Singapore banks' profits hit 6pc in 9 months
According to the Singapore Exchange, for the first three quarters of 2017, the three Singapore banks have averaged 6% YoY growth in net profit. DBS' total income and profit before allowances for 9M17 were at new highs from broadbased growth in loan volumes and fee income, which more than offset the impact of softer Singapore-dollar interest rates and weaker trading income.
However, DBS' higher third-quarter allowances resulted in a 5% decline in ninemonth net profit to S$3.17 billion (US$2.4b). DBS' net interest margin (NIM) for the 9MFY17 was unchanged YoY at 1.74%. OCBC's net profit after tax for its 9MFY17 at S$3.11 billion (US$2.3b) was 16% higher YoY. OCBC's net interest margin (NIM) for the 9MFY17 saw a YoY decline of four basis points to 1.64%.
UOB registered net profit of S$2.54 billion (US$1.9b) for its 9MFY17, up 8% YoY. UOB's NIM for its 9MFY17 improved by four basis points YoY to 1.76%.
Meanwhile, Singapore's big banks are adopting fintech 54% of fintechs have focused on banks. Singapore is already recognised as a top global fin- tech hub, thanks to government support and proximity to expertise. The year hasn't ended yet, but the sector has already transformed the banking landscape, UOB Kay Hian said.
The firm identified two fintech business models, namely, competitive, which directly challenges incumbent banks, and collaborative, which enhances their positions. Those in the latter gathered more traction. Investment in collaborative fintech companies increased 138% as fintechs increasingly view incumbent banks as potential partners.
As a result, banks have also seized the opportunities by collaborating and investing in fintech companies. Amongst fintech companies, those within the banking & payments subsector took the lion's share at 54%.
DBS has redesigned its IT infrastructure, leveraging on big data, biometric and AI to make banking simple and seamless for customers. On 16 April, DBS also launched Digibank in India, a mobile-only bank that is paperless, branchless and involves no signatures.
Customers are serviced by an AI-powered virtual assistant created in partnership with Kasisto, a spin-off from the creator of Siri. The virtual assistant is able to handle 80% of customer requests without human intervention while the balance 20% of customer requests go to live chat sessions.
UOB Kay Hian said that the upgrade has acquired 1.5 million new customers and 450,000 savings accounts.
DBS also developed iWealth for its wealth management business. Through this, users conducted banking transactions, accessed researches and analysis, and managed and traded a portfolio of stocks and funds. A mobile platform was launched in 1H2017.
Meanwhile, OCBC launched Emma, an AI-capable chatbot, on 17 January. The bot was able to answer questions on home and renovation loans with a total debt service ratio (TDSR) calculator. OCBC recorded that more than 10% of chat sessions have been converted to home loan sales prospects.
The bank also launched the algorithm-based robo-advisor that guides clients in their investment journey. Clients first complete a questionnaire, which determines their risk profile and investment goals. Thereafter, clients are advised to invest in one of five portfolios of ETFs and a thematic basket of stocks listed on the NYSE and NASDAQ. The platform will monitor the chosen portfolio and conduct regular rebalancing of an investment portfolio.