|
|
|
 |
|
Source:
www.mas.gov.sg |
|
MAS Releases Semi-Annual
Publication of Financial Stability Review |
|
|
|
|
The Monetary Authority of Singapore (MAS)
has released its Financial Stability Review (FSR [1]) for
December 2005. |
|
Since the June 2005 FSR, global financial
markets have remained resilient and have reacted well to a series of
shocks, including the Katrina hurricane disaster in the US, terrorist
bombings in London, and changes in the pegged exchange rate regimes in
China and Malaysia. |
|
The G3 economies continued to expand, amid
continuing monetary policy tightening in the US and sustained high
energy and commodity prices. |
|
The East Asian economies, including
Singapore, also experienced firm growth, with the balance sheets of both
the banking and corporate sectors further strengthening over the past
six months. |
|
Although household credit in several of the
East Asian economies continued to grow, household indebtedness has
remained broadly under control with authorities in some countries
introducing measures to curb indebtedness and stem property price
inflation. |
|
The Singapore banking sector has remained
sound, supported by healthy corporate and household sectors. Firms
reported sustained profits and improved liquidity positions, while the
household balance sheet strengthened further. |
|
In the banking sector, commercial bank
lending accelerated in Q3 2005, reflecting strong non-bank lending
activity in the Asian Dollar Market and overall interbank lending. |
|
The three local banking groups registered
growth in profits, declining non-performing loan ratios and capital
adequacy ratios that were above the regulatory requirement. |
|
The insurance sector saw improved
performance on the back of growth in new life business premiums and
higher operating profitability of general insurers. |
|
Notwithstanding the overall positive
assessment of Singapore's financial system, several possible downside
risks remain. |
|
First, global inflation could accelerate
much more than seen currently if oil prices were to rise further. This
could in turn lead to tighter-than-expected monetary conditions and
slower global growth. |
|
Second, the risk of a disorderly adjustment
of the USD remains with the continued build up of large global
imbalances. |
|
Third, there have been growing concerns of a
Avian influenza pandemic, which would have severe economic and financial
costs for the global economy. |
|
Based on a scenario of rapidly rising
interest rate environment leading to a sharp contraction in economic
growth, a stress test of market risk was conducted on six major banks,
including the three local banking groups. |
|
The stress test results showed that the
banks would be resilient to the shocks assumed under the scenario. The
estimated potential losses on the banks' market portfolios would be
about half of their average pre-tax profits in the past five years. |
|
A copy of the Financial Stability Review Dec
2005 is available on the MAS website. (Click
here to view the Financial Stability Review). The next issue of the
FSR will be issued in June 2006. |
|
Source:
www.mas.gov.sg Press Release 1 Dec
2005 |
|
|
|
 |
|
Important
Notice |
|
Our FrontPage
Editions are a historical record of our Web site and reflect
the changing of the times, and also of our Web site through
time. We do not and will not update the links and stories on
these FrontPages even if they have become obsolete. |
|
FrontPage Edition: Wed 7 Dec 2005
All rights reserved
