Parliamentary Replies
Published Date: 06 July 1999

DPM Lee's Reply to Parliamentary Question on Non-Performing Loans of Local Banks

Issues Raised in Parliament

Non-Performing Loans of Local Banks

For Parliament Sitting on 06 Jul 1999

To ask the Deputy Prime Minister if he will give an update on levels of non-performing loans, both local and foreign, at Singapore banks.

1. MAS has been making these figures available on its website on a quarterly basis (please see table). As at 31 Mar 99, the 5 local banking groups had a gross exposure of S$34.7bn (12.5% of their total assets) to Malaysia, Indonesia, Thailand, Korea and the Philippines. This was a marginal increase over Dec 98 (S$34.2 bn), but a decrease in exposure from Sep 98 (S$ 35.8 bn).

2. The non-performing loans [NPLs] of the 5 local banking groups to these 5 countries amounted to 24.3% of their loans to these countries as at 31 Mar 99. This figure has gone up, compared with 23.3% in Dec 98 and 17.8% in Sep 98. Including domestic loans and other global loans, the total NPLs of the local banks amounted to 8.0% as at 31 Mar 99.

3. NPL levels are high as local banks only write off the NPLs when all avenues to recover the loans have been exhausted. Restructured loans are classified as NPLs by local banks. Loans which are adequately collateralised and that are not in arrears in interest or principal repayments are also classified as non-performing if they have weak financials. This has resulted in local banks reflecting a higher NPL figure than is the actual case.

4. Local banks have set aside substantial provisions, amounting to 72% of their regional bank and non-bank NPLs as at 31 Dec 98. These provisions and the collateral backing the regional NPLs in aggregate exceed the regional NPLs outstanding. The level of NPLs does not threaten the financial health of any of the local banks.