Companies' debt levels in S'pore low; banks and insurers can withstand shocks: MAS

Despite still-high borrowing costs and weaker earnings, businesses in Singapore have been able to service their debts, the central bank has found, adding that macroeconomic uncertainty and geopolitical tensions are key hurdles ahead.

- Claire Huang

The Monetary Authority of Singapore (MAS) said on Nov 27 in its annual review of the corporate sector's financial resilience that in the past four quarters, businesses' balance sheets have stayed stable despite market volatility.

"Singapore corporates have benefited from the improving growth momentum in the third quarter of 2024, particularly in manufacturing and export activities," it noted.

Corporates have also benefited from financial conditions that have turned less restrictive as global interest rates ease, said MAS.

In assessing the corporate sector, MAS looked at four areas: firms' debt levels and their repayment abilities; how much liquid assets the companies have to cover short-term liabilities; their ability to roll over short-term debt; and the share of foreign currency debt to total debt.

It said defaults in businesses, including that of small and medium-sized enterprises, have been low, although vulnerabilities in the corporate sector have risen moderately due to weaker earnings and borrowing costs that are still high.