Chart of the Day: How exposed are Singapore banks to mortgages in Q1?
DBS gained the largest market share but has least mortgage exposure.
Out of Singapore's three largest banks, DBS' mortgage growth in Q1 posted the largest increase at 14% to book the largest increase in Singapore mortgage market in 2017, according to Jefferies.
Also read: Property curbs to hit banks hard by 2019
Despite the growth in its mortgage segment, DBS remained the least exposed to mortgages as only 22% of its loan portfolio is exposed compared to OCBC's 26%. UOB still has the largest mortgage exposure out of its peers at 28% in Q1.
The two other banks similarly beefed up their mortgage segments with OCBC and UOB growing their property exposure at 8% and 7% in Q1.
"If we assume that mortgage loans do not grow at all, the loan growth impact for DBS, OCBC and UOB will be 3ppt, 2ppt and 2 ppt, respectively, by our estimates. This translates to roughly 1-1.5ppt lower EPS," Jefferies added.
Housing loans have consistently constituted the largest portion of Singapore bank lending, according to Maybank Kim Eng. This makes the banks vulnerable to sluggish loan growth in the coming months as a result of the government raising the Additional Buyer Stamp Duty and tightening Loan-to-Value limits in an effort to cool the housing market.