Singapore bank shares may drag on Evergrande fallout; but analysts don't see direct risk

SINGAPORE banks have limited onshore China exposure and so will likely avoid direct hits from the Evergrande fallout, said analysts. But investors should watch share price impact, as the bank stocks are vulnerable to a drag from negative sentiment.

China's property giant Evergrande is teetering on bankruptcy as the world's most indebted property developer, buckling under more than US$300 billion of liabilities. It comes as in 2020, China regulators stepped in with new rules to curb excessive leverage taken by developers.

Singapore banks have benefited greatly from Greater China growth for a decade, by tapping on flows between China and Asean. But Hong Kong is a typical entry point, working with network customers, China state-owned enterprises (SOEs) and top-tier corporates. This means limited onshore exposure, said Citi analyst Robert Kong in a report. The non-performing ratios (NPLs) of loans related to their Greater China book are also relatively low.