SINGAPORE (Sept 16): On Sept 12, Maybank Kim Eng (MBKE) said in a report that it was using artificial intelligence to gauge the different metrics affecting the non-performing loans (NPLs) of local banks.
According to its analysis, the pace of non-Singapore dollar loan growth, domestic inflation and the rate of change in special-mention loans have the strongest influence in setting the direction of NPLs. In contrast, interest rates, changes to unemployment and GDP growth — variables that traditionally guide NPL forecasts — seem to have a smaller impact.
Singapore has a small domestic economy and the local banks have regionalised to maintain earnings growth. No surprise, then, that banks’ earnings growth has outperformed the GDP growth of the Singapore economy. Bank CEOs have also attributed their earnings growth to Singapore’s “hub” economy. Many operations of MNCs and Asian corporates that operate in Southeast Asia are based in Singapore. They include the wealth management activities of private banks and fund management activities of large fund houses.