DBS’ bad debts for transport sector creep up to 2.1% in 2Q16

Analysts are worried if DBS’ provisions are enough to offset this.

Still bearing an unrelenting drag from its Swiber exposure, DBS Group Holdings’ bad debts for the transport sector inched up to 2.1% against 1.1% last quarter.

Maybank Kim Eng revealed that this includes non-performing loans from O&G support services largely from Swiber. Of its steep $23 billion O&G exposure, 1-2% are deemed uncollectible.

DBS provisions may not be enough to cover future losses as it slipped to 113% this quarter from 134% in 1Q16, said Maybank Kim Eng.

“Despite a write-back in general provision of $228 million in 2Q16, provisions still may not suffice. We raised our FY16-18E credit costs assumptions from 30-36bps to 39-44bps,” it added.