RETAIL BANKING | Staff Reporter, Singapore

Singapore's bank loans growth hits 5.9% for the first nine months of 2017

It's a big jump from the -0.6% in 2016.

Bank loans growth reaccelerated from 5.1% yoy (+0.3% mom) in Aug to 6.2% yoy (+1.0% mom) in Sep (highest since Jun17), according to OCBC. This brought the first nine months bank loans growth to 5.9% yoy, which is still a big step up from the - 0.6% seen for the whole of last year.

Here's more from OCBC:

Notably, business loans growth rebounded from 5.8% yoy (0.1% mom) in Aug to 8.0% yoy (1.4% mom) in Sep (also the highest since Jun17). The momentum lift came from general commerce (16.4% yoy), financial institutions (15.0%), and manufacturing (which jumped from -0.1% to +11.1% yoy), as well as business services which recorded a stellar 22.2% yoy, albeit it was a tad slower than the 23.8% seen in the previous month.

This is consistent with the resilient 3Q17 GDP growth cues seen in the region and the healthy ongoing manufacturing and trade activities. Domestic business confidence should also sustain into 4Q17 given the festive season pickup but may moderate slightly in 1Q18.

However, consumer loans moderated from 3.9% yoy (0.5% mom) in Aug to 3.6% yoy (0.4% mom) in Sep, in line with the easing in housing/bridging loans growth (4.2% versus 4.3% yoy). With the recent pickup in enbloc sales and interest in the private residential property market, it remains to be seen if the housing/bridging loans growth would moderate or maintain around the 4% handle.

While 4Q16 bank loans growth base is slightly more challenging, it is plausible that total loans growth will dip below the 6% yoy handle seen in Sep. Nevertheless, given the benign macroeconomic prognosis for 2018, especially for regional economies, and a very gradualist approach to global monetary policy normalization, we do not expect any precipitous slowdown in domestic bank loans growth.

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