SINGAPORE: Oversea-Chinese Banking Corp (OCBC) flagged a 2 per cent hit to annual revenue from the coronavirus outbreak, following in the footsteps of larger peer DBS Group and signalling Singapore lenders may find it tough to keep growing robustly.
Even before the virus outbreak, banks in the city-state had forecast muted earnings growth for 2020 as interest rates soften and lending moderates after a record performance in the last three years.
The epidemic, which has claimed over 2,100 lives in China and infected hundreds in dozens of other countries, has rattled markets and raised concerns about its impact on economic growth due to supply chain disruptions and weak consumer spending.
“On the revenue side, we may see a 2 per cent reduction as compared to what we would have seen under a normal situation,” Samuel Tsien, Chief Executive of OCBC, Singapore’s second-largest bank, adding that overall revenue would rise this year.
He said loan growth is likely to be low this year, after expanding 3 per cent last year.
Singapore, one of the countries hardest hit by the virus outside of China, has already cut its economic growth outlook this year and flagged the possibility of recession.
Last week, the city-state’s biggest bank DBS had warned the outbreak could pull down full-year revenue by as much as 2 per cent.
OCBC, which also has operations in Hong Kong and mainland China, said the most impacted sectors — hotels, hospitality, retail, food and beverage and airlines — account for about 6 per cent of its total loan portfolio. — Reuters
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