(02-09-2014, 10:57 AM)CityFarmer Wrote: Since data always in doubt, especially on NPL (impairment allowance), let's supplement it with a guessing time:
The industrial guesstimate NPL ratio has a wide range, from as "optimistic" as 5%, to a "reasonable" 17%, to "pessimistic" of up to 30%.
Is the 8% impairment allowance high? Well, may be on the optimistic side...
I don't think NPL of 5% is considered "optimistic" as these are not subprime borrowers. 5% is often enough to wipe out most of the banks around the world. During the height of the last financial crisis, a lot of US banks has equity/asset of less than 5%. In that case, Basel III have to have a higher requirement for banks.
I doubt that there is any bank in the world being able to withstand 17% NPL, even as strong as Singapore banks.