Hanjin creditors risk earnings hit if loans not provisioned: analyst


Posted at Jan 11 2019 04:19 PM | Updated as of Jan 11 2019 04:46 PM

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MANILA -- Hanjin's creditor banks in the Philippines risk a hit in their earnings this year if they failed to provision for a possible default by the Korean shipbuilder.

Reeling from a global slowdown in shipping, Hanjin's Philippine unit sought court-assisted rehabilitation to pay 5 banks some $412 million.

Rizal Commercial Banking Corp has the "biggest exposure" to Subic Bay-based Hanjin and could report a loss "at worst" if the entire debt is unpaid, said China Bank Securities research director Garie Ouano.

The Yuchengco-owned lender earlier said its loans to Hanjin were "very manageable." BDO Unibank and Bank of the Philippine Islands also confirmed lending to Hanjin.

Two others identified in a Philippine Daily Inquirer report as among Hanjin's creditors have not issued statements -- Metrobank and state-run LandBank of the Philippines.

"If it does affect earnings, it's likely gonna be seen as a one-off," Ouano told ANC's Market Edge.

"Fundamentally, the banks are still strong. There's no clear evidence that the bankruptcy of Hanjin is a systemic problem so there's really no reason to be bearish on the sector for the long term," he said.

The financials sector on Friday closed 2.54 percent lower compared to a 1.02-percent decline in the main index.

RCBC was down 9.12 percent, BPI fell 4.76 percent while Metrobank shed 4.82 percent. BDO closed unchanged.