http://www.straitstimes.com/archive/...s-dec-20150131

Slight dip in loan figures for Dec

Numbers offer few clues as to economy's direction

Published on Jan 31, 2015 1:17 AM

By Mok Fei Fei


THE latest Singapore bank lending figures offered few clues to the local economy's likely direction.

The total value of loans was little changed last month from November as a rise in consumer lending offset a dip in business loans.

Loans disbursed totalled $607.96 billion, just a slight dip from November's $608.17 billion, preliminary data released yesterday by the Monetary Authority of Singapore showed.

Business loans came in at $371.5 billion, a drop of 0.4 per cent from the previous month, with the manufacturing, general commerce and financial institutions sectors being major drags.

Manufacturers borrowed $29.6 billion, a 6.4 per cent fall from the previous month, general commerce sector loans slid 1.2 per cent to $78.1 billion while financial institution borrowings slid 2 per cent to $80.9 billion. "This suggests that these key drivers of business loans are facing more subdued growth prospects," OCBC economist Selena Ling wrote in a note.

Other sectors, like construction, transport and business services, rose last month.

Consumer loans lent support to overall lending, climbing 0.5 per cent from the previous month to $236.4 billion, helped by higher demand in housing loans as well as credit card loans.

Housing loans, the biggest type of loan across all categories, rose 0.7 per cent to $177.4 billion, while credit card loans rose 2 per cent to $10.4 billion. Loans for cars and share financing, meanwhile, fell.

"Given general analyst expectations for a further softening in the domestic property market amid cooling measures and rising interest rate environment in 2015, it may be premature to conclude that a sustainable improvement in consumer and housing loans is on the cards for this year," said Ms Ling.

Despite a weakening property market, ratings agency Fitch believes banks here will face only a modest amount of pressure on their loan quality.

Fitch director for financial institutions Elaine Koh and senior director for financial institutions Sabine Bauer noted that borrowers' non-housing wealth is at healthy levels of 3.2 times above their liabilities.

Banks also have adequate collateral of 49 per cent, on average, loan-to-value ratio on the mortgages. Total bank loans last year amounted to $7.2 trillion, an 11.4 per cent rise from 2013, the slowest pace of growth since 2010's 9.6 per cent rise.

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