Bank lending limps along in November

Singapore

GAINS in bank lending eased in November from the previous month, reflecting weakening growth in business and consumer loans amid more pessimistic times for the economy.

Bank lending in Singapore in November was up 0.4 per cent from a month earlier, compared to the 0.8 per cent growth in October, preliminary data from the Monetary Authority of Singapore on Friday showed.

Loans through the domestic banking unit - which captures lending in all currencies but mainly reflects Singapore-dollar lending - stood at S$611 billion in November, up from S$608 billion in October. Business loans rose 0.7 per cent in November from October, at S$361 billion. This compares to the one per cent gain in lending in October from a month earlier.

Lending to manufacturing firms contracted again after a temporary reprieve in October, ending at S$25.3 billion in November. Lending to trade-related firms also weakened, growing just 2.9 per cent in November from a month earlier to S$63.4 billion, compared to 3.6 per cent in October.

The weaker business lending comes despite stronger lending to the construction industry, which makes up the single-largest proportion of business loans. This inched up 0.2 per cent in November from October to S$120 billion, reversing from a contraction in October. Lending to the building and construction industry makes up a third of all business loans.

Consumer loans were 0.1 per cent higher in November from a month earlier, at S$250 billion. This is also weaker than the 0.4 per cent gain posted in October. The gain in housing loans stayed at 0.6 per cent in November, as it was in October, taking total outstanding mortgage lending to S$191 billion. Housing loans make up 75 per cent of all consumer lending.

From a year ago, bank lending in November was up 1.1 per cent, just a shade stronger than the one per cent in October. Business lending contracted 0.2 per cent in November from a year ago, while consumer lending was up 3 per cent.

In a recent economic report, Nomura said it expects Singapore's Committee on the Future Economy to have the government take a more hands-on approach in developing new sectors, digitisation and re-training workers.

"However, such endeavours tend to be slow and therefore have a limited impact on the near-term growth outlook. With labour productivity growth still lacklustre and demographics unfavourable, the medium-term outlook remains downbeat, in our view," it said.