Singapore banks should post healthy loan growth through 2H, with OCBC likely to retain its lead, after the Monetary Authority of Singapore data showed lending rose 10.5% in May from a year earlier.
Business lending is likely to stay robust, supported by front-loaded trading ahead of the temporary 10% US tariffs expiring on July 24. That should offset a potential moderation in consumer borrowing which rose 9.6% in May from a year earlier, as higher inflation squeezed purchasing power.
Core inflation rose 1.4% in May from 1% at the start of the year. Funding pressure should ease on lower rates vs. a year ago and fixed-deposit growth slowing to 0.6% from 1.1%. That should help limit margin compression and support net interest income, likely to remain flat in 2026 compared with the prior year.
