Proportion of non-performing loans in corporate sector falls despite rising interest rates: Alvin Tan

THE ratio of non-performing loans (NPL) in the corporate sector and has fallen over the past year, even as interest rates have risen, Minister of State for Trade and Industry Alvin Tan said on Thursday (Oct 20).

The proportion was 2.5 per cent in June, down from 3.1 per cent in the same period a year ago, Tan told Parliament.

The NPL ratio within the small and medium-sized enterprise (SME) segment fell to 2.4 per cent, from 2.8 per cent, over the same period, he added.

He noted that SME loan volumes have also remained resilient, despite rising interest rates.

SME loan volumes expanded by 11.5 per cent on a year-on-year basis in August 2022, compared to the broader corporate loan growth of 7.2 per cent, Tan told the House.

Asked about the authorities’ forecast on NPLs with interest rates set to continue rising, Tan said it is useful to look at the corporate balance sheets of companies.

The Monetary Authority of Singapore (MAS), he said, conducts stress tests on the balance sheets of Singapore-listed companies, and it is found that most corporates would be resilient to further interest rate increases and earnings shocks.

As for unlisted companies, he said most have either healthy debt-servicing ability or sufficient cash holdings to cover their short-term financing or operational needs.

Tan noted that the government has also been helping companies access capital to grow their businesses.

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This includes Enterprise Singapore’s enterprise financing scheme, the productivity solutions grant, energy efficiency grant and SkillsFuture subsidies.