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Press Release: S&PGR Publishes BICRA On Singapore

24 Jul 2017 2:24 am
 
 
The following is a press release from Standard & Poor's: 
 
SINGAPORE (S&P Global Ratings) July 24, 2017--S&P Global Ratings today 
published its latest "Banking Industry Country Risk Assessment: Singapore." We 
classify the banking sector of Singapore in group '2' under our Banking 
Industry Country Risk Assessment (BICRA). Other countries in group '2' are 
Australia, Belgium, Canada, Finland, Germany, Hong Kong, Japan, Liechtenstein, 
Luxembourg, Norway, Sweden, and Switzerland. 
 
Our bank criteria use our BICRA economic risk and industry risk scores to 
determine a bank's anchor, the starting point in assigning an issuer credit 
rating. The anchor for banks operating only in Singapore is 'a-'. 
 
In our opinion, Singapore banks benefit from operating in a high income and 
economically and politically stable environment. The economy is highly 
competitive, diverse, and resilient. The high fiscal and monetary policy 
flexibility, as well as the strong sovereign creditworthiness, support this 
economic resilience. 
 
We believe the asset quality of Singapore banks will be vulnerable to further 
deterioration in external conditions, including meaningful exposure to the 
commodities sector, which is experiencing a slump. We also consider that 
economic imbalances exist because of high residential real estate prices. 
Although prices have gradually moderated due to cooling measures imposed by 
the government, prices remain elevated relative to income levels. 
 
Credit risk is mitigated by strong household balance sheets and full 
employment conditions, which support the economy's debt-bearing capacity. 
Singapore banks have conservative lending practices and underwriting 
standards. They also benefit from a very strong payment culture and rule of 
law in the country. 
 
We believe the institutional framework for Singapore banks is very strong. Our 
view reflects Singapore's capital regulations that are more stringent than 
international standards, and the regulator's very strong record of maintaining 
financial stability during past crises. Singapore's sound governance and high 
transparency provide further support. Risk appetite is restrained, and the 
banking sector had relatively stable profitability even during periods of 
external turmoil. 
 
Banks do not have high-risk characteristics, such as particularly risky 
products or aggressive commercial practices. Industry stability is high, with 
three local banks dominating the market. No particular market distortions 
affect the sector. Banks typically benefit from a "sticky" (i.e. high customer 
retention) and stable deposit base and high customer confidence in the system. 
 
Only a rating committee may determine a rating action and this report does not 
constitute a rating action. 
 
The report is available to subscribers of RatingsDirect at 
www.globalcreditportal.com and at www.spcapitaliq.com. If you are not a 
RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 
212-438-7280 or sending an e-mail to research_request@spglobal.com. Ratings 
information can also be found on the S&P Global Ratings' public website by 
using the Ratings search box located in the left column at 
www.standardandpoors.com. Members of the media may request a copy of this 
report by contacting the media representative provided. 
 
Primary Credit Analyst: Ivan Tan, Singapore (65) 6239-6335; 
                        ivan.tan@spglobal.com 
Secondary Contact: Rujun Duan, Singapore (65) 6216 1152; 
                   nancy.duan@spglobal.com 
Sovereign Analyst: Rebecca Hrvatin, Singapore (65) 6530-6420; 
                   rebecca.hrvatin@spglobal.com 
Media Contact: Richard J Noonan, Melbourne (61) 3-9631-2152; 
               richard.noonan@spglobal.com 
 
 
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Copyright (c) 2017 by Standard & Poor's Financial Services LLC. 
All rights reserved. 
 
 

(END) Dow Jones Newswires

July 23, 2017 22:24 ET (02:24 GMT)
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