Singapore bank lending has expanded in February for the fourth straight month, amidst growing confidence amongst banks and borrowers on the economic outlook.
According to the latest estimates from the Monetary Authority of Singapore, total bank lending in the Singapore-dollar increased by 0.5 percent in February or $1.49 billion to $284.8 billion at the end of the month. This was largely due to improvements in both consumer and business lending.
Compared to the previous year, bank lending in the country rose 5.3 percent, the fastest expansion since May 2009.
Loans to businesses also grew by 0.4 percent or $600 million over the month to $154.5 billion at end-February.
OCBC economist Selena Ling said that “it’s quite encouraging. We’re continuing to see loans picking up on a month-on-month basis. I think it should continue for the next couple of months.”
Last year, business lending was still down 0.8 percent, but this was the lowest drop since the year-on-year contraction in business loans started in July last year.
Given that there were more business days in February last year than this year, by which the Chinese New Year holiday for 2010 was in February instead of January, Ms. Ling said “that’s quite encouraging. It does look likely that we’ll see positive business loans growth on a year-on-year basis soon.”
Among the business loan segments, general commerce loans grew the fastest, with an increase of 4.7 percent or $1.1 billion to $24.7 billion.
Loans to manufacturing, building and construction firms, as well as business services loans, have also increased. But loans to transport, storage and communications firms, as well as loans to financial institutions, which include the fund management firms and real estate investment trusts, fell over the month.
Consumer loans, which have grown steadily throughout the economic crisis due to the housing loans, increased by another 0.7 percent or $130.2 billion from $900 million in February.
The housing and bridging loans, which are by far the largest consumer loan segment, increased 0.9 percent or by nearly $900 million to $93.6 billion at end-February. Loans for share financing have declined, but credit card lending and car loans rose slightly.
Mr. Ling said that the recent report in the Singapore property market “suggest that first-quarter housing sales were still very healthy, notwithstanding some of the recent government measures to cool the market, so that bodes well for loans growth.”
The latest survey for business expectations for Q1 showed that firms in the manufacturing and service sectors expect the business environment to improve in the first half of 2010, compared to H2 of 2009. Financial and banking companies have the most positive outlook within the financial services sector.