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Bad Debts within ASEAN banks are Bad News

Bad Debts within ASEAN banks are increasing.

I think it’s quite important to be aware of the bad debt numbers. It’s also known as bad loans or Non-Performing Loans (NPLs). This number quite frankly should be on a rising trend since many businesses have been forced to close due to the COVID-19 pandemic and when they close, jobs are lost and this will cause the unemployment numbers to spike. When people lose their jobs and is unable to secure a job quickly, then they may start to miss their loan repayments.

This has happened not just within ASEAN but throughout the world. Good news is that with vaccinations starting feverishly, GDP growth forecasts have also turned positive for 2021. This includes the forecast for Malaysia as well. Earlier article here: GDP forecast for Malaysia for 2021. If we like to have a global view, here’s that global view slightly earlier. Global Growth in 2021? What has happened to the bad debts within ASEAN banks?

Article in asia.nikkei.com For full article click on the article to read yeah. Meanwhile the image below provides a great overview. Generally, we could see that for Malaysian banks; CIMB, Maybank and Public Bank, the net profit has fallen but the NPL has stayed almost unchanged. This does not necessary mean that the NPLs are not rising for 2020. It may also be because the Malaysian banks are more aggressive in their bad loan provisions earlier; 2019.

When we look at another image, we would see that both Maybank and Public Bank actually show a reduction in NPLs as a share of total loans. This is positive news even if we could see a slight rise for CIMB.

Please do refer to the comprehensive article in asia.nikkei.com here. Article in asia.nikkei.com

It’s important to also look at the recovery and the strength of the respective banks too

If the recovery of all these economies start happening in 2021, it would also help tremendously in stopping the NPL numbers from rising further and some positives may show in 2022. So, 2021 is indeed an important year. I do hope that the number of cases drop low enough for travel within ASEAN at least to restart. Lots of potential economic multiplier effects once we have some travel bubble arrangements. Businesses can become more aggressive in their growth too. Let’s face the truth, that new norm of ZOOM everyday does not work well for the long run.

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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2 Responses

  1. your explanation is not quite correct as there is moratorium on non performing loan classification for the whole year of 2020 untill june21 ..

    1. Thanks Siew. I think we can see the NPL this June 2021 then. Perhaps it will be clearer as per what you have pointed out. Take care and thanks for reading.

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