Local banks grapple with intensifying cyclical risks

Asset quality and profitability are under pressure.

Cyclical risks to the operating environment for Singaporean banks are rising in spite of their largely stable set of 2014 financial results, Fitch Ratings said in a note today.

Fitch warned the ongoing domestic property market correction and slowing economic growth - both in Singapore and other key regional markets - are likely to continue weighing on asset quality and profitability.

Lower commodity prices, if sustained, may also add to pressures in light of potential negative knock-on effects on key countries and sectors of operation such as Malaysia and Indonesia, even as Singaporean banks have limited direct upstream exposures.

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