SINGAPORE (Jun 1): Singapore’s foreign reserves increased by $22.6 billion in April, bringing the republic’s total foreign reserve repository to $301.8 billion.

This translates to a 12.4% y-o-y expansion to Singapore’s broad money supply in April, from the 9.8% growth clocked in March, RHB Securities’ team of economists point out in a May 29 note.

This follows a reduction in government deposits to +14.3%, against the +15.7% registered the month before. Meanwhile, a stronger growth in the city-state’s net foreign position to +12.7%, from +11.5% in March, provided a further lift to its overall money supply, the RHB team adds.

Even so, the republic registered a fall in bank lending in April, on the back of a moderation in both domestic and Asian currency units.

This comes amid declines in both business and consumer loans disbursed, the RHB team notes.

Official data released by the Monetary Authority of Singapore (MAS) on Friday showed that total loans slipped 0.4% month-on-month to $689.7 billion in April, from the $692.4 billion disbursed in March.

Specifically, consumer loans slipped 0.9% to $255.9 billion, while business loans eased down a smidgen 0.1% to $433.76 billion, the central bank noted.

See: Singapore's bank lending edges down in April following drop in credit card loans

Touching on the decline in consumer loans, the RHB team attributes it “to a decline in consumer confidence, as a result of uncertainty in both the domestic and global environment.

As for business loans, they observe that the slower business activities during the ‘circuit breaker’ measures which kicked off on April 7 may have caused the drag.

For now, they are looking at “loan growth remain[ing] subdued on account of the prolonged uncertainty over the length and severity of the Covid-19 pandemic”.

As such, they have revised their 2020 loan growth forecast to a 2.0% contraction, from a previous 1.7% growth estimate.

CGS-CIMB analysts Andrea Choong and Lim Siew Khee concur. “We expect similar loan and deposit growth trends to recur, but the reopening of regional economies could provide some upside,” the duo put forth in a May 29 note.

To this end, they have posted “hold” calls on DBS, OCBC and UOB at target prices of $18.80, $8.37 and $19.04 respectively.

As at 3.36pm, shares of the three counters were up with DBS adding up 41 cents or 2.106% to $19.88 and OCBC gaining 23 cents or 2.69% to $8.78. UOB registered the largest increase of 45 cents or 2.31% to $19.95.