The expected mix of tired loan growth and plumper provisions for specific bad debts has come to pass in Singapore banks’ first-quarter results. There is some sense, though, that credit quality worries have been allayed – for this season, at least.

“Our impression of this results season is that credit quality concerns might be overblown for now. The bigger challenge is in revenue generation,” said Kenneth Ng, head of equity research at CIMB Research.

Indeed, the banking trio posted lower earnings from a year ago, reflecting market volatility and weak lending on feeble trade flows. In last month’s macroeconomic review, Singapore’s central bank noted that the impact of weaker external demand broadened in early 2016, reflected by a step-down in exports across most regional economies. Non-performing loan (NPL) ratios rose in all three banks.

To be clear, DBS profit is down at S$1.2 billion, but in the absence of a one-off gain from a property investment a year ago. Excluding the one-time gain of about S$136 million in 2015, DBS’s earnings again hit a record, 6 per cent higher.

And in closing off the earnings session for the banks on Tuesday, DBS cracked analysts’ expectations with a margin boost on its large deposit base, and a surprise boost from fee income, which hit a new high. The new bancassurance fees from its deal with Manulife propped up wealth management contributions. Fee income from its peers, by comparison, was weaker.

Trade loans at DBS contracted sharply by 23 per cent on the back of structural changes in China trade – a big worry among analysts – but the bank’s pivot to grow housing loans helped to cushion the collapse in the China tradebook. All in, lending at DBS was flat. Net interest margin (NIM) gained 16 basis points to 1.85 per cent on higher Singapore-dollar interest rates – now the strongest margin of the lot. DBS has the largest deposit base in Singapore.

CIMB’s Mr Ng also pointed out that DBS’s return on equity stood at 11.9 per cent, which runs ahead of its peers’ roughly 10 per cent. “More fee income, less lending seem to deliver improvements in all the right metrics,” he added.

OCBC found less favour from its bancassurance business. Singapore’s second-largest bank was bruised by poorer contributions from Great Eastern Holdings, on the back of unrealised mark-to-market losses on the insurer’s bond and equity portfolio.

OCBC was also hurt by bad debt allowances, which more than doubled to S$167 million, and warned of deeper stress from oil-related exposure. Overall, its oil-and-gas NPLs totalled S$897 million, or an NPL rate of 0.43 per cent – worsening from 0.39 per cent a quarter ago. To be sure, of the total amount, about 60 per cent of such lending is still being actively serviced.

That OCBC set aside more allowances for specific bad loans – mainly from its oil-and-gas (O&G) exposure – is in line with the industry.

But OCBC also raised its general allowances nearly three-fold – unlike its two peers. DBS did not make new general allowances, saying it had a “healthy level” of S$3.2 billion in general allowances built up. UOB wrote back general allowances on debts, which pulled its total allowances about 30 per cent lower from a year ago to S$117 million.

Credit Suisse analyst Sanjay Jain said in his report that UOB’s writeback was from excess set aside during the global financial crisis for the debt portfolio, which UOB thinks it no longer needs. The same brokerage noted earlier and separately that OCBC has had a lighter provisioning against bad loans than its two local competitors over the last five years.

Correspondingly, OCBC’s net profit fell 14 per cent to S$856 million from a year ago, missing forecasts.

“Despite the earnings miss, we believe the asset quality held up reasonably well,” said Daiwa analyst David Lum, noting that most of the negativity came from weaker-than-expected fee income that includes wealth management, as well as life assurance.

UOB, the first bank to report its results, posted a 4.4 per cent fall in earnings for the first quarter to S$766 million – a result that was in line with market expectations. Costs crept up against flat income growth and higher tax expenses. Bad loans stayed concentrated in the oil-related segment; the bank also added new NPLs mainly from commodity exposures in Canada and Australia relating to the mining industry, analysts said.

While fee income was weak, analysts were stirred by the smaller- than-expected allowances set aside by UOB.

“We believe the reassuring asset quality bodes well for the rest of 2016,” said Daiwa’s Mr Lum.

DBS shares rose 7 cents to S$15.35 on Tuesday. By contrast, OCBC shares fell 17 cents to S$8.60, and UOB shares dropped 20 cents to S$18.40.

