Report on Mortgage Loans Statistics, October 2014 March 2015 Research and Statistics Department Monetary Authority of Macao 1. New Approvals of Residential Mortgage Loans On an annual basis, new approvals of residential mortgage loans (RMLs) surged in the fourth quarter of 2014 and the first quarter of 2015, increasing by 28.1% and 34.5% respectively (Table 1). On a quarterly basis, new RMLs approved rose 19.3% to MOP14.0 billion in the first quarter of 2015 after a drop of 22.3% in the preceding quarter. Residents continued to dominate newly approved RMLs, accounting for 96.4% of the total for the six months ending March 2015. New approvals of RMLs to residents and non-residents increased year-on-year by 26.1% and 131.9% respectively in the fourth quarter of 2014. For the first quarter of 2015, the non-resident component continued to grow faster than the resident component, with the former up markedly by 163.1% and the latter increasing by 31.9%. Analysed by loan usage, financing purchase of residential properties made up 40.5% of all new RMLs approved in the six-month period to March 2015. Compared with the same period in the preceding year, approvals for purchase of residential properties increased 2.7% in the fourth quarter of 2014 but decreased 12.5% in the first quarter of 2015. On the other hand, approvals for other purposes jumped 60.6% and 95.5% respectively in the fourth quarter of 2014 and in the first quarter of 2015. - 117 -
Report on Mortgage Loans Statistics, October 2014 - March 2015 Table 1: New RMLs Approved (Period Figures) (MOP'000, unless stated otherwise) Quarter 3 4 1 2014 Q4 2015 Q1 (%) 2014 Q4 2015 Q1 (%) 1. New RMLs approved 15,104,803 11,740,292 14,004,534-22.3 19.3 28.1 34.5 - Residents 14,438,932 11,351,913 13,453,575-21.4 18.5 26.1 31.9 - Non-residents 665,871 388,379 550,959-41.7 41.9 131.9 163.1 2. New RMLs approved by sector of borrowers and by usage 2014 (a) To individuals 13,190,527 10,132,126 10,410,448-23.2 2.7 27.6 9.7 Of which: collaterised by uncompleted units 3,568,690 1,953,055 2,925,041-45.3 49.8 503.4 319.1 - Residents 3,351,518 1,816,031 2,736,674-45.8 50.7 461.1 301.8 - Non-residents 217,172 137,024 188,367-36.9 37.5.. 1,020.6 (i) to finance purchase of residential properties 8,875,915 5,091,619 5,088,327-42.6-0.1 9.0-12.9 (ii) others 4,314,612 5,040,507 5,322,121 16.8 5.6 54.0 45.7 (b) To enterprises 1,914,276 1,608,166 3,594,086-16.0 123.5 31.4 292.4 Of which: collaterised by uncompleted units 66,408 75,260 31,129.. -58.6.... - Residents 66,408 75,260 31,129........ - Non-residents 0 0 0........ (i) to finance purchase of residential properties 158,621 193,706 53,495 22.1-72.4-59.5 49.9 (ii) others 1,755,655 1,414,460 3,540,591-19.4 150.3 89.6 302.2 Note:.. Not applicable. 2015 Quarter-to-quarter Year-on-year Equitable mortgage, which accounted for a relatively small portion (19.4%) of new RMLs approved in the six months to March 2015, jumped year-on-year by 526.6% in the fourth quarter of 2014 and surged 323.6% to MOP3.0 billion in the first quarter of 2015. Equitable mortgage to residents, which accounted for 93.5% of the respective total for the six months ending March 2015, jumped 484.3% in the fourth quarter of 2014 and rose 306.4% in the subsequent quarter. The non-resident portion increased by a massive 1,020.6% in the first quarter of 2015, after a rise from a zero base in the preceding quarter. In the six months through March 2015, equitable mortgage to individuals reached MOP4.9 billion while that to enterprises was at a comparatively small value of MOP106.4 million. Chart 1 depicts the distribution of new approvals of RMLs by loan amount. Of the MOP5.1 billion new RMLs approved for purchase of residential properties in the first quarter of 2015, 35.7% were for loans with the amount above MOP6.0 million, compared to 24.1% in the previous quarter. Loans with amount between MOP3.0 million and MOP4.0 million formed the second-largest group with a 20.2% share, down from 27.1% in the fourth quarter of 2014. Meanwhile, the share of loans with - 118 -
