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Relaxed policies boost China’s new lending
SG FREEZES ASSETS OF RUSSIAN FINANCIAL INSTITUTIONS
PAYMENTS
The Monetary Authority of Singapore (MAS) has prohibited financial institutions (FIs) in its jurisdiction to do business or offer financial services to four Russian entities, the Russian government, the Central Bank of the Russian Federation, and Ukraine’s breakaway regions of Donetsk or Luhansk.
Financial entities sanctioned include VTB Bank Public Joint Stock Company, Promsvyazbank Public Joint Stock Company, Bank Rossiya, and Vnesheconombank (The Corporation Bank for Development and Foreign Economic Affairs).
Singapore-Russia transactions
FIs in Singapore are also barred from doing business with the Russian government and the Central Bank of the Russian Federation. This includes purchasing, selling, providing financial services for, assisting in the issuance of, or dealing with securities or certificates of deposit issued by Russia’s government or central bank.
Banks are also ordered not to enter into financial transactions or provide financial services to Donetsk and Luhansk.
Singapore FIs are further prohibited from establishing any new business relations, undertaking or entering any financial transaction, providing financial assistance, or transferring financial assets as well as “other assets or resources” with the four banks.
FIs who have possession, custody, or control in Singapore of any funds or assets owned or controlled directly or indirectly by the four banks were ordered to immediately freeze them.
They are also asked to ensure that such funds, financial assets, or economic resources are not made available to the sanctioned banks.
New bank lending in China fell “more than expected” with aggregate finance dropping to CNY2.37t
Relaxed policies boost China’s new lending
LENDING & CREDIT
Relaxing monetary policies gave a little boost to new lending in China as banks remained cautious over concerns regarding credit quality–and any further cuts may not be enough to alleviate concerns, according to a report by the financial institution ING.
New bank lending in China fell “more than expected” in December 2021, with aggregate finance dropping to CNY2.37t from CNY2.61t in November of the same year, according to the report.
New yuan loans also fell to a total of CNY1.13t from CNY1.27t in November.
The fall happened despite the central bank cutting reserve requirement ratios (RRR) by 0.5 percentage points (ppt) and interest rates by 5 basis points around the same period.
The small growth in credits shows that despite cuts to RRR and interest rates, banks are reluctant to lend as their concern is more about credit quality, according to ING’s Iris Pang, chief economist, Greater China.
“This is because several big corporations have recently defaulted. Though the default entities are mostly real estate developers, the risk is increasing to the suppliers, mostly in the industry of construction materials,” Pang said.
Demand for loans is mostly affected by real estate. The sector is likely bracing for more woes to come their way in the next few months, with the deleveraging for real estate developers likely to remain in force over the year. ING believes that this will end up as a merger and acquisition activity to reduce debt ratios for the most heavily indebted real estate developers. Stateowned enterprises (SOEs) will replace some private-owned enterprises across the industry.
If loans continue to experience a monthly decrease, Pang noted that the government may need to send out “a clearer message” to banks.
“If risk awareness is on the top of the list of banks’ concerns, then further RRR and interest rate cuts may not yield a result of more credits. That means that even a loosening monetary policy may not boost economic activity,” Pang said.
We may also see a return to the old days when banks lent to SOEs, which are supposed to be better in terms of repayment ability, Pang added.
On the upside, the economy is expected to extend its growth streak in 2022, which should give banks some relief from any unexpected pandemicrelated drawbacks. China’s economy grew 8.1% for the full year 2021, partly due to the low base growth of only 2.2% in 2020. It is forecasted to grow another 5.4% for the full year of 2022 on the back of stronger industrial production and the rise of retail sales. Both exports and imports also grew by around 21%, and ING expects trade to keep its momentum in 2022 as global growth is expected to be better this year.
A hidden gem amongst industries, is the investment in advanced technology, according to ING. This is partly the result of the land-mine that is the USChina relationship.
“As the US is restricting technology exports to China that can find a dual-use for military and commercial purposes, China has had to invest to build up its own capacity in advanced technology. This is an arena that has the potential for very high growth,” ING said.
