SINGAPORE, April 20 (Reuters) - Moody's Investors Service on Monday cut its ratings outlook on Singapore's three banking groups to "negative" from "stable", saying the global recession would hurt earnings and asset quality.
DBS Group <DBSM.SI>, United Overseas Bank <UOBH.SI> and Oversea-Chinese Banking Corp <OCBC.SI> are currently rated "Aa1" for both long-term debt and deposits, equivalent to the AA-plus rating assigned by rivals Standard & Poor's and Fitch Ratings.
"The negative outlooks of DBS, OCBC and UOB reflect the fact that the deepening global economic downturn could have a protracted impact on their asset quality and earnings," Moody's Vice President and Senior Analyst Christine Kuo said in a statement.
But Moody's also said the three Singapore lenders had strong franchises and healthy credit profiles, and benefited from a "very high level of support" from the Singapore government.
"Consequently, even in a severe downside scenario, we would expect the banks' financial strength ratings to remain above average and their debt and deposit ratings to be solidly positioned within the Aa-rating band," Kuo said.
Singapore last week reported its economy contracted a record 11.5 percent from a year earlier in the first quarter and said gross domestic product could shrink as much as 9 percent for the whole of 2009.
