Credit Brief on Singapore SMEs Q4 2020

This is a quarterly report jointly published by the CRI at the Risk Management Institute of National University of Singapore and Validus Capital. Read the full report here →

Excerpt

Overall, the NUS-CRI 1-year PD decreased during Q4 2020, from 28.78bps in September to 26.90bps in December. The credit profile of Singapore SMEs improved despite the yearly GDP contraction of 6% in Q4 2020 based on estimates from the Ministry of Trade and Industry (MTI).

According to the survey conducted by the Singapore Business Federation and DP Information Group, the business optimism of Singapore’s SMEs has improved due to the easing of restrictions, paving the way for economic recovery. The initiation of the Regional Comprehensive Economic Partnership (RCEP) and the rollout of the COVID-19 vaccine are key factors that should serve as significant tailwinds for the Singapore SME sector in the near future.

At the same time, the government, alongside the MAS, have further extended support for SMEs to service their debt, giving them some breathing room to remain operational. These measures are slowly expected to wind down in the first quarter of 2021. Companies are therefore urged to ensure proper fiscal management as revenue growth is likely to remain muted in the near future. At the same time, they should focus on adapting themselves to remain buoyant in a rapidly shifting landscape.

Read the full report here →