Singapore's banking segment expanded by 4.4% in 2025, edging out the overall finance and insurance sector, which grew 4.3% for the year, according to FPA Financial's Singapore Financial Services Market View published in February 2026. The banking segment's performance moderated from the 7.3% expansion recorded by the broader finance and insurance sector in 2024, yet it remained a key driver of Singapore's financial services growth alongside the insurance segment.
Within the financial services ecosystem, auxiliary financial services grew 5.0% in 2025, led primarily by payment players benefiting from higher regional spending. The fund management segment expanded 5.1% for the year, supported by accommodative financial conditions and improving market sentiment. These sub-segments slightly outpaced banking, but the banking segment's absolute contribution to sector output remained substantial given its larger base.
Exhibit
Growth Rates of Singapore Financial Services Sub-Segments in 2025 (%)
Banking segment grew 4.4%, driven by domestic credit intermediation.
Growth Rate (%)Source: Orionmano Industries
Domestic Credit Intermediation Drove Expansion
The banking segment's 4.4% growth was propelled by a substantial 6.1% increase in lending to residents during 2025. This uptick in domestic credit intermediation reversed a prior period of weakness in manufacturing lending, as banks expanded credit to the sector amid firmer-than-expected domestic growth momentum. Consumer lending, including housing loans, also picked up during the year, contributing to the overall expansion in resident credit.
The turnaround in manufacturing lending represents a notable shift. According to the Monetary Authority of Singapore's Financial Stability Review for 2025, resident credit growth has been 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 sector-level recovery helped offset headwinds elsewhere in the domestic loan portfolio.
The growth in resident loans was, however, partially offset by weaker lending to business services. This divergence suggests that while manufacturing and consumer-facing segments strengthened, cyclical softening in commercial real estate and professional services constrained broader credit expansion. Overall, the composition of domestic credit growth reflects a rotation toward trade-exposed and household segments, supported by broadly accommodative financial conditions that kept borrowing costs declining amid expansions in credit and money supply.
Non-Resident Lending and External Demand
Externally, loans to non-residents increased 3.4% in 2025, supported by stronger lending to the Americas. This external loan growth, while more modest than the domestic component, underscores Singapore's role as a regional financial hub channeling credit flows across borders. The MAS Financial Stability Review notes that credit to non-bank entities expanded at a healthy pace over the past year, with cross-border lending contributing to overall balance sheet growth.
The recovery in external lending coincides with broader trade dynamics. Global demand for electronics, particularly those linked to AI-related products, has boosted trade-related sectors and supported loan demand from corporates engaged in cross-border commerce. Singapore's banking system, which channels funds to emerging Asia and beyond, benefits from these trade flows, though the pace of non-resident credit growth has been tempered by macroeconomic uncertainties and geopolitical risks.
Despite the headline growth, the 3.4% increase in non-resident loans lagged domestic credit expansion, reflecting a cautious approach by Singapore-based banks to cross-border exposures. Banks have maintained disciplined underwriting standards, focusing on high-quality borrowers in key markets such as the Americas, where economic resilience has supported credit demand. The slower pace of external lending also reflects the shift in global funding conditions, as interest rate differentials and currency volatility have influenced borrower preferences for Singapore-dollar-denominated credit.
Banking Sector Resilience and Risk Indicators
The expansion in credit activity occurred against a backdrop of low systemic risk. According to the MAS Financial Stability Review, the overall banking financial vulnerability index (FVI) for Singapore remained benign in 2025. Liquidity and maturity risks stayed low, with banks maintaining healthy liquidity positions and stable loan-to-deposit (LTD) ratios.
Leverage vulnerabilities for both residents and non-residents were low amid strong capital buffers. The MAS assesses the banking sector FVI across four dimensions: resident leverage risk, non-resident leverage risk, liquidity risk, and maturity risk. All indicators pointed to a resilient system, with most corporates benefiting from firmer-than-expected domestic growth momentum and households supported by a stable economic environment.
The MAS expects the finance and insurance sector to remain supported by broadly accommodative macroeconomic and financial conditions in 2026. A low-interest-rate environment is anticipated to sustain credit demand, though banking growth is likely to moderate from 2025 levels while remaining positive. The combination of strong capital buffers, stable funding profiles, and prudent underwriting positions Singapore's banking system to navigate potential headwinds, including geopolitical uncertainty and shifts in global trade policy, without compromising financial stability.
