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BANKING

What DBS’s results tell us about banking and Covid

The bank’s full-year results for 2020 suggest bad-loan generation is manageable and that brighter times lay ahead – but we still do not know the whole story about borrowers under moratoria.

DBS's Piyush Gupta.
DBS's Piyush Gupta.
Photo: Bloomberg via Getty Images

Wednesday’s annual result for 2020 from DBS was closely watched, and not just by the bank’s shareholders.

DBS is the first of the Singaporean banks to report full-year numbers, and Singaporeans are among the first banks in Asia to do so, making this a useful barometer not only for how bad the past year has been, but how the coming one will look.

The first thing the market was looking for was a clue about bad debts and provisioning, in particular as regulators around the region began to unwind the moratoria they put in place to protect borrowers.

For some time there has been a concern about how much bad news was being disguised by these moratoria and how heavy the delayed hit would be when it came.

DBS’s non-performing loan (NPL) rate stood at 1.6% on December 31, in line with recent years. During the last 12 months, after recoveries and write-offs, non-performing assets (NPAs) rose 16% year-on-year to S$6.69 billion. S$1.9 billion of loans turned non-performing during the last 12 months, compared with S$1.3