UOB says S$2b of its oil & gas exposure 'may be vulnerable' if prices stay low, but sees no major risk to credit quality

UOB has a total exposure of S$12 billion to the oil and gas sector.
UOB has a total exposure of S$12 billion to the oil and gas sector.PHOTO: ST FILE

SINGAPORE - United Overseas Bank said around S$2 billion of its oil and gas exposure could show weakness if oil prices continue to stay low.

But the UOB chief executive Wee Ee Cheong stressed that Singapore's third-largest lender is not seeing any systemic risks in its asset exposure to the vulnerable oil and gas sector and the volatility in China.

UOB is the first of Singapore's Big Three banks to report fourth quarter results.

As of Dec 31, the bank's total exposure to the commodities sector was S$21 billion, including around S$12 billion in the vulnerable oil and gas sector, Mr Wee said at a media briefing on Tuesday (Feb 16).

If oil prices continue to stay low, some 20 per cent of that S$12 billion - about S$2 billion - may be vulnerable, said Mr Wee. That only amounts to about 1 per cent of UOB's total asset, he noted.

UOB also had another S$21 billion asset exposure to China, where economic slowdown and credit quality issues continue to hound the business and banking sectors.

Around S$11 billion of its China asset exposure was in banks, with 75 per cent of this accounted for by the top five banks in the country.

Non-bank China exposure was around $8.7 billion, and the non-performing loans ration in this segment was only around 1 per cent, as UOB focused on state-owned enterprises and large local firms to ensure credit quality.

Mr Wee stressed that while the global slowdown and plunging oil prices will continue to throw up headwinds, the regional economy is not facing a fullblown crisis due to much stronger national and banking balance sheet.

UOB hence expects the uncertainties ahead to be manageable, he added.