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The Curious Case of Guotai Junan
6 April, 2017Euromoney, March 20 2017
The annual results announcements of Singapore’s three banks all followed a common theme: exposures to oil and gas service businesses are coming back to haunt them; and, for two of them at least, wealth management is the future.
OCBC reported an 11% drop in net profit year-on-year of S$3.47 billion ($2.45 billion). With it came news that the non-performing loans ratio has more than doubled since March 2015, from 0.6% to 1.3%. Almost all of that is the result of the oil and gas support sector, which accounts for 0.61 percentage points of the 1.3%. It was negligible less than two years ago.
Over at DBS the bank’s annual net profit, at S$4.24 billion, was down 2% on the previous year. Here, NPLs have risen from 0.9% a year ago to 1.4% today and allowances have doubled in a year to S$1.43 billion; again, oil and gas support services were the culprit.
UOB’s S$3.1 billion profit was down 3.5% for the year. NPLs grew from 1.4% to 1.5% over the year, although at least they were better than the previous quarter. Specific allowance on loans more than doubled to S$969 million – again, mainly due to oil, gas and shipping.
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