Brokers' take

Singapore Banks Moody's Investors Service, Nov 28

THE Singapore Ministry of Trade and Industry has announced financial support measures for embattled domestic oil service companies. The government measures will help contain the significant deterioration in the credit quality of the loans. The three Singapore banks' asset quality metrics have deteriorated since late 2015. The majority of the banks' new non-performing loans (NPLs) are to oil service companies whose operating cash flows and debt repaying capabilities have diminished with the protracted oil and gas industry slowdown that began in the second half of 2015. The new measures will help the cash-strapped companies service their debt. The three Singapore banks' exposure to oil service companies was around one to 3 per cent of their gross loans at end-September 2016. Although the schemes potentially increase the banks' credit exposure to the embattled sector, the government will take on 70 per cent of the loan risk, leaving participating banks the remaining 30 per cent.

Jumbo Group | Buy Target price: S$0.77 Nov 28 close: S$0.655 DBS Group Research, Nov 28