UOB’s credit costs in 1QFY2020 was just 36 basis points compared with OCBC which announced 86bps of credit costs. DBS’s total credit costs shot up to 1.08% compared to its specific provisions of 20bps in FY219, when it had a write-back of $58 million in general provisioning.
SINGAPORE (May 15): The three local banks have taken slightly different approaches to pro-visioning and dividends. Credit costs are allowances or provisioning for both impaired and non-impaired loans. The relationship between how these allowances are calculated and the economy, also affects risk-weighted assets (RWA). Allowances affect earnings which is part of the numerator in the common equity tier 1 (CET1) ratio, while RWA is the denominator.
First the provisioning. United Overseas Bank’s (UOB) general provisions of $61 million in 1Q2020 looks very low compared to Oversea-Chinese Banking Corp and DBS Group Holdings.
