Chart of the Day: Singapore banks’ loan quality hinges on China exposure

China-related loans make up 20-25% of the pie.

Loan losses are set to rise as the property market continues to cool.

According to a report by Fitch, the regulator is expected to remain vigilant for signs of stress. Banks’ corporate and regional exposures - including China-related loans, which are 20-25% - will drive loan quality.

Additionally, Singaporean banks’ potential losses from mortgages will remain minimal due to relatively healthy household balance sheets (household assets excluding housing/liabilities of 3.2x) and adequate collateralisation (49% average LTV ratio). Absolute levels in housing loan delinquencies have remained extremely low in both jurisdictions.

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