DBS will have O&G woes until 2018

An estimated $500m worth of new bad loans looms over the bank.

DBS's asset quality is expected to bear the pressure and heightened credit costs due to crude oil prices and the still dismal state of the oil & gas sector.

According to UOB Kay Hian analyst Jonathan Koh, the bank has an exposure of $3b to 90 smaller offshore support firms.

"About 60% or $1.8b of these smaller accounts are deemed vulnerable, of which S$0.8b was recognised as NPLs as of June 17," the analyst said.

With this, the bank is expected to recognise another $500m worth of new non-performing loans in the second half of the year and the balance of another $500m next year.

"This would necessitate specific provisions of $250m-300m each in 2H17 and 2018," Koh said.

For the first six months of its current financial year, the bank recognised total NPLs of around $1.18b.