None performing loans
Nonperforming loans have hit many of the three top banks in Singapore, especially from the oil and gas industry. The industry has been forced to sell oil at much-reduced prices because of a weakening economy hence making them unable to pay back loans due to reduced profits.
Fluctuating interest rates
An increase in interest rates affects the bank’s profitability positively. The profitability may arise from things such as investment securities and loans. That, therefore, means that the bank is guaranteed the borrower will pay with interest the amount that he or she owes to the bank. However, in the recent past, there has been a lot of interest rates in Singapore. It has been caused by harsh economic conditions as well as government regulations on the banking sector. Hence this has caused uncertainties thus leading some of the banks to close their Singapore offices.
Technicality of financial roles
One financial area which has been affected by the regulations is the product control. The rules state that for any finance officer who takes this position must not only know how to develop the profit and loss statements but he must be able to understand all the factors that shape a profit and loss statement or even a balance sheet.Also, the candidates ought to have a vast knowledge of international banking regulations. These financial roles are therefore left open because of lack of the desire skills. This has in turn contribute to stall growth of banks.
Shortage of local experts
Most international banks in Singapore want tremendous growth. Because of that they need to hire professionals to take the banks to the next level. However, there has been a shortage of human talent in Singapore. These banks are force to source for human capital overseas which is more expensive due to costs of settling the expert. On the other hand, banks can decide to take locals who are more experience but there lacks local professionals.
Banks in Singapore are not attracting many candidates as before because of poor salaries. This has been a major concern over the recent years. Most people are unwilling to join the banking sector because they have fears of being overwork. And yet the pay is minimal. Furthermore, the pay has also been decreasing over the years.
It has been a tough time for most banks in Singapore, but if they can mitigate all these challenges, then they can rise and make the country become one of the major economies in the world.
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