Here’s why bad loans don’t bother OCBC’s big boss

Distressed debt levels are still extremely low.

Samuel Tsien, OCBC’s Group CEO, is not worried about the slight uptick in non-performing loans at his bank.

In the kopi-C column on SGX’s My Gateway website, Tsien said that non-performing loans (NPLs) still remain extremely low and are unlikely to hit levels seen during the Global Financial Crisis and the Asian Financial Crisis.

“We need to put this into the right context. NPLs have been extremely low by any standards. So even if (interest rates) were to rise, we need not panic as they are, in a way, normalising, and this is not unexpected. Nonetheless, I don’t expect NPLs to increase to a level of grave concern,” Tsien said.

OCBC’s customers have stronger fundamentals now than before, which would boost their ability to survive a downcycle like this, he added.

“The other factor is that in previous cycles, central banks had been less active. Now, central banks are not only more active in ensuring a sound domestic banking system, they are also coordinating with one another to ensure the country, region and economic bloc are able to withstand shocks,” he noted.