Ratings Of Singapore's Big Three Local Banks Will Hold Steady - Fitch

Tom Burroughes

22 February 2017

The “AA-” credit ratings and stable outlooks for Singapore’s three large domestic banks – DBS, United Overseas Bank and Oversea-Chinese Banking Corp – will continue to be bolstered by profits, strong capital and disciplined funding despite rising bad loans, according to (AA-/F1+/Stable), (AA-/F1+/Stable) and (AA-/F1+/Stable) were “resilient in 2016 in the face of a challenging operating environment and continued weakness in the offshore services sector, which pressured the banks' asset quality and profitability.”

The combined weighted-average non-performing loan ratio for the three banks rose to 1.40 per cent at the end of 2016, compared to 1.06 per cent in the previous year.

The weighted-average provision buffers as a proportion of NPLs shrank to 101.5 per cent from 130.8 per cent over 2016, although at above 100 per cent on average they still provide a large buffer against further credit slippage, Fitch said in a statement yesterday.

The banks' core capitalisation ratios strengthened, with fully-loaded core equity tier one ratios ranging from 12.1 per cent to 13.3 per cent.