Singapore bank loans crashed to 4-year low

And manufacturing loans shrank again.

OCBC’s recent Macro Views reveals that bank loans in Singapore continued to ease in May, despite a boost from business loans that expanded bank loans by 1.1%.

Building and construction loans accelerated from 9.2% yoy to 10.3% yoy but manufacturing loans headed the other direction and contracted by 8.0% yoy, reflecting the divergent fortunes of the two industries.

Consumer loans also eased from 6.8% yoy to 6.6% yoy, albeit housing/bridging loans regained some traction to grow by 7.6% yoy, which is faster than the 7.3% yoy in April.

According to OCBC, the pick-up in mortgage loan momentum coincided with the 11-month high of 1,470 private residential property units sold in May, but the jury is still out on whether the latter sales pace can be sustained or is simply indicative of opportunistic and highly price-elastic demand.

It is expected that the average bank loans growth for Jan-May 2014 is 14.2% yoy, and is likely to decelerate further for a couple more months before stabilizing.