Covid-19 could cause worse disruptions to global supply chains than Sars: OCBC chief

THE current novel coronavirus outbreak could cause larger disruptions to global supply chains than the severe acute respiratory syndrome (Sars) epidemic in 2003, says OCBC Bank chief executive officer Samuel Tsien.

In an email to the bank's customers last Friday, Mr Tsien cautioned that amid volatile markets and "significant uncertainties", recovery from the crisis will be slow, though accelerating through 2021.

"We saw consumer confidence and sentiments dwindle, and companies delay their investment and expansion plans. The stresses to the global supply chains could be larger than the 2003 Sars outbreak. The financial market has become more volatile and defensive," he wrote.

"The recovery will be slow in the beginning but will accelerate as it continues into 2021."

This comes after the bank projected a revenue growth of about 2 per cent, from earlier projections for FY2020, due to the global pandemic - despite having raised dividends on the back of a solid fourth quarter, with profits beating analysts' expectations.

In a media briefing last month, Mr Tsien told reporters that aside from the top-line impact, credit costs are projected to go up by a few basis points and its non-performing loan ratio is expected to go up a notch.

Still, in his email to customers, Mr Tsien maintained that the outbreak presents a one-off, event risk, and recognised that banks and the authorities worldwide have been responding with relief measures.

Like other banks here, OCBC has rolled out an assistance package to help customers mitigate the fall-out from the rogue. Its measures include allowing customers to restructure their loans and providing a moratorium on principal repayment, as well as offering bridging loans in the form of additional working capital financing to affected businesses.

Mr Tsien remains optimistic about the outbreak settling down later this year.

"With coordinated efforts, better hygiene discipline and the arrival of the warmer season, I am still hopeful the virus will be contained later in the year, and gradual recovery of investment spending and consumer sentiments will commence soon after, starting with China," he wrote.