Moody's puts Singapore banks on "negative" outlook

[Yr1985]

Can anyone explain what will be the impact of the rating?

 

 

File photo: Singapore's skyline.

 

Enlarge

Caption

 

 

 

SINGAPORE: Credit rating agency Moody's on Monday downgraded the outlook of Singapore's three main banks to "negative" from "stable" amid rising property prices and mounting household debt in the city-state.

 

"The two main drivers underpinning our opinion are the recent period of rapid loan growth and rising real estate prices in Singapore and in regional markets where Singapore banks are active," it said in a statement.

 

"These have increased the probability of deterioration in the banks' credit profiles under potential adverse conditions in the future."

 

Moody's said Singapore banks have been operating in a favourable environment for an extended period amid low interest rates and strong regional economic growth, which has led to rising credit and asset inflation in the property and financial markets.

 

Domestically, household debt increased to 77.2 percent of gross domestic product as of March 2013 from 64.4 percent at the end of 2007, with private property prices growing 120 percent during the same period.

 

"Regionally, we observe similar or even more dramatic trends," Moody's added, noting that Singapore banks generate more than 37 percent of their revenues from overseas markets.

 

A tightening of US monetary policy is a "potential trigger" that could have an impact on interest rates in Singapore and neighbouring countries as well as capital flows in emerging economies where Singapore banks are active, Moody's said.

 

Federal Reserve Chairman Ben Bernanke said last week the US central bank would maintain its growth-oriented policies "for the foreseeable future". But some analysts expect its $85 billion-a-month bond purchases to taper off in coming months, possibly in September.

 

Moody's outlook report covers prospects in the next 12-18 months for DBS Bank, Oversea-Chinese Banking Corp and United Overseas Bank.

 

[Hosaybo]

Higher interest rate......

[Yr1985]

Higher interest rate......

 

Now garment put a loan ceiling of not more than 60% of personal income, stricter borrower profile scan. If bank raise interest, then who will wan to loan for property? Or is it the other way, high property prices are the root cause?

[Throttle2]

Lower credit ratings equals higher funding cost for the bank.

Higher funding cost equals lower profits for the bank

 

But all these is just base on theory lah.

[Yewheng]

Now garment put a loan ceiling of not more than 60% of personal income, stricter borrower profile scan. If bank raise interest, then who will wan to loan for property? Or is it the other way, high property prices are the root cause?

 

Will see how is it like.. will property price continue to rise or drop?

 

Hmm...

[Hosaybo]

Yes, base on theory, Higher cost of borrowing. However, as sg bank is still not in bad shape, just that risk is deem higher now, it might or might not go up.

[A_korusawa]

we have to take Moody's credit with that pinch of salt - afterall, its 'yankees' driven

they are trying to weaken the repu of those stable regional growth banks in order to make room for the yankees to curb their market shares here

yes, sillypore has opened/exposed itself with too much local/inhouse domestic loans that put its risk dangling at the mercy of commercial drivers

but hey! sillyporeans credibilities are still strong!

thus, I wun say this Moody's review will NOT have any major impact to the ineterest rates locally

look, the banks want business afterall, regardless of long term loans with low interest rather than high gain with high risk . . .

its about the loans against valuation of our domestic gains compared now till 2015 . . .

perhaps, we are paying too much for a uncertain valuation domestically!

[Toothiewabbit]

Another worrying sign?

 

 

http://www.channelnewsasia.com/news/singap...-in/752966.html

 

SINGAPORE: Singapore's central bank said rising household debt in the city-state is worrying, and that it is "important to act now to limit build-up of leverage".

 

Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), said that 5 to 10 per cent "have probably over-leveraged their property purchases".

 

For example, they have total debt service payments at more than 60 per cent of their income.

 

Mr Menon added that if mortgage rates were to rise by 3 percentage points, the proportion of borrowers at risk could reach 10 to 15 per cent.

 

Speaking at a press briefing, Mr Menon also said the Singapore economy will "comfortably meet" the growth forecast of 1 to 3 per cent this year.

 

According to the central bank, "GDP growth should pick up over the course of the year amid an improving external environment".

 

Snigapore's economy grew 1.3 per cent in 2012.

 

The MAS said the forecast for headline inflation will be revised down to 2-3 per cent, from 3-4 per cent previously. The core inflation forecast for 2013 remains at 1.5-2.5 per cent.

 

Mr Menon said that this is the first time in three years that CPI inflation has come down closer to historical trends and within MAS' comfort range.

 

Headline inflation was elevated at 4.6 per cent last year due to higher residential property rentals and car prices, while core inflation, which excludes accommodation and private road transport, averaged 2.5 per cent in 2012.

 

The MAS had paid-up capital of S$25 billion as at 31 March 2013, unchanged from the end of the previous financial year, according to its annual report.

 

The MAS does not hand over any profits to the government during the financial year when there is no accounting profit.

 

The Singapore central bank made a net loss of S$10.61 billion in fiscal year 2012/13, reversing from the gain of S$2.77 billion in the previous financial year.

 

The MAS said its good investment returns over the year were more than offset by the strength of the Singapore dollar.

 

"This is an issue of reporting currency. If we had reported our profit and loss in international currency, it would show a healthy profit," said Mr Menon.

