This is Singapore banks' secret weapon against pressure on asset quality

This could stem from rocketing property prices.

According to Standard & Poor's credit analyst Ivan Tan, banks' strong financial profiles and prudent management strategies will provide buffers against any possible pressure on asset quality from high property prices and a potential turn in the interest-rate cycle.

"Banks in Singapore are likely to maintain their robust financial profiles, underpinned by adequate capitalization, strong liquidity, and good asset quality," said Mr. Tan.

"Although asset quality is likely to deteriorate slightly and revenue growth for banks could decelerate, our ratings incorporate normal credit cycle turns. Singapore banks are coming from a position of strength and have sufficient buffers against downside risks in our base-case scenario."

Here's more from Standard & Poor's:

We believe that demographic and liquidity factors, rather than speculative pressure, largely underpin the rise in real housing prices in Singapore. In addition, Singapore's government has shown a readiness to take measures to rein in rising home prices.

On Jan. 11, 2013, the government announced its seventh round of cooling measures since 2009, and its most comprehensive to date. Key measures include raising buyer's stamp duty to up to 18%, lowering the loan-to-value ratio to 50%, and increasing cash down payments to 25%.

The bulk of these measures apply to loans for second homes; Singaporean first-time buyers and buyers of government-built flats are relatively unaffected. In June 2013, the regulator also introduced a debt-servicing threshold of 60% of monthly income for property loans granted to individuals.

In our view, these measures serve two purposes: address overexuberance in residential property investments and instill greater financial prudence in buyers. We believe that these measures have been effective in moderating property prices and are in line with the government's intention to stabilize the market.