Bank loans fell 4.2% in January

Consumer loan growth dipped to 0.7% whilst business loans increased 5%.

Bank lending growth for both domestic and Asian currency units in January 2019 fell to 4.2% YoY from 5.1% in December 2018, according to a report by RHB Research.

“This continued the trend seen since mid 2018,” RHB Research noted. “Business loans continued to trend higher, but the moderation in consumer loans kept total loans down.”

Singapore’s consumer loan growth dipped to 0.7% in January from December 2018’s 1.4% with components including professional and private individuals recording larger contractions.

Meanwhile, loans to businesses grew stronger at 5% from December’s 3.8% supported by higher growth in loans for agriculture & mining, manufacturing, transport and construction. However, loans to professional and private individuals, as well as business services contracted for the month.

Singapore’s foreign reserves rose, adding $6.2b in January to a total of $293.9b. “This is a rebound from the $1.8b decline seen in the previous month,” RHB Research noted.

Singapore’s M3, including Asian currency units, grew 6% YoY in January as the net foreign position rose strongly alongside growth in private credit, but was capped by softer public credit, the report highlighted.

“Given the trend, we expect M3 to grow 4% in 2019,” RHB Research added. “Going forward, we expect loans growth to moderate slightly to 7.2% in 2019. This is premised on a tightening monetary environment and cautious growth in property transactions.”

Meanwhile, lower-trending loan growth is seen as an indication that the tightening stance taken by the Monetary Authority of Singapore has had a compounding impact. Adding to that is the curb on property ownership to cool down the rise in property prices.