BUSINESS confidence and loan demand remains “very mixed” across the different industries given the K-shaped nature of the Covid-19 recovery story, said OCBC chief economist Selena Ling in a note on Monday.

This comes amid noticeable softness in loan demand from manufacturing, transport, storage and communication, and business services industries in April. 

Data from the Monetary Authority of Singapore on Monday showed that total business loans in Singapore came in near flat at S$427.69 billion in April after four straight months of steady growth. 

This was even as loans to the single largest business segment – building and construction – rose 0.3 per cent month on month to S$152.15 billion to reverse the 0.3 per cent decline in March.

Loans to the manufacturing sector were down 3.4 per cent month on month to S$26.89 billion in April; loans to the transport sector fell 4.1 per cent to S$24.70 billion; and loans to business services slumped 5 per cent to S$10.92 billion. 

Year on year, total business loans contracted for the eight straight month by 1.4 per cent.

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Consumer loans, on the other hand, were up 0.3 per cent in April for the ninth straight month, aided by loan demand recovery in the housing segment. 

Housing loans, which make up three-quarters of consumer lending, extended their growth streak for the eighth straight month, up 0.4 per cent to S$204.65 billion in April. 

Overall, loans through the domestic banking unit – which captures lending in all currencies but reflects mainly Singapore-dollar lending – rose for the sixth consecutive month by 0.1 per cent in April to S$692.17 billion, albeit slower than the 0.7 per cent increase in March. 

With the implementation of Phase 2 (Heightened Alert) from May 16 through June 13, Ms Ling said the question remains if the uptick in overall sentiments can sustain into May and June, or will see a “hopefully temporary and mild” setback. 

“Consumer loans may remain buoyant due to the resilient mortgage loans growth and hence should remain the key support for loan demand for now,” she said.

While Singapore’s latest S$800 million Covid-19 support package had included four additional months of suspension for tuition fee loans, this should have limited impact at this juncture, Ms Ling added. 

Year on year, total bank lending in April was up 0.4 per cent – the first step into positive growth territory since May 2020.