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Aberdeen Standard upbeat on Singapore banks, warns on DBS provisions

Reuters  |  SINGAPORE 

By Anshuman Daga and Jack Kim

(Reuters) - Aberdeen said it likes banks due to their strong balance sheets and quest for new growth drivers but warned that the management of top lender DBS risks losing credibility if it takes any more big provisions for and gas loans.

Last week, DBS, Southeast Asia's biggest bank, reported an unexpected slide in its quarterly profit, which fell 23 percent as the bank nearly doubled provisions for loans to the and gas sector.

During its results conference, DBS CEO Piyush Gupta said the bank had taken the opportunity to accelerate booking the provisions.

The lender had taken provisions in some earlier quarters too.

"They have had a few rounds of kitchen sinking, so I'm not sure how long," Christopher Wong, a senior manager at Aberdeen, a major investor in banks, said at the Global 2018 Outlook on Tuesday.

Wong said he hoped that this was the last major provisioning under Gupta "because if not his credibility will be on the line".

Wong, who is part of the fund firm's Asian equities team, helps run the Aberdeen Equity fund, which had assets of S$797 million ($586 million) as of end-September and is the biggest Singapore-focused stock fund, according to Thomson Lipper.

Oversea-Chinese Banking Corp and DBS were the top two holdings of the Aberdeen Equity fund, with nearly half of the fund's assets allocated to the financial sector, as of end-September.

Wong, though, said that Aberdeen is comfortable with its stakes in banks.

"The balance sheet is rock solid, they've been beefing up risk management, the asset quality is under control and provisioning is good," he said.

($1 = 1.3607 dollars)

(Reporting by Anshuman Daga and Jack Kim; Editing by Muralikumar Anantharaman)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Tue, November 14 2017. 17:52 IST