abt record flood in Msia:

    Cherry picking ?

    Why no reporting of record flood in Msia ?

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  • Rabble-rouser:

    For those who wish to understand more after reading Uncle Leong’s debt article, please read this article from Zerohedge which goes further from here [looking from a global perspective].
    Link: http://www.zerohedge.com/news/2017-11-07/worlds-largest-bubbles-ranked-algebris-investments
    S’pore’s property market isn’t mentioned in this Zerohedge article but a lot of similarities correlate with HK’s bubble property market. They include:
    * Belief in “inelastic demand” for housing [limited land in S'pore;
    * Mainland [China] money inflow [mostly for En Bloc];
    One element of London’s bubble property market resonates with S’pore’s:
    * “Property ladder” mentality [Upgrading desires]

    Excerpts from the Zerohedge article:
    But, in terms of the largest bubbles he sees, the most concerning are property markets in Australia, London, and Hong Kong.
    “Sometimes, the most dangerous types of bubbles develop in property assets,” Gallo said. “They affect almost the entire population of a country, while financial assets may only be important for a smaller part of the population.”
    Property markets in these three locations are overheated, and we are starting to see signs this overvaluation is beginning to reverse as monetary policy shifts and THERE IS A PROSPECT FOR HIGHER INTEREST RATES. Not enough is being done about these bubbles, Gallo noted, and because of the widespread potential impact, these three are the largest and most worrisome.

    P.s. Most economic commentators avoid mentioning S’pore for good reasons re: Legal problems & entanglement issues from the G. But the end result will only be catastrophic for S’poreans because they’ll remain clueless & still bullish for S’pore properties despite the facts. The fact is the world today is interlinked & interconnected in many ways – you can’t isolate yourself from world’s events thinking things are all good in S’pore – you don’t even bother about the rest of the world. S’poreans have a very parochial view of the world & it’s what I find disturbing about many S’poreans especially for all ages, from the Pioneers to the Millenials.

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  • Rabble-rouser:

    To those it may concern:
    This is written from a perspective which to prevent IBs from earning their $1.00 per comment & enabling them to launch rebuttals thus further enriching & lining their pockets. If you’re clueless, read this:
    Link: https://STR.com/2017/11/07/pap-grassroots-leader-confirms-existence-of-internet-brigade/
    1. Property prices can drop as much as 50% to 60% reduction in a crisis re: 1985 Pan EL crisis, 1998 ACC, 2008 GFC – The next crisis is probably due!
    2. The PAP govt doesn’t underwrite S’pore property values – they can only just adjust supply numbers, give property tax breaks, some leeway to property developers & tweak financing rules, reduce stamp duties for buyers – but the selling motivation & the demand factor isn’t under their control. So how can property value not collapse?
    3. S’pore unemployment rate statistic are misleading. You need to understand the basis for their statistical data collection. Jobless people who are not actively look for jobs [discouraged by poor job seeking result]; time lapsed job seekers, etc are effectively excluded from the data collection. Also, underemployment re: Uber/Grab driving by graduate drivers representation isn’t a healthy job market by definition despite low unemployment figure.
    4. Wage steadily increasing isn’t a clear definition of the economy which is impacted by income disparity. The wage is an average figure but the largest wage increases probably accrued to the higher strata eg. Superscale G grade civil servants, Ministers (8 months KPI bonuses), GLCs (SMRT CEO Desmond Kuek’s million dollar salary) while the masses (80% to 90%) are suffering from stagnant wages or declining ones. Divided over a population figure which is bolstered by jobs-for-foreigners numbers/excluded jobless locals, the wage figure looks like steadily increasing but is it?
    5. Doom & gloom forecast are just simply delayed predictions. It will happened but just not now! Sunshine & sunny day forecast can also be wrong when it rains/floods. If everyone is so ‘Choon’ [100% accurate] – no one needs to work for a living – just speculate on shares, buy 4D or bet on Pow-Bei [horses] for a living. But life isn’t so ‘Choon’ so we need to either work harder [PAP's doctrine for the [90%] masses] or we work smarter [PAP's [5%] million dollar welfare system or we [5%] gaming against the PAP aristocratic system].
    6. IBs are mostly ex-Malaysians looking for a payout & running dog windfall in S’pore. Why don’t you return to M’sia & drown in the record floods, for all I care! Like Ugly Betty re: Wee Shu-Min, ‘Get out of my elite, uncaring face!’ BTW, where that ugly looking Bee-arch gone to? I hope that she doesn’t do an Annabelle Chong event!

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