Strong growth for major banks seen: Fitch Ratings

This will be supported by wider margins and well-contained credit costs.

There will be a good sign of profitability for Singapore’s top banks in 2023 due to wider margins and credit costs, said Fitch Ratings.

“Higher profits and muted loan growth will buoy capitalisation, which may encourage some of the banks to undertake inorganic expansion in the near term,” the analyst said in a report.

The banks will be boosted by rising interest rates, with net interest margins to moderate in the later parts of 2023.

Asset-quality risks could still be mitigated and credit impairments “from higher debt service burdens are expected to be covered by the significant general provisions held by the banks”

“Capital ratios are likely to rise over the next 12-18 months, notwithstanding our expectations that the three banks will return more capital to shareholders. The banks have also been eager to expand overseas and higher capital may encourage inorganic activity,” said Fitch.