Singapore’s headline loan growth improved in April but continued to remain in negative following drag in business loan segment, which contracted sharply during this period. However, companies remain cautious on risks of borrowing under the prevalent challenging environment and chances of a rate hike ahead.
The headline number registered -0.8 percent y/y in April. This is an improvement from the -1.7 percent decline in the previous month, which is also the weakest on record since Feb, 2000. The business loan segment registered contraction of 2.9 percent, an improvement over the past month’s -4.2 percent.
However, consumer loan segment has remained patient despite a deteriorating economic environment. It has not only remained in positive territory but firmed as well.
Consumer related loans grew by 2.4 percent, up from 1.9 percent previously. This is mainly driven by a still healthy mortgage loan growth of 3.7 percent.
"And with the recent easing in curbs on car purchases, expect consumer loan growth to pick up even further," DBS said in a research note.
However, the labor market has eased, not cracked completely. Unemployment remained below the 2 percent mark amid average job redundancies. This may have bolstered consumers to remain bullish on the economic performance of the country.
