High capitalisation and strong domestic deposit franchises are among the Singapore banks' key rating strengths, Fitch said.

Global credit ratings organisation Fitch has affirmed the ratings of Singapore’s “Big Three”: DBS, Oversea-Chinese Banking Corporation and United Overseas Bank.

The banks’ long-term issuer default ratings have been affirmed at “AA-“ with a “stable outlook”, and their viability ratings are pegged at `aa’.

Fitch, however, has a negative outlook on the Singaporean banking sector as a whole, citing uncertainties over US-China trade relations and market volatility caused by any US Federal Reserve rate surprises.

The agency said it “expects the Singapore banks to further deepen and expand their regional footprints in faster-growing emerging markets, becoming increasingly exposed to the more challenging operating environments in these economies”. 

High capitalisation and strong domestic deposit franchises are among the Singapore banks' key rating strengths. The latter underpins their sound funding and liquidity positions, as indicated by their high average Singapore dollar liquidity coverage ratios of 220 per cent-438 per cent in the fourth quarter of last year, Fitch said.

“We expect the banks to retain their capital strength due to their adequate profitability and modest short-term growth prospects in light of the uncertain economic outlook and subdued property market sentiment in Singapore. OCBC's capitalisation should also benefit from its scrip dividend scheme in the near term,” Fitch said.