BANK lending growth in Singapore was flattish in May, as weaker lending activity to financial institutions partly offset a spurt in lending for trade-related activities.
But this comes amid expectations of stronger economic growth in the months ahead, which should lead to business lending picking up. Loans through the domestic banking unit, which captures lending in all currencies but mainly reflects Singapore-dollar lending, stood at S$633 billion in May, up from S$631 billion in April, preliminary data from the Monetary Authority of Singapore (MAS) on Friday showed. This translates to a 0.3 per cent gain between the two months.
Business lending rose 0.4 per cent in May to S$381 billion from the month before, a shade weaker than April's growth of 0.7 per cent.
Loans to financial institutions were flat at S$90.3 billion in May, compared to a 3 per cent growth in April. Construction lending was likewise flattish at S$123 billion. Lending to general commerce, though, grew 4.3 per cent to S$68 billion in May, reversing a slight contraction in April.
The central bank said this week that it expects global trade to recover, alongside a more entrenched economic expansion in the US, recovery in domestic demand in the eurozone and steady growth in China.
The Singapore economy is forecast to grow by 1 to 3 per cent this year, with a strong likelihood that it would be higher than the 2 per cent registered last year.
Selena Ling, head of treasury research and strategy at OCBC Bank, said business loans growth may have started to plateau in the second quarter and to stabilise in the second half of the year, but it should remain in positive growth territory as global and regional economic and trade prospects have brightened.
Acknowledging the more upbeat assessment from MAS this week, she kept her forecast for the full-year bank loans growth at 7 per cent from a year ago.
"Growth has been somewhat uneven sectorally, but this is to be expected in the initial stages of an externally-led pickup and should broaden to the rest of the economy over the course of the year," she said. "In particular, apart from the trade-related cluster that has been a major growth driver this year, the modern services cluster is also poised for higher growth in the second half of this year, whereas the domestic-oriented cluster may remain weak in certain segments like real estate and retail."
Consumer loans inched higher by 0.2 per cent in May to S$252 billion, growing at the same pace registered in April.
From a year ago, bank lending was up 6.8 per cent, slightly easing in the growth of 7 per cent posted in April.