Latest news with #NPLs
South China Morning Post
30-07-2025
- Business
- South China Morning Post
Hang Seng says it has ‘provided for' rising bad loans in Hong Kong's property market slump
Hang Seng Bank remains financially healthy, as the extra provisions and collateral provided by borrowers are sufficient to withstand the continued increase in non-performing loans (NPLs) at the HSBC unit, according to its CEO. 'The amount of collaterals and provisions for NPLs has exceeded 100 per cent,' executive director and CEO Diana Cesar said in the bank's interim results announcement on Wednesday. 'Based on what we know now and what we can see coming, we think the extra provisions and collateral we have got are enough to cover.' Hang Seng, the largest among Hong Kong's locally incorporated banks, made extra provisions to shield the loan books from the 0.57 percentage point rise in NPL, which reached 6.69 per cent of total loans at the end of June, from 6.12 per cent at the end of last year. The provisions weighed on the bank's interim profit, which fell 30 per cent to HK$6.88 billion, from HK$9.89 billion a year earlier. Earnings per share fell 34 per cent to HK$3.34 per share. Diana Cesar, the executive director and CEO of Hang Seng Bank, speaks during the bank's 2023 results announcement on February 21, 2024. Photo: Jonathan Wong 'The first half of 2025 was demanding with ongoing uncertainties including trade tariffs, sustained high interest rates and a prolonged downturn in the commercial property market,' Cesar said. 'These have all adversely affected the broader economy.' Hang Seng's shares closed 7.4 per cent lower amid a declining market to a six-week low of HK$113.80 on Wednesday after reporting its biggest percentage drop in earnings since the first half of 2022.
Borneo Post
01-07-2025
- Business
- Borneo Post
Sabah Development Bank's losses drop significantly
— Photo from Sabah Development Bank website KOTA KINABALU (July 1): Sabah Development Bank Berhad (SDB) on Tuesday announced a significantly reduced pretax loss of RM86 million (net loss of RM82 million) for the financial year ended 2024. This marks a notable improvement from the substantial pretax loss of RM878 million (net loss of RM684 million) recorded in the previous year, primarily due to extensive provisions for Non-Performing Loans (NPLs) and diminished asset values accumulated over the past years. SDB expects to report a modest profit in FY2025. This progress reflects positive momentum in SDB's ongoing 3-Year Transformation Journey, which commenced in the second half of 2023 under a new board and management. Following a rigorous restructuring exercise, the Bank's total capital ratio had dropped to 7.9% by end 2023. However, as of end-2024, the capital ratio has rebounded to a strong 20.71%, backed by strong support from the Sabah State Government. On 4 June 2025, RAM Rating Services Berhad (RAM) affirmed SDB's debt instrument ratings at AA1/Stable/P1. The AA1 rating indicates a high safety for payment of financial obligations, while the 'Stable' outlook reflects RAM's expectations that the long-term rating will be unchanged over the intermediate term. The Bank's Commercial Papers were also affirmed at P1, the highest short-term rating assigned by RAM, reflecting high safety for payment of short-term obligations. In alignment with its mandate from the State Government, SDB is now focused on financing development projects in Sabah, predominantly in the infrastructure, power and water sectors. The State has positioned SDB as the lead lender for local-content in major investment projects, reinforcing its pivotal role in driving Sabah's economic growth. Between January 2024 to June 2025, SDB approved RM1.763 billion loan applications within its developmental mandate. During the same period, the Bank turned down RM9.646 billion in loan applications that either fell outside its mandate or did not meet its enhanced credit standards. Since the setup of an independent professional recovery team in September 2023, notable progress has been made in addressing the NPLs. The Bank's Board has approved RM965 million in settlement proposals. This is in addition to RM2 billion in pledged securities currently placed under receivership.
