No cause for concern over housing loans: OCBC Bank

76% of outstanding loans are for owner-occupiers.

During the analysts’ briefing for Singapore-based OCBC Bank, while management painted a sanguine outlook, Maybank Kim Eng noted that it maintains its HOLD call on OCBC.

According to a research note from Maybank Kim Eng, this is because it believes Wing

Hang Bank (WHB) will remain an overhang.

Meanwhile, OCBC Bank reaffirmed the strength of its housing loans and did not see cause for concern, and said 76% of its outstanding loans are for owner-occupiers.

Here’s more from Maybank Kim Eng:

It also cited the bank’s strong internal credit criteria.

FY14E NIM is expected to be 1.64-1.70% (1H14: 1.70%, 1H13: 1.64%), suggesting a weaker 2H14 on competitive pressures.

Management did not provide colour on its funding structure and integration plans for WHB.

A separate briefing will be held in due course.

Echoing DBS, OCBC sounded at ease with its China exposure.

Amounting to SGD27b at end-June (DBS: SGD50b), SGD8b was in the form of trade loans and SGD19b in non-trade loans.

The latter are loans extended to China corporates and state-owned enterprises (SOEs) for purposes outside China.

OCBC has zero exposure to Qingdao commodity financing and does not extend loans to borrowers who use commodities as pledged collateral.

About 87% of its exposure to China was booked outside China, with Singapore and Hong Kong being the two primary booking centres.