SIngapore Loan Vs Bond

STRICTLY PRIVATE AND CONFIDENTIAL

Singapore: Loan vs. bonds in the banking books

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Singapore: Loan vs. bonds in the banking books
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Characteristics of corporate loans1
Loan growth2
Total outstanding loans and advances issued by Domestic Banking Units (DBU) stood at SGD
393 billion as of April 2012 with a 20.5% Y-o-Y increase. Total outstanding loans and advances issued by Asian Currency units (ACU) stood at USD 862 billion as of April 2012 with a 3.93%
Y-o-Y increase. Combined total volume of loans and advances stood at SGD 1486 billion with a
7.85% Y-o-Y increase.
Loan/Bond mix
For DBU: Loans and advances/Bond investments = 2.91
For ACU: Loans and advances/Bond investments = 8.65
Combined: Loans and advances/Bond investments = 5.68
Leverage of the banking sector
Three domestic banks namely Development Bank of Singapore (DBS), Oversea-Chinese
Banking Corporation Ltd. (OCBC) and United Overseas Bank Ltd. (UOB) together commanded almost 60% in combined market share in SGD loans and deposits at year-end 2010. In the table below we present the leverage of these three domestic banks at the end of 2011.
Figure 1: Leverage of the banking sector3
Equity (SGD million)
Debt (SGD million)
Leverage (debt/Equity)

DBS
UOB
OCBC
33,069
23,144
25,390
55,425
33,266
34,716 1.68 1.44 1.37

Source: Bloomberg

Typical maturities
Corporate loans have maturity mostly either 3 years or 5 years and sometime 10 years.
Revolving feature
Revolver loans are quite frequently issued in Singapore. Revolving features allows the borrower to drawdown some portion of the credit line.

1

There is no published report on the corporate loan market of Singapore. It seems that only a small percentage of corporate loan is rated by any of the top 3 rating agencies and hence information about the