Singapore mortgage banks

Financials Of The 3 Singapore Mortgage Lenders (Q4 2015)

This is a snapshot of the 3 Singapore bank’s financial results following their results announcement this month.  At MortgageWise we seek to provide the most comprehensive data and analysis on mortgage solutions in Singapore and we do make it a point to track the financial results of the top 3 lenders, with particular focus on their mortgage books and deposits breakdown (as local banks start to use deposit rate to price their mortgage interest starting from 2014 or what we refer to as DMR – Deposit Mortgage Rate).

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All data and illustrations reproduced here are taken from the respective banks’ quarterly results announcement presentation slides and materials available at SGX website available for general public’s access and perusal.

3 local banks financials 2015

It is apparent DBS has managed to gain the most market share for mortgage business from a year ago as it now has the biggest loan book amongst the 3 local banks, hardly surprising given the success of DMR (Deposit Mortgage Rate) it pioneered when it first rolled out its FHR back in Jun 2014.  Still UOB home loans manage to grow tremendously in the last quarter after going aggressive on fixed rates but all eyes will be on it this year – whether it will follow suit and launch its own version of DMR.  We have speculated this since end of last year and in fact we believe DMR will likely replace Board rates within the next few years.

On the deposits side, DBS is the only bank which gives a glimpse of their SGD composite whereas we have to do our own deductions for OCBC and UOB as both banks give only a breakdown based on their total deposits in all currencies.  We are obviously more concerned with SGD deposits composite as that shows in some ways how likely the cost impact will be for banks when they raise their DMR – negligible (a position we have held in this blog since the beginning)!

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For DBS home loans, its FHR18 is pegged to 18-month fixed deposit rate for amounts between $1,000-9,999.  As at 31 Dec 2015, SGD fixed deposits ($11.24b) only forms around 8% of their entire SGD deposits base ($140.77b).  And for FHR18 if we apply Pareto’s 80:20 rule that only 20% of that $11.24b comes from 80% of small depositor accounts ($1000-9999) in which what FHR18 is defined on – raising FHR18 would only lead to rise in cost of funds for only $2.25b (1.6%) of their deposits.

The same conclusion is made when we deduce the SGD composite based on OCBC’s charts below which shows that their SGD CASA (current account & savings account) deposits total $60.8b out of the total SGD deposits of $88.91b or 68.3%.  Which also means fixed deposits (ignore other accounts which we assume insignificant) constitute the other 32% which is way more significant than DBS’s 8%.  However in absolute terms OCBC’s SGD fixed deposits at $28.11b is more than twice that of DBS’s $11.25b.  Does that mean those on OCBC home loans will be less susceptible to a hike in DMR (36FDMR) compared to those on DBS (FHR18)?  That is hard to speculate really as we do not proclaim to be knowledgeable about bank’s Treasury and funding operations.

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OCBC does not give the maturity breakdown for SGD deposits.  However do note that if the maturity breakdown on deposits for its SGD follows the pattern as that for all currencies, then notice how 36 months or 3 years or longer maturity makes up an insignificant percentage of total deposits.  We thus believe that the cost impact on the bank again will be negligible if when raise their 36FDMR for the same reason as DBS.

DBS deposits breakdown 2015
DBS net interest income 2015
OCBC net interest margin 2015
OCBC deposit funds breakdown 2015
UOB net interest income 2015

At, we seek to provide thought leadership in the area of mortgage planning in Singapore, taking deep dive into developments and news on mortgages & helping clients track interest rate movements.  We do not just go for one-time business with clients but rather choose to build long trusting relationships by giving truly independent advice to the extent of losing the deal.  We strive to become the first-choice mortgage partner for homeowners and the creditable distributor of home loan products for banks and financial institutions in Singapore.

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