Tag Archives: UOB

UOB suing over inflated housing loans

Singapore’s High Court has allowed United Overseas Bank (UOB) to proceed with legal action against two property agents, five individuals and Lippo Marina Collection (LMC), a subsidiary of Lippo Group, reported The Straits Times.

The defendants are being sued by the bank for their alleged failure to disclose the lavish furniture rebates offered by the developer to buyers of 38 apartments at the Marina Collection condominium.

UOB claims that because they were not informed about the rebates, they granted a higher loan amount to the condo buyers. Otherwise, they would have cut the mortgage quantum.

For example, the buyer of a $5.98 million unit was given a furniture rebate of $1.78 million. But the purchaser got a bank loan of $4.79 million, which is higher than the actual sales price of $4.2 million.

The bank also alleged that the distorted prices for the 99-year leasehold units infringed on the mortgage rules introduced by the Monetary Authority of Singapore (MAS). It also claimed that the buyers do not have the financial capability to repay the loans, as 37 of the 38 loans are already in default.

Countering UOB’s claim, LMC said the responsible parties in a housing loan agreement are solely the buyers and the bank. In addition, it had no knowledge of the misrepresentation of the actual sales price.

The two property agents also jointly denied the accusation that they conspired to deceive the bank. They said UOB’s vice-president of housing loans at the time was cognisant in all matters relating to the buyers’ mortgage applications. Hence, it cannot be said that the bank was not aware.



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