Malaysian banks brace for profit hits as OIL&GAS firms restructure debt
By A. Ananthalakshmi and Liz Lee | KUALA LUMPUR, SEPT 26
Malaysian lenders are bracing for a hit to profits this year as they bump up provisions for sour loans to the local oil and gas services sector that has been battered by the slump in energy prices and cutbacks in projects.
The problem mirrors pain playing out in neighbouring Singapore, where the collapse of oilfield services firm Swiber Holdings Ltd has stoked concerns about the size of the city state's biggest lender DBS Group Holdings' exposure to the industry.
Last month, Malaysia's Perisai Petroleum Teknologi , an offshore oil and gas services provider, said it was aiming to renegotiate terms with bondholders on a S$125 million ($92 million) bond.
A day later, Malaysia's biggest bank Malayan Banking Bhd (Maybank) reported a tripling in loan provisions that was partly responsible for a 27 percent decline in second-quarter net profit - further fanning concern about the sector.
"While Malaysian O&G names are in a relatively better liquidity situation than their Singapore peers, we expect this to continue to remain an issue for these banks due to the volatility in oil prices," said Nomura analyst Tushar Mohata.
