Singapore UOB says loans to small firms may fall

SINGAPORE, Nov 4 (Reuters) - United Overseas Bank (UOBH.SI), Singapore's second-biggest lender, said on Tuesday credit demand from small- and medium-sized businesses could fall as the economy slows amid a global financial crisis.

"As of now, we are not seeing any distress amongst SMEs," a UOB spokeswoman said.

"Going forward, there may be some slow payments by SME customers and lower demand due to slowing economy which may put some stress on SMEs' cashflow in the future."

The emailed statement was in response to queries from Reuters after the bank reported last week a larger-than-expected 5.1 percent fall in its quarterly profit as volatile financial markets hurt non-interest income and it wrote down bad debt.

UOB, controlled by chairman Wee Cho Yaw and his family, is considered the leader in loans to local small- and medium-sized businesses, and has benefited from demand for property and construction.

It warned last week loan growth would slow after it saw an expansion of 18 percent in the third quarter from a year earlier.

Singapore banks, which have largely dodged the global credit crisis so far because of strong loans growth, now face weak capital markets that will hurt fees, slowing credit demand due to the Asian economic downturn and rising bad debt.

UOB said it would be disciplined in managing its costs, including staff costs, but added job cuts would be the last resort.

"Some avenues could include... slowdown in hiring, holding present positions, smaller or no built-in increment...," the bank added. (Reporting by Saeed Azhar; Editing by Jennifer Tan)