UOB grapples with HK, China real estate loans as prices sink

Bank has had to work through multiple deals clients struggled to refinance or defaulted on

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A significant portion of UOB's property exposure is in Hong Kong, which is in the throes of a multi-year commercial real estate downturn, with prices down about 50 per cent from peak levels.

(PHOTO: BLOOMBERG)

A large wager on Hong Kong and China real estate is backfiring on one of Singapore's top banks, which is facing mounting troubles in the region's deteriorating property markets.

UOB over the years financed real estate abroad including hillside luxury homes in Hong Kong, a five-star hotel overlooking the city's central harbour, shopping malls and a Shanghai life science park.

It lent to Chinese developers.

Over 40 per cent of the loans its Hong Kong branch made were property-related as at June, a higher concentration than that of some other banks in the Chinese territory.

In 2025, UOB has had to work through multiple deals that borrowers struggled to refinance or defaulted on, and is paring its overall Greater China exposure.

UOB jolted investors in early November when it booked $615 million in general provisions for commercial real estate (CRE) loans that could go bad in the future, pushing up its total allowance for credit and other losses to $1.9 billion in the first nine months of 2025. The bank said it took proactive steps in the light of continued "sector-specific headwinds" in Greater China and the US.

In the weeks since the results, investors have fixated on UOB'S CRE risk and the bank's "kitchen-sink" cleanup, said Autonomous Research analyst Ivan Ng.

UOB shares are down 4 per cent to date in 2025, while Singapore peers DBS Group Holdings and OCBC are up about 27 per cent and 16 per cent, respectively.

Even though UOB said the charge will not affect its dividend and buyback programme, "investors remain sceptical, fearing that further CRE-related provisions could eventually pressure capital returns", Mr Ng wrote in a report in December.