Local banks suffered delinquent shipping loans in Q1

The credit outlook is dimming.

Singapore banks were hit with a number of non-performing shipping loans in the first quarter, but analysts note that overall asset quality remained robust.

“Other than weakness in specific accounts especially in the shipping industry, asset quality was steady. Singapore housing NPL ratios stayed low. While the credit outlook is dimming, we believe risks will be contained by banks’ proactive NPL classification,” stated Maybank Kim Eng analyst Ng Wee Siang.

In particular, UOB reported NPLs from two large shipping accounts. However, Ng said that UOB’s outsized general-provision ratio was raised preemptively in the past two years to counter potential slippages.

UOB Kay Hian analyst Jonathan Kho noted that NPLs increased 3-5% quarter-on-quarter for the banks but NPL ratios have remained largely unchanged.

“Banks have heightened their monitoring on asset quality but we expect asset quality to remain resilient,” Kho noted.