Growth moderates to 4.3% as banking and insurance drive output, fund management subdued.

Record Value Added in 2025

Singapore's financial services sector generated value added of approximately SGD 79.0 billion in 2025, cementing its position as a 12.1% contributor to the national economy despite moderating growth from the previous year. The sector's share of nominal GDP underscores its structural importance to Singapore's economy, which expanded by 4.3% year-on-year in the first three quarters of 2025, partly due to front-loading of activities ahead of US tariff deadlines, according to the ASEAN+3 Macroeconomic Research Office (AMRO).

The finance and insurance sector expanded by 4.3% year-on-year in 2025, moderating from the 7.3% growth recorded in 2024, as reported by FPA Financial in its Singapore Financial Services Market View published in February 2026. This deceleration reflects a normalisation of activity following an exceptionally strong 2024, when the sector's growth more than doubled the preceding year's pace, as noted by the Monetary Authority of Singapore (MAS) in July 2025.

Growth Rate (%)Source: Orionmano Industries

Segment Performance

Growth in 2025 was driven primarily by banking and insurance, while the fund management segment registered more subdued activity amid weaker global market conditions.

Banking grew by 4.4% in 2025, supported by sustained domestic credit intermediation. Loans to residents rose 6.1%, driven by a turnaround in lending to the manufacturing sector, though this was partially offset by weaker loans to business services, according to FPA Financial. Consumer lending, including housing loans, also picked up during the year. Externally, loans to non-residents increased 3.4%, supported by stronger lending to the Americas.

Auxiliary financial services, which includes payments, expanded by 5.0% in 2025, led mainly by payment players benefiting from higher regional spending, FPA Financial reported.

Fund management grew by 5.1% for the year, as accommodative financial conditions and improving sentiment boosted net inflows, though the segment's performance was tempered by weaker global equity market conditions, which kept activity subdued relative to prior periods.

Insurance performed robustly, with life insurance contributing significantly to the sector's overall resilience. The life insurance segment benefited from sustained demand for protection and savings products, supported by the low-interest-rate environment.

Macroeconomic Context and Resilience

The sector's 2025 performance was underpinned by broadly accommodative macroeconomic and financial conditions, including a low-interest-rate environment that supported credit demand and insurance product uptake. Singapore's economy expanded by 4.3% year-on-year in the first three quarters of 2025, driven in part by front-loading of trade and production activities ahead of the August 7 deadline for US reciprocal tariff implementation, AMRO noted. The delay in tariff implementation and continued front-loading activities in the region sustained growth momentum.

The banking sector remained resilient. 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. Banks are well capitalised, with the capital adequacy ratio (CAR) at 18.2% and Tier 1 CAR at 16.7% in Q3 2025, well above minimum regulatory requirements, according to AMRO. Liquidity positions remained strong, with the liquidity coverage ratio (LCR) at 144% and the net stable funding ratio (NSFR) at 115% in Q3 2025, also above minimum requirements. The net interest margin (NIM) of local banking groups hovered around 1.9% in Q3 2025, in line with historical averages.

The wealth management sector reached a valuation of approximately SGD 198 billion and hosted 1,650 single-family offices, according to a report from ResearchAndMarkets via GlobeNewswire, as cited by Singapore Business Review. Growth in wealth management is driven by demand from high-net-worth individuals seeking professional financial advice, estate planning, and cross-border investment solutions, supported by Singapore's regulatory stability and strong legal infrastructure.

Outlook for 2026

MAS expects the finance and insurance sector to remain supported by broadly accommodative macroeconomic and financial conditions in 2026, according to FPA Financial. A low-interest-rate environment and sustained credit intermediation are expected to underpin banking and insurance activity.

However, downside risks persist. Global tariff uncertainties could moderate fund management performance, and a potential slowdown in global growth presents headwinds. MAS has warned that the pace of growth seen in recent years is unlikely to persist, as the industry braces for slower global expansion amid ongoing trade policy uncertainties. The banking sector's loan-to-deposit ratio of approximately 66.7% in September 2025 indicates room for further credit extension, but banks may exercise greater prudence in lending, and businesses may also be cautious in borrowing given tariff uncertainties.

With accommodative monetary conditions expected to persist and continued support from digitalisation and wealth inflows, Singapore's financial services sector is poised for steady but more moderate growth in 2026, subject to global trade policy developments.