Business Recorder
21-06-2025
- Business
- Business Recorder
NA panel approves bringing over Rs10m pension into tax net
ISLAMABAD: National Assembly Standing Committee on Finance and Revenue Friday granted approval for bringing over Rs 10million pension into the tax net at a rate of 5 percent. Taking part in discussion, MNA Muhammad Jawed Hanif Khan stated that it seems that this move would bring all pensionable amounts into the tax net in the future. He was of the view that there might be a limited number of people, and probably Judges of the higher courts would come into the tax net. The NA Panel also discussed the FBR's proposal for the deduction of the tax amount after the decision of the High Court. The Parliamentarians belonging to PPP and PTI opposed this proposal and argued that it was an infringement of the right of appeal of the taxpayer, as the FBR should not withdraw the money from the account of the taxpayer soon after getting a favourable decision from the High Court. Chairman FBR, Rashid Mahmood Langrial, made all-out efforts to convince the members of the NA Panel and stated that the tax amount was proven at three to four forums, and after proving the case in favour of the FBR the tax amount was secured from the taxpayers. The Parliamentarians were of the view that the due tax amount should only be drawn after exhausting all forums, including the Supreme Court of Pakistan. The Chairman of the Committee instructed the FBR to come up with a second thought and revised draft on the piece of legislation in the finance Bill; otherwise, in the existing shape, the committee would reject such powers from the FBR. The NA Panel also approved amendments proposed in the Income Tax in the Seventh Schedule, which provides special treatment for the banking sector. The FBR has proposed five amendments for disallowing banks from incorporating expenses from the payment of taxes, including the rented building of banks and advances to Non-Performing Loans (NPLs). Copyright Business Recorder, 2025
Zawya
12-06-2025
- Business
- Zawya
Bad loans force Kenyan banks to review credit risk appraisal
Top Kenyan banks with regional operations, have posted flat, slowed or declined profits in the first quarter of this year, reversing the growth momentum seen recently. Loan quality — measured by gross non-performing loans (NPLs) to gross loans ratio — weakened to 17.4 percent, from 15.7 percent, in the same period last year, reflecting a surge in bad loans, which prompted banks to adopt tight credit risk appraisal. According to the Central Bank of Kenya, in its quarterly credit survey, most lenders are willing to keep more of their liquid assets in risk-free government securities in the second quarter (April-June). This, they think, will minimise the threat of bad loans triggered by borrowers struggling to repay in a floundering economy. Interest income from loans and advances to customers, the lenders' key revenue source, has been a major casualty, potentially reflecting subdued demand for loans, compounded with declining non-funded income from banking transactions, an indicator of weakening economic activities. Kenya Bankers Association (KBA) says the reduced profitability for lenders is a reflection of near-zero credit growth and reduced banking transactions as a result of slowed economic activity."The slowed growth in profitability is really a reflection of near zero growth in credit. This mirrors the sharp rise in interest rates aligned to the CBR hikes effected over the period,' said Samuel Tiriongo, director of research and policy at KBA.'As a result, demand for credit dipped. With the beginning of interest rate cuts, credit growth is expected to recover from Q2 and beyond. These trends are typical of business cycles.' This includes a slowdown in economic activities that eroded the lenders' non-funded income through reduction in fees and commissions on banking transactions and reduction in income associated with forex trading.'Despite the rate cuts, loan uptake has remained subdued, with some institutions adopting a more cautious lending approach resulting in a modest contraction of their loan books.'In addition, foreign exchange trading income has declined across most banks, negatively impacting non-funded income,' says Ngugi Waweru, an investment analyst in the corporate finance division at Faida Investment Bank. Government securities, he said, had also returned declined interest earnings as there have been generally lower yields. On the other hand, interest expenses have either remained flat or decreased, largely due to reduced interbank deposits or lower interest payouts on customer deposits as this segment has shown limited growth or contraction.'This reduction in expenses has helped cushion the impact of sluggish interest income,' Mr Waweru said. A review of the unaudited financial statements of top lenders for the three months period to March reveals profit numbers that have either declined, remained flat or grown at a slower rate. For instance, KCB Groups' net profit) grew marginally by 0.3 percent to Ksh16.53 billion ($128.13 million), Co-operative Bank Group's net profit grew by 4.54 percent to Ksh6.9 billion ($53.48 million), Equity Group's net profit declined four percent to Ksh15.34 billion ($118.91 million).'The environment is expected to be even tougher this year with all the headwinds streaming from global trade tariff wars to shifting geopolitics in the East region,' KCB Group's Chairman Joseph Kinyua told an investor briefing in Nairobi. Absa Bank Kenya posted a four percent growth in net profit to Ksh6.17 billion ($47.82 million) while DTB Kenya net profit increased by 9.9 percent to Ksh 3.2 billion ($24.8 million). Stanbic Bank Kenya posted a 16.6 percent drop in net profit to Ksh3.3 billion ($25.58 million), owing to a contraction in non-interest income, while Standard Chartered Bank Kenya reported a 13.5 percent drop in net profit to Ksh4.8 billion ($37.2 million) due to a shrink in its loan book and decline in forex income. The surge in the volume of non-performing loans (NPLs) mirrors the financial distress that households and businesses are facing as government seeks to raise revenues through multiple taxation measures to pay debts and finance operations.'Loan growth has largely been muted as banks assess the ongoing macro conditions. Non-performing loans (NPLs) have hit a record high. Other banks have slowed down on loan