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Banks' higher bad debt charges reflect harsher environment

A LOT of attention has been focused on the jump in bad debt provisions of the local banks which released their fourth-quarter results last week. What probably jolted also was the comment by DBS chief executive Piyush Gupta that as the Singapore economy slows, more defaults will show up. After all, for much of last year, Southeast Asia's largest bank was teflon-like even when its smaller rivals started posting mortgage defaults. It wasn't that DBS did not have any sour loans. There were the odd charges for a few bad debts in India and a copper smelter in China, but hardly anything significant.

And while the rivals began posting home loan defaults, DBS actually showed an improvement. In its Q3 results,...

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