Shaky Indonesian loans put UOB under threat

Asset quality will deteriorate.

United Overseas Bank is under threat from asset quality deterioration in Indonesia, a report by UOB Kay Hian revealed.

The report noted that Indonesian non-performing loans (NPLs) grew 5% quarter-on-quarter in Q1 due to exposure to a manufacturing/textile company.

On the flip side, UOB’s Indonesian operation is smaller and dwarfed by its sizeable presence in Singapore and Malaysia.

“Management is closely monitoring its Indonesian operations and expects one to two more quarters of asset quality weakness,” said the report.