'Moody's Investors Service says Singapore’s three largest banks are poised to weather further weakening in asset quality and continued downward pressure on profitability in 2017.
In addition, Moody’s believes DBS Bank, Oversea-Chinese Banking Corporation and United Overseas Bank will continue to be lifted by strong government support.
"Declining asset quality and profitability for the three large Singapore banks contributed to the recent downgrades of their standalone credit assessments to a1 from aa3, but as we expect further headwinds to be manageable, we do not envisage further downgrades over the next 12-18 months," says Simon Chen, a Moody's vice president and senior analyst.
"Problem loans will increase in 2017, but new problem loan formation – primarily from the embattled oil services sector – will slow from the peak levels observed in 2016," adds Chen.
However, Moody’s notes that the deterioration in the banks' regional loan quality is likely to remain mild as the banks remain cautious on business growth amid continued macroeconomic headwinds.
Meanwhile, elevated credit costs and slower loan growth will see continued downside risks on profitability over the next few quarters, according to Moody’s.
The Singapore banks, though, are less exposed to market volatility and refinancing risks as they exhibit a low reliance on market funding, relative to highly rated global peers.
Moody's further notes that the Singapore government's support for senior creditors will remain strong despite moves towards regulatory bail-in.
Unlike regulations in the US and EU, Moody’s says the scope of bail-in is likely to be limited in Singapore.
The Monetary Authority of Singapore's current proposal to introduce a bank resolution and bail-in regime excludes all existing and prospective senior debt, customer deposits and interbank liabilities.
In addition, Moody’s says Singapore's fiscal buffers have not been affected by the downturn in growth and remain more robust than those of other Aaa-rated peers.'
. Plan to sell some of my starhill and board CDG when it rebounds abit. Telcos boarded in November Liao, cheap enough back then. Thank you for your CCT combo meal! 
