http://www.straitstimes.com/archive/...ateau-20140501

Growth in bank loans hits plateau

Businesses and consumers seem wary about economy

Published on May 1, 2014 1:48 AM

By Chia Yan Min


BANK lending was almost flat in March, compared with February, in a sign that both businesses and consumers remain cautious about economic prospects.

Overall, bank loans - to consumers and businesses - came in at $587.7 billion, based on preliminary Monetary Authority of Singapore data released yesterday.

That is a 0.6 per cent rise over February, at a slightly faster clip than the 0.4 per cent increase registered in February from January.

However, both months fell well short of the 2.1 per cent growth logged in January from December.

Business loans for March stood at $360.5 billion, up 0.7 per cent from February. This was marginally higher than the 0.4 per cent rise recorded in February over January.

Bank lending to the manufacturing, building and construction and business services sectors fell in March over February.

This was offset by an increase in loans given out to businesses in other sectors, including general commerce and financial institutions.

The dip in loans to manufacturers appears at odds with strong factory output numbers in recent months, but is probably not a cause for concern, given more optimistic expectations for the industry this year, said UOB economist Francis Tan.

"The outstanding pool of loans is smaller, but that doesn't necessarily imply a slowdown in investment... Manufacturers could be paying down shorter-term loans," he said.

He added that the 7 per cent surge in loans given to companies in general commerce - which recorded the largest increase among business loans - is in line with higher trade volumes and stronger demand for trade finance.

Consumer loan growth was also slow in March, edging up just 0.3 per cent over the preceding month to reach $227.2 billion.

Car and property loan curbs continued to make their presence felt.

Housing loan growth continued to moderate, rising 0.4 per cent over the preceding month to $168.8 billion. This was comparable with February's 0.5 per cent month-on-month hike.

Car loans entered their 20th consecutive month of decline, falling 1.9 per cent to $10.1 billion. Buyers have been hit by tighter financing requirements and higher prices for Certificates of Entitlement.

March bank lending rose 13.5 per cent over the same month last year, slightly slower than February's 14.6 per cent growth.

Bank loan growth is expected to slow further in April and May due to a high base last year, said OCBC economist Selena Ling.

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