Here's the real deal about the spike in banks' non-performing assets

NPAs spiked in Q2 but still below regional average.

Singapore's largest banks struggled with a sharp increase in non-performing assets in the second quarter, driven mostly by delinquent debtors in neighboring Southeast Asian countries.

Data from SGX show that as at 30 June 2015, DBS’s total non-performing assets (NPAs) rose 5.8% year-over-year, but fell 0.7% quarter-on-quarter.

Total NPAs at OCBC jumped 23% from a year earlier and 8.3% versus the previous quarter, while UOB’s NPLs increased 8.4% year-on-year and 2.5% quarter-on-quarter.

By industry, NPAs in the general commerce segment posted the biggest year-over-year increase in the June 2015 quarter, followed by NPAs from professional and private individuals, excluding housing loans. NPLs in the manufacturing sector also registered a year-on-year increase but fell quarter-on-quarter.

In terms of non-performing loans (NPLs), both OCBC and UOB registered the highest NPLs by geography from Malaysia, Indonesia and Thailand.

DBS saw its NPLs from Singapore and greater China increasing year-over-year, while South and Southeast Asia posted the highest NPL ratio among its geographies.

The NPL levels for some of Southeast Asia’s largest banks are also higher, according to data tracked by Bloomberg. Ten Malaysian banks with a market capitalisation of US$1 billion or more chalked up an average NPL ratio of 1.47%, while Indonesia’s 10 biggest listed banks averaged an NPL ratio of 1.48%. Thailand’s six biggest and Philippines’ nine largest banks averaged NPL ratios of 2.75% and 1.5% respectively.

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