S'pore bank loan quality 'satisfactory'

S'pore bank loan quality 'satisfactory'

SINGAPORE (Reuters): The Monetary Authority of Singapore (MAS)
said yesterday the quality of local banks' loans remains
satisfactory.

An MAS statement said Singapore banks' non-performing loans
(NPLs) or average classified loans constitute less than three
percent of their total loan portfolios.

An MAS official told Reuters there was some confusion in the
market regarding a media report that NPLs were "about three
percent".

The MAS statement said Singapore banks have made adequate
provision for their classified loans. "In addition they have
general provisions of at least one percent of their loan
portfolio to cushion unexpected losses".

The media report had caused some selling of the Singapore
dollar early in Sydney trading bringing the local currency to a
42-month low of 1.5740 in thin trading.

The Sing rebounded later in Asian trading on the back of talk
the MAS was checking rates.

Banking analysts said the media report was misleading as it
implied NPLs for Singapore banks are at three percent.

One banking analyst said: "The truth is that it is probably
somewhere between two and three but it is not three percent."

She said market estimates of NPLs for Singapore banks have
historically been about one and a half percent but it could have
crept up over the last 10 months given the slowdown in the
region. "It is only to be expected," she said.

"I don't think we should be too worried about Singapore banks
as they have very strong balance sheets which are unparalleled by
banks in the region," Sim Mui Tan, analyst with Merril Lynch,
said.

Bank stocks were mostly flat at noon in line with the
lackluster stock market.

DBS foreign was up 10 cents to S$15.80, OCBC foreign was
unchanged at S$10, UOB foreign was down 20 cents to S$10.50 and
OUB foreign was off 10 cents to S$6.25.