Cautious DBS stops offering loans for 3rd or more homes
By Zhang Fengming |
00:00 UTC+8 April 26, 2010
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Print Edition
Print Edition
DBS stopped mortgages for third or more homes in China by adopting a cautious real estate loan policy, its China chief executive officer has said.
"We studied the latest State Council notice and decided to suspend issuing credit to third or more homes," said Melvin Teo, executive director and CEO of DBS Bank (China) Ltd.
The State Council, or China's Cabinet, said in a statement on April 18 that in a bid to curb real estate speculation banks can suspend offering individual housing loans for third homes in places where prices have risen too rapidly and too high.
"It's really difficult to define the 'too-rapid and too-high prices' as no set standard can be applied," Teo said. "Our decision is to stop offering mortgages for third or more homes as a precaution."
The bank is quite conservative as far as loans for real estate development are concerned as it offers such credit only to familiar clients.
Teo said the bank, Southeast Asia's biggest, is not worried about its property loan assets and a recent pressure test indicated that a 30 percent drop in housing prices won't dent its asset quality. The bank, which was locally incorporated on Chinese mainland in 2007 with a registered capital of 4 billion yuan (US$585 million), is proactive in growing loans in China.
"We are proactive but we won't lower our long-standing credit issuing standard in return for a bigger market share," he said.
DBS China's new credit grew slightly in 2009 when compared with 2008. Teo said the bank won't slow its expansion this year on concerns of an economy overheating.
"We will closely watch the economic conditions but aren't worried about China's capability to guide its growth," he said. "No, we won't hold back our growth."
China's banking regulator is curbing the rapid credit growth.
Banks lent 2.6 trillion yuan of new credit in the first quarter of this year. China targets 7.5 trillion yuan in new loans this year. Banks in China extended a record 9.6 trillion yuan of new credit in 2009.
"We studied the latest State Council notice and decided to suspend issuing credit to third or more homes," said Melvin Teo, executive director and CEO of DBS Bank (China) Ltd.
The State Council, or China's Cabinet, said in a statement on April 18 that in a bid to curb real estate speculation banks can suspend offering individual housing loans for third homes in places where prices have risen too rapidly and too high.
"It's really difficult to define the 'too-rapid and too-high prices' as no set standard can be applied," Teo said. "Our decision is to stop offering mortgages for third or more homes as a precaution."
The bank is quite conservative as far as loans for real estate development are concerned as it offers such credit only to familiar clients.
Teo said the bank, Southeast Asia's biggest, is not worried about its property loan assets and a recent pressure test indicated that a 30 percent drop in housing prices won't dent its asset quality. The bank, which was locally incorporated on Chinese mainland in 2007 with a registered capital of 4 billion yuan (US$585 million), is proactive in growing loans in China.
"We are proactive but we won't lower our long-standing credit issuing standard in return for a bigger market share," he said.
DBS China's new credit grew slightly in 2009 when compared with 2008. Teo said the bank won't slow its expansion this year on concerns of an economy overheating.
"We will closely watch the economic conditions but aren't worried about China's capability to guide its growth," he said. "No, we won't hold back our growth."
China's banking regulator is curbing the rapid credit growth.
Banks lent 2.6 trillion yuan of new credit in the first quarter of this year. China targets 7.5 trillion yuan in new loans this year. Banks in China extended a record 9.6 trillion yuan of new credit in 2009.
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