Moody’s places Singapore banks on ‘negative’ outlook

SINGAPORE - Agence France-Presse

Credit rating agency Moody’s downgraded the outlook of Singapore’s three main banks to “negative” from “stable” yesterday, 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.

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

“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.