This article was first published on May 4, 2016.
Get The Business Times for more stories.

SINGAPORE – Ms Lindy Ong had just woken up when she heard the sound of items dropping from the unit above hers. Then, the housewife, who is in her 40s, smelt something burning.

“When I went to the balcony, I wondered why there was smoke. I looked up and saw that it was coming out continuously from my neighbour’s home,” said Ms Ong, who saw Singapore Civil Defence Force (SCDF) personnel at the scene.

She grabbed her mobile phone and left her house, knocking on her neighbours’ doors before she made her way to the ground floor.

The Housing Board flat above hers had caught fire on Tuesday (May 3).

The SCDF said it was alerted to the incident on the 11th floor of Block 215 in Marsiling Lane 3 at about 11.25am.

About 20 residents were evacuated from the block, and there were no reported injuries.

The occupants of the flat were not home when the fire took place, and they were surveying the damage when The Straits Times visited in the afternoon. The entire living room of the flat in which the fire had broken out had been left charred.

The flat’s occupants said they did not know of the fire’s cause, but declined further comment.

The SCDF said it dispatched two fire engines, one red rhino, two fire bikes, one support vehicle and one ambulance to the scene. Its personnel had to force entry through the unit’s front door to put out the blaze with a water jet.

Ms Ong said when she reached the ground floor, a crowd had gathered, watching as the blaze was quickly put out. The window of the affected unit had shattered from the heat, she said, and flames were raging out of the flat.

Ms Sum Balan, whose father lives directly above the affected unit, was there to pick him up to live with her for a few days.

He is worried, said Ms Sum, who is in her 40s and works in the IT industry, because the floor in his living room was still hot hours after the fire was put out. There is no visible damage in his house.

Ms Sharifa Shah, an immediate neighbour to the affected unit, said she thought that someone was praying when she smelt smoke after 11am. But it soon became pungent and she realised that something was amiss, and called the police.

“My first thought was to inform everybody that there was a fire,” said the 65-year-old part-timer in the security industry, who knocked on doors on her way down from the 11th floor.

Residents waited for around 45 minutes before they returned to their homes.

Click on thumbnail to view photos. Source: 

The New Paper, The Straits Times, Mr Saifullah Khalid

This article was first published on May 3, 2016.
Get a copy of The Straits Times or go to straitstimes.com for more stories.

Months after deporting 26 “radicalised” Bangladeshi workers, Singapore arrested eight other Bangladeshis who the authorities say were members of a group called Islamic State in Bangladesh (ISB).

Besides, another five Bangladeshis were deported for suspected militancy link. They were arrested from Banasree area in Dhaka yesterday.

The five were investigated as part of crackdown on the so-called ISB, and it was found that “they possessed and/or proliferated jihadi-related materials, or supported the use of armed violence in pursuit of a religious cause”.

However, their involvement in ISB was not found, according to Singapore’s home affairs ministry.

Briefing the media yesterday, Additional DMP Commissioner Monirul Islam said some of the five arrestees were found in possession of Mufti Jasim Uddin Rahmani’s books that are known for preaching militancy.

According to investigators, Rahmani is the spiritual leader of banned local militant outfit Ansarullah Bangla Team.

Sent back on April 29, the five have been identified as Mizanur Rahman alias Ghalib Hasan, 38, of Kasba upazila of Brahmanbaria, Md Rana Mia Pilot, 29, of Gabtali upazila of Bogra, Md Alamgir Hossain, 31, of Gangni upazila of Meherpur, Md Tanjimul Islam, 24, of Matlab upazila of Chandpur, and Masud Rana alias Sontu Khan, 31 Bera upazila of Pabna.

While the eight others were detained on April 26. Singapore’s home ministry website said they were aged 26 to 34 and planning to stage terror attacks in Bangladesh.

They have been identified as Rahman Mizanur, 31, Shariful Islam, 27, Mamun Leakot Ali, 29, Md Jabath Kysar Haje Norul Islam Sowdagar, 30, Miah Rubel, 26, Sohag Ibrahim, 27, Sohel Hawlader Ismail Hawlader, 29, and Zaman Daulat, 34.

Members of the so-called ISB, formed in Singapore in March by Rahman Mizanur, had identified several possible targets in Bangladesh, which include lawmakers, ministers, and media personnel, according to a kill-list released in the website.

