Banks buck lending decline

Bank lending in Singapore rose 0.5 per cent in May from April.
Bank lending in Singapore rose 0.5 per cent in May from April. ST PHOTO: LIM YAOHUI

Bank lending here rose 0.5 per cent in May from April, finally turning the corner after four straight months of decline.

The total number of loans disbursed amounted to about $597 billion, according to data from the Monetary Authority of Singapore released yesterday.

Business lending was up 0.8 per cent at $359.7 billion over April's figures, as demand for credit grew across most segments.

Loans for general commerce companies jumped 3.4 per cent month-on-month to $72.8 billion.

Lending to financial institutions, the second-largest contributor to business loans, climbed 1.5 per cent to $74.9 billion.

Bucking the trend, however, was the transport, storage and communication sector, where borrowing fell 3.4 per cent to $18.8 billion.

Loans given out to the building and construction sector, the largest lending component, also slid 0.07 per cent to $104.2 billion.

The statistics for consumer lending in May were less upbeat, with such loans dipping 0.03 per cent to $237.4 billion, compared with that in the month before.

Car loans continued on their downward spiral, falling a further 1.1 per cent month-on-month to $8.1 billion.

But credit card loans increased 0.3 per cent to $9.6 billion, while housing and bridging loans inched up 0.03 per cent to $179.4 billion.

Ms Selena Ling, head of treasury research and strategy at OCBC Bank, said in a note that total bank lending slipped 0.1 per cent in year-on-year terms - the first such fall since October 2009.

Business loans also tanked further, shrinking for the second straight month by 2.4 per cent year-on-year, dragged down by lending to the general commerce and manufacturing sectors, she noted.

Still, Ms Ling said that bank loans may "remain soft, but should not contract year-on-year for an extended period of time".

"The global growth environment is sluggish but not heralding a recession at this juncture, barring a full-fledged contagion fallout from Grexit, which is not our baseline scenario," she said, referring to Greece's possible exit from the euro zone should it default on a debt repayment.

A version of this article appeared in the print edition of The Straits Times on July 01, 2015, with the headline 'Banks buck lending decline'. Print Edition | Subscribe