Singapore Banking Monthly - Phillip Securities Research 2026-06-08: Interest Rates Finally Stabilise

• Singapore interest rates are showing signs of stabilisation with May’s 3M-SORA up 2bps m-o-m to 1.07%, the first m-o-m increase in 2 years, and fell by 124bps y-o-y, the smallest y-o-y decline in 13 months. Singapore y-o-y loan growth the highest since post-COVID (Apr26: +7.9%). Banks have maintained low-to-mid-single-digit guidance.

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3M-SORA showing signs of stabilisation

• Singapore's interest rates rose 2bps m-o-m to 1.07% in May, the first m-o-m increase in 2 years, since May 2024. May’s 3M-SORA fell by 124bps y-o-y, the smallest y-o-y decline in 13 months, and was 6bps lower than the 1Q26 3M-SORA average of 1.13%. May's SORA uptick reflects reduced expectations of US rate cuts and firmer domestic liquidity after MAS’s April policy tightening. We expect SORA to continue drifting modestly higher into year-end as the gap with US rates closes.

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Singapore y-o-y loan growth reaches 7.9%

• Overall loans to Singapore residents, encompassing lending in all currencies, rose by 7.9% y-o-y in April to S$908bn. This is the highest y-o-y growth post-COVID and the second time it has crossed the S$900bn mark. 2026 year-to-date loan growth is at 6.7%. We continue to expect mid-single-digit loan growth in 2026, as steady business and housing demand is balanced against a high base and lingering global trade uncertainty. The banks are guiding low to mid-single-digit loan growth in 2026.

• Business loans increased by 7.3% y-o-y in April. Loans to the building and construction segment, the single largest business segment, rose 3.5% y-o-y to S$184bn. Meanwhile, loans to the manufacturing segment grew 15% y-o-y in April to S$27bn, higher than March’s 4% growth.

• Consumer loans increased 9% y-o-y in April to S$357bn, marking the 28th consecutive y-o-y increase since December 2023. Housing loans, which comprise ~70% of consumer lending, grew 7% y-o-y in April to S$250bn.

• Total deposits and balances, which include deposits in all currencies made by non-bank customers, grew by 7% y-o-y in April to S$2.1tn. In the Current Account and Savings Account, or CASA, the proportion remained relatively stable at 20.5% (Mar26: 20.6%) of total deposits, the second highest in 41 months, and grew by 14% y-o-y to S$432bn. We expect the CASA ratio to hold around current levels, with still-low deposit rates keeping the opportunity cost of holding CASA contained, and this is beneficial for the banks as a larger share of low-cost funding lowers funding costs and cushions NIM compression.

Hong Kong loan growth highest since Jan 2021

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Glenn Thum Phillip Securities Research | https://www.poems.com.sg/ 2026-06-08

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