Sector expands at slower pace than 2024's 7.3%, supported by strong life insurance new business premiums and broad-based credit growth.

Singapore's finance and insurance sector expanded by 4.3% in 2025, moderating from 7.3% in 2024, driven by banking and life insurance under accommodative conditions. The sector recorded total weighted new life insurance premiums of S$6.53 billion for the full year, representing an 11.3% year-on-year increase, while banks continued to extend credit to non-bank entities on a broad-based basis. Despite the deceleration from 2024's stronger pace, the industry remains on track to meet the Monetary Authority of Singapore's (MAS) target of 4–5% annual value-added growth under the Financial Services Industry Transformation Map (ITM) 2025.

Growth Moderation in Context: 4.3% in 2025 vs 7.3% in 2024

The 4.3% growth rate for 2025 represents a normalization following a robust 7.3% expansion in 2024. Data from the Singapore Department of Statistics, as cited in industry summaries, confirms this deceleration. The sector's performance nonetheless outpaced broader economic growth, and was supported by accommodative monetary conditions that sustained lending activity across resident and non-resident segments.

The moderation reflects a cooling from the post-pandemic rebound phase, when low base effects and pent-up demand drove outsized gains. However, the underlying fundamentals—credit expansion, insurance demand, and wealth management activity—remained intact throughout 2025.

Growth Rate (%)Source: Orionmano Industries

Life Insurance Surge: 11.3% Growth in New Business Premiums

The life insurance sector was a standout performer in 2025. Total weighted new business premiums reached S$6.53 billion, an 11.3% year-on-year increase, according to the Life Insurance Association Singapore. The fourth quarter alone recorded 13.0% growth compared to the same period in 2024, indicating strong momentum heading into 2026.

Growth was driven primarily by sales of investment-linked policies, as documented in the MAS Financial Stability Review published in November 2025. Singapore residents continued to prioritise protection coverage and long-term investment, even amid a challenging macroeconomic environment. The total sum assured increased by 3.1% year-on-year, signalling broader financial security enhancement across the population.

The insurance industry in Singapore remains well-capitalised. The average capital adequacy ratios (CARs) for both direct life and general insurers are well above regulatory requirements, according to MAS. The direct general insurance sector also reported solid gross premium growth for H1 2025, driven by business in Singapore, coupled with favourable underwriting results and investment income. Direct life and composite insurers reported sustained growth in their invested assets, with a slight shift in allocation towards equity securities in recent quarters. The reinsurance sector has remained resilient, with steady gross premiums and positive underwriting results.

Banking Sector Credit Expansion and Profit Outlook

Credit to non-bank entities expanded over the past year, supported mainly by loan growth to residents, according to the MAS Financial Stability Review. Growth in resident non-bank credit was broad-based, with increased contribution from trade-related sectors in recent months. The credit-to-GDP gap for Singapore remained negative in Q2 2025, suggesting room for further expansion without immediate overheating risks.

However, forward-looking sentiment among banks and insurers has moderated. The confidence index for the finance sector slipped to 54.3 in Q4 2025 from 58.0 in Q3 2025, following a steady decline over the year from 59.1 in Q1 2025 and 57.4 in Q2 2025, as reported by Asian Banking & Finance. This suggests that while current operating conditions remain supportive, firms are pricing in headwinds to profitability in 2026.

Notably, financial-related segments outside traditional banking showed relative resilience. Other financial and insurance activities rose to 57.1 in Q4 2025 from 55.5 in Q3 2025, indicating that the moderation in confidence is more concentrated within core banking and insurance firms.

Industry Sentiment and Policy Backdrop

Despite the moderation in sector-specific profit expectations, overall business sentiment in Singapore improved. The Singapore Business Federation's Business Sentiment Index rose 1.2 points to 53.4 in Q4 2025, ending a six-month decline. Insurance and banking were among the sectors that "performed positively" in the quarter, even as sentiment across the wider economy remained mixed.

Growth confidence across all businesses rose from 55.4 to 57.7 in Q4 2025—the highest level recorded in 2025—with insurance and banking showing the strongest improvement on that measure. On policy sentiment, sector-level views were strongest in IT and insurance and banking, even though overall sentiment towards government policies eased slightly to 55.7.

The MAS Financial Services ITM 2025 targets 4.0–5.0% value-added growth per annum for the sector, alongside 3,000–4,000 net jobs created annually. The 2025 outcome of 4.3% sits comfortably within this band, validating the strategic framework. The ITM focuses on enhancing asset class strengths, digitalising financial infrastructure, catalysing Asia's net-zero transition, and shaping the future of financial networks.

Outlook

The sector's ability to sustain growth within the MAS target range of 4–5% annually will depend on how banks and insurers navigate moderating profit expectations and global economic uncertainties. The steady decline in the finance confidence index over 2025 points to cautious positioning. On the other hand, the broad-based credit expansion, strong life insurance demand, and resilient non-core financial activities provide a buffer against sharper downturns. Retrenchment data from Q4 2025 showed financial and insurance services recording the second-highest retrenchment rate among industries in Singapore, a data point that bears watching in 2026 as firms potentially restructure to protect margins.