ធនាគារសិង្ហបុរីបង្កើនភាគហ៊ុននៅប្រទេសចិនរបស់ពួកគេចំពេលមានវិបត្តិ Evergrande

 ASEAN's largest lenders tap economic powerhouse on path to COVID recovery

Singapore's largest banks are raising their stakes in the Chinese market, even as fears linger of a wider economic fallout from the woes of China Evergrande, the world's most indebted property developer.

DBS Group Holdings, Oversea-Chinese Banking Corp. and United Overseas Bank -- some of the biggest lenders in the 10-member Association of Southeast Asian Nations -- this week reported figures that showed surging profit and increased lending to clients in China.

On Friday, DBS announced a net profit of 1.7 billion Singapore dollars ($1.2 billion) for the three months to September, up 31% from a year ago, as the lender showed signs of continued recovery from the COVID-19 pandemic.

Its non-trade corporate loans increased SG$5 billion during the quarter, with growth led by drawdowns in Singapore and greater China. Operating profit in its Hong Kong unit was up 22% before pricing in allowances for nonperforming assets.

DBS in September received approval from the China Securities Regulatory Commission to establish a joint venture securities company that will engage in brokerage, securities investment consulting, securities underwriting and sponsorship, as well as proprietary trading services.

The bank's chief executive, Piyush Gupta, said during a results briefing on Friday that the China unit has commenced operations, with two deals to date.

"Our portfolio is very clean and very solid," he said of DBS' activities in the Chinese market. "We do a lot of stuff with the largest state-owned enterprises, many of which have continued to grow quite nicely."

The bank, which is Southeast Asia's largest, announced in April that it had obtained approval from regulators to take a 13% stake in Shenzhen Rural Commercial Bank Corporation, becoming its largest shareholder and securing representation on its board of directors.

DBS and its peers look to China to help lift earnings as they carve out a recovery path from the pandemic, but scrutiny over the risks of exposure to the country has risen due to the Evergrande crisis.

The Chinese real estate company has flirted with default after missing a series of bond interest payments, showing in a recent filing that it has debts of 240 billion yuan ($37.5 billion) due over the next year.

Evergrande's troubles and missed payments by smaller rivals have sparked fears of contagion across the $50 trillion Chinese financial system in recent weeks.

China's economic growth also continued to slow in the third quarter, as gross domestic product came in at 4.9%. Yet Singapore's lenders are not flinching, even as weakness in the Chinese property sector puts the health of the wider economy at risk.

On Wednesday, OCBC reported a net profit of SG$1.22 billion for the three months ending September, up 19% from the SG$1.03 billion gained in the same period a year ago. Like DBS, it continued its COVID recovery from the previous quarter.

Greater China made up 23% of OCBC's operating profit during the period, up from 22% from a year ago, while the contribution from its home market of Singapore fell to 46% from 50%.

OCBC's Chinese loan book has grown in the last few consecutive quarters, edging up from SG$67 billion in January-March to SG$70 billion in April-June, and SG$73 billion from the three months through September.

Greater China and Singapore are the two top markets by geography for OCBC in terms of lending activity.

The bank on Wednesday highlighted that total China onshore and offshore loans made up about 11% of its total lending -- largely to top state-owned enterprises, large corporates and network clients.

Mainland China onshore exposure stood at 2% of the lender's loans, of which less than a third were corporate real estate loans.

"We are a foreign bank that aims to connect China companies with the rest of the world, and so our total exposure outside is always higher than the exposure onshore," OCBC CEO Helen Wong said during a media briefing on Wednesday.

The lender intends for its wealth management portfolio serving greater China to become an important driver for growth. It has a Hong Kong unit -- OCBC Wing Hang Bank -- which recently linked up with China's Ping An Bank to serve Chinese clients.

"We have continued to build our coverage team in Hong Kong, but also we are looking to increase our bank's strength in China inside our Wing Hang China business, where we will be able to serve individuals," Wong said.

While OCBC and its domestic peers continue to court the Chinese market, Evergrande's troubles have prompted questions over the extent of the lenders' exposures to the country.

According to Tharman Shanmugaratnam, the minister in charge of the Monetary Authority of Singapore, the city-state's central bank and financial regulator, Singapore's banking system does not have large exposure to China's real estate sector.

Direct exposures are less than 1% of nonbank loans, the minister said in a recent update to parliament. Yet authorities are keeping close watch on any indirect or spillover effects on the Singapore economy arising from developments in China, Tharman said.

For UOB, its earnings report released on Wednesday showed a gross loan growth of 9% year on year, mainly from corporate lending from the Singapore and greater China markets.

Gross loans provided to China rose from SG$48 billion in the April-June quarter to SG$50 billion in the following three months.

The bank booked a 57% year-on-year increase in net profit to SG$1.05 billion for its third quarter on the back of the loan growth it captured, up from SG$668 million the year before.

After Singapore at 52%, greater China formed the next biggest piece in its loan portfolio by region, at 16%.

"We remain positive on the investment and trade potential between China and ASEAN," UOB CEO Wee Ee Cheong told journalists at a results briefing on Wednesday.

"This is a market [that] is too big to ignore," he said. "We are trying to seize opportunity in China -- greater China -- to entice some of the big companies if they are interested in ASEAN."

Nikkei Asia