Bank lending rose year on year for the first time in 12 months in October, boosted by a surge in consumer loans.
Total bank loans rose to to $608 billion, up 1 per cent compared with $601.7 billion in October last year, according to preliminary data from the Monetary Authority of Singapore yesterday.
Lending to businesses continued to slide amid the uncertain economic environment.
Loans to companies fell 0.5 per cent to $358.5 billion this year from $360.2 billion last October.
The sharpest drop was once again in the general commerce sector, with loans plunging 12.5 per cent year on year to $61.6 billion.
Loans to manufacturers slid 5.5 per cent to $25.4 billion. The sector, which makes up a fifth of the Singapore economy, has been stuck in the doldrums amid the poor global economic outlook and lacklustre trade growth.
Lending to businesses continued to slide amid the uncertain economic environment. Loans to companies fell 0.5 per cent to $358.5 billion this year from $360.2 billion last October. The sharpest drop was once again in the general commerce sector, with loans plunging 12.5 per cent year on year to $61.6 billion.
However, this was partially offset by a rise in lending to financial institutions, business services firms and transport, storage and communications companies.
In particular, loans to financial institutions surged 16.5 per cent year on year to $79.5 billion
UOB economist Francis Tan said companies are generally still holding back on borrowing and new investments, given the cautious sentiment.
Meanwhile, consumer loans rose year on year, supported by an increase in mortgages, credit card interest payments and share financing.
Overall, consumer loans rose to $249.5 billion in October, up 3.3 per cent from the same month last year.
Housing and bridging loans rose 3.6 per cent year-on-year to reach $190.1 billion, while credit card loans grew to $10.4 billion from $9.96 billion a year ago. Share financing chalked up the biggest jump, almost tripling year on year to $2.4 billion.
Mr Tan noted that while total mortgage lending has been climbing steadily over the past year, this growth is likely to taper off in the coming year.
This is because interest rates are expected to rise more aggressively next year, which will dampen property investment demand.
Wages are also likely to go up, but at a more modest pace, next year, which would weigh on overall consumer loan growth, Mr Tan said.
"The economy is facing various headwinds and there is no clear catalyst for lifting loans growth in the coming months," he added.