Report on Mortgage Loans Statistics, October 2014 - March 2015 amount in the range of MOP4.0 6.0 million went down to 15.9% in the first quarter of 2015 from 16.8% in the preceding quarter. Chart 1: Approvals of New RMLs* by Loan Amount (%) 40 35 30 25 20 15 10 5 0 35.7 30.9 27.1 24.4 24.1 20.2 18.9 18.3 16.8 15.9 14.0 14.1 10.711.0 8.6 5.5 1.6 2.0 1,000 1,000 ~ 2,000 2,000 ~ 3,000 3,000 ~ 4,000 4,000 ~ 6,000 > 6,000 (in MOP '000) 2014 Q3 2014 Q4 2015 Q1 Note: *New RMLs approved in this chart include new RMLs approved to finance purchase of residential properties only. All new RMLs approved were arranged on floating rate basis with an expectation of higher interest rates in the near future. Twenty four point three percent of the newly approved RMLs were priced at more than 2.5% below the prime rate in the first quarter of 2015, down from 28.6% in the fourth quarter of 2014 or 41.7% in the same period of the preceding year. On the other hand, 20.7% were priced at 2.0 2.5% below the prime rate in the third quarter, down from 34.8% in the same period last year. Chart 2 shows monthly statistics of new approvals of RMLs in the period under review. The newly approved loans moved up for most of the months except November 2014 and March 2015, and were concave-up as indicated by the corresponding three-month moving average. - 119 -
Report on Mortgage Loans Statistics, October 2014 March 2015 Chart 2: New RMLs Approved (10 6 patacas) 7,000 6,500 6,000 5,500 5,000 4,500 4,000 3,500 3,000 2,500 2,000 Oct 2014 Nov Dec Jan 2015 Feb March New RMLs Approved Three-month Moving Average 2. New Approvals of Commercial Real Estate Loans Following a decrease of 58.6% in the previous quarter, new commercial real estate loans (CRELs) approved rose by 39.6% quarter-to-quarter to MOP19.3 billion in the first quarter of 2015. Of which, 89.6% were granted to residents. On an annual basis, new approvals of CRELs dropped 14.2% in the first quarter of 2015, following an increase of 26.8% in the preceding quarter. The resident component went down yearon-year by 11.2% to MOP17.3 billion in the first quarter of 2015 while the nonresident component dropped 33.2% to MOP2.0 billion. The non-resident component assumed a relatively small share of 10.4%. Analysed by loan usage, new CRELs approved to finance property development 1 saw a year-on-year increase of 21.8% in the fourth quarter of 2014 but decreased by 55.0% in the first quarter of 2015. 1 Including construction of residential, commercial and industrial buildings. - 120 -
Report on Mortgage Loans Statistics, October 2014 - March 2015 Table 2: New CRELs Approved (Period Figures) Quarter 2014 2015 2014 2015 3 4 1 Q4 Q1 Q4 Q1 (MOP'000, unless stated otherwise) (%) (%) 1. New CRELs approved 33,349,402 13,807,206 19,280,973-58.6 39.6 26.8-14.2 - Residents 30,580,297 12,631,537 17,273,846-58.7 36.8 17.9-11.2 - Non-residents 2,769,105 1,175,669 2,007,127-57.5 70.7 552.1-33.2 2. New CRELs approved by usage 2014 (a) To finance property development (including construction of residential, 19,384,843 3,376,808 3,368,371-82.6-0.2 21.8-55.0 commercial and industrial buildings) (b) To finance property investment (purchase of properties) 4,651,644 3,033,180 3,576,738-34.8 17.9 14.9-16.0 (c) Others 9,312,915 7,397,218 12,335,864-20.6 66.8 35.0 15.0 2015 Quarter-toquarter Year-on-year Chart 3 depicts the distribution of new approvals of CRELs by loan amount. In the first quarter of 2015, 58.3% of new CRELs approved were for amount of over MOP150 million, up from 52.7% in the previous quarter. Loans with value in the range of MOP10 50 million formed the second-largest group, which registered an increase in share from 17.1% in the fourth quarter of 2014 to 19.1% in the first quarter of 2015. On the other hand, the share of loans for amount in the range of MOP50 100 million went down from 11.4% to 8.1%. With respect to the lending rate, 38.5% of new CRELs approved were arranged on HIBOR 2 basis in the first quarter of 2015, down from 42.0% in the previous quarter and 51.5% in the same period of 2014. The share of new CRELs priced at or below prime rate stood at 60.5% in the first quarter of 2015, up from 56.0% in the fourth quarter of 2014 and 44.8% in the first quarter of 2014. As shown in Chart 4, new approvals of CRELs were relatively volatile during October 2014 March 2015. They expanded month-to-month by a large extent of 74.4% and 106.1% in two individual months but shrank by a range of 1.8-24.0% in the other four months. The corresponding three-month moving average had showed an increasing trend since the last month of 2014. 2 HIBOR refers to Hong Kong interbank offered rate. - 121 -