 

Total assets managed by Singapore-based asset managers were S$1.63 trillion as of the end of last year, 21.5 per cent percent higher year on year due to "strong inflows and higher market valuation".

 

- CNA/xq

[Sabian]

The horse already bolted until out of sight liao.

 

 

[Felipe]

i was at a conference recently and the US speaker said for '50k salary, having house loan of 500k is extremely dangerous'...based on US context.

 

i was like er...SG one must be must worse cos our mortgages are many times higher.

[Little_prince]

i was at a conference recently and the US speaker said for '50k salary, having house loan of 500k is extremely dangerous'...based on US context.

 

i was like er...SG one must be must worse cos our mortgages are many times higher.

 

US guide line is about 6 x annual salary.

 

mcf forummers most can buy sentosa cove liao

[Ender]

The horse already bolted until out of sight liao.

This is the shxt he left behind..

[Wt_know]

alamak, isn't right after moody downgrade singapore outlook, big shot came out said ... no worries, everything is ok ... spore banks are ROCK SOLID

 

now spore central bank is worrying?

 

Another worrying sign?

 

 

http://www.channelnewsasia.com/news/singap...-in/752966.html

 

SINGAPORE: Singapore's central bank said rising household debt in the city-state is worrying, and that it is "important to act now to limit build-up of leverage".

 

Ravi Menon, managing director of the Monetary Authority of Singapore (MAS), said that 5 to 10 per cent "have probably over-leveraged their property purchases".

 

For example, they have total debt service payments at more than 60 per cent of their income.

 

Mr Menon added that if mortgage rates were to rise by 3 percentage points, the proportion of borrowers at risk could reach 10 to 15 per cent.

 

Speaking at a press briefing, Mr Menon also said the Singapore economy will "comfortably meet" the growth forecast of 1 to 3 per cent this year.

 

According to the central bank, "GDP growth should pick up over the course of the year amid an improving external environment".

 

Snigapore's economy grew 1.3 per cent in 2012.

 

The MAS said the forecast for headline inflation will be revised down to 2-3 per cent, from 3-4 per cent previously. The core inflation forecast for 2013 remains at 1.5-2.5 per cent.

 

Mr Menon said that this is the first time in three years that CPI inflation has come down closer to historical trends and within MAS' comfort range.

 

Headline inflation was elevated at 4.6 per cent last year due to higher residential property rentals and car prices, while core inflation, which excludes accommodation and private road transport, averaged 2.5 per cent in 2012.

 

The MAS had paid-up capital of S$25 billion as at 31 March 2013, unchanged from the end of the previous financial year, according to its annual report.

 

The MAS does not hand over any profits to the government during the financial year when there is no accounting profit.

 

The Singapore central bank made a net loss of S$10.61 billion in fiscal year 2012/13, reversing from the gain of S$2.77 billion in the previous financial year.

 

The MAS said its good investment returns over the year were more than offset by the strength of the Singapore dollar.

 

"This is an issue of reporting currency. If we had reported our profit and loss in international currency, it would show a healthy profit," said Mr Menon.

 

Total assets managed by Singapore-based asset managers were S$1.63 trillion as of the end of last year, 21.5 per cent percent higher year on year due to "strong inflows and higher market valuation".

 

- CNA/xq

Edited July 23, 2013 by Wt_know

[ShepherdPie]

http://business.asiaone.com/news/spectre-r...d-debt-malaysia

 

i think those invested in MY properties got to be more worried.

 

PETALING JAYA - Although the latest measures introduced by Bank Negara to rein in household debt would ensure a sound and sustainable household sector, more is needed to prevent debt from reaching alarming levels, said economists.

 

The household debt in Malaysia, which stands at about 83 per cent of gross domestic product (GDP), is higher than many other countries in the region like the Philippines, Indonesia, Singapore, Hong Kong and Japan. If not prevented, it could put a damper on the country's 5 per cent-6 per cent projected GDP growth this year.

 

Edited July 23, 2013 by ShepherdPie

[Toothiewabbit]

This is the shxt he left behind..

How come the trail so long wan har...seriously?

[Toothiewabbit]

alamak, isn't right after moody downgrade singapore outlook, big shot came out said ... no worries, everything is ok ... spore banks are ROCK SOLID

Does this qualify as a response?

 

http://business.asiaone.com/news/no-need-f...ody-over-moodys

[Wt_know]

why singapore central bank is worrying

is it because singapore central bank think otherwise ... conflicting message leh

 

 

Singapore's central bank said rising household debt in the city-state is worrying, and that it is "important to act now to limit build-up of leverage".

 

Does this qualify as a response?

 

http://business.asiaone.com/news/no-need-f...ody-over-moodys

Edited July 23, 2013 by Wt_know

[Toothiewabbit]

why singapore central bank is worrying

is it because singapore central bank think otherwise ... conflicting message leh

 

 

Singapore's central bank said rising household debt in the city-state is worrying, and that it is "important to act now to limit build-up of leverage".

Central bank has enuf on its plate liao....MAS records 10b loss as Sing dollar rises...

 

http://business.asiaone.com/news/mas-recor...-soars/page/0/1