Maybank Singapore to maintain capital, liquidity above regulatory waters: Moody's

The bank hopes to keep a low problem loan ratio of around 0.5%. 

Maybank Singapore is expected to maintain its capital and liquidity metrics above regulatory waters, according to Moody’s.

The bank’s A1 deposit ratings and a3 BCA affirmations reflect its strong asset quality, prudent capital and liquidity management, and modest profitability. 

With a focus on low-risk housing and auto loans in Singapore, Maybank Singapore expects to maintain a low problem loan ratio of around 0.5%. 

These loans account for over 60% of the bank’s total gross loans and adhere to strict consumer debt regulations. 

Additionally, the bank has robust loan-loss reserves exceeding 250% of its problem loans as of 31 December 2022.

Maybank Singapore also anticipated maintaining capital and liquidity metrics that surpass regulatory requirements, according to Moody's. 

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As of 31 March, the bank's Common Equity Tier 1 capital ratio stood at a robust 14.2%.

Additionally, the bank’s average SGD- and all-currency liquidity coverage ratios, including Maybank's Singapore branch, were high at 165% and 146% respectively during the first quarter of 2023.

Despite a lack of economies of scale, MSL's return on average assets is expected to remain modest around 0.5%. 

While the bank experienced an expansion in net interest margin due to higher domestic interest rates in 2022, it is likely to stabilise at current levels as funding costs catch up. 

Additionally, Maybank’s credit costs will be elevated due to pre-emptive provisioning amid the economic slowdown in Singapore.