Singapore banks to be affected by modestly higher risk-weight charges in 2017

But capitalisation remains stable.

According to Fitch Ratings, Singapore banks’ capital standing remains solid, with fully loaded CET1 ratios ranging between 12.4%-13.5% at end-September 2016. We expect capitalisation to remain stable despite modestly higher risk-weight charges that will affect the banks from 1 January 2017, aided by healthy internal capital generation. "Our internal stress tests show that sound capital buffers should enable Singapore banks to weather a significant deterioration in credit quality."

"We expect Singapore banks to retain their domestic deposit franchise strengths. Their sound Singapore dollar LCR stood in excess of 200% for 3Q16, and their Singapore dollar loan-deposit ratios had improved to 86.0% by end-September (June: 88.7%, March: 87.2%). The banks’ all-currency LCR averaged a comfortable 132% for 3Q16," adds Fitch.

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