Singapore's banking giants brace for higher bad loan charges amidst O&G fiasco

All three are expected to reflect declining earnings for Q3.

With a struggling oil and gas industry and weaker interest margins, Singapore's three largest banks -- DBS, OCBC, UOB -- are poised to report higher impairment charges to the beleaguered sector.

For starters, Goldman Sachs Group Inc. said DBS is expected to lead the increase in impairment charges of $255m for the period. This is a 43% jump from a year earlier.

With this, it would have to report its second consecutive quarterly decline with OCBC. UOB will also post a 10% drop in earnings.

“Dark clouds are still hanging over the oil and gas sector, which is going to add a negative feel to the banks,” said Jeremy Teong, a banking analyst at Phillip Securities in Singapore. “Net interest margin weakness will become pronounced given this year’s drop in Sibor.”

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