Total loans granted by banks in Singapore fell for a third month in April, as continued sluggishness in the economic outlook dampened business activity.
Overall, loans fell 0.8 per cent in April from the same month last year to $589.8 billion, with the decline stemming from a slowdown in business loans.
Business loans in April fell 2.9 per cent year on year to $346.6 billion.
The sharpest fall was seen in the general commerce sector, with loans falling 20.9 per cent to $55.6 billion in April year on year. Loans to professional and private individuals for business purposes had the second-highest year-on-year drop, of 6.2 per cent, to $9.3 billion.
Bucking the trend, loans to the agriculture, mining and quarrying sector as well as to the building and construction industry both grew.
Consumer loans also rose despite the gloomy economic outlook, supported by an increase in housing loans, credit card interest payments and share financing.
Overall, consumer loans grew 2.4 per cent in April from the same month last year to $243.2 billion.
Housing and bridging loans climbed 3.7 per cent over the same period to $185.9 billion, while credit card interest payments increased 2.5 per cent to $9.8 billion.
Share financing chalked up the biggest jump, more than doubling to $2.4 billion.
DBS economist Irvin Seah said he was surprised by how resilient consumer loans have been despite the gloomy economic outlook, but said it could be a reflection of the relatively stable labour market.
"While we have seen a softening in the labour market, it hasn't cracked yet. There has been an increase in redundancy numbers lately but it is still far from the levels seen in previous recessions," he noted.
The overall decline of 0.8 per cent in total loans can be read as an encouraging sign, he said, given that it is an improvement over the 1.7 per cent drop in loans seen in March from the same period the year before.
However, he added that there is not enough reason to cheer, as business loans are still in negative territory. In March, business loans had dropped 4.2 per cent from the same month the year before.
"If business loans continue to dive, the resilience in the consumer loans segment won't be sustainable as a continued fall in business loans implies a deterioration in business conditions, which then implies a higher risk for the labour market, and therefore for consumers," he noted.
OCBC economist Selena Ling said loans have now shrunk for seven months straight.
"Car loans... continued to shrink by 4.8 per cent year on year, but may start to see some respite with the recent easing of auto loan measures, albeit it remains a small segment - just 3 per cent- of the consumer loan market," she said.