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

Singapore Banks 2025: Loan Growth Slows as Consumer Lending Shines, Business Demand Softens

Overview: Tepid Loan Growth Amid Macroeconomic Uncertainty

Singapore’s banking sector is experiencing a period of moderation, with April 2025 data showing a slowdown in total loan growth. The Monetary Authority of Singapore (MAS) reported loan growth of just +3.4% year-on-year (YoY), the lowest pace in 2025 so far after hitting a high of +4.2% YoY in March. This tepid, low single-digit growth is expected to persist through 2025, even as potential U.S. Federal Reserve rate cuts loom. Despite robust first-quarter earnings, Singapore’s major banks face limited upside as macroeconomic uncertainty, particularly related to tariffs, weighs on loan momentum.

Maybank’s Ratings and Financial Projections for Singapore’s Top Banks

Loan Growth Trends: Business Weakness Offsets Consumer Strength

April’s MAS data reveal a concerning deceleration in lending, especially on the business front. After a robust March, non-residential loans posted a monthly contraction of -1.4% in April, reversing from a +3.7% surge the month before. Residential loan growth also softened, dipping -0.5% MoM, compared to +0.6% in March. The main drag came from business loans, which declined -1.6% MoM after a five-year record growth of +4.0% MoM in March. Residential business loans fell -1.1% MoM, ending a six-month expansion streak.
Despite these setbacks, consumer loans have proven remarkably resilient. They reached a 5-year high of +4.7% YoY, significantly outpacing business loans at +2.9% YoY. Within consumer lending, housing loans—which make up 19% of the total—rose +3.6% YoY to SGD 245 billion, the fastest rate since July 2022. However, early 2025 saw a moderation in housing prices, with HDB’s resale price index bottoming out at a five-quarter low of 1.5%, casting some doubt on the sustainability of robust mortgage demand if price softening continues.

Deposit Growth Signals Risk Aversion

Total deposits from non-bank customers remained robust, growing +6.1% YoY in April 2025 to SGD 1,963 billion. Fixed and savings deposits led the way, rising +0.7% and +0.9% YoY, respectively. The uptick in deposits, coupled with decelerating loan growth, suggests a shift toward risk aversion. Investors and businesses appear increasingly cautious amid escalating U.S. tariffs and global supply chain uncertainties.

Loan Portfolio Breakdown: Sectoral Insights

Singapore banks’ loan books as of April 2025 are broadly diversified:

• Financial and Insurance: 25%
• Building & Construction: 16%
• Housing: 19%
• General Commerce: 9%
• Consumer (excluding housing and car loans): 9%
• Manufacturing: 6%
• Transport, Storage and Communication: 6%
• Professionals: 2%
• Business – Others: 5%
• Agriculture, Car Loans, Credit Cards, Share Financing: Remaining minor segments

The relative outperformance of consumer loans, particularly housing, stands out as a crucial support for system-wide loan growth.

Company Analysis: DBS, OCBC, UOB

DBS Group

• Market Cap: USD 88.9 billion
• Current Share Price: SGD 44.72
• Target Price: SGD 45.26
• Upside: 1%
• P/E (2025E/2026E): 11.7x / 12.7x
• P/B (2025E/2026E): 1.8x / 1.8x
• Dividend Yield (2025E/2026E): 6.7% / 6.7%

DBS maintains a “Hold” rating, as earnings resilience contrasts against the sector’s fading loan growth momentum and macro uncertainties. Yield remains attractive, but upside is limited.

OCBC

• Market Cap: USD 53.6 billion
• Current Share Price: SGD 16.23
• Target Price: SGD 17.08
• Upside: 5%
• P/E (2025E/2026E): 10.3x / 10.5x
• P/B (2025E/2026E): 1.2x / 1.1x
• Dividend Yield (2025E/2026E): 5.8% / 5.0%

OCBC also receives a “Hold” rating. While its dividend remains healthy and valuation reasonable, the bank faces the same growth headwinds as its peers.

UOB

• Market Cap: USD 46.1 billion
• Current Share Price: SGD 35.41
• Target Price: SGD 35.21
• Upside: -1%
• P/E (2025E/2026E): 10.2x / 10.1x
• P/B (2025E/2026E): 1.1x / 1.1x
• Dividend Yield (2025E/2026E): 6.4% / 4.9%

UOB is rated “Hold” as well, with a slight downside based on target price. Like its peers, UOB’s strong yield is offset by lackluster loan growth outlook.

Market Outlook: Neutral Stance Maintained

Despite resilient earnings in the first quarter of 2025, Singapore’s banks are expected to remain in a low growth environment. Consumer lending remains robust, but business loan appetite is weakening. Heightened uncertainty over tariff-related macro risks and moderating property prices could further dampen demand for new loans. Deposit growth, meanwhile, underscores a cautious mood among businesses and individuals.

Conclusion

Singapore’s banking sector enters the mid-year mark with solid deposit growth and consumer lending, but persistent macroeconomic concerns and softening business loan demand are capping upside potential. Investors can expect continued resilience in dividends and balance sheet strength, but near-term growth catalysts remain elusive. Major banks—DBS, OCBC, and UOB—are rated “Hold” as the sector navigates a challenging loan growth environment in 2025.

Contact and Analyst Information

Lead Analyst: Thilan Wickramasinghe
Email: thilanw@maybank.com
Phone: (65) 6231 5840
For further details or inquiries, contact Maybank Research Pte Ltd, 50 North Canal Road, Singapore 059304.