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7 Key Things to Know About DBS Group Holdings Ltd’s Exposure to Oil and Gas  

DBS Group Holdings Ltd (SGX: D05) held its second quarter earnings briefing last month.

Piyush Gupta, Chief Executive Officer for DBS Group, spent a good amount of time talking about the bank’s exposure to the oil and gas industry. Much of the discussion centred on the situation at the troubled Swiber Holdings Limited (SGX: BGK). But, there was more to it than just Swiber.

Here’re seven quick notes I noted from the briefing:

  1. DBS Group’s total exposure to the oil and gas industry is around S$23 billion. The bank breaks out its oil and gas industry exposure to two major portfolios. The first piece consists of the producers, traders, and processors. For context, this portion makes up S$16 billion of the total exposure. The second piece is labelled “Others” which include providers of offshore support services.
  2. Gupta dived into the offshore support services portion first. DBS Group has exposure of S$7 billion to this portion, down from the S$9 billion recorded earlier this year. The Swiber exposure, worth around S$700 million, has been written off.
  3. According to Gupta, S$2 billion of the aforementioned S$7 billion exposure belong to state-owned or government-linked shipyards. The biggest piece is in Singapore, Gupta said.
  4. The remaining S$5 billion exposure is 90% secured, unlike the situation at Swiber. The bulk of the secured assets are vessels, and they are being valued every six months. Gupta acknowledged that the value of the vessels have been coming down. As a result, the loan-to-value [LTV] ratio is in the region of 70% to 80%, up from the 50% to 60% reported earlier this year.
  5. Another way to look at the S$5 billion exposure is to split it into two parts. The first part, worth around S$2.3 billion, can be further split into five names. Gupta said DBS Group has exposure of around S$600 million each to all five names. He also said that one name has weakness, though he added that this unnamed company does not have any bond repayments due within the next two years.
  6. The other piece, which is worth $2.7 billion, is distributed among 90 different companies. Gupta said that one-third of the 90 names have weakness. He added that part of this is Swiber-linked. Again, he reminded everyone that the majority of this portion is backed with assets.
  7. Next, Gupta circled back to the first piece, namely loans to producers, traders, and processors (which is a S$16 billion exposure). He said most of the portfolio are for trade loans and that there is no material weakness seen there.

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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.