Bank lending in May rose for the eighth straight month on the back of a more positive economic outlook, with both business and consumer loans increasing.
Total loans rose to $633.2 billion, up 6.8 per cent compared with $592.8 billion in May last year, according to preliminary data from the Monetary Authority of Singapore (MAS) out yesterday.
Bank lending growth has been picking up in recent months, rising 6.3 per cent year on year in March and 7 per cent in April - the fastest pace in more than two years. Bank loans have been rising year on year since October 2016.
This comes as Singapore's economic growth outlook seems to be taking a turn for the better. The Ministry of Trade and Industry has said that this year's growth is likely to be more than 2 per cent, which sits at the higher end of its 1 per cent to 3 per cent forecast and surpasses last year's modest 2 per cent.
Lending to businesses expanded for the sixth straight month in May to $381 billion, a 9.3 per cent rise from a year earlier.
Manufacturing sector loans slid 12.8 per cent, but this was offset by strong increases elsewhere.
Loans to the general commerce sector surged 21.7 per cent year on year, while lending to financial institutions rose 29.6 per cent. Lending to business services firms also went up, rising 25.7 per cent, even as transport, storage and communication companies received 16.1 per cent more in loans.
Total loans in May this year.
Total loans in May last year.
OCBC economist Selena Ling said: "While business loans growth may start to plateau... and stabilise in the second half of the year, it should remain in positive growth territory as global and regional economic and trade prospects have brightened."
Meanwhile, consumer borrowing rose 3.3 per cent year on year in May to $252.2 billion, supported mainly by an increase in mortgages and car loans.
Housing and bridging lending rose 3.9 per cent year on year to reach $193.7 billion, while car loans went up 2.2 per cent to $8 billion.
Said Ms Ling: "Given the resilience in the domestic labour market and assuming that the domestic interest rate environment sustains at low levels, consumer loans should remain fairly steady."