International Business & Economy Negative ratings for Singapore banks - Spike in bad loans feared -...

Negative ratings for Singapore banks – Spike in bad loans feared – SDP raises questions




- Advertisement -

Fearing a spike in bad loans, Moody, a credit rating agency has revised the ratings of local banks DBS, OCBC and UOB from stable to negative.
Referring to deteriorating credit conditions against a backdrop of slower economic and trade growth, the credit rating agency’s report said that our big banks will see an increasing amount of problem loans and will have to hike loan loss provisions on back of the escalating regional headwinds.
Moody warned that because of weaker economic growth and banks’ tighter credit underwriting, Singapore’s corporate sector is headed for a challenging deleveraging cycle.
“Domestic firms are affected by slowing economic and trade growth in Asia and the drop in oil and other commodity prices. This has led to deteriorating corporate profitability, and in turn to lower credit metrics for corporates across several industries, including manufacturing, oil and gas, shipping, ship and rig building, and metals and mining,” Moody said.
Because foreign loans constitute around one-half of our local banks gross loans, they also face escalating headwinds from slowing growth in regional economies.
The collapse in oil prices is another factor which affects the banks’ asset quality. Their large exposure to oil and gas borrowers, including services companies, which were the most affected by the collapse, poses a looming risk for the local banks.
The three large Singapore banking groups however maintain very strong buffers in terms of capital, loan loss provisions and pre-provision income, Moody said. Although bad loans are expected to increase, asset quality remains good, the credit-rating agency suggested.
Responding to the negative rating by Moody the opposition political party, Singapore Democratic Party (SDP), has released a statement saying that it “is troubled by news.”
Noting that such a worrying trend is occurring in the midst of an economic downturn exacerbated by high land costs which is causing a slew of companies exiting the Singapore market resulting in “more and more workers are being retrenched”, SDP asked why the “Finance Minister Heng Swee Keat has not produced a Budget to address these big concerns for the immediate future as well as for the longer-term.”Follow us on Social Media

Send in your scoops to 

- Advertisement -

Govt error leads to over S$370m wage support wrongly disbursed to 5,760 firms

Singapore – Over S$370 million in wage support was wrongly distributed by the Government to some 5,400 companies after using the wrong dates to determine the amount to be paid, while around 2,300 firms remain underpaid. As a result of the incorrect...

PSP’s Kumaran Pillai looks forward to working with new CEC members

Singapore -- Following the changes in the Progress Singapore Party’s (PSP) Central Executive Committee (CEC), one of its members, Kumaran Pillai, shared that he was looking forward to working with the new committee members. In a Facebook post on Wednesday (Apr 7)...

Ngee Ann Poly student accused of robbing woman at knifepoint 

Singapore—A Ngee Ann Polytechnic student, then 17 years old, was accused of robbing a woman at knifepoint in Lengkong Tiga last year. He was able to get $40 from her during the robbery. The incident occurred at about 1 am on Oct 3,...
Follow us on Social Media

Send in your scoops to