Floundering financial services sector hurt Singapore GDP growth

Sectoral growth moved at a snail’s pace of 0.8%.

Singapore’s banks surely aren’t having a good time right about now as loan exposures and NIM figures came out disappointing. To make matters worse, the domino effect has reached Singapore’s GDP growth as the Ministry of Trade and Industry (MTI) revised it down to 2.1% due to weaknesses in the services sector--including the financial services industry.

Services sector has recorded its second consecutive sequential decline of -0.6%.

The MTI data showed that the finance and insurance service sector shrank 11.2% in the second quarter, with banks mainly to blame.

This record followed the 14.2% plunge recorded in the first three months of the year.

"The more subdued pace of expansion was attributed mainly to the banking segment, as persistent regional headwinds continued to weigh on lending activities," MTI said in its report

The said sector slowed down to 0.8% growth, compared to the 2.7% growth registered in the preceding quarter.

"At the same time,fees and commissions received by banks turned in a dismal performance, alongside the dampened demand for banking services such as portfolio management and trade financing," MIT expounded.

Interestingly, the robust growth in the forex segment helped augment the impact of falling net fees and commissions in banking and fund management segment.

"The forex market registered strong average daily turnover growth of 32 per cent in the second quarter, alongside higher demand for safe haven currencies in an environment of heightened financial market volatility," the trade ministry said.