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Bank lending set to end the year with a whimper

November loans down 0.7% from a year ago at S$604b, reflecting weaker business lending
Friday, January 1, 2016 - 05:50
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HAVING THE BLUES: Trade-related loans fell 11.7 per cent in November from a year ago to S$70 billion. Lending to financial institutions also fell 15.5 per cent to S$70 billion.

Singapore

BANK lending is due for a dull finish for the year, according to November figures released on Thursday, and given the weaker business conditions in this lukewarm environment.

Loans through the domestic banking unit - which essentially captures lending in all currencies but mainly reflects Singapore-dollar lending - stood at S$604 billion last month, preliminary data from the Monetary Authority of Singapore (MAS) showed on Thursday.

This is down 0.7 per cent from a year ago, and is a sharper contraction compared to the 0.4 per cent year-on-year fall posted in October.

Compared to December last year - when loans totalled S$608 billion - bank lending has also fallen about 0.7 per cent.

This reflects weaker business lending, which in November stood at S$362 billion, falling by about 3 per cent from the S$371 billion registered at end-2014.

From a year ago, the drag was most felt in lending to the trading companies and financial institutions - with each segment contributing loans of about 20 per cent of total business lending. Lending in both sectors has been contracting each month on a year-on-year basis since January.

Trade-related loans fell 11.7 per cent in November from a year ago to S$70 billion. Lending to financial institutions also fell 15.5 per cent to S$70 billion. Lending to manufacturing firms, likewise, has been contracting.

A clear buffer comes from building and construction loans, which are still growing at over 10 per cent, and make up a third of all business loans - the single-largest portion. In November, this stood at S$120 billion, up 16.7 per cent from a year ago.

Consumer loans are growing, and rose 3 per cent from a year ago to S$242 billion. But growth has been decelerating for some years now, standing at single digits since November 2013. Consumer lending is driven by housing loans, and the mortgage market has been hit by cooling measures to rein in leverage fuelled by years of low interest rates.

From a month ago, consumer lending grew 0.4 per cent in November. This is stronger than the 0.2 per cent gain in October from September.

Business loans in November rose 0.4 per cent from October. A month ago, it fell 1.9 per cent.

Overall, bank lending in Singapore rose 0.4 per cent in November from the previous month. This is a reversal from the contraction in October.

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