Turnaround in manufacturing lending drove resident loan growth, though weakness in business services partially offset gains.

Singapore resident loans expanded 6.1% in 2025, reversing the prior year's sluggish performance as a rebound in manufacturing lending and improving business sentiment drove credit demand. Bank lending reached SGD 902.3 billion by March 2026, up from SGD 893.6 billion in February, according to the Monetary Authority of Singapore. The headline figure marks a meaningful acceleration from the 3.8% year-on-year growth recorded in the second quarter of 2025, with overall loans to non-bank customers rising 4.7% year-on-year by August 2025, according to MAS data.

Manufacturing Lending Reverses Contraction

The manufacturing sector—which had experienced subdued credit demand through much of 2024—emerged as the primary driver of resident loan growth in 2025. Industry estimates point to a broad-based pickup in factory-related borrowing, supported by improved business sentiment and a recovery in global trade flows. While precise sectoral breakdowns are not publicly available at the granular level, the MAS Macroeconomic Review for October 2025 noted that the pickup in overall loans was "boosted by higher corporate loans to residents," with the manufacturing turnaround forming a key component.

The lending expansion was not uniform across all segments. Business services lending remained weak, partially offsetting gains from manufacturing, according to MAS commentary. The divergent trajectory reflects uneven sectoral recovery, with professional services firms maintaining cautious balance sheet management amid ongoing uncertainty in global trade policy and hiring costs.

Total bank lending in Singapore has been on a steady upward trajectory. The SGD 902.3 billion recorded in March 2026 represents an all-time high for the series, with monthly data from CEIC showing total loan growth reaching 6.24% year-on-year in March 2026, accelerating from 5.39% in February 2026.

SME Borrowing Costs Ease, Approval Rates Rise

Small and medium enterprises, which account for a significant share of Singapore's corporate borrowers, benefited from improved credit conditions in 2025. According to Linkflow Capital's annual SME loan study, the average borrowing cost for Singapore SMEs fell to 8.18% in 2025, down from 8.47% in 2024. Loan approval rates rose in tandem, reaching 74% in 2025 compared to 70% a year earlier.

The study also found that loans above SGD 500,000—which had entirely disappeared from approved volumes in 2024—returned in 2025, accounting for 5% of approved loan volume. However, bank loan processing times lengthened significantly to 33 days in 2025 from 22 days in 2024, while non-bank funders disbursed loans in approximately seven days. Among rejected applications, the share linked to adverse personal credit records increased sharply to 11% in 2025 from 3% in 2024.

Institutional lending patterns showed that foreign banks handled 38% of approved loan volume in 2025, while local banks accounted for 46% and digital banks 11%. Notably, 82% of SMEs seeking financing in 2025 did not have existing bank loan facilities, indicating that first-time borrowers continue to form the bulk of demand.

Percentage (%)Source: Orionmano Industries

Consumer Credit Profile Strengthens

Consumer credit quality showed material improvement in 2025, supporting the overall lending environment. On-time loan repayments reached 86% in 2025, a post-COVID record, according to data from IFS Capital Group. This marks a significant jump from 65% in 2024, with the repayment rate having fluctuated between 51% and 65% from 2020 to 2024, and plunging to 36% in 2022. IFS Capital Group described the data as indicating "general improvements in the overall consumer credit profiles in Singapore, both in the bankable and underserved segments."

Notwithstanding the improvement, debt consolidation remained the most common loan purpose among underserved borrowers, with 26% citing it as the primary reason for borrowing. IFS Capital Group attributed the persistence of debt consolidation demand to rising credit card rollover balances, which hit a record SGD 9.07 billion in late 2025. The rollover balance trend has been rising since 2022, suggesting that while repayment capacity has improved, a subset of borrowers remains reliant on credit to manage existing liabilities.

Other borrowing purposes among underserved borrowers included income advance (12%), medical reasons (7%), self-improvement (6%), and business expansion (5%).

Source: Orionmano Industries

Outlook

Credit demand is expected to remain healthy into 2026, supported by improving business sentiment and declining global interest rates. The MAS Macroeconomic Review noted that "credit demand should stay healthy as business sentiment improves amid some reduction in uncertainty." However, headwinds persist. The escalation of the Middle East conflict in early 2026—which began in February—is expected to pressure SME operating costs through higher freight, energy, and shipping expenses linked to disruptions in the Strait of Hormuz, according to Linkflow Capital. Additionally, as global interest rates decline further, banks' net interest margins are expected to narrow, potentially tempering the pace of lending growth.