Bank lending picked up in December, with business loans recording the first year-on-year increase in 16 months.
Total bank loans hit $617.35 billion, a 2.9 per cent increase from December 2015, according to preliminary data from the Monetary Authority of Singapore yesterday.
This beat November's 1.1 per cent year-on-year rise in bank lending and marked three months of positive loan growth.
Notably, business loans in December climbed 2.8 per cent from a year earlier to $367 billion.
Consumer loan growth was steady, with total lending up 3.1 per cent from December 2015 to $250 billion. Consumer loan growth in November came in at 3 per cent year on year.
DBS economist Irvin Seah said the turnaround in business lending reflects a return of business confidence amid a brighter economic outlook.
"Barring any sudden spike in interest rates, we expect business loan growth to continue to strengthen, along with the steadily improving business climate in the coming months," he added.
The pickup in business lending was led by more loans to agriculture, mining, manufacturing and construction firms, all of which had seen dwindling borrowing in the past few months.
Loans to manufacturers rose 0.9 per cent to $26.2 billion from a year earlier, while building loans rose 1.7 per cent to $121.4 billion.
Total bank loans in Dec, a 2.9 per cent increase from December 2015.
Consumer loan growth in Dec, up 3.1 per cent from December 2015.
Business loans in Dec, up 2.8 per cent from December 2015.
Loans in the general commerce sector fell 3 per cent year on year to $64 billion in December, compared with a 9 per cent fall in November.
Lending to financial institutions surged 16.9 per cent from a year earlier to $80.3 billion.
Loans to business service firms, as well as transport, storage and communications companies, also continued to climb.
On the consumer side, housing and bridging loans rose 4 per cent in December from a year earlier to $192 billion.
Credit card lending rose 5.2 per cent to $10.8 billion, while share financing climbed 8.4 per cent to $2.46 billion.
Car loans inched up 0.2 per cent to $7.9 billion from a year earlier, bucking months of declining growth.
Nonetheless, economists do not expect to see consumer loan growth strengthening much more.
Mr Seah said: "Existing macro-prudential measures remain in place and household leverage is still high. These two factors will likely continue to weigh on consumer loan growth, which may not be a bad thing, given the sluggish labour market at present."