Chia Der Jiun: Financial Sector Growth Expected to Slow
The financial sector in Singapore registered robust growth in 2024 but the local regulator warned that a slowdown may be underway.
According to the Monetary Authority of Singapore (MAS), the city-state's financial services sector grew by 6.8 percent in 2024, doubling the 3.1 percent growth in the previous year.
Assets under management increased 12.2 percent to a new high of over S$6 trillion ($4.7 trillion). Assets in the insurance industry rose 3.6 percent to S$456.4 billion. Average daily FX trading volumes exceeded S$1.5 trillion while debt issuance surpassed S$300 billion, up 30 percent. From 2021 to 2024, the sector’s average growth rate was 4.7 percent with 4,400 net jobs created per annum.
However, a future slowdown is expected.
«Looking ahead, we do not expect financial sector growth to continue at the pace of the last few years,» noted MAS managing director Chia Der Jiun in a speech during a media conference on the watchdog's annual report.
High Uncertainty
While he did not elaborate on the slowdown, Chia noted that there were challenges from policy and macroeconomic uncertainty in the broader environment.
«[F]inancial markets for now appear to be pricing in a relatively benign outcome. Equity markets have recovered from the turbulence in April and rallied to new highs. Credit spreads are tight. Volatility indices are at low levels. Asian currencies have strengthened in spite of tariff threats,» he said.
«The disjoint between risks to the global economy and benign market pricing means that financial markets are vulnerable to sharp pullbacks and bouts of volatility if risk scenarios crystallize. The triggers could include an escalation of trade conflict, geopolitical conflict and heightened concerns by investors over unsustainable policies.»
Emphasis on Stress Testing
To deal with the uncertainty, the MAS is placing greater emphasis on stress testing to assess domestic financial system stability. This includes the application of more severe scenarios such as a sharp tightening in global financial conditions, financial market volatility, a trade shock and persistent elevated levels of policy uncertainty.
«Singapore banks have strong capital buffers and healthy liquidity profiles, and should weather a global recession and tightened financial conditions, for an extended period,» Chia shared on the regulator’s key findings.
AML Breaches
Chia also spoke about the recently announced regulatory actions against nine financial institutions (FI) over breaches related to the historic S$3 billion money laundering scandal.
«Singapore continues to welcome legitimate wealth,» he said. «We are working with FIs in Singapore to improve their practices so that they are sound, effective and efficient. Our financial eco-system will be tough on suspicious and illegitimate monies, but welcoming and efficient to legitimate wealth. This will provide a strong and sustainable basis for the continued growth of the wealth management sector.»
Strengthening Competitiveness
Despite the risks, the MAS has continued to develop Singapore’s financial sector with efforts placed particularly in three areas. They include fostering responsible adoption of artificial intelligence; supporting Asia’s transition to a low-carbon economy; and enhancing the resilience and security of digital financial services.
«Amidst prevailing global uncertainties, MAS will continue to strengthen the competitiveness and capabilities of our financial sector,» Chia added.
