October marks the eight month of decline in Singapore’s bank lending, following a drag in 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 $675.64 billion. This is down 0.3% from the $677.46 billion disbursed in September, the Monetary Authority of Singapore (MAS) outlined on Nov 30.
October’s decline was led by a 0.7% dip in loans to businesses to $418.40 billion, from the $421.28 billion disbursed in the month before.
This was led by a 2.4% month-on-month plunge in loans to financial institutions to $96.99 billion. This marks the segment’s third straight month of decline.
A simultaneous drop in loans to business services (-1.4%) and manufacturing (-0.7%), further depressed the overall lending to businesses.
Meanwhile, loans to the construction industry – the single-largest business lending segment – came in flat at $150.87 billion. This is a reversal from the contractions seen in the previous months, as the sector was reeling from stalled operations.
The transport, storage and communications sector was the only one to register a month-on-month loan growth of 0.4% in October.
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Touching on the sector’s performance, OCBC Bank’s head of treasury research and strategy, Selena Ling says “a potential cliff effect” will be avoided by the partial extension of loan moratoriums beyond Dec 31 for individuals and small and medium enterprises.
“But the mixed nature of the different business industries reaffirms the long tail nature of the Covid pandemic and the K-shaped nature of the recovery trajectory,” she adds.
Consumer loan disbursements bucked the downward trend, to climb 0.4% month-on-month, to $257.24 billion.
This is thanks to a 0.3% climb in housing loans to $199.73 billion. This marks the second month of growth for the segment.
Unsecured personal loans, excluding credit cards, rose 1% to S$37.43 billion over the same period.
Ling observes that other consumer loan segments such as car loans and share financing registered three months of positive sequential growth at 0.2% and 2.8% respectively.
This “suggests that consumer appetite for big-ticket items like cars and also risk appetite for investments, especially for equities amid the current market rally, are gradually returning,” she adds.
On a year-on-year basis, total bank lending was down 2% in October. In this time, total business loans was down by 2% while consumer loans slid by 2.2%.
Shares of all three banks were down as at 3.31pm on Nov 30, with DBS dropping 11 cents or 0.43% to $25.57 and UOB dipping 40 cents or 1.74% to $22.66. OCBC meanwhile was at $10.03, down 12 cents 1.18%.