Here's why Singapore industry loan growth can slow up to 10% in 2014-2015

SGD deposits remain highly disappointing.

In Singapore, while SGD deposits grew a marginally stronger 1% MoM and 1.1% YoY, their growth remained uninspiring.

According to a research note from Maybank Kim Eng, holding cash remains unappealing when interest rates are so depressed.

Further, although SGD LDR inched up to 86.7%, it remained comfortably low. SGD LDR can rise further as deposit growth is expected to remain sluggish.

Industry loan growth is expected to slow to 9-10% in 2014-15, the report noted. Housing loans should expand just 4-6%, in tandem with a slowing property market.

However, Maybank Kim Eng believes its slack will be picked up by reasonably strong business loan growth of 12-14%. Lending for general commerce could prove the wild card.

For exposure, DBS is the top sector pick (BUY, TP SGD23.40), the report said. It should be best positioned to take advantage of an eventual rise in interest rates.