Stronger credit to drive financial sector after 6.2% Q2 growth

Robust lending and wealth management activity underpinned the sector’s gains.

Singapore’s financial services sector is expected to remain supported by strengthening credit growth and measures to deepen the capital markets, according to a Nomura report.

The outlook comes as the finance and insurance sector grew 6.2% in the second quarter (Q2), accelerating from 5.3% in the first quarter, the report said.

Separately, Maybank said the expansion was fueled by strong lending activity, with credit growth at 11.8%, and wealth management fees amidst safe-haven inflows.

It noted that resident lending growth was broad-based across outward-facing industries, including manufacturing, transport and communications, and professional services, as well as lending to private individuals.

Non-resident lending increased 17.1% in Q2, Maybank added.

The expansion comes as the wealth management market continues to grow. A Boston Consulting Group (BCG) report showed cross-border wealth booked in the city-state is projected to increase 9% annually to $4.22t by 2030 from $2.68t in 2025. 

Singapore ranked as the world’s third-largest cross-border booking centre, BCG added.

Meanwhile, DBS is targeting more than $1t in assets under management across its retail and wealth businesses by 2030.

The bank had earlier set plans to open 18 new wealth centres and upgrade 36 existing facilities across six Asian markets—Singapore, Hong Kong, mainland China, India, Indonesia, and Taiwan—by end-2027.

Other parts of the economy also recorded strong growth during the quarter. Wholesale trade expanded 8.3% year on year, whilst manufacturing grew 12.5%, led by a 33.8% increase in electronics and 19.3% growth in precision engineering. 

Maybank said electronics growth was supported by demand for semiconductors, semiconductor manufacturing equipment and servers and related products.

The overall economy grew 5.9% year on year in Q2, revised up from an advance estimate of 5.7%, after expanding 6.3% in the first quarter. This brought first-half growth to 6.1%.

The Ministry of Trade and Industry raised its 2026 GDP growth forecast to 4.5% to 5.5% from 2% to 4%, citing the strong impact from the global artificial intelligence investment boom and a less severe impact from the Middle East conflict.

Maybank, meanwhile, upgraded its full-year growth forecast to 5.2%. Nomura also raised its projection to 5.7% from 4.6%, whilst increasing its 2027 forecast to 4% from 3%.

However, the Japanese bank maintained its 2026 core inflation forecast at 2.1% but expects inflation to accelerate in the coming months.

“With still elevated energy prices and some lagged adjustments in electricity tariffs, which were raised substantially in July, we expect core inflation to rise significantly to nearly 3% by August/September from 1.6% in June, well above the historical average of 1.9%,” it added.

Nomura said its latest GDP revisions imply a more positive output gap, increasing the potential for second-round effects from higher energy and electricity costs and likely keeping the Monetary Authority of Singapore alert to inflation risks.