Banks are likely to compromise on loan pricing.

Analysts believe more provisions are likely to be set aside by banks amid the turning credit cycle and lacklustre economic outlook, especially in the oil and gas sector, commodities, and SME sectors.

Maybank KimEng said on average, credit costs of 44bps and 41 bps respectively for FY17-18E across the banks.

"Our estimates for provisions are currently 14-24% and 8-20% above consensus estimates for FY17 and FY18 respectively across the banks. We estimate that if we lower FY17-18E credit costs by 10bps for each bank, FY17-18E net profit will increase by c.6-7%, ceteris paribus. We believe asset quality deterioration has not fully run its course," the research house said.

With this, it noted how operating outlook will remain challenging for 2017 as loan growth will be in the low single digits.

"The lending environment is likely to remain lackluster; and 2) banks may be unwilling to take on higher risks," it said.

As of September 2016, Singapore banks have been lending out faster than the system domestically, where system’s loan growth was -5% YoY vs. the banks’ loan growth at 4-5% YoY.

"Therefore, we think banks are likely to compromise on loan pricing. A normalised interest rate environment can help to offset the fall in customer spreads, although it remains to be seen if customer spreads may be under pressure from competitive loan pricing and lack of repricing for credit spreads," Maybank said.
 

The Monetary Authority of Singapore's regulatory changes in 2016 and planned reforms throughout 2017 has seen many financial institutions launch a recruitment drive for regulatory reporting professionals and risk control experts.

This is one key finding from the latest Hays Quarterly Report for the January to March quarter, which is a guide to the current hotspots of recruitment activity and trends.

2016 saw an unprecedented amount of new regulations and changes drafted that have tightened the compliance and governance requirements for all financial institutions.

Recent and upcoming regulatory changes have seen Singapore become one of the most active financial regulators in Asia. The ever-tightening regulatory changes have created high demand for compliance officers and regulatory reporting professionals whose roles will be critical in ensuring financial institutions conform to the new changes laid down by MAS.

As the search for qualified candidates intensifies, job seekers will have greater bargaining power due to a limited talent pool that may see those on the market receive multiple job offers.

In other trends, the first quarter of the calendar year will also see huge demand for engineers and planners as government-funded works on healthcare and transport projects gather further pace ahead of the 2020 completion target date. A number of digital marketing roles will become available this quarter as the competitive nature of businesses operating online has seen many adopt a localised approach to accommodate Singaporean consumer trends.

With extra focus on developing personalised and targeted campaigns, candidates are expected to be well versed with CRM and data analytics tools with competition fierce for qualified candidates in this field. Employers may have to not only map out a long-term strategy as to where their business will be in five to ten years’ time, but also how they plan to meet the career aspirations of candidates who are looking to make waves in an era of digital transformation.