Will the bleak state of Singapore's business loans turn around soon?

Loans fell by 5% in July.

Business loans may be plummeting, as they’re now on their 8th consecutive month of decline, but analysts are saying they’re close to bottoming out.

According to a report by OCBC, 3Q16 bank loans growth to fall by 2.9% yoy, largely due to an anticipated August drag due to a high base in August 15.

Meanwhile, OCBC added that bank loans may decline a more benign 1.5% yoy for the full year of 2016.

On the other hand, consumer loans also moderated from 2.8% yoy (+0.5% mom) in June to 2.2% yoy (flat mom) in July, as housing/bridging loans (+3.4% yoy) and credit card loans (+2.9% yoy) continued to ease in momentum, OCBC said.

“Auto loans also continued to decline by 2.9% yoy in July, which is the smallest yoy contraction since March 2012, likely reflecting the gradual turnaround after the car loan rules were loosened. Given the domestic labour market is also softening, consumer loans growth may also plod rather than race along,” the report added.