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LOANS growth for Singapore banks will be subdued in the coming months, while non-performing loan (NPL) ratios will creep up, said BMI Research.
All these are leading the research house to be cautious about its outlook for Singapore banks, compared to its optimism over the banks' peers in the region.
"We are generally positive on the outlook of Asean-5 banks, with the exception of Singapore banks," it said. "Singapore banks still face multiple headwinds from subdued economic activity and exposures to the oil and gas sector."
Asean-5 refers to Indonesia, the Philippines, Malaysia, Singapore and Thailand.
BMI Research's report published on April 19 comes as UOB chief executive Wee Ee Cheong said on April 20 that new NPL inflows would have "peaked for this year, and hopefully everything should normalise downwards".
BMI Research said that Singapore's loans growth will remain subdued over the coming months, despite a recent slight recovery.
Slow economic growth and uncertain external conditions due to a slowdown in China will curb loans growth for DBS Group, UOB and OCBC.
In addition, with the banks' asset quality remaining under pressure due to their oil and gas exposures, BMI Research sees their NPL ratios creeping up.
"The financials of small and medium-sized companies in the oil and gas sector are still feeling the negative effects from the significant decline in oil prices, and it is likely that banks will have to raise their allowances further."