Oil and China exposures hurting S'pore banks

Singapore

IT'S a new year of old problems for Singapore banks, with their shares falling 12-15 per cent since the start of 2016 on concerns over oil-and-gas exposure, and China.

With oil prices slipping below the US$28 mark as the lifting of international sanctions on Iran, the world's fourth-largest oil producer, could mean a deeper supply glut, analysts warned of more bad loans from the sector, but said this should not cause alarm.

"Growing predictions that oil prices would stay at depressed levels are stoking fear that Singapore's three listed banks would soon be hit with rising defaults in their oil and gas exposures," said a recent RHB report.

"Although acknowledging that recent developments have increased asset quality risks, Singapore banks believe the rise in non-performing loans (NPLs) would remain manageable. Most oil-and-gas customers are said to have a decent balance she…