MAS Sees Bank Risk From Rising Global Rates

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http://www.bloomberg.com/news/2013-12-03/singapore-banks-face-risks-from-rising-interest-rates-mas-says.html

Singapore’s central bank warned that rising global interest rates could weigh on household and corporate debt and pose risks for banks in the city-state.

A 3 percent increase in mortgage rates would boost the share of overly indebted households to as much as 15 percent from 10 percent now, the Monetary Authority of Singapore said in its annual financial stability review today.

Banks also need to guard against credit quality deterioration as rates increase after Singaporean companies’ median debt-to-equity ratio rose to 39 percent at the end of June, the authority said.

Banks that have increased their lending to China and India need to be aware of the slowing economic growth in those countries, MAS said.

DBS, Oversea-Chinese Banking Corp. and United Overseas Bank Ltd., Singapore’s three local lenders, were in the Top 10 of a Bloomberg list of the world’s strongest banks compiled as of Sept. 13.