Sunday, January 2, 2011

Bank lending up 1.7% in November

BANK lending rose at a healthy pace in November, easing earlier fears of a sharp slowdown in lending activity, as both business loans and consumer housing loans continued to expand.

Total Sing-dollar loans grew 1.7 per cent over the month to $318.5 billion - the 12th consecutive month of growth - Monetary Authority of Singapore estimates released yesterday show. Over the year to end-November, total bank lending was up 14.5 per cent - the fastest year-on-year expansion since January 2009.

Analysts had earlier expected the annual pace of loans growth to slow to below 10 per cent by the end of the year, as economic activity cooled. But recent data shows that economic growth remained surprisingly strong even in November.

Data released on Christmas Eve showed that Singapore's manufacturing output expanded 1.1 per cent in November from a month earlier, after seasonal adjustments - surprising economists who had expected output to shrink.

Loans to businesses, which make up over half of all Singapore-dollar bank lending here, rose by 1.7 per cent, or $2.9 billion, over the month to $168.9 billion. That's faster than the 0.8 per cent growth in October, though the data isn't seasonally adjusted, and the monthly changes are volatile.

Over the year to Nov 30, business loans were up 11.4 per cent - the fastest year-on-year growth in 21 months.

The growth in business loans in November was led by a surge in general commerce loans, which rose by 5.1 per cent, or $1.5 billion, over the month to $30 billion.

Loans to three other major industry sectors - building and construction; financial institutions, including fund management companies and real estate investment trusts; and transport, storage and communication - also rose over the month.

Loans to building and construction firms - the biggest chunk of business loans - expanded 2.3 per cent to $52.7 billion, while loans to financial institutions grew 2.7 per cent to $36.8 billion. Lending to transport, storage and communication firms rose 2.2 per cent, to $9.2 billion.

But loans to manufacturing firms - another big segment - fell 3.8 per cent to $10.8 billion. Loans to business services firms also fell, by 5.1 per cent to $4.6 billion.

Over the month, consumer loans grew by 1.6 per cent, or $2.4 billion, to $149.7 billion - slightly slower than the 1.8 per cent growth in October. Compared with a year earlier, loans to consumers were up 18.2 per cent.

Housing loans remained the biggest driver of the growth in consumer loans, though there are signs of slowing growth. Housing loans rose 1.7 per cent over the month - and 22.1 per cent over the year - to $110.9 billion at end-November. The annual pace of growth has been slowing since August, when it reached 23.4 per cent.

Analysts have said that government measures to cool the property market, announced on Aug 30, won't have a big impact on the aggregate bank lending data until much later, since loans for new-home purchases tend to be drawn down only when properties are completed.

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