Singapore credit growth rises in January, driven by business-related loans

Singapore credit growth continued to pick up in January driven by business loans rather than consumer loans. It registered at 2.9 percent y/y, up from 1.1 percent in the previous month and the trough of -2.7 percent in June 2016.

Most importantly, the uptick was driven. Business-related loan growth reported the first positive reading of 2.8 percent after being stuck in the negative territory for the past sixteen months, while consumer loan growth remained steady at 3.1 percent, reported DBS Bank in its research note.

The turnaround in business loan growth reflects the improvement in business confidence amid a relatively more sanguine economic outlook. In this regard, barring any sudden spike up in interest rates, we expect business loan growth to continue to strengthen along with the steadily improving business climate in the coming months, they added.

The DBS Bank in its research note mentioned that the existing macro-prudential measures remain in place and household leverages are still high. These two factors will likely continue to weigh down on consumer loan growth, which may not be a bad thing given the sluggish labour market at present.