Report on Mortgage Loans Statistics, October 2014 March 2015 Chart 3: Approvals of New CRELs by Loan Amount (%) 80 70 60 50 73.3 58.3 52.7 40 30 20 10 0 0.2 0.4 0.3 1.7 3.8 2.4 1,000 1,000 ~ 5,000 7.0 3.7 4.1 5,000 ~ 10,000 9.9 19.1 17.1 10,000 ~ 50,000 11.4 7.1 8.1 7.6 7.7 4.1 50,000 ~ 100,000 100,000 ~ 150,000 > 150,000 (in MOP '000) 2014 Q3 2014 Q4 2015 Q1 Chart 4: New CRELs Approved (10 6 patacas) 10,500 9,500 8,500 7,500 6,500 5,500 4,500 3,500 2,500 1,500 Oct 2014 Nov Dec Jan 2015 New CRELs Approved Feb March Three-month Moving Average 3. Outstanding RMLs and CRELs As at end-march 2015, the outstanding balance of RMLs stood at MOP159.0 billion, representing an increase of 4.0% from three months earlier or 27.2% from a year ago. - 122 -
Report on Mortgage Loans Statistics, October 2014 - March 2015 The resident sector remained dominant. Their respective value reached MOP149.6 billion, equivalent to 94.1% of total RMLs outstanding. Concurrently, the outstanding balance of CRELs amounted to MOP132.2 billion, representing an 8.4% increase from end-december 2014 or a hike of 38.3% from a year earlier. The resident component, which accounted for 90.5% of the total as at end-march 2015, rose by 36.9% from a year ago, while the non-resident component increased by 53.5%. Table 3: Gross Outstanding RMLs and CRELs (End-of-period figures) 2014 Quarter 2014 2015 2014 2015 3 4 1 Q4 Q1 Q4 Q1 (MOP'000, unless stated otherwise) (%) (%) 1. Gross outstanding RMLs 146,814,727 152,885,033 158,977,819 4.1 4.0 29.3 27.2 - Residents 137,989,059 143,861,024 149,587,861 4.3 4.0 28.3 25.6 - Non-residents 8,825,668 9,024,009 9,389,958 2.2 4.1 46.4 60.0 2. Gross outstanding RMLs overdue 105,111 103,223 117,782-1.8 14.1 55.1 47.2 3 Gross outstanding CRELs 115,636,401 122,042,439 132,246,930 5.5 8.4 43.1 38.3 - Residents 105,162,733 110,124,693 119,680,470 4.7 8.7 38.6 36.9 - Non-residents 10,473,668 11,917,746 12,566,460 13.8 5.4 104.2 53.5 4. Gross outstanding CRELs overdue 90,885 64,685 80,031-28.8 23.7 143.3 85.4 Real Estate-Related Loans (RMLs+CRELs) (%) (percentage points) 5. Share in total loans to private sector 38.9 39.9 41.1 0.99 1.22 1.79 3.04 - RMLs 21.7 22.2 22.4 0.42 0.26 0.05 0.87 - CRELs 17.1 17.7 18.7 0.57 0.96 1.74 2.17 6. Delinquency ratio 0.07 0.06 0.07-0.01 0.01 0.02 0.01 - RMLs 0.07 0.07 0.07 0.00 0.01 0.01 0.01 - CRELs 0.08 0.05 0.06-0.03 0.01 0.02 0.02 7. Write-off ratio (Period figures) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 - RMLs 0.00 0.00 0.00 0.00 0.00 0.00 0.00 - CRELs 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2015 Quarter-toquarter Year-on-year At end-march 2015, gross outstanding RMLs as a percentage of total private-sector loans (including both residents and non-residents) was 22.4%, up a marginal 0.87 percentage points from a year ago, indicating that RMLs grew largely in line with total private-sector loans during the period. On the other hand, the share of gross outstanding CRELs in total private-sector loans increased year-on-year by 2.17 percentage points to 18.7%. As a result, the share of property-related loans 3 in total 3 RMLs and CRELs are combined to provide a measurement of property-related lending. - 123 -
Report on Mortgage Loans Statistics, October 2014 March 2015 private-sector loans, a broad indicator of Macao banks exposure to the real estate sector, 4 rose 3.04 percentage points to 41.1%. The delinquency ratio of RMLs, defined as the ratio of the amount of RMLs overdue for more than three months to total outstanding RMLs, provides an indication of asset quality of the loan portfolio. The ratio was at 0.07% at end-march 2015 while the delinquent amount moved up to MOP117.8 million from MOP80.0 million a year earlier. The delinquency ratio of CRELs stood at 0.06%, up 0.02 percentage points from end-march 2014. Correspondingly, the value of delinquent CRELs jumped 85.4% to MOP80.0 million. The combined delinquency ratio of RMLs and CRELs increased to 0.07% at end-march 2015 from 0.06% a year ago. For the six months ending March 2015, the write-off ratio of either RMLs or CRELs stayed at zero. The estimated amount of RMLs in negative equity, however, increased by 17.9% from a year earlier to MOP0.7 billion at end-march 2015. 4. Conclusion New approvals of property-related loans showed mixed performance in the six-month period under review. Both RMLs and CRELs resumed their gains in the first quarter of 2015, after showing notable contractions in the last quarter of 2014. In terms of outstanding value, property-related loans sustained their upward trend and continued to represent a significant component of bank lending, especially for the resident sector. Their share in total customer loans stood at 41.1% in the first quarter of 2015, against 39.9% in the previous quarter. The asset quality, albeit at a high level, witnessed modest deterioration in the period under review. The delinquency ratio, delinquent amount and estimated amount of negative equity all witnessed hikes from very low bases. 4 This indicator, however, is a broad measurement in the sense that different types of real estate-related loans, such as residential mortgage loans, loans to construction companies and loans collateralised by commercial real estate, may have different risk characteristics. - 124 -
