Bank lending edges up 2.3% in November

By Conrad Tan

Bank lending rose modestly in November as loans to businesses resumed growth after shrinking in October.

But lending growth in the coming months is likely to be muted, analysts say, given the highly uncertain outlook for the world economy.

Total Singapore-dollar bank loans rose 2.3 per cent over the month to $415.8 billion at Nov 30, after growing just 0.3 per cent in October.

Business loans, which make up over half of total loans, expanded by 2.9 per cent to $240.1 billion, reversing the 0.1 per cent contraction in October. Consumer loans grew 1.4 per cent to $175.7 billion, faster than the 0.8 per cent growth in October, though the monthly loan volumes are volatile and not seasonally adjusted.

Rapid growth in business lending over the past year has driven the expansion in overall bank lending, even as growth in consumer home loans slowed after the slew of government measures to cool the property market that were introduced starting late last year.

Over the year to Nov 30, total bank loans grew 30.5 per cent, while business loans rose by a record 42.2 per cent. But that growth is likely to slow sharply in the coming months, as businesses put expansion plans on hold amid the uncertain economic environment.

The government has warned that Singapore’s economic growth is likely to fall below 3 per cent in 2012, from about 5 per cent this year, and could stall if the world’s advanced economies slide into recession. ‘We expect 2012 loan growth to be sharply lower than our 30 per cent estimate for 2011,’ DMG & Partners Research analyst Leng Seng Choon said.

Yesterday’s data from the Monetary Authority of Singapore (MAS) showed that business lending in all major industry segments rose over the month to Nov 30. the biggest increase was contributed by general commerce loans, which rose by $2.2 billion, or 4.5 per cent, to $51.5 billion.

Lending to the building and construction sector, the biggest segment of business loans, also expanded. Building and construction loans – which includes loans to building cooperative societies, developers and real estate agents – rose by $1.6 billion, or 2.6 per cent, to $65 billion. That marked a sharp acceleration in growth, from just 0.4 per cent in October.

Other major business-loan segments also expanded. Loans to non-bank financial institutions such as fund management companies and real estate investment trusts rose by 2.1 per cent, or $1.1 billion, to $53.8 billion.

Loans to manufacturing companies grew 3 per cent to $18.2 billion, reversing a 1.5 per cent slide in October; loans to business services firms expanded 6.8 per cent to $4.4 billion, after shrinking 5.3 per cent in October; and loans to transport, storage and communications businesses rose 6.9 per cent to $11.8 billion after declining by 1.6 per cent the previous month.

Loans to professional and private individuals for business purposes also rebounded, rising 6.8 per cent to $3.9 billion, after plunging 22 per cent in October.

In the consumer loan category, housing and bridging loans – the biggest segment – rose just one per cent in November to $129.4 billion, while car loans, the next biggest segment, shrank 0.5 per cent to $11.33 billion.

Credit-card lending continued to grow, rising by 4 per cent to $7.71 billion, while share financing loans expanded 5.3 per cent to $942 million, reversing a decline of 5.7 per cent in October.

This article was first published in The Business Times.