provisions, likely pointing to enhanced recovery efforts,' said Melodie Gatuguta, a research associate (Banking) at Standard Investment Bank. Francis Mwangi, CEO of Kestrel Capital, said volatility in forex trading and tightening spreads as lending rates ease faster than deposit rates and lower yields on government securities impacted banks' earnings.'Two main reasons: FX volatility in 1Q25 has been significantly less than in 1Q24 when the Ksh touched 160 against the USD. Tightening spreads as lending rates ease faster than deposit rates and lower rates on new investments in government papers,' Mr Mwangi said. If the performance of the lenders in the first quarter of this year is anything to go by, then the bank shareholders might not smile at the end of the year.'The Q1 performance is a reflection of volatilities in the macroeconomic climate. My conviction is that this environment will sustain for the year, even as monetary policy pushes for lower lending rates, structurally the credit risk weighting is not following the same trend' said Dan Owuor, an independent financial analyst based in Nairobi.'Tax policy uncertainty going forward and the clarity on government pending bills are likely putting their thumbs on the scale.'Across the borders, Tanzania's two biggest banks, CRDB Bank Plc and NMB Bank Plc, posted double-digit growth in net earnings in the three months to March this year in a politically charged operating environment as the country gears for a general election in October. CRDB Bank Plc's net profit increased 36 percent to Tsh173.41 billion ($64.46 million) while its net interest income declined to Tsh428.6 billion from Tsh344 billion in the same period last year. NMB Bank Plc posted a 15 percent growth in net profit to Tsh184.14 billion ($68.45 million) from Tsh160.36 billion ($59.61 million). In Uganda, private sector credit growth slowed to 7.8 percent in the three months to January from 8.2 percent in the three months to October 2024 reflecting the impact of increased government borrowing, which constrained private sector access to credit, according to the Bank of Uganda.'Lending rates are expected to stay high, with the balance of risks leaning toward an increase due to upside risk factors such as persistent tight liquidity conditions and higher net domestic financing. However, competition from alternative financing sources, like the parish development model, and a potential loosening of monetary policy could exert downward pressure on rates,' the central bank said. © Copyright 2022 Nation Media Group. All Rights Reserved. Provided by SyndiGate Media Inc. (
Zawya
08-06-2025
- Business
- Zawya
African Peer Review Mechanism (APRM): 'Fitch's Downgrade of Afreximbank's Rating is Based on Flawed Loan Classification'
In line with Decision [Assembly/AU/Dec.631(XXVII)] of the African Union Assembly of Heads of State and Government and Article 6(g) of the African Peer Review Mechanism (APRM) Statute (2020), which together mandate the APRM to provide support to African countries in the field of credit ratings. The APRM routinely undertakes independent analyses of rating actions and commentaries issued by international credit rating agencies on African sovereigns and multilateral financial institutions. On 4 June 2025, Fitch Ratings downgraded African Export-Import Bank (Afreximbank), lowering its long-term foreign currency issuer default rating from 'BBB' to 'BBB-' with a negative outlook. Fitch justified its decision by citing a perceived increase in credit risk and weak risk management policies, based on its estimate that the bank's non-performing loans (NPLs) stood at 7.1%. This estimate stems from Fitch's classification of exposures to the sovereign Governments of Ghana (2.4%), South Sudan (2.1%) and Zambia (0.2%) as NPLs. Notably, this 7.1% figure is significantly higher than the 2.44% ratio reported by Afreximbank in its own disclosures. The APRM notes with concern Fitch Ratings' misclassification of Afreximbank's sovereign exposures to the Governments of Ghana, South Sudan and Zambia as NPLs. This classification raises critical legal, institutional and analytical issues which the APRM strongly contests. The assumption that Ghana, South Sudan and Zambia would default on their loans to Afreximbank is inconsistent with the 1993 Treaty establishing the Bank to which Ghana and Zambia are both founding members, shareholders and signatories. The Multilateral Treaty signed in 1993 is legally binding on all member countries, imposing specific legal obligations related to the Bank's protection, immunities and financial operations. By virtue of this Treaty, loans extended by Afreximbank to its member countries are governed by a framework of intergovernmental cooperation and mutual commitment, rather than typical commercial risk principles. It is, therefore, legally incongruent to classify a loan to member countries as non-performing, especially when the borrower states are shareholders in the lender institution, no formal default has occurred and none of the sovereigns have repudiated the obligation. Fitch's unilateral treatment of these sovereign exposures – as comparable to market-based commercial loans – despite their backing by treaty obligations and shareholder equity stakes, is flawed. Doing so reflects a misunderstanding of the governance architecture of African financial institutions and the nature of intra-African development finance. Fitch has misinterpreted the invitation extended by Ghana, South Sudan and Zambia to Afreximbank to discuss the loan repayments as signalling an intention to default and/or to lift the Preferred Creditor Status. The APRM calls upon Fitch Ratings to re-examine its criteria and assumptions in this case and to engage in technical consultations with Afreximbank and other relevant African stakeholders. Objective, transparent and context-intelligent credit assessments are critical to ensuring fair treatment of African institutions in the global financial system. The APRM reaffirms its commitment to promoting accuracy in the credit ratings. Distributed by APO Group on behalf of Afreximbank. APRM CREDIT RATING RESEARCH &ADVISORY For inquiries contact: Dr McBride Nkhalamba Ag. Director of Governance&Specialised Reporting Dr Misheck Mutize Lead Expert on Credit Rating Agencies Ms. Ejigayhu Tefera Researcher For media inquiries or further information, please contact the APRM Continental Secretariat at info@ @ APRMorg – X
