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Trade tensions, cooling property market cloud outlook for Singaporean banks

Major Singaporean banks warned of slowing loan growth for the second-half of 2018, after reporting higher net profit for the second quarter on increases in interest and fee income.

DBS Group Holdings Ltd., the city-state's largest lender by assets, trimmed its full-year loan-growth forecast Aug. 2, after posting an 18% year-over-year rise in second-quarter net profit.

The lender's CEO, Piyush Gupta, said trade loans associated with Chinese businesses could slow amid trade tensions between China and the U.S. Meanwhile, the Singaporean government's recent measures to cool the property market could also dampen demand for mortgage loans, he added.

United Overseas Bank Ltd. and Oversea-Chinese Banking Corp. Ltd., whose lending to clients in Greater China grew more quickly than in other regions in the second quarter, echoed the concern.

The trade spat could further weaken the Chinese economy which has already shown signs of slowing, UOB CEO Ee Cheong Wee said during the bank's earnings briefing Aug. 3. The lender's net profit rose 28% in the second quarter from a year earlier, the strongest growth among the three major banks. Loans in Greater China rose 37% to S$38 billion in the second quarter from a year earlier.

OCBC COO Ching Wei Hong said during an earnings briefing Aug. 6 that domestically, mortgage growth has started slowing.

"There's still a fairly resilient demand from first-time homebuyers," he said, adding that he expects the lender's overall 2018 loan growth to be in the low-to-mid single digits.

As of Aug. 9, US$1 was equivalent to S$1.36.

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