Singapore bank lending falls for 10th straight month in July on sluggish economy

Bank loans fell for a 10th straight month in July 2016 as the sluggish economy continued to weigh on business activity and sentiment.
Bank loans fell for a 10th straight month in July 2016 as the sluggish economy continued to weigh on business activity and sentiment.PHOTO: AFP

SINGAPORE - Bank loans fell for a 10th straight month in July as the sluggish economy continued to weigh on business activity and sentiment.

Overall, loans slipped to S$597.2 billion in July, down 2.2 per cent compared with the same month last year, due largely to a decline in business lending.

Bank loans last suffered a similar extended decline in the 1980s, when total lending shrank for 12 months in a row, from May 1986 to April 1987.

Business loans fell 5 per cent year-on-year in July to reach S$351.8 billion, the 11th straight month of decline, according to preliminary data released on Wednesday (Aug 31) by the Monetary Authority of Singapore.

The sharpest drop was in the general commerce sector, with loans plunging 22 per cent year-on-year to S$59.7 billion.

Loans to manufacturers also experienced significant declines.

However, loans to financial institutions, construction industry firms as well as to companies in the transport, storage and communications sector grew. Lending to agriculture, mining and quarrying firms also ticked up, as did loans to business services firms.

Meanwhile, consumer loans went up despite the gloomy economic outlook, supported by an increase in mortgages, credit card interest payments and share financing.

Overall, consumer loans rose to S$245.5 billion in July, up 2.2 per cent from the same month last year.