Thai banks bad loans will soar to highest since GFC

FOUR IN FIVE SINGAPOREAN GEN Z TRY TO GO CASHLESS

THAILAND

Over four in five Gen Z Singaporeans have tried going fully cashless for payments during the pandemic, according to Visa’s latest Consumer Payment Attitudes Study.

A total of 82% of Gen Z consumers surveyed said that they have attempted going cashless, higher than the nearly three in four (74%) of Gen Y consumers who tried to do the same.

This is influencing the way they shop. Seven in 10 (70%) Gen Z consumers indicated that they are comfortable going to stores with self-checkout lines, and 70% of them are comfortable with biometric-authenticated payments.

As a whole, three in five Singaporean consumers have tried going fully cashless, the study found further reported.

Amongst the reasons driving Singaporeans to go cashless is its greater speed and efficiency (47%), convenience (47%), and ease of tracking financial records (43%).

Types of transactions that Singaporeans are most likely to go cashless include bill payments, with over 6 in 10 (62%) indicating this. Almost the same (59%) said that they will most likely go cashless for public transportation-related transactions, and for taxi and ridesharing payments (56%).

Nearly three-quarters of Singapore consumers (74%) now use contactless cards, Visa found. Eightyfour percent of those who currently use the payment method use it at least once a week. Other digital payment methods that are widely used in the city include online card payments (81%), mobile contactless payments (49%), and swiping or inserting a card (48%).

Thai banks bad loans will soar to highest since GFC

THAILAND

Singapore banks’ risks are expected to rise over the next 24 months, with the banking sector’s nonperforming loan (NPL) ratio expected to climb to 5%–its highest since the 2008 global financial crisis.

Ratings agency S&P Global Ratings said that there is a one-in-three possibility that economic risks will rise for Thai banks, although its rated banks in the country still carry stable outlooks in the same period thanks to good capitalisation and healthy provision of coverage ratios.

Whilst recent steps taken by the government and central bank–through their relief programmes–will reduce risks for the country’s banks, it won’t eliminate them, S&P warned.

“There is an increasing divergence in economic reality and reported asset quality ratios,” the ratings agency said in a report, noting that the banking sector’s reported [NPL] ratio has remained stable at about 3% due to supported by ongoing relief measures.

“In our opinion, regulatory forbearance is just prolonging the pain of underlying problem loans. At 14%, the high proportion of banks’ loan books under relief measures points to incipient problems in the system,” S&P warned.

The restructuring would provide a temporary lifeline to the borrowers and slow NPL growth, but will not resolve the structural problems in the system, the ratings agency further warned in the report.

“In the absence of any effective measures to reduce the high household debt burden, borrowers will remain dependent on better economic conditions and low-interest rates to service their obligations on time,” it said.

The crisis in Ukraine could also further delay the normalization of international tourist arrivals in Thailand, S&P said.

There is a divergence in economic reality and reported asset quality ratios

Regulatory forbearance is just prolonging the pain of underlying problem loans

Singapore bank chiefs’ salaries rise

SINGAPORE

Singapore banking chiefs enjoyed bigger take homes in the past fiscal year, with their salaries rising by double-digits in percentages.

DBS’ CEO Piyush Gupta saw his salary rise a whopping 47.8% in 2021 for a total of US$9.98m (S$13.57m), the bank’s annual report shared. This is over S$4m higher than his 2020 pay of S$9.18m in total.

Gupta’s cash bonus in 2021 totalled S$5.16m, over 51% higher than in 2020, when he received just S$3.41m.

The rise came on the back of DBS posting a record high profit for the fiscal year of 2021. DBS reported a net profit of S$6.8b during the year, 44% higher than in 2020. This was partly driven by loans growing to the bank’s highest in seven years, with DBS reporting a total of 9% rise to S$409b in loans.

Local rival UOB also saw its CEO Wee Ee Cheong’s salary climb to about US$8.03m.