Moody’s Investors Service said in a statement on July 8 that its outlookon Singapore's banking system in the next 12-18 months is negativeas it has been since July 2013, due to the country’s rising interestrates and potentially more bad loans.
“Because thebanks have rapidly grown both their domestic and cross-border loans inrecent years, we expect a moderate increase in problem loans, asinterest rates rise, due to the US Fed's expected raising of policyrates, and as asset prices are likely to fall,” said Eugene Tarzimanov,Moody's Vice President, on the release of Moody's “Banking SystemOutlook Singapore”.
“As a result, the banks will face a modest increase in their credit costs over the next 12-18 months,” he added.
The report looks at Singapore's banking system based on fivefactors, including operating environment, asset quality and capital,funding and liquidity, profitability and efficiency, and systemicsupport.
Tarzimanov said that nevertheless, thebanks' problem loans during 2014-15 will increase only moderately,given the very low one percent reported at the end of 2013.
Themild deterioration will likely originate from the banks' foreign loanbooks, which made up 47 percent of their gross loans at end-2013.
Moody's rates DBS Bank, Oversea-Chinese Banking Corporation (OCBC) andUnited Overseas Bank (UOB), Singapore's three major banking groupswhich together accounted for around 60 percent of domestic system assetslast year.-VNA
“Because thebanks have rapidly grown both their domestic and cross-border loans inrecent years, we expect a moderate increase in problem loans, asinterest rates rise, due to the US Fed's expected raising of policyrates, and as asset prices are likely to fall,” said Eugene Tarzimanov,Moody's Vice President, on the release of Moody's “Banking SystemOutlook Singapore”.
“As a result, the banks will face a modest increase in their credit costs over the next 12-18 months,” he added.
The report looks at Singapore's banking system based on fivefactors, including operating environment, asset quality and capital,funding and liquidity, profitability and efficiency, and systemicsupport.
Tarzimanov said that nevertheless, thebanks' problem loans during 2014-15 will increase only moderately,given the very low one percent reported at the end of 2013.
Themild deterioration will likely originate from the banks' foreign loanbooks, which made up 47 percent of their gross loans at end-2013.
Moody's rates DBS Bank, Oversea-Chinese Banking Corporation (OCBC) andUnited Overseas Bank (UOB), Singapore's three major banking groupswhich together accounted for around 60 percent of domestic system assetslast year.-VNA
