DBS Group Holdings, Singapore's biggest lender, reported a 6 percent drop in second-quarter profit, hit by a sharp jump in provisions for bad loans as firms in the oil and gas services sector struggle to service debt.
Provisions for non-performing loans more than doubled, led by a charge of S$150 million ($111 million) for troubled oil and gas services firm Swiber Holdings Ltd. DBS said its total exposure to Swiber was S$721 million, revised up from S$700 million stated in previous filings.
Knocked by a rout in oil prices and failing to receive an expected equity injection, Swiber has been placed under judicial management.
Banking sources and analysts have warned that credit woes in the oil and gas services sector - a key industry for Singapore - are widespread, spelling more headaches for lenders.
DBS said it had S$23 billion exposure to the oil and gas sector of which S$7 billion was to oil services firms excluding Swiber.
DBS's net profit came in at S$1.05 billion in the three months ended June, versus a S$1.12 billion profit a year earlier.
This was line with an average forecast of S$1.051 billion from six analysts polled by Reuters. The poll was taken before DBS disclosed its exposure to Swiber.
United Overseas Bank and Oversea-Chinese Banking Corp , have also flagged concerns about loans to the oil and gas services sector - a key industry in Singapore.