THE latest round of property cooling measures is unlikely to impact banks heavily, with mortgage and construction loan demand expected to remain resilient this year, though at a slower growth rate.
This is because data so far since the cooling measures were implemented suggests that demand for property is still strong, Citi Research said in a report yesterday.
It expects the mortgage growth rate to reach 9 per cent this year, compared with 16 per cent last year. It also predicts the growth rate for construction and non-bank financial institution loans to drop only slightly from over 17 per cent to about 15 per cent.
Citi Research cited the sale of about 300 units at the 630-unit QBay Residences, and the strong interest received at a Jurong residential site near the MRT station with 12 developer bids as evidence of continued strong demand.
Also, despite the previous six rounds of property cooling measures, there was still a growth of over $20 billion in net mortgage drawdowns last year. The latest measures in mid-January - the most comprehensive yet - could lead to lower residential sales volume, seeing the net new mortgage drawdowns taper to $14 million this year, said analyst Robert Kong.
He also expects demand for construction loans to be "robust".
In relation to the White Paper suggesting a population of 6.5-6.9 million by 2030, National Development Minister Khaw Boon Wan has said that about 200,000 homes will be built by 2016 and enough land for 700,000 homes will be set aside by 2030.
Based on this, Mr Kong predicts government residential land sales to remain at $7-8 billion annually for the next two years (it came up to $8.6 billion last year), supporting strong levels of construction loans.
On the local banks' fourth-quarter results season, all the banks will end the year with "relatively muted numbers", with further but small pressure on net interest margins, Mr Kong forecasts.
Treasury profits, however, could be a possible wildcard for revenues, he added.
Given that DBS and OCBC are now trading at or near 12-month highs, Citi Research's preference is UOB.
The stock has lagged behind due to its mortgage exposure being the highest among the three local banks. Mr Kong noted, however, that OCBC has been just as reliant on mortgage loan growth, with it registering 4 per cent up to last September, as compared with UOB's 3.7 per cent.
DBS will be the first bank to kick off the reporting season today, followed by OCBC next Friday and UOB on Feb 27.
