Moody's lowers Singapore banks outlook to negative

Credit ratings agency Moody's Investors Service has downgraded the outlook on the largest banks in the republic from stable to negative.

In a statement on Thursday (31 March), Moody's said the affected banks are DBS Bank, its parent company DBS Group Holdings, United Overseas Bank (UOB), and Oversea-Chinese Banking Corp (OCBC).

It said the rating reflects its expectation of a "more challenging operating environment for banks in Singapore this year, and possibly beyond," and that it will put pressure on these banks’ asset quality and profitability. It added that the credit conditions for banks in here would likely continue to weaken against the backdrop of slower economic and trade growth, both domestically and in the region.

Meanwhile, Moody's noted that Singapore banks maintain "very strong buffers," in terms of capital, loan loss provisions, and pre-provision income and that their funding and liquidity profiles are also robust and there was also a "very high" probability of government support, if needed.

Moody's currently rates DBS Bank, OCBC, and UOB at Aa1, the second-highest long-term rating possible. DBS Group Holdings is rated just a notch below the other banks at Aa2.

Moody's rating outlooks provide an opinion on the possible rating direction over the next 12 to18 months, and are assigned only to banks' long-term deposit, issuer and senior unsecured debt ratings.

Nikki De Guzman, Editor at CommercialGuru, wrote this story. To contact her about this or other stories email nikki@propertyguru.com.sg

More from PropertyGuru:
Sembawang EC’s smart homes draws crowds
Westwood Residences named among top cycling-friendly projects
Factory, warehouse rent falls further in Q1
New generation steps up to lead CDL
CBD office rents dip by 3.9%