Singapore’s DBS Group Holdings posted a 9 percent decline in quarterly profit and, like rival OCBC, booked higher provisions for bad loans.
In what has become a test for Singapore’s banks long lauded for their conservative lending standards, many firms in the city state’s oilfield services industry are struggling to pay debt, hit by weak oil prices and charter rates as well as delays to projects, Reuters reports.
Net profit at DBS, Southeast Asia’s biggest bank by assets, came in at S$913 million (US$643 million) in the three months ended December, the lowest in two years, compared with S$1.0 billion a year earlier.
This was below an average forecast of S$936 million from six analysts polled by Reuters.
The bank said charges for bad loans rose 87 percent to S$462 million from S$247 million a year earlier.
DBS’s net interest margin, a key gauge of profitability, fell 13 basis points to 1.71 percent as Singapore-dollar interest rates were lower compared to a year ago.
It expects mid-single digit growth in loan and income in 2017.
In a further sign of pain in the offshore services sector, Ezra Holdings Ltd. has warned it may have to take a US$170 million writedown on a joint venture.
This week it also said that a creditor of a business owned the venture had filed a court application requesting that the JV’s subsidiary be wound up.
On Tuesday, OCBC reported an 18 percent drop in quarterly net profit to a three-year low.
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