A Breakdown Of Oversea-Chinese Banking Corp Limited’s Loan Portfolio

Oversea-Chinese Banking Corp Limited (SGX: O39) is one of the three main local banks listed in Singapore.

As a lender, OCBC is exposed to credit risk, amongst other forms of risk. In simple terms, credit risk is the risk of borrowers defaulting on their loans.

Therefore, investors in the bank must have a good understanding of its credit risk. To do so, one must first have a rough idea about the composition of OCBC’s loan portfolio.

In this article, I want to breakdown OCBC’s loan portfolio according to both geography and industry.

Here’s a table showing the bank’s gross loans and bills receivable (as of 31 December 2016) depending on where the credit risk resides:

Source: OCBC 2016 annual report

We can see that Singapore was the biggest contributor to OCBC’s loan book in 2016 with a 43% share. Singapore was followed by Greater China, Malaysia, and Indonesia at 25%, 13%, and 8%, respectively. Another important point is that the bulk of OCBC’s loans (93% of gross loans and bills receivable) in 2016 came from Asia.

The table below shows a breakdown of OCBC’s gross loans and bills receivable (as of 31 December 2016) by industry:

Source: OCBC 2016 annual report

From the above, we can see that OCBC’s loan book was rather diversified industry-wise. Housing loans are the most important for OCBC, accounting for 27% of the total in 2016. Building and construction was the second largest at 16%.

A Foolish conclusion

In all, the key takeaways are that OCBC’s lending activities are focused on the Asia Pacific region, with big exposure to the housing, and building and construction markets.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.