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Singapore bank lending ticks down in January as business loans decline

BANK lending ticked down by 0.2 per cent in January on a month-on-month basis amid declining business loans, preliminary Monetary Authority of Singapore data showed on Friday.

However, economists say that last month's bank lending numbers may not be a good gauge of the economic impact of Covid-19, given that the virus outbreak started in earnest only in late January while the Chinese New Year holidays may also have distorted data.

Loans through the domestic banking unit – which capture lending in all currencies, but reflect mainly Singapore-dollar lending – stood at S$691.15 billion in January, compared with S$692.4 billion in December 2019. But from a year ago, it rose 3 per cent.

Business loans fell 0.3 per cent from December to S$428.35 billion, amid a drop in loans to financial institutions, manufacturing, general commerce and business services firms.

Consumer loans remained largely steady at S$262.81 billion compared with December's S$262.79 billion, but fell 1 per cent year on year.

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Within consumer loans, housing and bridging loans was mostly flat from a month ago at S$200.83 billion in January – an improvement after 12 straight months of declines - compared to S$200.74 billion in December. On a year-on-year basis, however, it was down 1.7 per cent. Housing and bridging loans makes up about three quarters of consumer spending.

OCBC economist Selena Ling flagged that February and March data may be a better reflection of whether the virus outbreak has translated into greater caution in loans as the full brunt of Covid-19 may not have been felt in January. The Chinese New Year holidays also further muddied data due to the shorter month.

On the outlook, she noted: "In particular, businesses, especially those in tourism and hospitality sectors and even the manufacturing sector, may have turned more cautious due to the uncertainties over visitor arrivals and spending, and also returning overseas workers’ travel restrictions and the impact of supply chain disruptions for the latter." 

CIMB Private Bank economist Song Seng Wun likewise said February will be the earliest month to observe the financial impact. This comes as financial institutions have started rolling out support measures this month to help customers with working capital, he added. 

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