(Nov 13): It has been an interesting week of results for our Singapore Market Portfolio, with two of our larger-cap holdings hitting new highs after reporting their 3QFY2017 numbers. Meanwhile, another one of our holdings benefited from an offer.
Early in the morning of Nov 6, DBS Group Holdings said its earnings for 3QFY2017 fell 25% y-o-y to $802 million, or 29.6% below the Bloomberg consensus of $1.14 billion. DBS attributed the weak earnings to a spike in net allowances, which rose to $815 million in 3QFY2017 from $304 million in 2QFY2017.
The issue was the oil and gas (O&G) support services sector, to which DBS had loan exposure of $5.3 billion as at Sept 30. Non-performing assets related to this sector totalled $3 billion, for which cumulative specific allowances of $1.5 billion have been made. All in, DBS had NPAs of $6.1 billion as at Sept 30, up 26% q-o-q. Its non-performing loan ratio stood at 1.7% at the end of the quarter, up from 1.5% at the end of the previous quarter.