Loans to non-bank residents grew 6.1% year-on-year in 2025, led by a recovery in business lending as the manufacturing sector expanded 8.7% and trade-related industries drove credit demand.

Lending Recovery Broadens Across Sectors

After contracting 2.4% in 2023, resident non-bank lending in Singapore staged a sustained recovery, growing 5.2% in 2024 and accelerating to 6.1% year-on-year in 2025, according to data from the Monetary Authority of Singapore (MAS) cited in the AMRO Annual Consultation Report. Total bank loans to the private sector reached a record high of SGD 902.3 billion in March 2026, up from SGD 893.6 billion in February 2026, with business loans accounting for SGD 547.6 billion and consumer loans SGD 354.7 billion.

The headline 6.1% growth figure for 2025 is derived from MAS's published contribution-to-growth breakdown in the Financial Stability Review 2025, which shows year-on-year changes in household debt contributions. The AMRO report independently confirms that resident non-bank lending grew 6.8% year-on-year in the first nine months of 2025, consistent with the full-year trajectory.

Business loan recovery was initially concentrated in trade-related industries before broadening around mid-2024. By 2025, growth momentum peaked at the turn of the year, softened through April, and then picked up again—driven largely by swings in lending to trade-related industries amid uncertainty around U.S. tariff policies. The manufacturing sector, which grew 8.7% in 2025 (up from 3.8% in 2024), was a key contributor to this turnaround, per the Economic Survey of Singapore 2025.

Household loans climbed steadily throughout the period, underpinned by strong demand for housing and bridging loans, partly due to lower interest rates. The 3-month compounded SORA declined from 3.6% in August 2024 to 2.5% in April 2025, according to the IMF's 2025 Article IV Consultation report, supporting mortgage demand.

Banking Sector Resilience and Asset Quality

Singapore's banking sector remained resilient through the credit expansion, supported by sound asset quality, strong capital buffers, ample liquidity, and solid profitability. 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, according to AMRO.

Provisioning coverage strengthened significantly to 137% as of Q2 2025, up from 113% in Q2 2024, as banks built precautionary buffers against a potentially uncertain economic environment. Capital adequacy remains robust: the aggregate CAR stood at 18.2% and Tier 1 CAR at 16.7% in Q3 2025, well above regulatory minimums. Local banking groups' strong earnings underpinned their capital positions, with MAS noting that aggregate Common Equity Tier 1 capital remained healthy.

Liquidity and maturity risks stayed low in 2025, with banks maintaining healthy liquidity positions and stable loan-to-deposit ratios. The credit-to-GDP gap remained negative, suggesting the expansion has not yet created overheating pressures.

Percentage point contribution (pp)Source: Orionmano Industries

Household Sector Leverage Remains Manageable

Household debt dynamics showed mixed signals but remained within manageable parameters. Mortgage loans continued to drive household credit growth, supported by lower interest rates and sustained demand for both public and private housing. The resale price of public housing grew 9.7% in 2024, nearly double the 4.9% pace in 2023, prompting the government to tighten the loan-to-value ratio for HDB loans to 75% from 80% in August 2024, as noted in the IMF report.

Despite rising house prices, household balance sheets appear stable. The MAS Financial Stability Review indicates that personal loans to personal disposable income (PDI) ratios have stayed within historical ranges. Delinquency rates crept up but remained below 1%. Rollover balances as a share of PDI have increased since 2022 but not to levels that signal systemic stress.

Credit card and personal loan growth was moderate. As of March 2026, credit card loans stood at SGD 17.4 billion, while other personal loans reached SGD 78.7 billion, according to Trading Economics data. Motor vehicle loans rose to SGD 9.7 billion.

Outlook and Risks

The loan growth trajectory faces headwinds from potential tariff escalation and tighter financial conditions. The IMF notes that U.S. tariff announcements in April 2025 triggered global equity market selloffs and a sharp tightening in domestic financial conditions, with Singapore's stock market dropping 12.1% in the first week of April. While conditions have since eased, the volatility around trade policy continues to influence lending patterns, particularly in trade-related industries that drove much of the 2025 expansion.

Domestic private credit growth is expected to moderate as base effects normalize and the impact of lower interest rates fades. Trading Economics forecasts total loans to the private sector reaching approximately SGD 884 billion by end-Q2 2026, with projections of SGD 960 billion by 2027 and SGD 1.0 trillion by 2028—implying a deceleration from the recent pace.

Manufacturing sector lending momentum will depend on global demand for electronics, particularly AI-related products, which the MAS identifies as a key driver of trade-related credit expansion. The property sector remains a wild card: while concerns about overheating have eased, the combination of tight supply, rising resale prices, and lower interest rates could sustain household borrowing demand.