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.