However, Kwok sees improvements happening in the medium-term. To this end, she expects the banks to focus on targeted growth in the greater China region over the next one to two years by boosting their lending to key growth areas. The banks may also capitalise on the investment and trade trends between the region and Asean, as well as lift their transaction-banking and wealth-management exposure, says Kwok.
Singapore banks are unlikely to discard their strategies for the greater China region as the area is “key” for medium-term growth, says Bloomberg Intelligence credit analyst Rena Kwok. The region spans mainland China, Hong Kong, Macau and Taiwan.
Despite the region’s weak risk-return underwriting and uneven economic recovery, risks for Singapore’s banks are limited, notes Kwok in her Oct 2 report. “In percentage terms the greater China region contributes more to bad loans than profits, but systemic risk is low with nonperforming loan (NPL) ratios capped at 2% in 1HFY2024, buffered by high provisions and capital,” she adds.
