Resident loans outperformed at 6.1% growth, driven by manufacturing and consumer lending, while non-resident lending was supported by the Americas.

2025 Full-Year Banking Growth

Singapore’s banking sector expanded by 4.4% in 2025 as domestic credit intermediation strengthened, according to FPA Financial’s February 2026 market review. Loans to residents rose 6.1% year-on-year, while loans to non-residents increased 3.4%. The auxiliary financial services segment grew 5.0% during the year, driven primarily by payment players benefiting from higher regional spending, and the fund management segment expanded 5.1% as accommodative financial conditions and improving sentiment boosted net inflows.

Growth (%) (%)Source: Orionmano Industries

Resident Loan Drivers and Non-Resident Trends

Resident loan growth was driven by a turnaround in lending to the manufacturing sector and a pickup in consumer lending, including housing loans, although this was partially offset by weaker loans to business services, FPA Financial reported.

The AMRO Asia December 2025 assessment provides additional granularity. Resident non-bank lending—which had contracted 2.4% in 2023—grew 5.2% in 2024 and accelerated to 6.8% year-on-year in the first nine months of 2025. The recovery in business loans was initially concentrated in trade-related industries before broadening around mid-2024, particularly into property-related sectors as business sentiment improved. Growth momentum peaked at the turn of the year, softened through April 2025, then picked up again, largely driven by swings in trade-related lending amid uncertainty around U.S. tariff policy direction. Household loans climbed steadily, underpinned by strong demand for housing and bridging loans, partly due to lower interest rates.

On the non-resident side, lending to borrowers outside Singapore increased 3.4% in 2025, supported specifically by stronger lending to the Americas, FPA Financial noted. Total bank loans to businesses in the system reached SGD 524.0 billion by September 2025 according to MAS data cited by Trading Economics, with notable growth in manufacturing, building & construction, and general commerce segments.

Credit Quality and Banking Sector Resilience

The robust loan expansion occurred alongside strong asset quality and capital adequacy metrics. The overall non-performing loan (NPL) ratio declined for a fifth consecutive quarter to 1.2% in Q2 2025, with all major segments registering lower NPL ratios than a year earlier, AMRO Asia reported. While most sectors saw further NPL declines, the transport and storage sector and the accommodations and food services sector recorded upticks, with the latter weighed down by cost pressures and demand shortfalls according to MAS data.

Capital buffers remained ample. The banking sector’s capital adequacy ratio (CAR) stood at 18.2% and Tier 1 CAR at 16.7% in Q3 2025, well above minimum regulatory requirements. Liquidity positions were healthy: the liquidity coverage ratio (LCR) was 144% and the net stable funding ratio (NSFR) was 115% in Q3 2025. The loan-to-deposit (LTD) ratio was approximately 66.7% as of September 2025, indicating banks had room to extend credit, though AMRO Asia noted that both lenders and businesses may exercise caution amid ongoing tariff uncertainties. Deposit growth remained buoyant at 6.1% year-on-year in April 2025 according to Minichart’s June 2025 sector analysis.

Net interest margin (NIM) for local banking groups hovered around 1.9% in Q3 2025, in line with the historical average. With over one-third of their revenue derived from non-interest sources, local banking groups maintained well-diversified income streams supporting profitability resilience, AMRO Asia noted.

Outlook for 2026

Forward-looking indicators point to sustained momentum entering 2026. Singapore’s total loans growth reached 6.24% year-on-year in March 2026, according to CEIC Data, accelerating from 5.39% in February 2026. FPA Financial projects that loan growth in Singapore will remain resilient in early 2026 before moderating later in the year, as global economic uncertainties and the evolving U.S. tariff landscape weigh on sentiment and investment decisions.

The broader Singapore financial services sector is expected to grow at a compound annual growth rate (CAGR) of 4.0% from 2024 to 2029, supported by advances in digital banking, fintech innovation, and regulatory developments, FPA Financial noted. The auxiliary activities segment, consisting largely of payment service providers, is also expected to expand at a steady pace, underpinned by firm regional consumption and stable payments activity.

AMRO Asia’s December 2025 assessment cautions that while growth momentum of business loans has picked up, it remains subject to swings in trade-related lending amid tariff policy uncertainties. The banking sector’s strong capital and liquidity buffers, however, provide a solid foundation to absorb potential shocks, with the LTD ratio of around 66.7% indicating that Singapore banks retain headroom for further credit expansion even if macroeconomic conditions deteriorate.