Although Singapore's financial sector has been resilient through the Covid-19 pandemic, it could still face headwinds that should give pause to regulators contemplating lifting restrictions such as curbs on bank dividend payments. On Wednesday, the Monetary Authority of Singapore (MAS) revealed in its annual report that the financial services sector turned in a robust performance last year, growing by 5.1 per cent, despite a 5.4 per cent contraction in real gross domestic product (GDP). Moreover, at a time of rising unemployment, the sector created a net 2,500 jobs. Financial institutions are expecting to create about 6,500 new hiring opportunities this year.

Economic prospects for 2021 look cautiously optimistic. The MAS expects that GDP growth could exceed the upper end of the official forecast of 4 per cent to 6 per cent. Private sector analysts have raised their forecast to 6.5 per cent. The MAS reported that systemically important domestic banks have even stronger capital positions than prior to the pandemic and their non-performing loans (NPLs) have remained largely stable at around 2.4 per cent in the first quarter.