Bank lending dips in July, weighed down by fall in business loans

Singapore

A DROP in business loans was the main drag to total bank lending in July, even as housing loans continued to slide for the seventh straight month.

Bank lending in Singapore dipped 0.9 per cent to S$680.7 billion in July from a month ago, on broad weakness across both business and consumer loans. This is its first decline after five months of growth, going by preliminary data from the Monetary Authority of Singapore (MAS).

But year on year, loans are up 2 per cent.

The slide in bank lending in July from the month before came on the back of falling business loans, which fell 1.3 per cent to S$418.01 billion, reversing from the growth streak of the past six months.

General commerce loans slid the most, falling by 4.6 per cent month-on-month, followed by loans to financial institutions, which were down by 3 per cent. The manufacturing sector also saw a 2.7 per cent dip in bank lending, as the US-China trade war continued to weigh on sentiment.

However, some segments held up. Loans to building and construction, for example, rose 0.7 per cent; loans to the transport, storage and communication sector grew 1.7 per cent.

On that note, CIMB Private Bank economist Song Seng Wun pointed out that, even as overall business loans fell month on month, the performance by the various industries was still a mixed bag.

"One year since the trade war started in earnest, lending activities in general have been affected in certain industries because of the uncertainty and the cautious environment," he said.

Total consumer loans fell 0.3 per cent to S$262.7 billion in July, compared with a month ago, on the back of a continued decline in housing loans.

Housing loans, which account for three-quarters of consumer lending, dropped for a seventh straight month on a month-to-month basis, declining 0.2 per cent to S$201.77 billion. Year on year, they were down about 0.8 per cent.

This comes with the local property market having had its demand clipped by the cooling measures put in place last July.

Mr Song said the outlook for bank lending continues to be challenging, as businesses face more pressure from the bleak global economy, and the downward trend in housing loans is unlikely to turn around any time soon.

But not all is doom and gloom - there are still some pockets of growth in the economy, in areas such as food manufacturing and information and communications technology (ICT), he noted.