Bank lending in Singapore fell in December from November in a sign that economic activity could be slowing down.
Total loans and advances fell to S$607.96 billion at the end of December from S$608.17 billion at the end of November, according to the Monetary Authority of Singapore’s (MAS) latest monthly statistical bulletin.
Banks lent more money for the building and construction industry in December compared to November, but loans to manufacturing and for general commerce declined. According to Voyage Research, work on Changi Airport’s Project Jewel and the expansion of Terminal 1 are likely to have helped to boost bank lending to the construction sector in December.
Said Mr Phuah Keng Keat, Investment Analyst, Voyage Research: “The slowdown in the economic zone, for example eurozone and slowdown in China GDP have contributed to the slower business activities in Singapore. For corporate loans, we are seeing a trend that more companies issue medium term notes to lower financing cost in view of the rise of the interest rates, we forecast that the medium term issuance will gain popularity in view of bank loans.”
Meanwhile, credit card loans rose to S$10.42 billion at end-December from S$10.22 billion in November.
According to MAS, total credit card billings rose to S$4.37 billion as at end-December – up from S$3.82 billion in November and S$3.98 billion in December 2013. But rollover balances fell to S$5.5 billion in December from S$5.67 billion in November.
Banks wrote a higher proportion of credit card debt during the last three months of 2014, with the charge-off rate rising to 5.5 per cent in December from 5.4 per cent in September. The charge-off rate is a measure of bad debts that had been written off as a percentage of the average rollover balance for the period.
As monthly charge-off rates tend to be too volatile, MAS publishes publish quarterly charge-off rates, which is calculated by annualising the ratio obtained from dividing the bad debts written off for the quarter by the average rollover balance for the same quarter.
“MODEST” INCREASE IN TOTAL BANK LOANS FOR 2015: OCBC
Housing and bridging loans rose to S$177.4 billion from S$176.2 billion in November, while car loans fell from about S$8.8 billion in November to S$8.6 billion.
Commenting on the numbers, OCBC Bank said this brings full-year 2014 bank loans growth to 11.4 per cent. This is the slowest since 2010 when loans growth rose by just 9.6 per cent.
Total loans had risen in November from October following two months of decline.
For 2015, OCBC expects total bank loan growth to increase by a more modest 8 per cent year-on-year, “given the less than sterling external demand environment and the domestic supply-side constraints”.
In its latest report, rating agency Fitch Ratings said Singapore property market correction will place modest pressure on banks’ loan quality given borrowers’ non-housing wealth and banks’ adequate collateralisation.
But it adds that the local banks will remain resilient against rising property risk, and that potential losses from mortgages will likely be minimal due to relatively healthy household balance sheets.
Credits: Channel NewsAsia