Non-resident loans rose 3.4%, with overall credit expansion driven by trade-related and AI-linked demand, MAS reports.

Overall Banking Credit Growth in 2025

Singapore's banking sector recorded total loan growth of 4.4% in 2025, with a pronounced divergence between resident and non-resident lending, according to the Monetary Authority of Singapore's Financial Stability Review 2025. Loans to residents increased 6.1% year-on-year, nearly double the 3.4% growth in loans to non-residents, indicating that domestic credit demand was the primary engine of expansion.

The momentum has carried into 2026. CEIC data shows total loans growth accelerated to 6.24% in March 2026, up from 5.39% in February 2026 and well above the historical monthly average of 4.20% since 2005. This suggests the credit cycle remains in an expansionary phase, driven by sustained resident borrowing.

YoY Growth (%) (%)Source: Orionmano Industries

Resident Loan Drivers: Trade, AI, and Housing

The 6.1% jump in resident loans was not broad-based but concentrated in specific sectors. According to the MAS Financial Stability Review, resident credit growth was underpinned by lending to trade-related sectors, which were buoyed by front-loading of exports and strong global demand for electronics linked to AI-related products. This pattern reflects Singapore's position as a critical node in the global semiconductor and advanced manufacturing supply chain, where AI-driven demand for chips and data centre infrastructure has created a sustained borrowing cycle.

The ASEAN+3 Macroeconomic Research Office (AMRO) provides corroborating granularity. After contracting 2.4% in 2023, resident nonbank lending grew 5.2% in 2024 and accelerated to 6.8% year-on-year in the first nine months of 2025. The recovery was initially driven by trade-related industries before becoming more broad-based around mid-2024, with property-related industries also contributing. AMRO notes that business loan growth momentum peaked at the turn of 2025, softened through April, and then picked up again—driven largely by swings in lending to trade-related industries amid uncertainty around US tariff policies.

Household lending has been equally robust. Mortgage loans grew 5.2% year-on-year in Q2 2025 to S$284.3 billion, following a 4% increase in Q1 2025, according to SingStat household balance sheet data cited by Asia News Network. Total household liabilities reached S$390.9 billion in Q2 2025, marking the seventh consecutive quarterly increase since Q4 2023. Mortgage loans have accounted for at least 70% of household liabilities since Q1 1999, underscoring the dominance of housing-linked debt in Singapore's consumer credit profile.

The housing loan uptrend has not triggered red flags among analysts. Maybank Kim Eng estimated that household debt as a percentage of GDP stood at approximately 53% in Q2 2025—above the 50% threshold but well below levels that have historically preceded financial stress in developed markets. Lower interest rates and moderating housing price gains are expected to improve housing affordability for new borrowers through the remainder of 2025.

Banking Sector Stability and Asset Quality

Despite the rapid credit expansion, Singapore's banking system has maintained robust buffers across multiple metrics. The overall non-performing loan ratio declined to 1.2% in Q2 2025, a fifth consecutive quarterly fall, according to AMRO. While most sectors saw further declines in NPL ratios, 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, per MAS.

Capitalisation ratios remain well above regulatory minima. The capital adequacy ratio stood at 18.2% in Q3 2025, with the Tier 1 CAR at 16.7%, according to AMRO. Liquidity positions are equally strong: the liquidity coverage ratio was 144% and the net stable funding ratio was 115% in Q3 2025, both above minimum regulatory requirements. The loan-to-deposit ratio of approximately 66.7% in September 2025 indicates that banks have room to extend further credit, though AMRO notes that institutions may be more prudent in the current tariff-uncertain environment.

On the consumer side, repayment behaviour has improved markedly. IFS Capital Group data shows that on-time loan repayments hit a post-COVID record of 86% in 2025, up from 65% in 2024 and well above the 36% to 65% range observed between 2020 and 2024. Delinquency rates remain within acceptable norms across both bankable and underserved segments.

However, there are pockets of concern. Credit card rollover balances reached a record S$9.07 billion in late 2025, and debt consolidation remains the most common loan purpose among underserved borrowers (26%). Income advance (12%), medical reasons (7%), self-improvement (6%), and business expansion (5%) round out the primary reasons for borrowing. The persistence of debt consolidation activity is strongly linked to rising credit card rollover balances, which have been on an upward trend since 2022.

The banking sector's net interest margin hovered around 1.9% in Q3 2025, in line with the historical average, while local banking groups derive over one-third of their revenue from non-interest sources, providing income diversification. With strong capital buffers, low NPL ratios, and improving repayment behaviour, the sector appears well-positioned to sustain healthy credit growth into 2026, though tariff uncertainties and elevated consumer debt levels warrant monitoring.