https://www.google.com.sg/amp/s/www...ality-ocbcs-sme-loans-may-be-risk-bank?espv=1
The credit quality of Oversea-Chinese Banking Corporation’s (OCBC) loans for small- and medium-sized enterprises (SMEs) could be a risk to the bank, says Bloomberg Intelligence credit analyst, Rena Kwok.
SMEs are defined as firms with annual sales of $100 million and below.
“Default trends will have to be watched as SMEs’ loan payment in Singapore weakened further in 2Q2023 amid economic risks,” Kwok writes, noting that OCBC’s SME loans are weaker compared to its peers.
“A continued uptick in slow payments across most sectors in Singapore in 2Q2023 could signal that SMEs are facing tighter cash flows as the business environment weakens amid macro headwinds,” Kwok adds.
During the quarter, SMEs in the manufacturing and wholesale sectors reported a higher percentage of slow payments with manufacturing firms increasing by 0.68% y-o-y and 0.26% q-o-q. Slow payments from wholesale firms rose by 0.72% y-o-y and 0.12% q-o-q.
To this end, payments by manufacturing and wholesale firms, which are more impacted by external factors, may face added pressure this year, says Kwok.