Macau is listed as one of UNESCO’s World Heritage Sites, is known as the ‘Orient Las Vegas’, and has achieved amazing developments over the past few years. The IMF estimates that its per capita GDP in 2013 could have been as high as fourth globally.
At the same time, local people are benefitting from the historically low unemployment rate. But like all booming economic entities, Macau has had to deal with soaring real estate prices. The contradiction between real estate prices and average individual income exists in lots of developing cities, but is more prominent in Macau because it is only a tiny island. The Macau Government began to realise how the problem hindered the improvement of local people’s livelihoods and began to make efforts to solve the problem.
Driven by its booming tourism industry, service exports and domestic demand, Macau has grown substantially over the past few years. Its GDP in 2013 was almost double that in 2010, while its per capita GDP ranked the first in Asia. Meanwhile, its foreign exchange reserves and fiscal reserves have been increasing since 2010, and Macau has already become one of the richest cities in the world.
A climate of growth
Founded in July 2009, ICBC Macau has also developed a lot in the past few years thanks to the prosperous economy in Macau and the internationalisation of the renminbi. ICBC’s compound average growth rate of profit after tax from 2009 to 2013 is 31 percent, and its assets in 2013 are 2.7 times what they were in 2009. Today, ICBC Macau is the second-largest bank and the largest locally registered bank in Macau.
ICBC Macau…paid much attention to economical housing projects, and grasped the chance to serve those low-income people from the outset
According to recent statistics, the real median incomes of locally employed residents stood at MOP 15,000 in 2013, while the average property price per square metre was MOP 81,111 (see Fig. 1). Indeed, Macau real estate prices reached a historical high in 2013. There is no doubt that more and more low-income residents can hardly afford to buy a house; most of them can’t even meet the conditions for private mortgage loans.
In order to ease these people’s stress in the housing market, the MSAR (Macau Special Administrative Region) Government announced a restart to the Economical Housing Plan in 2011, followed by an amendment to the Economical Housing Law, which aimed to assist local residents who were at a specific income level and financial situation in solving their housing difficulties, and to promote the increase of local housing supply and improve the residents’ social welfare.
According to the law, the income of qualified applicants should be somewhere between MOP 7,820 and MOP 22,240 per month, and personally held net assets should be no more than MOP 672,168. The average property price per square metre of the ‘economical’ house is nearly one-fifth that of ‘normal’ houses.
Those people who have succeeded in applying for economical houses were generally those on low-incomes and in vulnerable sections of society. Some of them even have difficulties decorating new houses. Compared with the application procedure for ordinary mortgage loans, the application for an economical house mortgage is similar, but deals in smaller amounts. Because this could result in a difficult workload and comparatively low returns, other banks in Macau paid less attention to providing mortgage loans to low-income residents.
Economical housing projects
ICBC Macau, however, paid much attention to economical housing projects, and grasped the chance to serve those low-income people from the outset. The Economic Housing Programme has several projects located in different parts of Macau, and during its involvements in these projects, ICBC Macau has found that the major challenge was how to supply timely information, together with a complete and convenient service to the customers, while approving the mortgage loans as much as possible in accordance with local regulation from the AMCM (Monetary Authority of Macau).
Based on research of the local market situation, together with related laws and regulations, ICBC launched a series of loan privileges for citizens who planned to buy the economical houses. Most of the measures were carried out in order to offer high-quality mortgage loans to local residents and help those low- and middle-income people overcome their funding issues. At the time when the first economical house was on sale, applicants could get useful information without delay.
ICBC Macau also provided a lot of preferential terms to benefit applicants. To smooth along applications, the bank sent its own staff to sales offices and show flats for economical housing properties. With face-to-face service, the problems and applications of prospective owners could be solved in time.
When it came to the products and the pricing aspects, the bank offered flexible services to convince more customers to use the system, instead of the traditional strategy of low interest rates, for example, taking the household appliance coupon and the supermarket coupon as an additional premium. Compared with other banks in the country, ICBC Macau offered a package of benefits for a larger group of local residents.
Additionally, learning about the decoration difficulties that some applicants were having, ICBC Macau offered various ways to help them out of this situation. Besides the free household appliance coupons, the bank also promised to provide decoration loans in order to lower the worries of applicants.
ICBC Macau issued specially designed mortgage loan strategies to low-income residents and reduced credit risk by separating the censoring and approving procedures, aiming to improve the success rate of the mortgage loan and to maximise customer satisfaction.
Fast and efficient
Based on the high concentration of the economical housing projects, the loan origination work has to be finished in a relatively short period of time. To ensure the applicants aren’t made to wait, the bank works hard to concentrate its human resources together with technology and facility support to prolong business hours consistently. With the active engagement of the relevant departments, on one occasion more than 1,000 mortgage loans had been set up in less than 10 days, and the whole loan origination stage in each project had been finished in a rapid and effective way.
In spite of the low return of economical housing mortgage loans, ICBC Macau still sticks to providing excellent service to every single customer. By the end of 2013, five Economical Housing Projects had been finished, and 8,060 units could be occupied. According to official statistics, 6,004 units have been sold. ICBC Macau has dealt with 4,554 of the mortgage loans offered to these successful applicants, representing a market share of 75.85 percent.
Having worked hard in the sector, ICBC Macau has established its brand image in economical housing mortgages and won the respect and appreciation of the low-income segment of society. Going forward, with the objective of ‘taking from society, giving back to society, serving society’, ICBC Macau will continue to support the MSAR Government’s policies and fulfil its social responsibility, devoting itself to social welfare.
