Bank lending dips for 2nd straight month, consumer loans shrink

Bank lending declined for a second consecutive month in April, with consumer loans taking a bigger hit than business loans from the disruption caused by circuit breaker measures.

Total lending dropped 0.4 per cent to $689.7 billion last month, from $692.4 billion in March. It rose 2 per cent over the same month last year, preliminary data from the Monetary Authority of Singapore showed yesterday.

Total business lending last month dipped 0.1 per cent to $433.8 billion, from $434.2 billion in March, with financial institutions and businesses in manufacturing and general commerce on the downtrend.

But sectors such as agriculture, construction, and transport, storage and communication saw small increases in lending over the same period.

Consumer loans shrank across all segments, falling 0.9 per cent to $255.9 billion last month, from $258.2 billion in March.

Maybank Kim Eng economist Lee Ju Ye noted Singapore's circuit breaker measures to counter the spread of Covid-19 have had a bigger impact on loans to consumers compared with loans to businesses.

The various financing schemes such as the Temporary Bridging Loan Programme and the Enterprise Financing Scheme, implemented by the Government as part of its fiscal support measures, may have cushioned the impact on business loans, she said.

For consumer loans, the closure of retail and food and beverage outlets, and travel restrictions in particular, resulted in a plunge in credit card loans, Ms Lee noted.

"The closure of car dealerships and showrooms (and) the suspension of certificate of entitlement bidding exercises in April have also driven car loans to a four-year low," she said.

The MAS data showed that credit card loans last month shrank 8.9 per cent to $9.7 billion from $10.6 billion in March - and were down a sharper 13 per cent year on year.

Car loans dropped 1.3 per cent month on month to $8.7 billion from $8.8 billion in March, and were 3 per cent lower than a year ago.

Total lending dropped 0.4 per cent last month, from $692.4 billion in March.

Total business lending last month dipped 0.1 per cent from $434.2 billion in March, with financial institutions and businesses in manufacturing and general commerce on the downtrend.

Housing loans, which make up three-quarters of consumer loans, inched down 0.1 per cent to $200.06 billion last month, from $200.3 billion in March.

"Consumer loans will likely stay weak in May and June, before improving steadily in July as consumer-related businesses reopen by then," said Ms Lee.