Singapore kicked off 2021 with an increase in its bank lending for the third consecutive month in January following higher loans to businesses.

Total loans from the domestic banking unit – which captures lending in all currencies, but mainly reflects Singapore dollar lending – came in at $683.59 billion. This is up 0.7% from the $678.72 billion disbursed in December 2020, the Monetary Authority of Singapore (MAS) revealed on Mar 1.

January’s showing was led by a 0.9% increase in business loans to $322.73 billion. 

Loans for building and construction – which makes up the single-largest business lending segment – inched by 0.3% to $150.40 billion. This is a reversal from the 0.6% contraction in had logged in the month prior.

Meanwhile, consumer loans were up by 0.5% to $260.87 billion in January. 

A major contribution came from 0.4% m-o-m increase in housing loans to $202.14 billion.

On a y-o-y basis, total bank lending was down by 1.1% in January.

SEE:Singapore's bank lending continued to grow for second month in December 2020

Economists at RHB Securities Singapore Research team expect bank lending growth for domestic and Asian currency units to remain weak in 1Q2021.

This will be led by consumer loans as momentum remains positive following high private home prices, they explain.

However, “the still soft labour market, which is only showing slight signs of recovery, may dampen consumer loan performance,” they add in a Feb 28 note.

Business loans – which account for around 75% of total loans – are conversely expected to weigh down bank lending in 1Q2021. 

“Momentum for segments within business loans will likely be segregated in tandem with the uneven sectoral economic recovery that is to be expected. We anticipate loans to services, transport storage and communication and manufacturing to remain weak in 1Q2021,” the economists note.

As at 11.35am on Mar 1, shares in all three banks were up, with OCBC edging up by 13 cents or 1.18% to $11.12 and UOB going up by 44 cents or 179% to $25.12. DBS’ shares meanwhile was trading up 45 cents or 1.69% at $27.09.