Bank not seeing stress in Singapore mortgages: Gupta

Singapore

DBS Group Holdings is not seeing any stress in its Singapore mortgage book, said its chief executive Piyush Gupta.

The bank's non-performing loans (NPLs) for housing stood at S$110 million as at Sept 30, unchanged from June 30, but down from S$119 million a year ago.

Speaking at DBS's third-quarter results briefing on Friday, Mr Gupta said: "I suspect the quality of our portfolio is different." Elaborating, he said that a larger part of the bank's mortgage book comprised borrowers who were owner-occupiers, and that the bank also granted a bigger proportion of HDB home loans relative to its rivals.

He was responding to reports that United Overseas Bank (UOB) and OCBC Bank had posted higher NPLs from bad loans for high-end mortgages. Both banks reported Q3 results on Thursday.

UOB said that its housing NPLs had increased in the last two consecutive quarters to S$502 million for its fiscal third quarter, primarily as a result of borrowers investing in a particular high-end residential project in Singapore.

OCBC also reported higher housing NPLs tied to high-end homes in Singapore. Its housing NPL for the third quarter rose to S$272 million, up S$45 million or 20 per cent from S$227 million a year ago. The figure at end-June 2014 was S$253 million, and at end-December 2013 was S$217 million.

An OCBC spokeswoman said: "The increase in the housing loan NPLs in the third quarter over the second quarter was largely attributable to the consolidation of OCBC Wing Hang's portfolio with OCBC's. The rest of the increase prior to the second quarter was due to isolated high-end property cases (in Singapore)."

Mr Gupta said that data from the Credit Bureau showed DBS's delinquent rate to be better than average - by 0.3 per cent.

Home loans continue to show strong growth. He said he expected Singapore mortgages to increase S$3.7 billion to S$3.8 billion for the 2014 full year, up from earlier estimates of S$2 billion to S$2.5 billion. Singapore mortgages are S$45 billion.

Total group housing loans reached S$51.8 billion in Q3, up from S$48.3 billion a year ago, because "outflows have been much less softer".

Refinancing to another bank or sale by borrowers has been "very slow", he said; at the same time, DBS is getting continued inflows from new buildings, he said.

Next year, he expects the Singapore housing loan to grow by about S$3 billion.

Total group loans grew 8 per cent from a year ago and 2 per cent quarter-on-quarter to S$265 billion.

For the full year of 2014, overall group loan growth is now expected to be 7 to 7.5 per cent, lower than previous estimates of 8 to 9 per cent, he said.

He attributed the lower growth to the slowdown in China, but said the bank is currently still budgeting for 8 to 10 per cent loan growth for 2015.

China's economy in Q3 rose 7.3 per cent, the slowest in five years; it is expected to expand 7 per cent for 2015, weaker than 2014's projection of 7.4 per cent.

The impact of China's slowdown was particularly strong in July and August, due to the fall in commodity prices, said Mr Gupta.

This has affected the value of commodity financing, he said.

Anecdotally, however, the bank saw some volume recovery in September, though it remains to be seen whether the "pick-up is systemic" or the slowdown is "the new normal", he said.

DBS should be able to provide firmer guidance for 2015 loan growth towards the end of this year, he added.