Stable oil prices are fine, and a recovery in the Baltic Dry Index can't hurt. But seriously, how long can Singapore's banks remain hostages of the island's shipping and offshore marine services industry?
That question is bound to be asked as another earnings season comes burdened with a high-profile bankruptcy.
Ezra Holdings, the Singapore- listed offshore services group that sought protection from creditors in the United States last month, counts DBS Group Holdings (DBS) and OCBC Bank among its biggest unsecured creditors. United Overseas Bank (UOB), the third of the city's three home-grown lenders, is on the hook too. The trio's claims total US$642 million (S$897 million), most of which is unsecured.
Providing for losses on soured corporate debt is one thing; finding new borrowers to replace the duds is another. Mortgages should have been the natural fallback.
Yet, unlike Hong Kong, which is in the grip of property mania, Singapore's residential real estate market is comatose after a record 14 straight quarters of declines in apartment prices.
In 2013, developers offered almost 16,000 new homes in Singapore, compared with 11,000 in Hong Kong. Last year's figure for Singapore was below 8,000, while Hong Kong's primary sales figures almost touched 17,000 for a third year.
It's too early to say if a recovery in Singapore's new home sales last month was anything more than a flash in the pan. While bankers rue the absence of a red-hot property market, their salvation is the so-called "net stable funding" requirement. As regulators dissuade lenders from backing a long-term asset like a mortgage with short-term interbank loans, Singapore's local banks, which get plenty of lazy deposits, have a competitive advantage over their foreign rivals.
Mr Jeremy Teong, an analyst at Phillip Securities, estimates that DBS, OCBC and UOB had roughly 47 per cent of the island's housing loan market at the end of last year, compared with 43 per cent at the end of 2014. Their market share may increase further this year. However, competing for good-quality mortgage business could also mean sacrificing margins, Mr Teong says.
Hong Kong banks, too, are slashing mortgage rates, but they have the volumes to compensate. Where can Singapore banks find new customers when wage incomes among condo dwellers declined last year?
One answer to that question may be: the Government. Even as construction stagnates in the private sector, the public sector could award as much as $24 billion in new contracts this year, up from $15.8 billion last year, Singapore's Building and Construction Authority estimates.
Given UOB's dominance of the construction loan market, it might have the momentum to ride this growth, according to Phillip Securities. Overall, though, the outlook is far from great. Although the three banks' shares are up between 7 per cent and 11 per cent so far this year, a solid earnings recovery is not in sight.
For that, the lenders desperately need more - and more cheerful - borrowers.
A Hong Kong-style housing bubble would have been nice. In its absence, bank chief executive officers will have to amuse themselves with stable crude prices and shipping rates, and hope the carnage in corporate lending is over.
•This column does not necessarily reflect the opinion of Bloomberg LP and its owners.