Singapore’s economy was seemingly in better shape during the Phase 2 (Heightened Alert) restrictions between mid-May to mid-June, compared to during the circuit breaker in 2Q2020, notes Selena Ling, head of treasury research and strategy at OCBC Bank.

Her comments follow the 1.5% increase in the total loans from the domestic banking unit, to $703.92 billion in June. 

This is the fastest monthly growth seen in the metric since July 2020 and comes as business loans gain further momentum, the Monetary Authority of Singapore (MAS) announced on July 30. The metric captures lending in all currencies, but mainly reflects Singapore dollar lending. ItWhile the expansion was partly due to the low base in 2020, Ling observes that economic sentiments has also been more buoyant.

Business loans increased by 1.9% to $436.76 billion, up from the 0.2% rise seen in May and a flattish performance in April.

Key contributors to this was a 5.4% rise in general commerce loans to $72.60 billion, and a strong rebound in loans to financial institutions which saw $103.51 billion disbursed. This is up 3.6% m-o-m.

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Loans to the manufacturing sector grew by 1.8% to $28.76 billion, while that to the transport sector was up by 1.6% to $25.16 billion and other sectors was up 1.6% $32.34 billion.

In this time, loans to building and construction – the single largest business segment – slipped by 0.7% to $151.33 billion, making this the only segment to see a decline in disbursements.


See also: Singapore's bank lending increases by 0.7% in March


Looking at the 3-months moving average, economists at RHB say that momentum for business loans appear to be on an uptrend.

“In general, growth momentum to the largest components of loans to business remains steady for loans to financial institutions, general commerce and building and construction whilst slight moderation was seen for loans to the manufacturing sector,” they add.

On a y-o-y basis, total business loans were up 2.6%, in June. This is the first time the metric is seeing y-o-y growth since July 2020.

Meanwhile, consumer loans were up 5% y-o-y and 0.7% on a m-o-m basis to $267.17 billion. 

Housing loans – which accounts for three quarters of consumer lending – maintained its 10th month growth streak with a 0.6% increase to $206.29 billion. This is faster than May’s 0.2% growth rate.

Unsecured personal loans excluding credit cards edged up by 1.8% to $41.23 billion while loans for share financing were up 1.4% to $1.73 billion.

Loans for cars and credit cards conversely edged down by 0.1% each to $8.40 billion and $9.52 billion respectively.

RHB’s economists say that the low interest rate environment will continue to support the lending of consumer loans.

They add that the 3-months moving average momentum “remains steady, given the resilience in house and bridging loans as well as loans to professional and private individuals. Momentum for car loans should also sustain given the pickup in demand for cars”.

Overall, the economists say that the growth momentum in bank lending for domestic and Asian currency units should sustain in 3Q2021 ending September. 

“Despite the re-imposition of the Phase 2 (Heightened Alert) from 22nd July to 18th August, Singapore’s economic recovery should continue to be on track, drawing support from external oriented sectors as global demand continues to pick up traction,” they stress.

Shares in DBS edged down by 5 cents or 0.16% to close at $30.36 on Aug 2, while that in UOB was down by 15 cents or 0.57% at $26.13.  OCBC’s share meanwhile was trading flat at $12.30. 

Cover image: Bloomberg