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Malaysia: Risks growing for S’pore three largest banks
KUALA LUMPUR: Risks are growing for Singapore’s three largest banks – DBS Bank Ltd, Oversea-Chinese Banking Corp Ltd (OCBC) and United Overseas Bank Ltd (UOB) – as economic conditions worsen, Moody’s Investors Service said.
It said non-performing loans (NPLs) ratios remained low at 1.5%, but would deteriorate amid rising volatility.
It added that further improvement to profitability would be difficult.
Moody’s said the banks faced rising asset risk in 2019 amid a weakening macroeconomic environment, despite posting record results for the first half of this year.
“DBS, OCBC and UOB posted record net profits, stable asset quality and strong capital for the first half of 2019, but further improvement in profitability will be difficult amid slowing global growth and the potential for an escalation of the US-China trade conflict, ” Moody’s vice-president and senior analyst Simon Chen said.
“Specifically, we expect income growth to slow because net interest margins will either stagnate or decline as central banks globally cut rates, while credit costs will rise and loan growth will moderate due to the increasingly uncertain environment, ” Chen added.
He said income contributions from trading and wealth management would also be volatile, amid softer market sentiment.
Source: https://www.thestar.com.my/business/business-news/2019/08/14/risks-growing-for-spore-three-largest-banks#iCbaBg5sWlTVhAX0.99