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Bank lending in Feb grows at slower pace for the third month

Construction loans contracted over the month for first time since Jan 2011

[SINGAPORE] Bank lending in Singapore in February grew at a slower clip for the third straight month, with the loan business involving two key industries - construction and finance - registering particular weakness.

Preliminary figures released by the Monetary Authority of Singapore yesterday showed that domestic banking unit (DBU) loans stood at $584 billion in February, up 0.4 per cent from January. This was weaker than the 1.4 per cent month-on-month growth posted in January.

On a year-on-year basis, loan growth stood at 14.6 per cent, which is also poorer than the 16.5 per cent growth seen in January - and is the slowest gain since November 2010, data compiled by The Business Times showed.

The DBU gains refer to net growth, that is, new loans which have been granted after deducting loans which have been paid off. The DBU figures refer to loans denominated in Singapore dollars.

On a month-on-month basis, business loans in February grew 0.5 per cent to $358 billion. This is a much smaller expansion compared with the 2.1 per cent growth in January.

Loans to the building and construction segment - which is the largest component of all business loans - contracted in February over the month for the first time since January 2011, BT data showed.

The 0.2 per cent contraction to $92.4 billion in this segment is in contrast to the 1.4 per cent expansion in January. This also follows two months of expansion since December.

Loans to financial institutions - the next largest loan segment after construction - gained 0.6 per cent to $80.9 billion in February over the month. This is a marked weakness from the 5.8 per cent growth over the month in January.

There was, however, some strength seen in the manufacturing segment, on a loan-growth basis. Loans to manufacturers grew 2.4 per cent over the month to $32.6 billion, a significant lift from the 0.5 per cent growth posted in January.

As for consumer loans, the month-on-month growth was 0.3 per cent to $226 billion. This is a touch lower than the 0.4 per cent growth in January.

Growth in consumer loans is mainly driven by that in property loans, which grew 0.5 per cent to $168 billion. That is the same growth rate posted in January over the month.

The share of housing loans of total bank loans has risen further to 28.8 per cent in February, said Selena Ling, head of treasury research & strategy at OCBC Bank. "Hence, it may be premature to expect any early unwinding of property curbs before we see further stabilisation."

Growth in car loans, on a month-on-month basis, has been in negative territory since September 2012, and contraction in this segment has deepened, following car-loan curbs that were implemented in February last year.

In February, car loans contracted further by 1.9 per cent over the month to $10.3 billion. This compares with a 1.8 per cent contraction in January.

Broadly, the loan to deposit ratio, at 108 per cent in February, "is still on the uptrend and the highest since May 1998", said Ms Ling. Still, this is some distance from the record high in October 1997 of 115.6 per cent, she added.