In a Morgan Stanley note on Wednesday seen by BT, UOB chief risk officer Chan Kok Seong was quoted as saying that Singapore banks are likely to assess the lifetime impairment of credits."Credits that are temporarily affected by Covid-19 are unlikely to move between stages, and risk-weighted asset migration will depend upon whether or not weaker credit is viewed as temporary," said Mr Chan.
Still, Citi analyst Robert Kong said Singapore banks - held to more complex accounting standards now - will face their"first real test" on how to make forward-looking provisions for a broad macro downturn, and for large corporates that are not the direct target of these financial support measures but nonetheless may have run into financial difficulties.
Just looking at the consumer lending book here, at a worst-case scenario, Singapore banks may see a 14-18 per cent hit to their revenue in 2020, following the latest virus relief measures for consumers, he said. Eric Tham, UOB head of group commercial banking, further told BT that"a significant number" of SME customers would likely tap these various relief measures to fulfil their"acute needs" at this time. OCBC's Mr Goh said more SMEs across the board will look to apply for relief.
A DBS spokesman told BT there has been a"healthy" take-up of its SME property loan moratorium and the extension of import facilities of up to 60 days. Earlier in March, UOB and OCBC extended their relief measures in Malaysia, including moratoriums, to their corporate and retail customers.
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