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01-10-13, 16:33
http://www.straitstimes.com/premium/money/story/borrowing-rises-slower-rate-20131001
Borrowing rises - but at a slower rate
Total bank lending up 15.4%, but new rules may be reining in loan growth
Published on Oct 01, 2013
By Chia Yan Min
CONSUMERS and businesses borrowed more from banks in August than they did in the same month last year although recent new rules on lending appear to be reining in loan growth.
Total bank lending, regarded as a key indicator of economic activity, grew 15.4 per cent to $540.8billion in August compared with the same month last year, according to preliminary Monetary Authority of Singapore figures yesterday.
This is the fourth consecutive month of slowing year-on-year growth in bank loans: lending rose 17.6 per cent to $539 billion in July over last year, down slightly from June's 17.7 per cent growth.
Month-on-month, total loans grew 0.3 per cent from July.
Loans to consumers expanded 12.5 per cent to $219.6 billion in August, moderating from July's 13.2 per cent growth and June's 13.8 per cent.
Economists attribute the slowdown in consumer lending to recent policy measures aimed at cooling the exuberant car and property markets, as well as new loan curbs that encourage more prudent borrowing.
"This is a positive sign given that consumer leverage has risen a lot over last few years due to low interest rates," said DBS economist Irvin Seah yesterday.
He added that consumer loans are expected to continue growing at a slower rate into next year.
Car loans shrank in August over last year for a ninth straight month, falling 9 per cent on the back of car loan curbs and high certificate of entitlement premiums.
Housing and bridging loans - the largest consumer loans segment - continued to grow but at a slower pace of 13.5 per cent in August, down from 14.1 per cent in July. In month-on-month terms, total housing loans edged up 0.9 per cent.
Despite the slight dip in total bank lending, the sector's loans-to-deposits ratio breached the 100 per cent threshold for the second consecutive month in August. July was the first time since 1995 that this has occurred. A ratio beyond 100 per cent means banks are lending more than they are taking in as deposits.
This indicates that measures aimed at slowing loan growth - especially among highly-leveraged households - are having some impact at the margins, but not enough to make a dent in the loans-to-deposits ratio, said OCBC economist Selena Ling.
The coming months should give a clearer idea of the impact of these loan curbs, she added, and "further measures (to curb loan growth) should not be ruled out".
Meanwhile, business loans came in at $321.2 billion in August, up 17.4 per cent compared to last year, but slowing from the 20.8 per cent growth in July and 20.4 per cent in June. This is "another confirmation that the growth momentum in the third quarter has slackened somewhat from the hot pace in the second quarter", said OCBC's Ms Ling.
Manufacturing recorded one of the biggest falls in lending, with loans down 9.4 per cent over July's levels.
This was to be expected given the sector's disappointing industrial output data in August and slowing export growth in recent months, said Ms Ling.
"(This) likely reflects that tepid global demand is not translating into the pre-Christmas orders pick-up in the third quarter," she added.
However, a significant drop in business loans in the months ahead is not expected, "because the global economic outlook is relatively sanguine", said DBS' Mr Seah.
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Borrowing rises - but at a slower rate
Total bank lending up 15.4%, but new rules may be reining in loan growth
Published on Oct 01, 2013
By Chia Yan Min
CONSUMERS and businesses borrowed more from banks in August than they did in the same month last year although recent new rules on lending appear to be reining in loan growth.
Total bank lending, regarded as a key indicator of economic activity, grew 15.4 per cent to $540.8billion in August compared with the same month last year, according to preliminary Monetary Authority of Singapore figures yesterday.
This is the fourth consecutive month of slowing year-on-year growth in bank loans: lending rose 17.6 per cent to $539 billion in July over last year, down slightly from June's 17.7 per cent growth.
Month-on-month, total loans grew 0.3 per cent from July.
Loans to consumers expanded 12.5 per cent to $219.6 billion in August, moderating from July's 13.2 per cent growth and June's 13.8 per cent.
Economists attribute the slowdown in consumer lending to recent policy measures aimed at cooling the exuberant car and property markets, as well as new loan curbs that encourage more prudent borrowing.
"This is a positive sign given that consumer leverage has risen a lot over last few years due to low interest rates," said DBS economist Irvin Seah yesterday.
He added that consumer loans are expected to continue growing at a slower rate into next year.
Car loans shrank in August over last year for a ninth straight month, falling 9 per cent on the back of car loan curbs and high certificate of entitlement premiums.
Housing and bridging loans - the largest consumer loans segment - continued to grow but at a slower pace of 13.5 per cent in August, down from 14.1 per cent in July. In month-on-month terms, total housing loans edged up 0.9 per cent.
Despite the slight dip in total bank lending, the sector's loans-to-deposits ratio breached the 100 per cent threshold for the second consecutive month in August. July was the first time since 1995 that this has occurred. A ratio beyond 100 per cent means banks are lending more than they are taking in as deposits.
This indicates that measures aimed at slowing loan growth - especially among highly-leveraged households - are having some impact at the margins, but not enough to make a dent in the loans-to-deposits ratio, said OCBC economist Selena Ling.
The coming months should give a clearer idea of the impact of these loan curbs, she added, and "further measures (to curb loan growth) should not be ruled out".
Meanwhile, business loans came in at $321.2 billion in August, up 17.4 per cent compared to last year, but slowing from the 20.8 per cent growth in July and 20.4 per cent in June. This is "another confirmation that the growth momentum in the third quarter has slackened somewhat from the hot pace in the second quarter", said OCBC's Ms Ling.
Manufacturing recorded one of the biggest falls in lending, with loans down 9.4 per cent over July's levels.
This was to be expected given the sector's disappointing industrial output data in August and slowing export growth in recent months, said Ms Ling.
"(This) likely reflects that tepid global demand is not translating into the pre-Christmas orders pick-up in the third quarter," she added.
However, a significant drop in business loans in the months ahead is not expected, "because the global economic outlook is relatively sanguine", said DBS' Mr Seah.
[email protected]