Tag Archives: NPL

More high-end homeowners default payments

The number of houses placed on the auction block by banks has increased by nearly five-fold as borrowers struggle to sell their luxury units amid the falling prices and the government’s tough cooling measures, according to media reports.

Between January and October of this year, 98 repossessed homes were placed under the auctioneer’s gavel, said Colliers International, a far cry from the 17 for the whole of 2013.

These include non-landed properties at renowned residential projects such as Turquoise at Sentosa Cove (pictured), Reflections on Keppel Bay and Stevens Court at Stevens Road.

“Amid the stricter regulatory and financing environment, borrowers in default are finding it difficult to sell their properties on their own, as buyers generally remain cautious,” added Colliers International’s Deputy Managing Director Grace Ng.

Additionally, due to defaults by high-end property owners, non-performing loans (NPL) of local banks have also substantially increased.

According to United Overseas Bank (UOB), its housing NPLs nearly doubled to $502 million in the third financial quarter from $295 million a year ago. The significant gain is mainly attributed to borrowers who invested in a specific luxury project in Singapore, but the lender declined to reveal its name.

At the same time, Overseas Chinese Banking Corporation’s (OCBC) NPLs rose to $272 million from $227 million. One factor behind the increase is the consolidation of OCBC Wing Hang’s portfolio.

“If you have maxed out your loan quantum and values have dropped, you will have difficulty refinancing, especially if your credit worthiness is not attractive. There’s a possibility that banks may ask you to pump in more money to top up your value. When someone is not able to do so, that may go into the NPLs,” added Chestertons Singapore’s Managing Director Donald Han.


Spike in bad home loans swells Singapore banks’ NPLs

SLIDING Singapore home prices – especially those of high-end residences – are piling on more bad loans onto local banks’ non-performing loan (NPL) books.

United Overseas Bank (UOB) yesterday said that its housing NPLs have increased in the past two consecutive quarters to S$502 million for its fiscal third quarter, due primarily to borrowers investing in a particular high-end residential project in Singapore.

“Total NPL associated with this project was S$166 million, of which S$80 million and S$59 million arose in Q214 and Q314 respectively,” UOB said as it released Q3 results. The bank declined to name the project concerned or its location.

“This NPL was well collateralised with minimal impairment charge. Excluding the NPL from this isolated case, overall housing loans remain relatively flat.”

Jimmy Koh, UOB managing director, investor relations, said: “We are confident we’re on the other side of this issue and we are confident of the resilience of the rest of our housing loan portfolio.

“The regional economy is moderating with China going for quality growth and the government in Asean pro-actively controlling consumer debt. This means that the asset quality headwinds that we are seeing now will improve in the medium to long term.”

The group posted Q3 net profit of S$866 million, up 18.7 per cent due to loans growth and strong gains in fee and trading income. The earnings were 7.2 per cent higher than the S$808 million for the previous corresponding quarter.

OCBC Bank 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 figures at end-June 2014 and end-December 2013 were S$253 million and S$217 million respectively.

“The increase in the housing loan NPLs in third quarter over the second quarter is largely attributable to the consolidation of OCBC Wing Hang’s portfolio with OCBC’s,” said a bank spokeswoman. “The rest of the increase prior to the second quarter was due to isolated high end property cases (in Singapore).”

OCBC reported that Q3 net profit rose 62 per cent to S$1.23 billion, boosted by a one-off gain and contribution from Wing Hang Bank.

Singapore property prices are expected to fall further as the market grapples with increasing supply and tight financing rules.

On Tuesday, Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam said: “We have seen some correction in both private property prices and HDB resale prices over the last 4-5 quarters, but there is some distance to go in achieving a meaningful correction after the sharp run-up in prices in recent years.”

Mr Tharman, who is also chairman of the Monetary Authority of Singapore (MAS), added: “If we do not get a meaningful reversal after each upswing, property prices will run ahead of the growth of household incomes over the long term, which we should avoid.”

Last Friday, figures from the Urban Redevelopment Authority showed prices of private property falling by 0.7 per cent in the third quarter of this year, compared to three months earlier. That marked the fourth consecutive quarterly drop, though it was also the most benign dip since prices chilled a year ago.

The HDB resale market was hit much harder in the latest quarter, with prices slipping 1.7 per cent from a quarter ago – the biggest decline since Q3 2005.

Mortgagee sales or sales of properties by banks have also surged.

Data compiled by Colliers International, as reported by BT last month, showed the number of properties put up for auction by mortgagees climbing to 112 in the first nine months of this year from 20 in the same year-ago period.

The report also quoted Mok Sze Sze, head of auction and sales at JLL, as saying that the number of properties put up for auction by mortgagees in the first nine months of this year was the highest in five years since 2010.

*Bank results: UOB, OCBC