Banking grew by 4.4% in 2025, as loans to residents rose 6.1%, driven by a turnaround in lending to the manufacturing sector and a pickup in consumer lending including housing loans.

Macro Context: Record Loan Volumes and Accelerating Growth

Singapore’s banking system recorded total loans of SGD 886.1 billion in December 2025, a fresh all-time high and a 4.4% increase year-on-year, according to data from the Monetary Authority of Singapore (MAS) compiled by Trading Economics. Loans to resident borrowers—the core metric for domestic credit demand—rose 6.1% over the same period, underscoring a broad-based recovery in lending activity. The pace of expansion has continued into 2026: total loan growth reached 6.24% year-on-year in March 2026, the highest reading since mid-2024, with total outstanding loans climbing to SGD 902.3 billion by end-March 2026.

The 2025 acceleration marks a clear departure from the tepid lending environment of 2023–2024, when elevated interest rates and subdued global trade weighed on credit demand. The 3-month Singapore Overnight Rate Average (SORA) fell from 3.59% in Q3 2024 to 1.72% in Q3 2025, a decline of 187 basis points, providing material relief for borrowers across both corporate and consumer segments.

Sector Breakdown: Manufacturing Leads Corporate Turnaround

Within the business loan segment, which expanded to SGD 538.7 billion in December 2025 from SGD 528.3 billion in November 2025, manufacturing lending staged the most pronounced turnaround. Outstanding loans to the manufacturing sector reached SGD 27.6 billion in December 2025, up from SGD 23.9 billion in June 2025—an increase of over 15% in six months. The MAS Financial Stability Review for 2025 attributes this surge to strong tailwinds from AI-related electronics demand and front-loading of exports, which boosted trade-related sectors broadly.

General commerce lending rose sharply to SGD 99.1 billion in December 2025 from SGD 90.0 billion in June 2025, while transportation, storage, and communication loans grew to SGD 45.8 billion from SGD 43.1 billion over the same period. Agriculture, mining, and quarrying lending edged up to SGD 3.5 billion from SGD 3.72 billion in June, reflecting stable demand from commodity-related activities.

Notably, loans to financial and insurance activities declined to SGD 134.5 billion in December 2025 from SGD 136.1 billion in November, a modest contraction that may reflect tighter regulatory scrutiny or balance sheet optimisation by financial institutions following a period of rapid post-pandemic expansion.

Outstanding Loans (SGD Billion) (SGD billion)Source: Orionmano Industries

Consumer Lending Accelerates on Housing and Auto Demand

Consumer loans reached SGD 347.4 billion in December 2025, up from SGD 332.6 billion in June 2025, a 4.5% increase over six months. Housing and bridging loans—the largest single component—rose to SGD 244.1 billion from SGD 242.6 billion in November, reflecting resilient demand in Singapore’s residential property market despite cooling measures. Credit card loans climbed to SGD 17.8 billion from SGD 17.6 billion, and car loans increased to SGD 9.3 billion from SGD 9.1 billion. Other personal loans rose to SGD 75.6 billion from SGD 74.8 billion.

The steady expansion in consumer credit aligns with the broader improvement in household balance sheets noted in MAS’s Financial Stability Review, which reported that non-performing loan (NPL) ratios fell across most sectors in 2025, with asset quality remaining “generally strong.” The accommodative monetary policy environment—Singapore long-term yields fell 102 basis points in 2025—further supported consumer willingness to take on credit.

Asset Quality and Systemic Resilience

Despite rapid loan growth, the banking system has maintained healthy risk metrics. The MAS Financial Stability Review confirms that liquidity and maturity risks have stayed low, with banks maintaining stable loan-to-deposit ratios and strong capital buffers. NPL ratios declined across most sectors, though the transport and storage sector and the accommodations and food services (AFS) sector saw upticks in NPL ratios, with the latter weighed down by persistent cost pressures and demand shortfalls.

System-wide credit to non-bank entities expanded at a healthy pace, supported by strong growth in loans to resident borrowers. Total money supply (M2) grew 9.5% in 2025, reflecting both credit expansion and the tailwinds from buoyant global financial markets that drove the Straits Times Index to an all-time high, rising 17% over the course of the year.

Outlook: Momentum Extends into 2026

Early 2026 data points to continued acceleration. Total loan growth reached 6.24% year-on-year in March 2026, and total outstanding loans hit a new record of SGD 902.3 billion. Trading Economics’ long-term model projects Singapore’s loans to the private sector reaching approximately SGD 960 billion by 2027 and SGD 1.00 trillion by 2028, implying a compound annual growth rate of roughly 5–6% over the medium term.

Key risks to this trajectory include potential spillovers from a global economic slowdown, further deterioration in the AFS and transport sectors, and the eventual reversal of monetary easing. However, the combination of robust manufacturing demand, resilient consumer credit, and strong capital buffers positions Singapore’s banking system to sustain its growth trajectory through 2026.