Broker: Maybank Research Pte Ltd
Date of Report: June 1, 2025

Singapore Banks 2025 Outlook: Loan Growth Slows Amid Tariff Uncertainty, Consumer Lending Shines

Overview: Singapore Banks Face Tepid Loan Growth in Early 2025

Singapore’s banking sector is experiencing a noticeable deceleration in loan growth as of April 2025. According to the latest data, total loan expansion slowed to a modest 3.4% year-over-year, the lowest pace recorded in 2025 after peaking at 4.2% in March. Despite robust first-quarter earnings among the nation’s three major banks, the outlook remains subdued, with ongoing macroeconomic uncertainties—especially those related to tariffs—clouding the growth trajectory.

Financial Snapshot: Key Metrics for Singapore’s Top Banks

Loan Growth Trends: Weaker Momentum Despite Resilient Earnings

April 2025 MAS data shows total loans at SGD 1,316 billion, with YoY growth slowing to 3.4%.
This marks the lowest growth rate so far in 2025, down from a high of 4.2% in March.
The trend is expected to remain in the low single-digit range throughout 2025, even with anticipated US Federal Reserve rate cuts.
All three local banks—DBS, OCBC, and UOB—are forecasted to align with this slower growth pace.
Upside visibility is limited due to weakening loan momentum and increased macroeconomic risks from tariff-related uncertainties.

Segment Analysis: Non-Residential and Residential Loans Contract

Non-residential loans saw an unexpected contraction of -1.4% month-over-month in April, following a strong +3.7% MoM surge in March (the second-highest since September 2022).
Residential loans displayed more resilience but still slipped, declining by -0.5% MoM in April versus a +0.6% MoM increase in March.
The contractions across both segments are largely attributed to reduced business loan demand, reflecting softer credit appetite in most business areas.
Notably, non-residential business loans dropped -1.6% MoM after a record +4.0% MoM increase in March.
Residential business loans also fell by -1.1% MoM after six months of continuous expansion.

Consumer Loans Take the Spotlight

Consumer lending emerged as the leading driver of loan growth:
Consumer loans soared to a five-year high, up +4.7% YoY, far outpacing business loans (+2.9% YoY).
Housing loans—composing 19% of total loans—grew +3.6% YoY to SGD 245 billion, the fastest clip since July 2022.
However, housing prices began to moderate in 1Q25, with the HDB resale price index rising just 1.5%, the lowest in the past five quarters.
Further cooling measures and price declines may reduce transaction volumes, potentially impacting future mortgage demand.

Deposits: Growth Holds Firm Amid Risk Aversion

Total deposits from non-bank customers climbed +6.1% YoY in April 2025 to SGD 1,963 billion.
Fixed deposits and savings deposits maintained healthy growth at +0.7% YoY and +0.9% YoY, respectively.
The simultaneous rise in deposits and slowdown in loan growth signals a growing risk-averse stance in the market, driven by uncertainties around US tariffs and possible disruptions to supply chains and economic activity.

Loan Portfolio Composition: April 2025 Breakdown

Below is a snapshot of Singapore’s loan book composition as of April 2025:

• Agriculture: 1%
• Manufacturing: 6%
• Building & Construction: 16%
• General Commerce: 9%
• Transport, Storage & Communication: 6%
• Financial & Insurance: 25%
• Professionals: 2%
• Business – Others: 5%
• Housing: 19%
• Car Loans: 1%
• Credit Cards: 1%
• Share Financing: 0%
• Other Consumer: 9%

Outlook and Investment Ratings: Cautious Neutral Stance Maintained

The sector’s overall rating remains NEUTRAL.
While first-quarter 2025 earnings were resilient across the three major banks, the combination of decelerating loan growth, moderating housing prices, and macroeconomic headwinds limit upside potential.
Investors should monitor ongoing trade policy developments and consumer credit trends for signals of a shift in growth momentum.

Conclusion: Risk-Aware Environment, Consumer Loans Shine

Singapore’s banking sector is navigating a challenging 2025, with slowing loan growth and a marked shift in risk appetite among both businesses and consumers. Consumer loans—particularly housing—remain the bright spot, but broader loan growth is likely to stay subdued amid external uncertainties and policy headwinds. Investors and analysts should approach the sector with measured expectations, focusing on resilience in consumer lending and deposit growth as key indicators of underlying strength.

Contact Information: Maybank Research

For further insights and in-depth analysis, readers may reach out to Thilan Wickramasinghe, Head of Singapore Research, Maybank Research Pte Ltd.
This comprehensive review captures all details, figures, and company-specific analysis provided in the original research, offering investors a clear, actionable overview of Singapore’s banking sector as it enters a pivotal year.