Broad-based recovery for SMEs in 1Q 2021: OCBC

Photo from PxHere

Green shoots in Healthcare and Transport & Storage, which emerged in 3Q and 4Q 2020, continue to gain momentum in 1Q 2021 and lead the broad-based recovery for SMEs across industries.

SME cashflows largely returned to pre-Circuit Breaker levels in 1Q 2021, though challenges remain in several industries.

These are among the findings from the newly-launched OCBC SME Index (“OCBC SMEI”), a high-frequency index that is derived using the SME transactional data of over 100,000 OCBC Bank SME customers in Singapore with annual sales turnover of up to S$30 million (“SMEs”).

OCBC Bank serves more than one in two local SMEs and the base of micro, small and medium-sized enterprises referenced for the index broadly mirrors the national distribution of SMEs both by size and by industry.

The OCBC SMEI is a data-driven SME-focused index in Singapore based on the transactional data of SMEs, providing a barometer of SME business health and performance. The index is derived from a composite of indicators including collections, payments, cashflow and operating transactions of the SMEs with OCBC.

The OCBC SMEI is centred on a score of 50 which represents zero change in the inputs from a year ago. A score above 50 signifies improved health and a score of below 50 shows a deterioration relative to the same period a year ago.

Given the Covid-19 pandemic, the OCBC SMEI is especially important as it helps keep track of how SMEs are emerging from the pandemic and responding to both the disruptions and opportunities in digitalization, industry transformation and the shift towards sustainability.

OCBC SME Index continues to trend upwards

The recovery of SMEs has been very encouraging. The 1Q 2021 OCBC SMEI rose to 51.2, building on three straight quarters of improvement since its quarterly low in 2Q 2020, when the Circuit Breaker began in Singapore. This is the first time that the OCBC SMEI turned expansionary, exceeding 50, since the pandemic began a year ago.

In 1Q 2021, SME collections from sales and payments were 5% and 4% higher respectively year on year, and importantly the proportion of SMEs with positive net cashflow improved through the year and returned to the pre-Circuit Breaker level of 1Q 2020.


The Healthcare industry consistently performed better than the OCBC SMEI across the past 5 quarters.

The OCBC SMEI for the Healthcare value chain exceeded 50 in 3Q 2020 buoyed by Distribution and R&D which were resilient due to the strong demand for general healthcare and Covid-19 related supplies.

Service Providers such as clinics were heavily impacted during the Circuit Breaker, dropping to a low of 44.1 in 2Q 2020, but are recovering, turning positive from 4Q 2020 with the resumption of business in Phase 3.

Transport & Storage

Transport & Storage turned expansionary in 4Q 2020 and continued its positive momentum in 1Q 2021, lifted by trade and e-commerce in Land Transport and Freight Forwarders.

Green shoots emerged in 4Q 2020 as SMEs in domestic logistics supporting food deliveries and e-commerce helped to drive this rebound. The OCBC SMEI for Land Transport crossed 50 and continued to rise to 51.7 in 1Q 2021, up from the low of 42.3 in 2Q 2020, with the recovery in passenger transport.

Within the Transport & Storage value chain, Freight Forwarders and Water Transport were also lifted by the growth in trade and e-commerce, expanding to 51.2 and 51.8 respectively in 1Q 2021.

Food Services and Construction record strong performances in Q1 2021

The F&B industry closely mirrored the OCBC SMEI over the last 5 quarters. The index for the F&B sub-industry Food Services, which includes restaurants, cafes, fast food, pubs and cooked food stalls, rose to 50.8 in 1Q 2021, breaking 50 for the first time since 4Q 2019.

It reached a low of 35.2 in 2Q 2020, the lowest of any sub-industry during the pandemic, with adverse impact from the restrictions during Circuit Breaker. The growth in this sub-industry pushed the wider industry index for F&B to 51.3 in 1Q 2021.

The Building and Construction industry, which rose to 50.9 in 1Q 2021 was bolstered by strong property sales due to improving sentiments in the property market and the continued recovery in Construction and Building Materials. Construction rose to 51.1 in 1Q 2021 rebounding from its trough of 42.8 in 2Q 2020 with the resumption of projects.

However, challenges remain for a sustained recovery in these industries with the constraints on foreign labour supply and restrictions on travel following the surge in Covid-19 cases in India.

Mr Linus Goh, Head of Global Commercial Banking, OCBC Bank, said, “We developed the OCBC SME Index to bring greater focus to SMEs which are a critical driver of the economy. We believe a high frequency data-driven index will help the broader ecosystem keep pulse of the business health and performance of SMEs through the cycles and to direct attention and support to the SMEs. In particular, the OCBC SME Index will help track the progress of SMEs as they emerge from the Covid-19 pandemic and navigate the significant disruptions and opportunities in digitalisation, industry transformation and the shift to sustainability.”