Provisions offer clue to oil & gas sector turning the corner
Singapore
MARKETS were taken by surprise early last week when DBS Group Holdings unveiled a decisive move to clean up its exposure to troubled borrowers in the oil-and-gas sector.
The bank nearly doubled its provisions for bad debts to S$815 million as it classified residual weak oil-and-gas support services exposures as non-performing assets, and booked, as a result, an unexpected 23 per cent drop in third-quarter earnings.
Such a move will lower the downside risks for the largest lender in South-east Asia, which has said it is unlikely to take more such allowances.
But it has also revived the question: Is the worst in the oil-and-gas downturn really over?
Industry observers view the hefty provisions taken by DBS as a positive step forward for offshore and marine players here, which have been left battered and bruised by the downturn. After all, a crucial step to recovery is successful restructuring…
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