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Singapore banks can withstand pressure from property market correction: Fitch
The property market correction in Singapore may place modest pressure on banking system loan quality but the three domestic banks - OCBC, DBS and UOB - should be able to withstand this, Fitch Ratings said in a report on Friday.
"Fitch expects Singaporean banks' potential losses from mortgages to be minimal due to relatively healthy household balance sheets and adequate collateralisation," the credit rating agency said. "The government's macro-prudential policies over the past few years included measures to strengthen mortgage underwriting practices at local banks."
Mortgage delinquencies remain extremely low in both Singapore and Hong Kong - with Singapore's delinquency rate for housing loans at 0.36 per cent at end-September, and that of Hong Kong at 0.02 per cent for the same period.
Fitch added the Monetary Authority of Singapore (MAS) is expected to remain vigilant for signs of stress.
"The agency remains watchful of potential second-order effects of the housing slowdown, such as weaker private consumption and rising construction company defaults."