OCBC’s non-performing loans jump to $1.97b as O&G clients flounder

NPL ratio rose to 0.9%.

OCBC reported that the absolute amount of non-performing loans (NPLs) rose to $1.97 billion in FY15, a sharp increase from $1.28 billion in the previous year.

The group’s NPL ratio also rose to 0.9% at the end of December, higher compared to 0.6% a year ago.

Singapore’s second-largest listed bank blamed the spike in bad loans on a number of “large corporate accounts” associated with the oil and gas services sector.

A closer look at OCBC’s full-year results show that the total amount of the group's non-performing assets (NPAs) in Singapore almost doubled to $545 million, compared to just $274 million in December 2014.

In Singapore, amount of "substandard" loans almost quintupled to $337m, compared to just $72m in 2014. The amount of loans which have been classified as losses—or those which are utterly unrecoverable—also rose to $95m, compared to $86m at the end of 2014.

OCBC’s NPL ratio ticked up across all regions. The largest spike was recorded in Indonesia, where NPL ratio jumped to 2.3% from 0.7% in the preceding year. Bad loans in Malaysia also increased, where NPL ratio rose to 2.5% from 1.8% at the end of 2014.

Despite the NPL ratio uptick, OCBC said that the overall quality of its loan portfolio remained “sound”. The bank also said that it has comfortable allowance coverage ratios with total cumulative allowances covering 417% of unsecured NPAs and 120% of total NPAs.