SINGAPORE (Feb 26): Singapore's three largest banks by assets, DBS Bank, Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank (UOB) will face greater asset risks this year due to worsening macroeconomic conditions despite ending 2018 with record net profits, stable asset quality and strong capital, says Moody’s Investors Service.
This, combined, with the stagnation of net interest margins (NIMs), will also make it difficult for the banks to improve profitability further, says Moody’s.
Although the three banks maintained their non-performing loan (NPL) coverage ratios at 80%-100%, Moody’s says asset quality will deteriorate modestly across the board this year as a consequence of slowing global growth and uncertainty around the ongoing US-China trade tensions. Already, non-performing loan (NPL) ratios at DBS and UOB declined to 1.5% at the end of 2018 at the end of 2018, while OCBC's ratio rose modestly to the same level.
