Brokers' take

Singapore banks | Negative

Maybank Kim Eng, Aug 18

While O&G is not the only sector to face further asset quality deterioration, in the face of sluggish economic growth, it is arguably the biggest pressure point among the various sectors' loan exposure at this moment. We examine the impact on Singapore banks if NPL ratios for support services sector hits 20 per cent and 30 per cent.

In both these scenarios, potential increase in specific provisions for DBS remains the largest among the three banks, at 216-374 per cent versus UOB's 43-115 per cent and OCBC's 34-101 per cent. If we were to assume banks stagger the increase in specific provisions equally for FY16 and FY17, net profits will decline the most for DBS at ~3-5 per cent, …