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Chinese, Hong Kong and Singapore banks reduce loan loss provisions to below pre-COVID levels

Banks in most Asian markets booked lower provisions to cover potential loan losses as economies recover, which has contributed to the improved profitability in 1H 2021

February 16, 2022 | Wendy Weng
  • Singapore and Hong Kong banks were more aggressive in reducing provisions
  • Banks in Indonesia and Vietnam posted an increase in provisions
  • Provisions at Chinese, Hong Kong, and Singapore banks dropped below pre-pandemic levels

Banks made substantially higher provisions to cover potential defaults in loan books as the COVID-19 uncertainty mounted, which weighed heavily on bank earnings. In 2021, the loan loss provisions at banks in most Asian markets have shown a downward trend amid improving economic outlook, while some still took a more prudent approach to build buffers. The level of bank loan loss provisions has been affected by the COVID-19 relief measures and the economic conditions.

Overall, the Asian banking sector posted higher net profit in the first half (1H) of 2021 compared with a year earlier, bolstered by lower provisioning against bad loans. This is based on the analysis of data of 251 commercial banks and financial holding companies (banks) in seven Asian markets namely, China, Hong Kong, Indonesia, Malaysia, Singapore, Thailand, and Vietnam. On average, bank loan loss provisions in these seven markets fell by 19% in 1H 2021, based on the weighted average of growth in bank loan loss provisions across these markets. While loan loss provisions surged the most in Singapore banks in 2020, they also recorded the largest drop in provisions in 1H 2020.

Singapore and Hong Kong banks were more aggressive in reducing provisions

DBS, OCBC, and UOB reported a combined $4.7 billion in loan loss provisions in 2020, compared to $1.5 billion in 2019. After recording the sharpest increases in loan loss provisions in 2020, Singapore banks saw provisions drop the most in 1H 2021. The provisions at DBS, OCBC, and UOB fell by 95%, 72%, and 52% in 1H 2021, respectively. DBS took $66 million in loan loss provis...

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Asian Banker 500

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Chinese, Hong Kong and Singapore banks reduce loan loss provisions to below pre-COVID levels

Banks in most Asian markets booked lower provisions to cover potential loan losses as economies recover, which has contributed to the improved profitability in 1H 2021

February 16, 2022 | Wendy Weng
  • Singapore and Hong Kong banks were more aggressive in reducing provisions
  • Banks in Indonesia and Vietnam posted an increase in provisions
  • Provisions at Chinese, Hong Kong, and Singapore banks dropped below pre-pandemic levels

Banks made substantially higher provisions to cover potential defaults in loan books as the COVID-19 uncertainty mounted, which weighed heavily on bank earnings. In 2021, the loan loss provisions at banks in most Asian markets have shown a downward trend amid improving economic outlook, while some still took a more prudent approach to build buffers. The level of bank loan loss provisions has been affected by the COVID-19 relief measures and the economic conditions.

Overall, the Asian banking sector posted higher net profit in the first half (1H) of 2021 compared with a year earlier, bolstered by lower provisioning against bad loans. This is based on the analysis of data of 251 commercial banks and financial holding companies (banks) in seven Asian markets namely, China, Hong Kong, Indonesia, Malaysia, Singapore, Thailand, and Vietnam. On average, bank loan loss provisions in these seven markets fell by 19% in 1H 2021, based on the weighted average of growth in bank loan loss provisions across these markets. While loan loss provisions surged the most in Singapore banks in 2020, they also recorded the largest drop in provisions in 1H 2020.

Singapore and Hong Kong banks were more aggressive in reducing provisions

DBS, OCBC, and UOB reported a combined $4.7 billion in loan loss provisions in 2020, compared to $1.5 billion in 2019. After recording the sharpest increases in loan loss provisions in 2020, Singapore banks saw provisions drop the most in 1H 2021. The provisions at DBS, OCBC, and UOB fell by 95%, 72%, and 52% in 1H 2021, respectively. DBS took $66 million in loan loss provis...

Please login to read the complete article. If you already have an account, you can login now or subscribe/register.

Categories:

Asian Banker 500

Keywords:


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