Bank lending grows at fastest pace in more than two years in February

SINGAPORE — Bank lending surged last month at the fastest pace in more than two years, as loans to business services firms, financial institutions, as well as consumers increased, central bank data showed on Friday (March 31).

Loans and advances by domestic banking units – denominated mainly in Singapore dollars – rose 5.2 per cent to S$627.4 billion last month from February last year, preliminary data from the Monetary Authority of Singapore (MAS) showed. The rise – the most since December 2014 - was much more than the 2.8 per cent year-on-year increase in January to S$617.1 billion, but part of it was due to the Chinese New Year, which fell in February last year and January this year.

Ms Selena Ling, Head of Treasury Research & Strategy at OCBC Bank, said: “Business loans were the star performer and expanded for the third straight month by 6.4 per cent year-on-year in February… This was led by loans to business services (up 25.2 per cent year-on-year) and financial institutions (up 20.9 per cent).”

“Interestingly, loans to general commerce also turned positive (up 6.7 per cent year-on-year) for the first time since December 2014, which if sustained into the coming months could herald green shoots for regional economic and trade activities,” she added.

Consumer loan growth pick up pace to 3.6 per cent year-on-year in February from 3.1 per cent in January, underpinned by housing and bridging loans, which grew 4 per cent, Ms Ling noted.

“This is unsurprising as developers had sold 977 units in February versus 382 units in January, which marked the highest February sales data since 2012, according to Urban Redevelopment Authority data,” she said. After the Government eased some of the property cooling measures on March 10, there could be continued support to housing and bridging loan momentum in the near term, she added.

Loans and advances in Asian currency units - denominated in currencies other than the Singapore dollar - rose 1.6 per cent to S$541.3 billion last month from February last year, the MAS data showed.