A loosening monetary policy may not boost economic activity
UOB’s customer-centric, digitally innovative strategies honoured at the ABF Retail Banking Awards
UOB has been recognised as Domestic Retail Bank of the Year and Best Retail Bank.
Guided by values of customercentricity and its ‘Right by You’ motto, UOB was awarded multiple wins at the 2021 ABF Retail Banking Awards, including Domestic Retail Bank of the Year in Singapore, due to its unwavering commitment to supporting its customers through the pandemic.
The bank rolled out a series of digitalcentric strategies to ensure that customers face minimal banking disruption and maximum convenience. One key focus was on providing seamless digital onboarding and navigation for new digital natives. To continue engaging wealth customers, the bank quickly executed its first digital ‘Privilege Conversations’ webinar to discuss the latest market insights and the way forward in a post-COVID world. Cards usage offers also pivoted towards the supermarkets and e-commerce segments, as they empowered customers with the best daily essential deals in the comfort of their homes, resulting in over 50% surge in billings in those categories. The success of its digital-centric strategies was clearly reflected in the 45% soar in digital financial transactions, with PayNow and QRPay transactions further doubling in 2020.
The bank also recognised the importance of innovation, being the World’s 1st Bank to leverage VISA’s API for card-on-file provisioning, providing greater convenience for customers. Additionally, the bank’s forward thinking allowed them to reap the fruits of its past digital investments which better positioned the bank to serve customers’ banking needs amidst the pandemic. UOB’s success in its digitalised banking application and digital car & home loans ecosystems contributed to the bank’s record-high new mortgage sales in postTSDR y-o-y of 27% despite branch closures.
The bank did not rest on its laurels and continued to enhance its digital offerings to maximise rewards to customers. Recently, UOB launched the UOB TMRW banking application, which boasts the highest ratings amongst all banking applications in Singapore, and Rewards+, Singapore’s largest rewards programme with over 1000 deals across 20,000 locations islandwide.
By placing customers’ needs at the heart of its business, UOB continuously innovated and enhanced customer journeys with great success, contributing to its Best Retail Bank win.
Best Investment Product Innovation – Simplenvest UOB recognised the fervent interest in investments and the need to keep up with trends in digital transformation. SimpleInvest was designed specifically to offer every investor a simple and easy way to take the first step towards fulfilling their investment and financial objectives of 1) Liquidity, 2) Income, and 3) Growth. SimpleInvest is a testament to UOB’s commitment to serving customers with simple and innovative solutions that empower them to achieve their financial goals. Customers can access money market funds and funds of funds with just $100 via the UOB TMRW application – making it accessible and easy for customers to start their investing journey.
PFS Singapore Leadership Team in an 8x lift in the number of customers upgraded and a 4x lift in product conversions, an affirmation for the team to continue its efforts to enhance its branch journeys for customers.
Best Branch Innovation of the Year – Branch Profiler In UOB’s pursuit of an omnichannel
engagement strategy, the bank has also put forth an AI-powered experience for customers at its high-street wealth centres. Aiming to better identify and profile customers to serve them better and equip its bankers with relevant insights to better engage customers, the team developed and curated a differentiated, personalised customer journey at the branch by leveraging advanced analytics and technology. These personalised branch journeys have resulted
Best Banking for Women Initiative – Ladies Account UOB’s Lady’s Savings Account is also an industry-first female-only savings account that protects customers as they save. Combining both elements of Deposit and Insurance into one, it provides customers with higher coverage values the more they save. In an environment of declining interest rates amidst a competitive landscape, the Lady’s Savings Account leverages the perceived value and relevancy of critical illness insurance, shifting customers’ mindset to one beyond interest rates. This innovative and first-in-market solution offers peace of mind for women and is on track to achieve 30,000 new account acquisitions and $600m in savings end-balances by end-2021. The product has also been successfully launched across UOB Malaysia, Thailand and Indonesia and paved the way for the evolution of future deposit products of what savings can offer beyond earning interest rates.
