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Singapore's banking industry to see limited upside in 2017 on weak GDP growth - S&P

S&P Global Ratings in a report published today said that it sees limited upside for Singapore's banks In 2017 due to weak GDP growth. S&P Global Ratings maintains its stable outlook on the Singapore banking sector for 2017. However, S&P notes that Singapore's weak GDP growth will constrain the performance of the country's banking industry.

S&P estimates Singapore's full-year 2016 GDP growth to have been just 1.8 percent, its weakest since 2009. A weak property market and the troubled offshore and marine sectors continue to weigh on growth. S&P added that it believes Singapore to be at the early stages of a downturn in the credit cycle, and things are likely to get worse in 2017 and 2018.

The ratings agency forecasts Singapore banks' loan growth to remain modest in 2017 at 3 pct-5 pct, broadly in line with these banks' guidance. S&P expects liquidity to remain robust and also a high likelihood of extraordinary government support for Singapore banks.

"Growth will remain flat for Singapore's banks in 2017, further weighing down asset quality and creating pressure on profitability," said S&P Global Ratings credit analyst Ivan Tan. "The continued subdued performance will reflect weak domestic economic growth, global trade uncertainties, and a slowing China."

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February 28 12:00 UTC Released

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