Singapore’s bank loans extend annual declines for the tenth straight month, could stabilize from Sept

Singapore’s July bank loans declined for the tenth straight months by 2.2 percent y/y in July, but unexpectedly rose 1.1 percent m/m, central bank data showed on Wednesday. Singapore’s bank loans growth hit the lowest since January 2000 in the month of June. Today's data suggests that on-year bank loans growth is stabilizing somewhat and given low base effects from 2H15, stabilization in the negative bank loan prints from September can be expected.

Details of the report showed that business loans fell for the 8th consecutive month by a less severe 5.0 percent y/y in July (June: -6.2 percent y/y), but rose 1.9 percent m/m compared to June. A surprise improvement in loans to financial institutions (+7.0 percent y/y and +11.9 percent m/m) offset weakness in manufacturing (-12.0 percent y/y), general commerce (-22.1 percent y/y) and others (-12.6 percent). Consumer loans moderated from 2.8percent y/y (+0.5 percent m/m) in June to 2.2 percent y/y (flat m/m) in July.

"Looking forward, there are some green shoots that business loans may be gradually bottoming out. We expect 3Q16 bank loans growth to fall by 2.9 percent y/y, largely due to an anticipated August drag due to a high base in August ’15, but bank loans may decline a more benign 1.5 percent y/y for the full year of 2016," said Ang Jun Yu Kelvin, OCBC Economist.