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Bank lending growth continues to slow

[SINGAPORE] Growth in bank lending here continued to slow, according to numbers just released by the central bank, pointing to a generally sluggish third quarter for loans compared to the second quarter.

Domestic banking unit (DBU) loans to non-bank customers totalled $540.8 billion in August, according to the Monetary Authority of Singapore (MAS). This represents a 15.4 per cent year-on-year increase, compared with the 17.6 per cent rise recorded in July.

On a month-on-month basis, total lending inched up 0.3 per cent in August, compared to a 1.2 per cent increase in July.

Growth in loans to both business and consumer segments slowed; lending to businesses was up 17.4 per cent year-on year to $321.2 billion in August, compared to 20.8 per cent in July.

Lending to consumers was up 12.5 per cent year-on-year to $219.6 billion in August, compared to the 13.2 per cent increase in July. Compared with the previous month, business loans were flat, while consumer loans were up 0.8 per cent for August.

"Bank loans moderated more than our expectations," said Selena Ling, head of Treasury Research & Strategy, at OCBC Bank. "This is another confirmation that the growth momentum in the third quarter of 2013 has slackened somewhat from the hot pace in the second quarter of 2013."

She added: "The business loan segments that saw a momentum slowdown were manufacturing (up 11.6 per cent year- on-year but down 9.4 per cent month-on-month) and general commerce (up 20 per cent on the year, but down 1.8 per cent on the month).

"The former is to be anticipated given that the July-August non-oil domestic export (NODX) and industrial output data have been disappointing, and likely reflects that tepid global demand is not translating into the pre-Christmas orders pick-up in Q3 2013."

Of the other business segments, loans to the building and construction sector were up 20.5 per cent on the year and 1.6 per cent on the month; agriculture, mining and quarrying was up 82.4 per cent year-on-year and 4.3 per cent month-on-month; transport, storage and communication was up 15 per cent on the year and 6.8 per cent on the month; and business services and financial institutions were up 17.9 per cent and 11 per cent yearly, and 2.7 per cent and 2.1 per cent monthly, respectively.

As for the consumer loan segments, car loans continued to fall in August, dropping 9.1 per cent year-on-year and 1.9 per cent month-on-month.

Housing loans, on the other hand, continued to grow - up 13.5 per cent year-on-year and 0.9 per cent month-on-month.

Ms Ling commented: "Housing loans still expanded . . . which is likely reflecting the lagged drawdown of mortgage loans taken earlier, and the impact of the Total Debt Servicing Ratio (TDSR) rules may only show up later down the road."

Credit card lending, meanwhile, was up 12.5 per cent on the year and 1.3 per cent on the month, while share financing was up 31.5 per cent on the year and 1.7 per cent on the month.