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BT EXPLAINS

Three indicators to identify stress in the banking system, and what they show now

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Tan Nai Lun

Tan Nai Lun

Published Mon, Nov 13, 2023 · 08:06 PM
    • A high non-performing loan ratio is one indicator of a stressed banking system.
    • A high non-performing loan ratio is one indicator of a stressed banking system. PHOTO: YEN MENG JIIN, BT

    THE banking sector has been grappling with slowing loan growth, rising interest rates and greater macroeconomic uncertainty.

    The trio of Singapore banks have warned that slowing economic growth will likely weigh on results in 2024, although all three reported robust figures during their latest earnings calls for the third quarter ended September.

    While higher-for-longer interest rates may boost net interest margins (NIMs), loan growth will slow as a result, they said, and credit costs are expected to creep up.

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