OCBC flags more oil and gas non-performing loans but says no exposure to Swiber

A view of an Oversea-Chinese Banking Corporation signage at their premises in Singapore on January 12.
A view of an Oversea-Chinese Banking Corporation signage at their premises in Singapore on January 12.PHOTO: REUTERS

SINGAPORE - OCBC's asset quality issues arising from its exposure to the struggling oil and gas sector have deepened but not yet broadened, chief executive Samuel Tsien said.

In the three months to June 30, OCBC saw its oil and gas non-performing loans (NPLs) rising to S$933 million, or 0.45 per cent of total loans, up slightly from 0.43 per cent a quarter ago, Mr Tsien told a results briefing on Thursday (July 28).

But he stressed that half of the oil and gas NPLs are still being serviced, and the bank only classified them as substandard out of prudence.

 

Still, troubles in the oil and gas sector have not yet hit a bottom, Mr Tsien cautioned, adding that it may take another two quarters before more certainty can set in.

For now, the bank's exposure to the sector is manageable and the NPLs are well covered. There is no oil and gas client on the bank's portfolio that has abandoned its business, and the focus now is helping the affected clients deleverage.

When asked whether OCBC has any banking relationship with mainboard-listed offshore services firm Swiber, which announced on Thursday morning that it will wind up, Mr Tsien indicated that OCBC is not a banker for the company.

Meanwhile, outside the oil and gas sector, one state-owned manufacturer in China had also requested to defer loan repayment in the second quarter. Total non-performing assets rose 12.2 per cent to S$2.49 billion at end-June from S$2.22 billion at end-March.

Mr Tsien believes that the Chinese government's ongoing move to consolidate and restructure state-owned enterprises will be orderly and efficient, with only minimal impact on OCBC.