4 Quick Facts About Oversea-Chinese Banking Corp Limited’s Exposure to China

Shares of Oversea-Chinese Banking Corp Limited (SGX: O39) have hit a rough patch lately.

After hitting a high of $10.92 last year, the bank’s share price has dwindled by 17% to $9.10 as of yesterday. Worries around OCBC’s exposure to the struggling oil and gas industry and a slowdown in China’s economic growth appear to be some of the issues weighing on its shares.

These concerns were not lost on Samuel Tsien, OCBC’s chief executive. In a recent briefing for the bank’s 2015 fourth-quarter earnings, Tsien shared his thoughts on the subject of China and spent time to explain OCBC’s exposure to the country. He made a reference to the slide below which shows the size of OCBC’s Greater China loans:

2016-03-17 OCBC Loan Chart
Source: OCBC’s earnings presentation

Here’re four quick but important things to note:

  1. The Greater China region accounted for S$56 billion of the S$211 billion in total customer loans, or 26.5%, that OCBC held in its portfolio at the end of December 2015. This was unchanged from a year ago.
  2. From this Greater China exposure of S$56 billion, Tsien said that S$6 billion were booked from inside China. OCBC China and OCBC Wing Hang Bank were responsible for roughly S$3 billion each. This was a decline from a sum of S$8 billion seen in 2014.
  3. OCBC’s Greater China NPL [non-performing loans] ratio is at 0.4% at the end of last year. For context, the overall NPL ratio for OCBC was 0.9% for the same period. On this basis, Tsien said that the China portfolio is holding up well.
  4. The S$6 billion figure does not include OCBC’s China bank exposure. Tsien clarified that most of OCBC’s China bank exposure is to the big five China banks and policy banks.

Based on the above, Tsien feels that OCBC’s China portfolio is doing well and that there were no particular issues.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.