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Thread: DBS mortgage growth remains resilient despite falling volumes

  1. #1
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    Default DBS mortgage growth remains resilient despite falling volumes

    http://www.straitstimes.com/archive/...lumes-20140802

    DBS mortgage growth remains resilient despite falling volumes

    Published on Aug 2, 2014 12:56 AM


    HOME loans have stayed resilient for DBS Bank amid a struggling property market coping with a slew of cooling measures.

    DBS chief executive Piyush Gupta said yesterday that he was "a bit surprised" mortgages continued to see positive growth despite falling volumes.

    "Earlier, we thought the mortgage growth would slow down to $2 billion to $2.5 billion growth for this year.

    "Actually, we grew $2 billion in the first half. So, we're now looking at getting the mortgage growth in the book by about $3.5 billion for this year, which would make it the same as last year."

    Mortgage growth at DBS for the year is expected to stand at about 9 per cent, in line with the rest of the bank's portfolio, Mr Gupta added.

    DBS housing loans came in at $50.82 billion at the end of June, up 2 per cent from $49.85 billion at the end of March.

    Mr Gupta also said that the bank's non-performing loans (NPL) were "substantially lower than what was reported yesterday".

    Rival United Overseas Bank had said on Thursday that its NPL for Singapore mortgages was $80 million for the three months to June 30, owing to weak payments by high-end property buyers.

    Such buyers likely purchased the homes for investment or speculative purposes.

    One reason Mr Gupta cited for DBS' home loans doing better than expected is that its percentage of owner-occupied loans comes at a high 85 per cent, likely better than the market average.

    New bookings for DBS home loans in the second quarter went up by 28 per cent compared with the previous quarter, though it dropped by between 35 per cent and 40 per cent year on year.

    Data from the Urban Redevelopment Authority showed private home sales rose to 2,665 units in the second quarter, up from 1,744 units in the year's first three months.

    MOK FEI FEI

  2. #2
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    Default Housing loans not affected by softer property market

    http://www.businesstimes.com.sg/arch...arket-20140802

    Published August 02, 2014

    Housing loans not affected by softer property market

    By anita gabriel

    [email protected] @AnitaGabrielBT


    DBS Group Holdings does not expect to see bad loans in its housing loan book click higher on the back of a moderation in property prices or a potential slump in the sector here given that the bulk or some 85 per cent of its loans are for owner-occupied homes.

    "It's around 85 per cent or even higher and that could be principally why our portfolio quality is better," said DBS chief executive Piyush Gupta.

    Mr Gupta was asked to comment on why the bank's loan book is not displaying pressure from a softening property market when United Overseas Bank (UOB) revealed just a day earlier that its non-performing loan had climbed 7.3 per cent in the second quarter from a year ago to S$2.3 billion as payments by some high-end property buyers deteriorated.

    Even so, both banks' NPL ratios remained healthy with UOB's unchanged at 1.2 per cent for the quarter while DBS' bad loan ratio improved to 0.9 per cent over the period from 1.2 per cent a year back.

    Mr Gupta elaborated that DBS' quantum of financing for property loans is determined by the client's debt burden ratio and repayment capability based on an interest rate of 3.5 per cent.

    "We can't vouch for other banks, but we consistently do this and that could be the other reason we don't see any stress (in housing loans)," he added.

    Singapore's booming property market has gradually slowed down on the back of a slew of property cooling measures. But it's not yet time for the Monetary Authority of

    Singapore to take its foot off the brake and ease the curb as its managing director Ravi Menon had said recently that prices still remain high.

    Mr Menon had pointed out that while property prices have jumped 60 per cent over the last four years, they have fallen by merely 3.3 per cent over the last three quarters and so it was not yet time to lift the tightening measures aimed at stabilising the market.

    Mr Gupta opined that property prices could drift down a further 5-7 per cent over the next few quarters but it won't be "precipitous" and it is unlikely to hamper borrowers' ability to repay their housing loans.

    For one, in Singapore, like the rest of Asia and unlike the United States, financing of properties is generally more "cash-flow driven than property value driven". That, however. could change if rates rise or unemployment ticks upwards.

    "But we won't be seeing that in a hurry," he added.

    DBS, according to Mr Gupta, has done a stress test to assess if it could cope with a 30 per cent fall in property prices which has churned out a comforting outcome.

    "We see no problem at 30 per cent (fall). If rates rise, there will be marginal borrowers who can't pay but we don't anticipate a major issue," he added.

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