Chart of the day: Banks under threat delinquent ASEAN loans rise

Only DBS will be unscathed.

Delinquent Indonesian and Malaysian loans are on the rise for UOB and OCBC, as this chart from Credit Suisse shows.

OCBC’s Malaysia non-performing loans (NPLs) rose 10% on a quarter-on-quarter basis, while Indonesian NPLS surged by a staggering 139% quarter-on-quarter.

UOB’s overall NPLs rose 2.5% quarter-on-quarter, but the overall ratio remained stable. The group’s Malaysia NPLs increased was due to the pro-active classification of a collateralised performing account.

“UOB and OCBC’s performance were overshadowed by concerns over ASEAN asset quality. While [their] managements appear confident about the resilience of their books, investors are unlikely to give them the benefit of doubt so soon,” said Credit Suisse.

The report added that deteriorating macro conditions in ASEAN and a potentially delayed US rate lift-off could mean a more challenging second half.

“UOB and OCBC are likely to face some near-term pressure from weaker ASEAN NIMs. Key focus on ASEAN asset quality performance. Likely to determine earnings trajectory and investor sentiment over the next few quarters,” the report said.