Banks can withstand rise of impaired loans

Out of the eight banks in CGS-CIMB’s coverage, Public Bank Bhd and Hong Leong Bank Bhd came out tops through five indicators to assess the banks’ defensiveness against credit risks - the peak GIL ratio in the past 20 years, collateral coverage, loan loss coverage, total buffer coverage and the percentage of loan exposure to residential mortgages.

PETALING JAYA: Concerns of a potential spike in banks’ gross impaired loans (GIL) still linger in the market, especially since the targeted repayment assistance will expire in June next year.

CGS-CIMB Research said while the banking industry’s GIL ratio was expected to rise, the loan loss provisioning was expected to drop as banks have front-loaded most of their loan loss provisioning in 2020.