As all four leading Singapore-based and Asia-focused investment banks have reported financial results for the first quarter of 2017, wealth management has outperformed other businesses amid buoyant investment conditions.
OCBC posted a 14% annual increase in net after-tax profit of S$973m (US$690m), driven by 'sustained' growth in wealth management which registered a 70% year-on-year rise to S$215m, which is partly attributable to the acquisition of the former wealth and investment management business of Barclays in November, the Singapore bank said.
Overall wealth management income, comprising income from insurance, private banking, asset management, stockbroking and other wealth management products, grew 50% to S$724 million. The business contributed 32% to the group's total income, up from 23% in 1Q16.
The bank's global consumer and private banking operations, which include HNW services and wealth management products such as unit trusts, bancassurance products and structured deposits, brought in S$313m in operating profit, up 43% year-on-year. Assets under management (AUM) in private banking grew 49% on an annual basis to US$85bn, though this was partly driven by the acquisition of Barclays WIM.
UOB reported net earnings of S$807m, up 5.4% on an annual basis, with a 17.5% increase to S$508m in fees and commission income, driven by higher fund management and wealth management income. Wealth management income was up 56.1% to S$126m, while fund management earnings came in at S$54m, up 40% from the first quarter of 2016.
Profit at UOB's Retail segment, which includes retail wealth management and investment products, increased 18% to S$449m, primarily due to higher wealth management fee income. The group's Global Markets segment, which includes structured investment products other than those consolidated in the Retail and Wholesale segments, saw profit decline 12% to S$64m due to unfavourable foreign exchange movement.
By geographical segment, Singapore accounted for 57% of the group's operating income (S$1.2bn), followed by Malaysia and Thailand with 12% and 10%, respectively.
Meanwhile, Standard Chartered, whose largest shareholder is Singapore government-owned Temasek Holdings with a 16% stake, reported pre-tax profit of US$1.0bn, up 94% on an annual basis. The surge was primarily driven by f particularly low loan impairment and good cost control, StanChart noted. Wealth management income grew 21% on an annual basis to US$421m.
The bank generated just under 70% of its income in Asia, and another 21% in Africa and the Middle East. The bank noted 'continued momentum' in wealth management and deposits in North Asia and Greater China, particularly in Hong Kong, resulting from an increase in the proportion of 'Priority clients', as well as 'better performance' in wealth management in Africa and the Mid-East.
The bank posted Private Banking income of $117 million, up 2% year-on-year. Increases in Deposit margins and higher sales of treasury products in Wealth Management in the first quarter offset lower lending balances and margins following actions taken to improve the risk profile of the segment during 2016, StanChart said.
Earlier, DBS reported that wealth management income grew 26% year-on-year to S$222m, on the back of stronger sales of unit trusts and other investment products. Income in the Consumer Banking / Wealth Management (CB/WM) division rose 13% to S$1.16bn. The increase was across all product segments and led by double-digit percentage growth in investment products, DBS noted.
Treasury markets, which includes the Bank's structuring, market-making and trading across a broad range of treasury products, but excludes treasury products from the CB/WM and Institutional divisions, saw pre-tax profit plunge 68% to S$54m, as higher equity and credit product income failed to offset a slump in interest rate and forex products.
Between them, the four banks have distributed over 6,300 structured products, according to the SRP database. These include over 330 tranches so far in 2017. All their products have been placed in the Asia-Pacific region.
Click on the respective links for the full 1Q17 results of DBS, OCBC, StanChart and UOB.
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