In a document titled “We Need for Jihad Fight”, which was recovered from Rahman, the group also listed military targets such as the Border Guard Bangladesh (BGB), the air and navy forces and the Rapid Action Battalion (Rab).

“He also possessed documents on weapons and bomb making, as well as a significant amount of ISIS and al-Qaeda radical material which he used to recruit ISB members in Singapore from January 2016,” it says.

Asked about the militancy links of the eight, the additional DMP commissioner only said the Singapore authorities were interrogating them.

He, however, said the laws of the two countries are different. “If what is considered radicalism in Singapore is to be considered the same in Bangladesh, half the population would have to be in jail.”

Of the eight, Rahman Mizanur was an “S-Pass” holder. According to Singapore’s manpower ministry website, the “S-Pass” allows mid-level skilled staff to work in Singapore. Candidates need to earn at least $2,200 a month and have the relevant qualifications and work experience.

The other seven were “Work Permit” holders employed in the local construction and marine industries. These permits allow semi-skilled foreign workers from approved source countries to work in certain sectors.

The ministry said the eight men held in April had intended to join the Islamic State (IS or ISIS) militant group.

But after realising it would be too hard to travel to Syria, they instead planned to return to Bangladesh to overthrow the government and had “identified several possible attack targets”.

According to the ISB members, at least two more members of the group are in Bangladesh, said the ministry.

“The ISB members planned to recruit other Bangladeshi nationals working in Singapore to grow the group. The group had also raised monies to purchase firearms to carry out their planned terror attacks in Bangladesh. The money has since been seized,” read the ministry statement.

“Several of those detained may be liable for prosecution for terrorism financing.”

Rahman “admitted” to investigators in Singapore that he would carry out an attack anywhere if he was instructed by ISIS to do so, it said.

“ISB poses a security concern to Singapore because of its support for ISIS and its readiness to resort to the use of violence overseas.”

Meanwhile, Bangladesh High Commissioner to Singapore Mahbub Uz Zaman confirmed that the eight Bangladeshi nationals were detained for their alleged involvement in militancy.

He told The Daily Star that the suspects were detained on April 26 from their respective workplaces in Singapore as part of an ongoing investigation to identify the Bangladeshis who were suspected of plotting attacks on different professionals at home.

“The investigation is going on. We are closely working with the Singaporean authorities as our government has taken the security issue seriously,” the envoy told this correspondent over the phone yesterday afternoon.

The detainees were being quizzed by the Singaporean authorities, he added.

Earlier, Singapore authorities arrested 27 Bangladeshi construction workers between November 16 and December 1 last year for “supporting armed jihad ideology of terrorist groups such as Islamic State (IS) and al-Qaeda”.

Of them, 26 were deported to Bangladesh and local police arrested 14 of them on December 21 after police found their link with militancy.

DB officials then said the 26 deportees had no links to Islamic State or al-Qaeda. But the 14 had links with banned local outfit Ansarullah Bangla Team (ABT) and its detained spiritual leader Jasim Uddin Rahmani. A case was filed against them under Anti-Terrorism Act of Bangladesh.

“After investigation, those who were not found guilty under Bangladeshi law were freed, but they are kept under surveillance,” Additional DMP Commissioner Monirul Islam said back then.

The 14 are in jail and police are yet to submit any charge-sheet against them.

DMP PRESS BRIEFING

Monirul, who is the chief of Counterterrorism and Transnational Crime Unit of Dhaka Metropolitan Police (DMP), said they arrested the five during a raid at Banasree area of the capital around 11:30am yesterday.

They were deported on April 29 and were under surveillance. After filing of a case against them, they would be produced before a court with 10-day remand prayer for each of them.

The five went to Singapore between 2007 and 2011 as skilled and unskilled labourers.

Singaporean authorities alleged that these Bangladeshis were involved in terror recruitment and they used to seek financing and assistance in militancy, Monirul said during the briefing at the DMP Media Centre.

In primary investigation, it appeared that they became radicalised during their stay in Singapore and they didn’t have any militant connection before leaving the country as workers, he said.

The official added that police are now verifying the allegations made by Singapore authorities.