DPM Lee's Reply to Parliamentary Questions on Non-Performing Loans of Local Banks in Singapore

Issues Raised in Parliament

ANSWER TO PARLIAMENTARY QUESTION ON:
DPM Lee's Reply to Parliamentary Questions on Non-Performing Loans of Local Banks in Singapore

For Parliament Sitting on 12 Oct 98


Question:
To ask the Deputy Prime Minister if he will give an update on the latest position of the exposure of banks in Singapore as a result of the further decline in the property value and economic conditions in neighbouring countries.

To ask the Deputy Prime Minister what is the status of non-domestic non-performing loans (i) in absolute terms; (ii) as a percentage of non-domestic loans; and (iii) as a percentage of total loans; and whether recent capital control measures in Malaysia and further deterioration in regional economic conditions will raise the level of non-performing loans.

Answer:
1 As at 31 Aug 98, the 6 local banking groups had exposure of S$37.3bn 1 (15% of their total assets) to Malaysia, Indonesia, Thailand, Korea and the Philippines. Excluding the assets of Thai Danu Bank acquired by DBS in March 1998, the total exposure of the 6 local banking groups was S$31.3bn. This is a 16% drop from the December 1997 figure.

2 The non-performing loans [NPLs] of the 6 local banking groups to these 5 countries amounted to 17% (S$5.9bn) of their loans to these countries as at 31 Aug 98. As a percentage of the local banks' total loans, the ratio was 2.7%.

3 Including domestic loans and other global loans, the total NPLs of the local banks amounted to 6.1% as at 31 Aug 98.

4 In view of the public's and market's interest in the level of non-performing loans of the local banks, MAS will release such data henceforth on a quarterly basis.

5 The Singapore banks' NPLs in the region are likely to rise. The banks have set aside substantial provisions for this reason, and are likely to make further provisions so as to maintain their conservative stance towards possible loan losses and to preserve market confidence. The level of NPLs, present or projected, does not threaten the financial health of any of the local banks.


1 Of this, S$5.5bn comprised loans to and investments in, the local banks' banking subsidiaries and branches in the 5 regional countries.

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Last Modified on 26/11/2016