Two more Singapore banks have made huge provisions against bad debts as a result of the regional financial crisis. Oversea-Chinese Banking Corp, Singapore's second-largest bank, has increased its provisions for possible losses on loans by 245 per cent to S$569 million (about HK$2.67 billion), contributing to an 18 per cent drop in annual net profits for the year to December 31 to $581 million. Overseas Union Bank, the republic's fourth-largest bank, has raised its provisions by 280 per cent to $316 million, also resulting in an 18 per cent fall in last year's profit to $255 million after extraordinaries. Earlier this week Development Bank of Singapore, Keppel Bank and Tat Lee Bank also announced big hits to their respective bottom lines, with Tat Lee declaring the first loss by a Singapore bank in recent history. Despite hard times, both Oversea-Chinese and Overseas Union's operating profits before provisioning were up last year, 22 per cent and 30 per cent respectively, indicating continuing growth in their core businesses. However, as with the other banks, their lending exposure to Malaysia, Indonesia, Thailand, South Korea and the Philippines dragged their overall results down. Oversea-Chinese said it had $11.8 billion, or 20 per cent of its total global assets in these countries as of December 31. The bank put its total exposure to the five at $5.9 billion, or 15.3 per cent of its assets. For both banks, the bulk of their regional loan exposure was to Malaysia where they operate domestic banking subsidiaries, lending out primarily onshore in ringgit. Elsewhere in the region, Oversea-Chinese declared a $1.2 billion loan exposure to Indonesia, representing 2.1 per cent of its global assets. Of this, $800 million was in the form of non-bank loans. Its loan exposure to Malaysia was $7.2 billion, Thailand $800 million, South Korea $400 million and the Philippines $60 million. Overseas Union said its loan exposure to Indonesia was $334 million, of which $180 million was secured against Singapore assets. Its loan exposure to Malaysia was $4.3 billion, Thailand $628 million, South Korea $323 million and the Philippines $15.4 million. Asked whether Overseas Union may need to make further provisions this year, company chairman Peter Seah said: 'The situation in the region is very difficult to read, so it is very difficult to make a call. 'However, unless the situation deteriorates very badly, the need to have a lot more further provisioning would not be necessary.'
