WEALTH VENTURES LIFT PROFITS

Investments help offset weaker loan margins at DBS, OCBC and UOB

SINGAPORE’S big three banks have invested heavily in their wealthmanagement businesses over the past year and the results are starting to show.

Higher income from servicing Asia’s more well-heeled individuals helped DBS Group Holdings Ltd, Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank Ltd (UOB) offset badloan provisions and weaker loan margins to post better-than-expected first-quarter profits. OCBC’s wealth-management revenue surged 70 per cent from a year earlier, the firm reported yesterday.

The banks have expanded their wealth operations to take advantage of growing affluence in the Asia-Pacific region, where individual wealth surpassed North America for the first time in 2015, according to Cap Gemini SA.

Last year, OCBC purchased Barclays Plc’s wealth units in Hong Kong and Singapore, while DBS bought Australia & New Zealand Banking Group Ltd’s retail and wealth operations in five markets.

In wealth management, “we will continue to grow organically”, OCBC chief executive officer Samuel Tsien said at a briefing yesterday.

OCBC, Southeast Asia’s second-largest lender, reported a surprise 14 per cent jump in profit as higher wealth and insurance income offset a decline in net interest income at a time of low Singapore benchmark rates.

The Barclays acquisition helped OCBC’s private-banking unit, Bank of Singapore, climb four places to rank seventh among Asia’s 20 largest private banks in terms of assets under management last year. DBS was sixth on the list, unchanged from a year earlier. UOB entered the APB list for the first time at 14th.

“Wealth formation in Asia is very strong,” DBS CEO Piyush Gupta said May 2 after his bank’s results. “If you are one of the top 10 players in the market, you will get a degree of growth just by being in the market.”

DBS reported a one per cent gain in first-quarter profit from a year earlier. UOB posted a 5.4 per cent profit increase on April 28.

DBS’s fee and commission income gained 16 per cent to S$665 million, OCBC (29 per cent to S$481 million) and UOB (18 per cent to S$508 million). Bloomberg