Bank lending has weathered the double hit from a weaker manufacturing sector due to the trade war, and a housing market rattled by economic uncertainty and last year's cooling measures.
Total bank loans edged up 0.6 per cent to $684.88 billion in August, reversing a dip in July, preliminary Monetary Authority of Singapore data showed yesterday.
It noted that higher business loans offset the continued contraction in residential lending, which fell for the eighth straight month.
Business borrowing grew 1.1 per cent to $422.73 billion from July, while consumer loans shrank 0.2 per cent to $262.15 billion.
Housing loans, which account for 75 per cent of consumer lending, dropped 0.2 per cent to $201.37 billion and were down 1.1 per cent year on year.
Associate Professor Lawrence Loh from the National University of Singapore Business School said property cooling measures introduced last year have dampened housing loan growth, but economic uncertainty is also deterring buyers.
Weaknesses in the manufacturing sector amid the trade conflict between the United States and China also showed in the latest lending figures.
Loans to the manufacturing sector fell 0.2 per cent to $27.92 billion compared with July, while loans to all other segments, such as agriculture, construction and transport, expanded in August.
But manufacturing sector lending was up 4.5 per cent compared with August last year.
Maybank Kim Eng economist Lee Ju Ye said the pickup in business lending last month was mainly driven by loans denominated in currencies other than the Singdollar.
Fall in loans to the manufacturing sector in August to $27.92 billion, compared with July. Loans to all other business sectors, such as agriculture, construction and transport, grew in August. Loans to the manufacturing sector, however, grew by 4.5 per cent compared with August last year.
"Singapore's financial centre is benefiting from the reconfiguration of the manufacturing supply chain towards Asean amid the United States-China trade war," she added.
But the trade war's impact on local manufacturing companies is still evident from the contraction in loans to manufacturers.
CIMB Private Banking economist Song Seng Wun said one reason could be that banks are also more cautious about lending to such firms amid the uncertainty from the trade row.