SHAH ALAM: Malayan Banking Bhd (Maybank), the country’s largest bank by assets, said it is “cautious, but not overly concerned” over its exposure to distressed Singapore oilfield services firm Swiber Holdings Ltd, which is operating under court supervision following default on its loans and missed coupon payments.
Maybank group president and chief executive officer Datuk Abdul Farid Alias declined to say whether the bank has made necessary provision for impairment in its accounts.
“Times are tough not just for oil and gas (O&G) players, but for businesses across many sectors. I don’t comment on specific customers, but what I can say for now is that Maybank will continue to monitor each and every loan dished out to consumers and corporate companies. The bank will continuously ensure that its credit quality and monitoring system remain robust,” he told reporters after launching Maybank’s partnership with McDonald’s Malaysia, which will allow the latter’s customers to pay for meals using its debit card.
As for impairment, Abdul Farid said some companies in various sectors and industries may restructure their financial position to cope with the slowing economic pace. In the event of [a] default, “Maybank will make [the] necessary adjustments in its financial book”, he added.
“So will all other banks. But for now, we are cautious but not overly concerned as we ride and explore on other opportunities for growth,” he said, noting that the bank’s second-quarter financial results will be announced on Aug 25.
Singapore’s largest bank DBS Holdings Ltd, which has a S$721 million (RM2.15 billion) credit exposure to Swiber Holdings, reportedly saw its non-performing loans shoot up to 8.7% for the first six months ended June 30, 2016 from 1.3% at end-2015, and said it expects to recover only half of its total exposure to the offshore company.
In a note to clients dated Aug 1, CIMB Research said Maybank’s exposure to Swiber Holdings is minimal and related to a S$150 million five-year sukuk issued in August 2013, which comes with a fixed periodic distribution rate of 6.5%.
“Assuming that Maybank provides for the full sum of its exposure — in the form of impairment for the investments — we estimate this would lower net profit for the financial year ending Dec 31, 2016 by about 5%,” the research house said, estimating that Maybank has exposures totalling RM5.1 billion in Singapore’s O&G and other related sectors, which account for 1.2% of its total loan portfolios.