At MortgageWise we do our regular takes on the three local lenders’ financial performance where it pertains to mortgage business here in Singapore. As the lenders report results on an aggregated basis across all countries of operations and across all currencies (in constant-currency terms), we can only infer and do guesstimates based on information from the financial statements and those culled from all sources including the CEO’s insights during the AGMs, and press information. Still, we are proud to remain the only professional mortgage consultancy firm that publishes all such useful information on mortgages in Singapore, to aid homeowners make better decisions.
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DBS, OCBC and UOB have reported their 2017 1H financial performance last month and we will be comparing their results against the same statistics six months before on 31 Dec 2016:
Of the 3 banks, UOB registered the strongest growth in its mortgage books with 2.39% growth from end of 2016 to $62.9b, closing the gap with its arch rival DBS’s $64.9m. The latter’s loan book has remained relatively flat from 6 months ago although we noted its CEO report of the highest recorded new loans booking in Q2 of the last 5 years, with a market share of 28.7% as at 30 Jun which is largely unchanged from its 29% share six months ago. This could mean a large number of outflows as well during the period.
Both DBS and OCBC reported drop in its NIM (net interest margin) with DBS suffering a bigger drop of 6 basis points from 1.80 to 1.74 in first half of 2017. Part of the reason could be due to weakness in SIBOR in the 1sthalf, however UOB managed to buck the trend with an increase of 3 basis points to its NIM now at 1.74, drawing level with DBS.
We believe that market leader DBS will be under pressure to arrest its falling NIM now that it faces fierce competition from both its local rivals as well as foreign lenders who have been surprisingly aggressive in mortgage pricing this year. With the need to also stem its outflow, the bank will need to offer aggressive rates for repricing which means more pressure on its margins.
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In terms of market share, going by MAS published preliminary statistics for 2017 Q2, total outstanding housing loan in Singapore is now at $198.3b (based on utilized or drawn down amount). As DBS indicated a market share of 28.7% as at end-Jun, this means it has $56.9b portfolio of housing loans in Singapore which is about 88% of its total mortgage books of $64.85b. We do not know the exact breakdown between housing loans in Singapore vs other markets for the other two local banks. So, we can only assume (this is a fairly loose assumption) it to be in the same region of around 88% which means collectively the three local banks’ share of the housing market in Singapore would be $166.1b or close to 84%.
Overall for the 1H of 2017, UOB has the strongest performance for mortgage business in terms of both volume and margin. It also manages to grow its deposits and hence maintain its loan-to-deposit ratio at 86% on a group-wide basis.
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At MortgageWise, 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 mortgage products for banks and financial institutions in Singapore.