ANNUAL REPORT 2002 / 2003
SECTOR - PERFORMANCE AND GROWTH
in the Domestic Market
lending activity was weak, both in the interbank and non-bank segments.
Interbank lending fell by 9.6% in 2002, with the bulk of the decline coming from
a contraction in lending among resident banks. This reflected the consolidation
in the banking industry and ample market liquidity, which reduced the need for
banks to borrow to maintain their liquidity positions.
weak economy also took its toll on non-bank lending which fell by 1.6% in 2002.
Non-bank lending fell across most sectors, except mortgage loans which grew
10.6%. This was due to mortgage rates being driven lower because of strong
competition amongst banks and a change in CPF rulings, that now allows CPF money
to be used as part of the down-payment for private property purchases.
in the Asian Dollar Market
lending, especially to Europe, supported activity in the ADM. Non-bank lending,
however, continued to decline, albeit at a slower pace than during the Asian
crisis. There was a shift from cross-border lending to lending by foreign bank
affiliates within the countries. There was also a notable shift from bank
financing to capital market financing.
lending is likely to remain weak in 2003, with interbank lending remaining the
main source of market activity. Bank earnings are likely to shift towards
non-interest income sources. From a flow of funds perspective, the ADM has
remained an important centre for mobilising interbank funds globally. (See Box
2002, syndicated lending fell by 27.3% as firms cut back capital expenditure on
expectations of a further delay in the global economic recovery. (See Chart 3.)
As in previous years, borrowers from North Asia (excluding Japan) accounted for
the largest number of total cross-border syndicated loans.2 Cross-border
lending, which accounted for 47.2% of total syndicated lending, declined by
38.6% in 2002. This decline is consistent with the shift from cross-border
lending in the ADM to lending by foreign bank affiliates within the countries.
steps taken by MAS over the past few years to develop the debt market has
increased its breadth and depth. The average daily turnover of Singapore
Government Securities (SGS) has grown by more than two and a half times in the
past five years. In the corporate bond market, 2002 was a record year in terms
of the total outstanding volume of corporate debt and the number of issues by
foreign entities, despite a slowdown in new issuance.
|A More Resilient Financial Sector||Structure of Financial Sector||Financial Market Activity|
|Singapore Government Securities Market||Corporate Debt Market|
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