Nov business lending chilled by headwinds

Singapore

BUSINESS lending to key industries has weakened, as sharp geopolitical headwinds blowing into 2019 keep investors wary about the strength of global growth ahead.

Based on preliminary figures on bank lending in November, the overall weakness in business lending over the month has been masked in most part by growth in construction loans.

Lending to financial institutions - the second-largest business loan segment - registered its seventh straight contraction in November on a month-on-month basis, data from the Monetary Authority of Singapore (MAS) showed on Monday.

It again fell, this time by 0.3 per cent to S$101 billion from October. From a year ago, lending to financial institutions is up by a mere 0.3 per cent, its weakest since a year-on-year contraction in June 2016.

Lending in general commerce is down for its third consecutive month in November from October, falling 2 per cent to S$65.1 billion. It has also been contracting on a year-on-year basis since September.

Manufacturing loans swung back into the red in November, after a brief return to growth in October following a three-month contraction streak. In November, lending to manufacturers fell 1.9 per cent from a month ago to S$26 billion.

What has propped up business lending remains the building segment, with construction loans - the single-largest business lending segment - growing 1.2 per cent to S$135 billion in November from a month ago. That being said, this has decelerated in pace of growth from the 2 per cent gain seen in October.

Overall business lending was flat at S$406 billion in November from October, compared with the 0.5 per cent rise in October from September.

And all in, loans through the domestic banking unit - which captures lending in all currencies, but reflects mainly Singapore-dollar lending - stood at S$672 billion, unchanged from a month ago.

This flat performance was weaker than the 0.3 per cent gain in October from September. And as it is, bank lending in October had been a return to growth from the month-on-month contraction in September.

Total consumer loans were up 0.1 per cent to S$266 billion in November, the same pace of growth registered in the previous month.

From a year ago, total lending gained 2.8 per cent, its slowest since January 2017.