Singapore's finance companies get their pre-pandemic metrics back

It's back to pre-pandemic normal for Singapore's finance companies after a period of stretched financial metrics through 2020-2023.

CEIC has recently added a new dataset for these non-bank lenders, which play an important role in the city-state's economy. These firms offer services from SME financing to housing and installment-plan loans for big-ticket items.

During the pandemic, this sector saw its loans-to-deposit ratio (LDR) surge, as demonstrated in our first chart. Households and businesses quickly withdrew funds to address pressing liquidity needs. However, the contraction in loan volumes was comparatively modest, resulting in an elevated LDR.

Heightened liquidity risk was mitigated by an improving asset-to-equity ratio, as our second chart shows. This was driven by increases in owners' equity, indicating a reduction in financial leverage and a shift towards a more conservative financial stance.

LDR peaked in early 2022. As the economic landscape stabilized, deposit levels began to recover towards pre-pandemic figures. Concurrently, the asset-to-equity ratio also returned to historical norms, as the growth rate for loans picked up again surpassed that of equity.

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