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MOODY'S Investors Service has downgraded its ratings outlook for the Singapore banks to "negative" from "stable", it said on Thursday.
This is an opinion on the "likely rating direction" over the next 12-18 months, and are assigned only to banks' long-term deposit, issuer and senior unsecured debt ratings.
"The rating action reflects Moody's expectation that a more challenging operating environment for banks in Singapore in 2016, and possibly beyond, will pressure the banks' asset quality and profitability," the credit rating agency said. "Moody's expects credit conditions for banks in Singapore will continue to weaken against the backdrop of slower economic and trade growth, both domestically and in the region."
The outlook could be revised back to a "stable" rating if macro-economic conditions in Singapore and in the region improve, and these banks maintain sound financial metrics.
Moody's said despite these headwinds, Singapore banks maintain very strong buffers in terms of capital, loan loss provisions and pre-provision income. Funding and liquidity profiles are also robust. Moody's has affirmed the institutions' credit ratings.