There was unflinching focus on the three Singapore banking group’s housing loans in the third quarter, with United Overseas Bank (UOB) flagging bad mortgage loans that have gone up this round, as they did in the second quarter.
But the banks have highlighted that there was no systemic stress in their mortgage loans, with Oversea-Chinese Banking Corporation (OCBC) and DBS Group Holdings not discounting growth in home loans next year.
Bank counters all gained on Friday as well. The stock of OCBC rose 20 cents to S$9.89, while that of UOB gained 54 cents at S$23. DBS shares gained 15 cents at S$18.48.
UOB’s third-quarter results on Thursday showed that non-performing loans (NPL) for its mortgage loans stood at S$502 million at end September, up 70 per cent from a year ago.
To be clear, UOB’s overall NPL ratio was unchanged from a year ago, at 1.2 per cent. But the value of bad housing loans as a percentage of its mortgage loan book – which changes in size over the years – is now higher than a year ago. It stands at 0.9 per cent, compared to 0.6 per cent a year ago. This was due to borrowers investing in a Sentosa project, reports showed.
This distinction puts distance between that of UOB, and its two rivals. In the cases of Oversea-Chinese Banking Corporation (OCBC) and DBS, the value of bad housing loans as a ratio to their mortgage portfolio is down.
OCBC, which also announced its results on Thursday, reported NPLs of its housing loans at S$272 million, up 20 per cent from a year ago.
But the ratio of bad housing loans to its total mortgage book was 0.5 per cent, down from 0.6 per cent a year ago.
From DBS’s results on Friday, housing loans stood at S$110 million as at Sept 30, down 8 per cent from a year ago. Its housing NPL is about 0.2 per cent, also down from 0.25 per cent a year ago. DBS expects its Singapore housing loans to grow by about S$3 billion next year, said its CEO Piyush Gupta at a briefing.
And while OCBC foresees the impact of fewer new housing loans in Singapore to be reflected in the second half of next year, it should benefit from more housing loans in Hong Kong booked by Wing Hang Bank, said CEO Samuel Tsien.
UOB did not host a briefing this quarter, but its head of investor relations Jimmy Koh told the media that the bank was confident of the resilience of remaining housing loan portfolio.
All three banks posted flattish growth in their customer loans from a quarter ago, when Wing Hang’s fresh contribution to OCBC is stripped out. On a yearly comparison, loans are up.
OCBC’s core net profit, which strips out an accounting gain from its Bank of Ningbo stake, was up 11 per cent in the third quarter at S$841 million – close to the average forecast of five analysts surveyed by Reuters of S$845 million. UOB’s net profit rose 19 per cent to S$866 million, beating an average forecast of S$746 million in a Reuters poll. DBS’s net profit stood at S$1.01 billion, outperforming Reuters’ forecast of S$971 million.