Singapore

Firms, banks have stayed resilient despite Covid shock: MAS

Companies in Singapore suffered a significant fall in earnings due to the Covid-19 pandemic and sank deeper into debt, although most should still be able to withstand short-term financial pressures for now, the Monetary Authority of Singapore (MAS) said.

In its annual Financial Stability Review released yesterday, MAS also said firms and banks have so far remained generally resilient, despite the shock of the pandemic.

It added that swift government support for the corporate sector has helped, with efforts focused on extending credit to small and medium-sized enterprises.

"However, corporates with highly leveraged positions and smaller firms with weaker cash buffers remain vulnerable and could come under more severe strain," MAS cautioned.

Firms such as those in construction, travel-related services and property were also hit harder by a drop in domestic demand and safe management measures, it said.

Overall, Singapore firms "have weathered the initial earnings shock from Covid-19 relatively well" as they took steps to retain liquidity, supported by the Government and assistance measures.

Listed firms have bolstered cash buffers, MAS noted. But it warned that efforts to ease short-term cash flow concerns have also increased other risks, such as repayment difficulties, if the economic recovery is bumpy.

Smaller firms would also have weaker cash buffers and be more severely impacted by the crisis. - THE STRAITS TIMES

coronavirus