Singapore’s banks are an excellent window of credit metrics in both China and Hong Kong
Financials
DBS in Hong Kong shows an 8x rise in credit costs in recent periods. UOB’s credit costs in Greater China move from reversals to charges in the past two interim periods Y/Y. Even while OCBC shows declines in NPLs in all regions, it boosted its NPL coverage dramatically over the past year. Yields on financial assets are far lower at DBS than peers and the differential has worsened, which can mean worsening relative asset quality. Over the past several years OCBC has hardly expanded its financial assets, unlike peers, which can mean less seasoning risk. Long-term credit cost data does not favour DBS, where there can be a more volatile delta than peers in FY24 and perhaps in FY25.
Edition: 181
- 08 March, 2024