FINANCIAL REVIEW
FINANCIAL RESULTS
HDB provides Singaporeans with affordable and quality homes, amidst a quality living environment where communities thrive, through its role as the master planner and developer of Singapore’s public housing towns and estates.
To help Singaporeans become home owners, the Government subsidises HDB flats with price discounts for new flats and by offering a variety of housing grants. HDB also offers housing loans at concessionary interest rates to help eligible Singaporeans own their homes. For the needy, low income Singaporeans, HDB provides heavily subsidised rental flats.
To ensure that HDB towns continue to be renewed and cater to the changing needs of residents, HDB rejuvenates its towns and flats through programmes such as the Remaking Our Heartland (ROH) programme, Neighbourhood Renewal Programme (NRP), Home Improvement Programme (HIP), and various lift upgrading programmes. In addition, HDB develops and manages commercial properties like neighbourhood centres to provide a range of amenities in HDB towns.
To reflect the full spectrum of HDB’s operations, the financial results are presented under ‘Housing’ and ‘Other Activities’ in the audited financial statements. ‘Housing’ consolidates the results of housing programmes implemented. It comprises the Home Ownership, Upgrading, Residential Ancillary Functions, Rental Flats, and Mortgage Financing segments. ‘Other Activities’ comprises the Other Rental and Related Businesses segment, and Agency and Others segment, which are commercial in nature.
In the Financial Year (FY) 2020, HDB incurred a net deficit of $2,346 million, before the government grant, as compared with $2,665 million in FY2019. The net deficit comprised the deficit from the ‘Housing’ activities of $2,649 million, offset by the surplus from the ‘Other Activities’ of $303 million in FY2020.
HDB received a grant of $2,346 million in FY2020 from the Government to finance its deficit, and to protect the reserves of the past governments in accordance with the Constitution of the Republic of Singapore. The retained earnings of HDB as at 31 March 2021 remained at zero after the transfers to the capital gains reserve to protect the past reserves.
HOUSING RESULTS
The Home Ownership segment covers the development and sale of flats to eligible buyers under the various home ownership schemes for public housing. The Home Ownership segment reported a deficit of $1,953 million in FY2020 as compared with $2,232 million in FY2019.
HDB recorded a lower gross loss of $356 million for the sales completed (i.e. keys issued to buyers) in FY2020. The number of sales completed in FY2020 was 8,124 units as compared with 11,609 units in FY2019, due to the suspension of construction activities during the Circuit Breaker period in 2020 and gradual resumption of works thereafter.
The provision for foreseeable loss of $376 million that was made in the previous years was released on the completion of the sale of flats in FY2020. On the other hand, $1,089 million of additional foreseeable loss was provided, mainly for the new building contracts awarded as well as for the costs co-shared with HDB’s building contractors due to delays in building works caused by the COVID-19 pandemic. As a result, there was a net increase of $713 million in the provision for foreseeable loss.
HDB also disbursed $791 million of CPF housing grants to eligible buyers of resale flats and Executive Condominiums (ECs) in FY2020 as compared with $631 million in FY2019.
The Upgrading segment reported a deficit of $242 million in FY2020, as compared with $440 million in FY2019. The programmes include the NRP, HIP, and various lift upgrading programmes. The decrease in the deficit was due to a lower expenditure for the HIP. There were fewer units undergoing HIP upgrading in FY2020 as compared to FY2019, due to the suspension of construction activities during the Circuit Breaker period and gradual resumption of works thereafter.
The Residential Ancillary Functions segment includes lease administration, provision and management of ancillary facilities such as car parks in housing estates, and planning and building administration. It reported a deficit of $307 million in FY2020.
As part of the Government assistance measures to help households that have financial difficulties, rental rebates were given to households living in rental flats. HDB also suspended late payment charges on rent arrears. Hence, the Rental Flats segment recorded a higher deficit of $125 million in FY2020.
Similarly, to help flat owners who face difficulties in paying their HDB loans on time, HDB suspended late payment charges on mortgage arrears. The Mortgage Financing segment therefore recorded a higher deficit of $31 million in FY2020.
RESULTS OF OTHER ACTIVITIES
The segment on Other Rental and Related Businesses focuses on the provision, tenancy, and management of commercial properties and land. It reported a lower surplus of $279 million in FY2020, as compared with $454 million in FY2019. This is due mainly to the rental rebates given to qualifying tenants in HDB shops, social-communal facilities and offices to help the operators and businesses cushion the impact of the COVID-19 pandemic.
CAPITAL EXPENDITURE
Capital expenditure for the year was $5,914 million. A large proportion of the year’s capital expenditure continued to be incurred for the purchases of land and construction of public housing.
FINANCIAL POSITION
As at 31 March 2021, HDB’s total assets amounted to $87,451 million. Loans receivable were $38,002 million. Property, plant and equipment, investment properties, and properties under development and for sale were $44,168 million. Altogether these assets accounted for 94% of the total assets.
Capital and reserves stood at $15,219 million as at 31 March 2021. Reserves comprised capital gains reserve of $7,440 million and asset revaluation reserve of $5,316 million. The loans payable of $65,340 million comprised mainly loans from the Government and bonds.
FINANCING OF PUBLIC HOUSING
HDB’s annual deficit is fully covered by a government grant. In addition, HDB receives a government grant to preserve the capital gains attributable to past governments on disposal of the protected assets, in accordance with the Constitution of the Republic of Singapore. The cumulative government grants provided to HDB since its establishment in 1960 amounted to $38,571 million.
The main loans which finance HDB’s operations comprise:
- Mortgage financing loans that finance the housing loans granted by HDB to purchasers of flats under the public housing schemes.
- Housing development loans that finance the development programmes and operations.
- Bonds that finance HDB’s development programmes, working capital requirements, and refinancing of existing borrowings. During the year, HDB raised $3.90 billion and redeemed $2.45 billion of unsecured Fixed Rate Notes. Total outstanding Notes under the Medium Term Note Programme was about $26 billion as at 31 March 2021.