Report on Mortgage Loans Statistics, October 2014 - March 2015 Annex: Glossary Residency An individual is classified as a resident if he/she has a centre of economic interest in Macao. He/she has resided, or will reside, in Macao for over a consecutive period of at least one year. The individual s residency in Macao should be supported by his/her Macao home address. If the place and/or period of residency cannot be ascertained, the holding of a Macao Identity Card can be used as a proxy for Macao residency. Foreign students resided in Macao and cross-border workers (e.g. those who commute from Hong Kong or the Mainland to Macao every day) are treated as nonresidents. Similarly, a household member who studies abroad and/or seeks medical treatment abroad remains a resident of Macao as long as he/she remains a member of a household in Macao. A company has its place of operation (e.g. production of goods and/or provision of services) in Macao for over a consecutive period of one year. The company s operations in Macao should be supported by its Macao business address. If the place of operation and/or the period of operation cannot be ascertained, the holding of Registo da Sociedade (Company Registry) and the business address appearing on the Registry may be used as a proxy for residence. Residential mortgage loans (RMLs) RMLs refer to credit facilities provided by banks to individuals and enterprises that are collateralised by residential real estate. Residential real estate includes houses, apartments and other dwellings (including uncompleted units) intended for occupancy by individual households. It can be residential properties occupied by owners or for leasing. Overseas real estate is excluded from the survey. Commercial real estate loans (CRELs) Commercial real estate loans (CRELs) refer to credit facilities provided by banks (i) to individuals and enterprises that are collateralised by commercial real estates, (ii) to construction companies and (iii) to finance property development and investment, - 125 -
Report on Mortgage Loans Statistics, October 2014 March 2015 including land development and construction of industrial, commercial and residential buildings for sales or for lease. Commercial real estate encompasses buildings, structures, and associated land (including uncompleted units) used for office, retail and wholesale, industrial and hotels. Overseas real estate is excluded from the survey. New RMLs (or CRELs) approved New RMLs (or CRELs) approved are loans approved (RMLs or CRELs) during the reporting period. They include loans that are approved and drawn down during the reporting period, and loans approved but not yet drawn during the reporting period. Equitable mortgage Equitable mortgage refers to mortgage loans collateralised by uncompleted units. Uncompleted units are defined as properties which are planned to be constructed, under construction or completed construction but the developer has not yet obtained the occupation permit from the government. If the properties are constructed by a stratified system of ownership, including individual units, uncompleted units also include properties with final registration of stratified system of ownership not yet completed. Delinquency ratio Delinquency ratio is a ratio of total amount of overdue loans to total outstanding loans. The ratio provides an indication of asset quality of loan portfolio. Loans overdue refer to loans on which payments of interest and/or principal are overdue for more than three months. Write-off ratio Write-off ratio refers to the amount of RMLs or CRELs written off during the reporting period as a percentage of RMLs or CRELs outstanding. Negative equity Negative equity refers to those RMLs with an outstanding loan amount which exceeds the current market value (CMV) of the collateralised property. The latest valuation of the collateralised property by the bank can represent the CMV. - 126 -