Singapore central bank says banks can improve underwriting practices

SINGAPORE (Reuters) - Singapore's central bank said there was room for banks to strengthen underwriting practices in their corporate lending business after it conducted an inspection of several lenders.

The Monetary Authority of Singapore (MAS) said protracted low interest rates and increased liquidity over the past years had resulted in a very competitive market and compressed interest margins for banks.

In this environment, some banks may relax loan structures and covenants, and under-price risks in their corporate lending activities, it said.

The MAS did not name the banks, and said that while it did not see any notable weakening of underwriting standards and practices, there were areas for improvement and isolated cases of undesirable lending practices.

Singapore banks have seen a rise in their bad debt charges in 2015, hit by deteriorating quality of energy loans and a slowdown in China.

Rating agency Moody's said last week the broad-based deterioration in asset quality in Singapore seen in 2015 will continue due to slowing Asian economic and trade growth and increasing stress for oil and gas borrowers.

(Reporting By Aradhana Aravindan and Saeed Azhar; Editing by Miral Fahmy)