KUALA LUMPUR: Banks may have to incur provisions for their exposure to Perisai Petroleum Teknologi
which has become the second casualty in the oil and gas markets as it faces the redemption of its S$125mil (RM377mil or US$90mil) bond which matured on Oct 3, 2016.
It said Perisai had failed to secure a waiver on the payments and other obligations during a meeting with bondholders in Singapore. According to Bloomberg, more than 70% of the holders who voted during the meeting, voted against Perisai’s restructuring plan.
Perisai has a total debt of S$420mil (RM1.27bil or US$307mil), inclusive of the S$125mil bonds. Excluding the bond, its borrowings would be at S$295mil (RM888mil or US$216mil). Perisai has a total of eight bankers, namely DBS, OCBC, UOB, Maybank, RHB Bank, AMMB, BNP and Natixis.
“Given Perisai’s default on bond repayment, the banks have to reassess their exposure to the group. In order to be prudent, certain banks may decide to classify the loans as impaired and recognise the necessary provisioning.
“However, our oil and gas analyst does not expect the bond payment default to tangibly affect the loans taken by Perisai and its subsidiaries from the lenders,” it said.
CIMB Research said the banks have declined to provide information on their exposures to Perisai.
“To assess the impact, we have assumed an equal share of Perisai’s total bank borrowings of S$295mil (RM888.9mil) among the eight lenders. This translates to an exposure of S$37m (RM111.5mil or US$27mil) per bank (for Maybank, RHB Bank and AMMB).
“Any assumed provision for Perisai would have minimal impact on Maybank as we think that this would have been partly provided for by the bank in 1H16. Based on the same assumed provision, the negative impact for RHB Bank would be 4.6% of its FY16 net profit, and for AMMB at 6.3% of its FY3/17 net earnings, if they decide to recognise the provisions,” it said.
CIMB Research said all Malaysian banks classify their exposure to Perisai as impaired, adding the assumed total gross impaired loan of RM334.5mil (US$81mil) for Perisai (forthe three Malaysian banks) to the industry’s end-August 16 gross impaired loans (GIL) would increase the industry’s end-Aug GIL ratio by only 2bp to 1.68%.
“We expect banks’ loan loss provisioning (LLP) to peak in 2016, in line with our expectation that the gross impaired loan ratio would peak in 4Q16 or 1Q17. The expected smaller increase or even a decline in 2017 LLP would potentially drive up banks’ net profit growth in 2017. Given the better outlook in 2017 and attractive valuation, we retain our Overweight call on banks. BIMB remains our top pick,” it said.