Singapore bank lending up 5.9% to $673b in June

Corporate lending drove the monthly loan growth.

Singapore bank lending maintained its positive momentum after rising 5.9% YoY and 0.8% MoM with loans through the domestic banking unit clocking in at $673b in June, according to preliminary data from the Monetary Authority of Singapore.

This represents the fastest pace of bank loan growth since November 2017, OCBC Treasury Research said in a statement.

Also read: OCBC Q2 loan growth to hit 10% as Indonesian and Chinese arms outperform

In a breakdown, business loans drove lending gains after rising at a faster clip from 7% YoY and 1.2% MoM in June amidst strong lending momentum to financial institutions (19.5%), individuals for business (11.4%), business services (7.2%), building/construction (3.7%) and general commerce (3.6%).

Consumer lending in June also edged up 4.3% YoY and 0.2% MoM to $265b over the same period with car loans posting their fastest pace of growth in five years at 8.6% YoY.

"The pickup in car purchases and auto loans momentum could possibly sustain into July given the decline in Category A and B COE premiums which hit $25k and $31k respectively (lowest since March 2010) at the 4 July tender," OCBC added 

Banks are expected to maintain their strong lending momentum in the coming quarters as the government’s surprise cooling measures, which are widely expected to hammer housing loans, are expected to hit lenders only by 2019, according to a flash note from DBS.

Housing loans constitute the largest portion of Singapore bank lending with UOB exposure estimated at 27.9%, according to UOB Kay Hian. OCBC trails closely behind with property exposure of 27.6% whilst about 21.4% of DBS loan portfolio are housing loans.

“We see limited impact on housing loan growth at least in the next few quarters, thanks to previous approvals as they draw down,” DBS said in an earlier statement, adding that property developer loans may still sustain their strong performance up till Q2.