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4 Quick Things Investors Should Know About DBS Group Holdings Ltd’s Exposure to Oil and Gas

DBS Group Holdings Ltd (SGX: D05) held its 2017 first quarter earnings briefing at the beginning of May.

Piyush Gupta, the chief executive officer of DBS Group, spent a good amount of time in the briefing talking about the bank’s exposure to the oil and gas industry. He referred to the slide below in his comments:


Source: DBS Group’s earnings presentation

Here’re four quick notes from the briefing:

1. Gupta said that the offshore support services segment accounted for around $7 billion in exposure, relatively unchanged from a quarter ago. From this exposure, $1.8 billion belonged to state-owned or government-linked shipyards.

2. The portion that is at risk is in the remaining $5.5 billion, Gupta explained. The $5.5 billion can be further split into two blocks. The first block, worth around $2.6 billion, consists of five companies. Two of the five remain classified as non-performing assets (NPA). The other three companies remain stable with no deterioration.

3. The other block was distributed among 90-odd companies. Gupta said that DBS Group had previously guided towards more non-performing loans (NPL) from this group. As an update, there were another three companies moved into the NPL category.

4. With reference to the 90-odd group of companies, Gupta added that it would be unwise to assume that the oil and gas support sector is past its troubles or is ripe for a recovery. He said that large parts of the sector remain troubled, and DBS Group expects to have more NPL emerging as a result.

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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.