New figures, released by the Credit Bureau Singapore (CBS) in July 2009 showed increases in personal loans delinquency.

Figures reflect an upward increase in personal loans delinquency from Q2 from April 2009 onwards (refer to Appendix A).

Delinquent accounts refer to accounts which are 30 days or more overdue, attributing to a change in status from an A to a B or worse status in one’s credit report. There has been a gradual increase in personal loans delinquency from August 2008 till July 2009.

July’s statistics show that across all age groups – percentage of personal loan balances of $1,000 - $4,999 is at the highest. The age group of 21-29 contributes the highest percentage of holding this loan balance at 46.88% (refer to Appendix B). Some of the reasons for this age group having the highest percentage of personal loan amounts are that they have just started work and some require loans for marriage plans, furthering their studies or probably purchasing an expensive item ie; technological gadgets or motor vehicles.

Decline in 2009 Q1 Job Market

Q1 Statistics showed a rise in unemployment rate to 4.8% for residents in March 2009, translating to 95,700 unemployed Singaporeans and permanent residents, one-third more than 71,800 as reported in December 2008. Another outcome of the current recession is a decline in pay package, the first since 2003. The 3.7% decrease was a significant difference from the 2.4% increase in the previous quarter^.

The increased unemployment rate in March 2009 might have contributed to the increase in delinquency from 5.14% to 5.79% from April to July 2009.

Increase in new account openings for Personal Loan

The sharp increases in new account openings jumped to 24,104 between May 2009 and June 2009, however this can be attributed to GE Money joining as a new member and uploaded records to CBS, thus amounting to a surge in new account entities for personal loans (refer to Appendix C).

New members on board CBS – GE Money

The newest addition to CBS’ list of members is finance company GE Money which joined in May 2009, following the changes under the Moneylenders Act earlier this year that allows, for the first time; people earning between $20,000 and $30,000 per annum to get access to unsecured loans.

GE Money’s focus on innovation started with ezyCash, the award winning and pioneering personal loan that addresses the needs of customers through a unique distribution partnership with SingPost.

GE’s sharing of information as a result of its entry as a member into CBS will enable the latter to provide more comprehensive credit behavior information as well as enhance the risk assessment capabilities of lenders for people earning less than $30,000.

^ Source Straits Times, 18 Jun 2009.

Appendix A
Percentage of delinquent accounts for personal loans:

Appendix B
Percentage of Personal Loan Balance ($1,000 - $4,999) by age group:

Appendix C
New account openings for personal loans: