Singapore banks' capitalisation remains robust in Q1

DBS has the strongest capital levels.

According to Moody's, Singapore's big three banks' capitalisation remains strong, led by DBS. banks posted higher fully loaded CET1 ratios in 1Q 2017 from a year ago, driven mainly by retained earnings, issuance of new equity shares through scrip dividend schemes, and a modest increase in risk-weighted assets.

Here's more from Moody's:

We expect the banks to maintain stable core capital metrics. The room for further improvement is limited by a pick-up in credit growth starting in 2017, which will lead to faster risk-weighted asset growth.

Downside risks to the banks' capital are low because asset quality is gradually stabilising and pre-provision profitability remains sound.

The three banks are well-positioned for IFRS9, which will become effective in 2018. The banks say that they have provisions in excess of requirements under IFRS9. As such, they are likely to benefit from credit cost write-backs, which will have a net positive impact on their Common Equity Tier 1 (CET1) capital levels.

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