UOB is the sore loser in Singapore banks’ bad loans tally

O&G troubles pulled non-performing loan ratio to new highs.

Over the last two weeks, the three banking big-leagues, UOB, DBS and OCBC, have reported a higher non-performing loan (NPL) average ratio of 1.2% for 2Q16.

In a report, Moody's Investors Service noted that OCBC and UOB's NPLs have risen to new highs and are likely due to higher non-performing assets from offshore marine services companies, which in its view is the "riskiest" part of the oil and gas industry.

Among the three banks, UOB reported the highest NPL ratio of 1.4%. Both DBS and OCBC registered a 1.1% NPL ratio.

The report underscored that the funds banks had set aside to cover bad loans in the sector may not be ample.

Meanwhile, a report from SGX My Gateway quoted DBS CEO Piyush Gupta saying one-third of its oil services portfolio has weakness, while its total oil and gas (O&G) exposure stands at $23b.

"The bank said its exposure to Swiber amounts to more than S$700 million, and it expects to recover about half its total exposure," the report said.

Gupta maintained optimism over the issue, noting that DBS's total NPL ratio is unlikely to exceed 1.4%.

Meanwhile, OCBC CEO Samuel Tsien posed a different take, pointing out that the pressue O&G sector remains under.

Tsien said bad debt issues may continue to hover for another two quarters.