mr funny
05-07-07, 04:51
Published July 5, 2007
DBS says it's not over exposed to speculative property deals
Group says 80% of its housing loans are to owner-occupiers
By CHOW PENN NEE
THE red-hot property market has thrust banks into the spotlight over their heavy lending to developers and property owners.
Some have said that banks might be overly exposed to the property market boom especially if the market turns out to have been sustained by speculators - but this is not the case at DBS, one of its officials emphasised yesterday.
The bank's regional head of consumer banking, Edmund Koh, said in a media interview that DBS's exposure to speculative property buying is not excessive.
'One in five of our housing loans, or only 20 per cent, are taken up for property investment. The other 80 per cent are loans to owner-occupied property,' he said, adding that although loans being taken up for property investment is 'creeping up, it is still not alarming'.
This compares to the industry standard of 30 per cent to investment property and, 70 per cent to owner-occupied property, he said. 'Our portfolio is still good, we don't suffer too much losses,' Mr Koh said.
He said the bank has learned by experience not to lend excessively to speculators. 'We found that about five years ago, after the September 11 attack and during the Sars period, our losses were low because most of our loans were to owner-occupied property,' he said.
Speculators, with their 'flipping' behaviour - in which homes can be bought and sold several times before they are even built - would be riskier, he said. The bank said it looks at credit risks seriously, like a customer's debt-servicing ability and a property's loan-to-valuation ratio.
As at the end of March, housing loans made up 25 per cent of DBS's lending, the bank's annual report shows.
In an answer to a question on whether DBS would securitise its loans portfolio, Mr Koh said: 'Securitisation would only take place if margins are good,' adding that margins now are very thin.
The consumer banking arm of DBS now constitutes nearly 40 per cent of group earnings, totalling $858 million last year, and Mr Koh said he hopes the consumer bank can grow in the 'mid teens' year-on-year.
He is currently concentrating on putting resources into growing the China and Indonesia market. But Singapore accounts for the lion's share of the consumer banking profits, racking up more than 80 per cent of revenue.
He said that - contrary to what many people think - Singapore's banking industry is not saturated. 'We just need to create more needs for consumers and satisfy those needs,' he said.
To that end, the bank yesterday announced the launch of a new credit card aimed at high-spending frequent-flyers, estimated to be about 50,000 people.
The DBS Altitude American Express Card is aimed at people earning at least $80,000, and offers them a credit limit of up to four times their salary.
It claims to give the best air mile conversion rate, or three times better than the market offers on average.
Customers can choose from 38 international airlines across the networks of KrisFlyer and Star Alliance, Asia Miles and One World. It features a 24 hour butler service for cardmembers.
DBS has more than two million credit cards in circulation in the region.
DBS says it's not over exposed to speculative property deals
Group says 80% of its housing loans are to owner-occupiers
By CHOW PENN NEE
THE red-hot property market has thrust banks into the spotlight over their heavy lending to developers and property owners.
Some have said that banks might be overly exposed to the property market boom especially if the market turns out to have been sustained by speculators - but this is not the case at DBS, one of its officials emphasised yesterday.
The bank's regional head of consumer banking, Edmund Koh, said in a media interview that DBS's exposure to speculative property buying is not excessive.
'One in five of our housing loans, or only 20 per cent, are taken up for property investment. The other 80 per cent are loans to owner-occupied property,' he said, adding that although loans being taken up for property investment is 'creeping up, it is still not alarming'.
This compares to the industry standard of 30 per cent to investment property and, 70 per cent to owner-occupied property, he said. 'Our portfolio is still good, we don't suffer too much losses,' Mr Koh said.
He said the bank has learned by experience not to lend excessively to speculators. 'We found that about five years ago, after the September 11 attack and during the Sars period, our losses were low because most of our loans were to owner-occupied property,' he said.
Speculators, with their 'flipping' behaviour - in which homes can be bought and sold several times before they are even built - would be riskier, he said. The bank said it looks at credit risks seriously, like a customer's debt-servicing ability and a property's loan-to-valuation ratio.
As at the end of March, housing loans made up 25 per cent of DBS's lending, the bank's annual report shows.
In an answer to a question on whether DBS would securitise its loans portfolio, Mr Koh said: 'Securitisation would only take place if margins are good,' adding that margins now are very thin.
The consumer banking arm of DBS now constitutes nearly 40 per cent of group earnings, totalling $858 million last year, and Mr Koh said he hopes the consumer bank can grow in the 'mid teens' year-on-year.
He is currently concentrating on putting resources into growing the China and Indonesia market. But Singapore accounts for the lion's share of the consumer banking profits, racking up more than 80 per cent of revenue.
He said that - contrary to what many people think - Singapore's banking industry is not saturated. 'We just need to create more needs for consumers and satisfy those needs,' he said.
To that end, the bank yesterday announced the launch of a new credit card aimed at high-spending frequent-flyers, estimated to be about 50,000 people.
The DBS Altitude American Express Card is aimed at people earning at least $80,000, and offers them a credit limit of up to four times their salary.
It claims to give the best air mile conversion rate, or three times better than the market offers on average.
Customers can choose from 38 international airlines across the networks of KrisFlyer and Star Alliance, Asia Miles and One World. It features a 24 hour butler service for cardmembers.
DBS has more than two million credit cards in circulation in the region.