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Business lending hits single-digit growth in Nov

Loans growth continues to slow compared to a year ago; lending in November rises 0.6%

KEY SECTOR: Construction loans - the largest of all business loans - were up 1.6 per cent at S$103 billion in November, although the gain was still weaker compared to 2.5 per cent seen in October.


BANK lending showed some signs of life in November compared to a month before, rising 0.6 per cent after two straight months of no growth, data from the Monetary Authority of Singapore showed on Wednesday.

But loans growth continued to slow compared to a year ago, with business lending now crawling to a single-digit growth.

Meanwhile, growth in consumer loans, on a year-on-year comparison, continued to slow, and has been weakening consecutively since March 2013.

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"We expect bank loans momentum could stabilise around the single-digit year-on-year growth basis for the next couple of months, given that the base effects from the first half of 2014 remain relatively high," said Selena Ling, head of treasury research & strategy at OCBC.

She has a full-year bank loan year-on-year growth forecast of 11.6 per cent for this year, and an 8 per cent year-on-year growth forecast for 2015.

Loans through the domestic banking unit - which mainly reflect Singapore-dollar lending - rose 0.6 per cent in November, to S$608 billion. This compares with S$604 billion in October.

Compared to a year ago, though, loans in November were up just 7.5 per cent - a level not seen since 2010.

Business loans grew at 9.2 per cent in November from a year ago to S$373 billion, compared to 11.4 per cent in October.

It is the weakest increase since September 2010, which, at that time, reflected a recovery in bank lending after several months of contraction during the financial crisis in 2009.

Still, business loans were up 0.8 per cent from a month ago in November, reversing from a 0.3 per cent contraction in October.

Loans to manufacturers were up, after two months of decline. Construction loans - which make up the largest, or about a quarter, of all business loans - were also higher by 1.6 per cent at S$103 billion, though the gain was still weaker compared to 2.5 per cent seen in October.

Consumer loans gained 0.4 per cent to S$235 billion in November, at the same pace registered in October.

On a year-on-year basis, loans to individuals have hit a seven-year low. They grew 4.9 per cent compared to a year ago - the slowest increase since May 2007 - as growth in housing loans eased, and car loans shrank.

Growth in credit card debt slowed to 5.4 per cent from a year ago. It has hit S$10.2 billion.