Chart of the Day: Take a peek into the Greater China trade book of Singapore’s three biggest banks

The Qingdao port incident has sparked major concerns.

Recent reports of fraud in Chinese ports have urged Singapore’s three biggest banks to reveal the details behind their exposure to Greater China. These details should soothe wary investors who wish to know just how much money the big three are pouring into the Mainland.

According to CIMB, DBS’s China trade loans were pegged at around 14% of the group’s loans, OCBC’s was 5%, and UOB’s was 6%. OCBC’s exposure came as a surprise, as it turned out to be even smaller than first guessed.

Though the banks have a big China book, a good portion is financing foreign direct investment by China state-owned enterprises (SOEs) into ASEAN, and are not all trade.

DBS confirmed that it has the largest trade exposure, but explained that it was mostly financing imports into China and was not involved with commodity financing.

The report also stated that using total Greater China exposure as a proxy to China trade loans exposure may be a misnomer. OCBC and UOB have a good portion of their China exposure that are actually non-trade, financing investment flows of large China SOEs into ASEAN (for projects such as power plants or commodity
assets), or just in government securities. Of the three banks, DBS has the biggest exposure to China trade finance (S$36bn), vs. OCBC (S$8bn) and UOB (S$10bn-15bn).

“Even though China NPLs may be a non-issue, the slowdown in non-interest income from reduced client
activities is real. Trade fees, loan fees and treasury income all found it hard to deliver qoq growth. Only WM did better. OCBC was the only one that delivered qoq fee growth, while it had a good quarter for insurance earnings and that added icing on the cake,” noted the report.