Singapore banks resilient against rising property risk: Fitch

The Republic’s banks are expected to weather the correction in the city-state’s home prices as household debts are low relative to assets, Fitch Ratings said in a commentary on Friday (Jan 30).

Fitch also said local banks DBS, Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank (UOB) have healthy loss-absorption buffers, which will help them weather a significant rise in credit costs.

The ratings agency said housing loan delinquencies have remained extremely low in Singapore as household assets far exceed liabilities. In addition, property loans are backed by ample collateral with an average loan-to-value ratio of 49 per cent.

“While we anticipate Singapore banks’ loan losses to rise as the property market continues to cool, Fitch expects the Monetary Authority of Singapore (MAS) to remain vigilant for signs of stress,” the ratings agency said in a statement.

Singapore residential property prices have fallen by 5 per cent to 8 per cent since hitting a peak in mid-2013.

Fitch has a AA- rating on DBS, OCBC and UOB with a stable outlook.

Source : Channel NewsAsia – 30 Jan 2015

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