The overall sales volume of structured products in Singapore is rising fast, although proportionally is still relatively low compared to other Asian markets such as Japan or South Korea. The sales figure rose a whopping 45% in the first half of this year compared to the previous year, according to SRP data.

During the January to June period over 200 products worth SGD$639m (US$468m) were sold with non-retail and leveraged products driving most of the activity. More than half of the products launched were warrants, but deposits attracted the largest volume SGD$500m. United Overseas Bank (UOB) continued to be the largest distributor in the market, followed by Maybank and Oversea-Chinese Banking Corporation (OCBC).

UOB maintained its predominant market share in the domestic structured products market during the first half of 2018. The figure came in at 70%, up 2% points from the same period a year ago. Southeast Asia's third-largest bank issued nine products during the January to June period, worth SGD$450m. All nine products offer capital protection with a capped interest payment, depending on the performance of their underlying assets. Half of the products featured basket of shares tracking the performance of local firms such as CapitalLand and Singapore Telecommunications. The other half provide exposure to the Pimco Income Fund, and one product offers exposure to a mix of Real Estate Investment Trust (Reit) and stocks of local corporations.

UOB achieved record net earnings of SGD$2.05bn, up 24% from the same period in 2017. The rise was supported by strong operating income on the back of loan growth and an improved net interest margin. The bank also reported strong net fee and commission income, which rose 15% year on year, driven by its fund and wealth management services as well as credit card fees. Net earnings for the second quarter this year also rose to a new high of SGD$1.08bn, rising almost 30% from the previous year.

OCBC reported a record net profit of SGD$2.32bn in the first half of this year, up 22% from the same period a year earlier. The bank's second quarter net profit also reached a new high of SGD$1.21bn, 16% higher from the second quarter of 2017 and up 9% from the first quarter of 2018. The growth was driven by strong performances from its wealth management and insurance businesses, while higher loan growth and net interest margin boosted net interest income in the April to June period, OCBC stated.

The income generated by the wealth management sector, which makes up almost a third of the bank's total income, also rose over 10% in the first half of this year compared to the same period of last year to SGD$1.49bn. OCBC's wealth management business includes insurance, private banking, asset management and other wealth management products. OCBC generated sales worth SGD$12m with a single structured product in the first half of this year.

The OCBC 6-Year Stepped-Up Interest-Rate Linked Structured Deposit is a fully protected growth product, giving fixed interest semi-annual payouts. At maturity, if the strike price is lower than the prevailing spot rate meaning that the base currency weakens against the alternative currency, there will be a payout of up to 11.1% pa. at maturity in the base currency. If the condition is not met, the initial investment will be calculated as the principal divided by the higher strike price, delivered in the alternative currency.

Maybank issued four products, worth SGD$48m in the six-month period ending in June this year. They are growth and income products linked to Singapore Swap Offer Rate and capital protected. Two of the products are USD-denominated deposits and two other are denominated in Singaporean dollar. All four products have a five-year term and feature a callable payoff through which the bank can terminate the product earlier after each annual coupon date.

In its quarterly report, Maybank reported AUD12m in five-year collared floating rate notes issued via its USD3bn structured notes programme, as well as RM182.1m (US$44.2m), redemption of its RM10bn Ringgit medium term notes commercial paper/medium term note programme. The Singapore bank also issued RM2.4m in structured deposits

The carrying amount of both structured deposits and borrowings designated at fair value through profit or loss (FVTPL) of the group and of the bank as of  June 30, 2018, were RM10.1bn and RM9.1bn (December 31, 2017: RM6.6bn and RM5.7bn), respectively.

Maybank's corporate banking & global markets' profit before taxation and zakat decreased by RM167.3m or 7.7% to RM2,004.9m during the first six months of 2018 from RM2,172.2m during the same period of 2017. The decrease was mainly due to higher allowances for impairment losses on loans, advances, financing and other debts of RM224.1m and lower share of profits in associates and joint ventures of RM56.8m.

Investment banking activities saw their profit before taxation and zakat increased by RM112.5m or 117.1% to RM208.5m for the first six months of 2018 compared to RM96.1m compared to the same period of 2017. Asset management recorded a loss before taxation and zakat of RM32.8m compared to a profit before taxation and zakat of RM63.3m for the same period of 2017.

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