The Singapore bank has trebled its issuance of structured products in Taiwan as it continues to build up its ESG offering in its domestic market.

Net profit at DBS Group has increased by four percent to SG$1.3 billion (US$970m) in the third quarter ended on 30 September quarter-on-quarter (QoQ), which led to SG$3.7 billion in the first nine months – down 24% year-on-year (YoY).

Net interest income dropped six percent to SG$2.2 billion QoQ due to a ‘9bp fall in net interest margin, underlying loan growth healthy’.

Meanwhile, net fee income was up 17% to SG$913m QoQ led by wealth management and card fees, which contributed SG$380m and SG$160m, respectively.

Allowances reached to SG$554m, down 35% QoQ, after the bank accelerated the build-up in the first two quarters – bringing the total to SG$2.5 billion in the nine months.

At the same time, expenses rose by 4% to SG$1.5 billion QoQ. The cost-income ratio jumped to 43% from 40% QoQ.

DBS Private Bank last month launched a new tranche of its MSCI EM Asia ESG Leaders Outperformance Trade to capitalise on the SG$95m (US$70m) raised over seven tranches following the product’s debut in August 2018, SRP reported. DBS Bank has marketed over 3,500 structures across the Apac region year-to-date with an estimated value of US9.7 billion (3.98% market share) compared to 1,173 products worth US$4 billion (1.1% market share) during the same period of 2019.

There are 1,465 products issued by DBS Taiwan and three by DBS China from July to September, nearly treble the total issuance in the same period in 2019, SRP database shows.

Small tickets have largely supported the growth in Taiwan where the largest Singaporean bank by asset has seen a 55.5% increase of its issuance to 7,112 during the first nine months as the most active issuer in the region YoY, SRP reported.

The three products issued in China are structured deposits with digital deployed as payoff with a tenor of three months or six months. These are tied to single equity of Coca-Cola, Starbucks and Paypal, respectively. 

United Overseas Bank (UOB)

The third largest Singaporean bank by assets has posted a net profit of SG$668m in the third quarter, five percent lower QoQ and 40% lower YoY, due to ‘the pre-emptive build-up of credit allowance of SG$339m’.

The bank made a strategic move towards ESG as it adds sustainable investments within its structured products offering - by selecting issuers based on an in-house due diligence framework across its full suite of investment solutions, including unit trusts and bonds.

It is currently offering over 20 flow products tied to equities with high ESG ratings after seeing ‘strong interest’ in ESG investing from its clients through an in-house survey, SRP reported.

UOB had 4,706 structured products with strike dates between 1 December 2018 to 30 November 2019, 884 products to mature and 3,743 products with potential early redemption, as reported by SRP - UOB won two SRP APAC awards in August.

The bank is also among the top providers of dual currency structured deposits in China. These products, which offer no principal protection, are mostly issued by foreign banks including HSBC, Citi, Hang Seng Bank, DBS and UOB. The latter launched two single equity index structured deposits linked to the domestic CSI 300 Index during the last quarter.

The bank’s net profit during the first nine months of 2020 stood at SG$2.2 billion, down 33% YoY, as a result of ‘declining margins, slower customer activities and pre-emptive credit provisioning in view of the uncertainties from the Covid-19 pandemic’.

Net interest income reached SG$1.5 billion, up one percent QoQ led by ‘an improvement in net interest margin of 5 bps to 1.53% as liquidity buffers eased in line with a stabilising funding environment’. The figure was 13% lower YoY. 

Fee income was up 15% to SG$514m QoQ, as ‘business activities resumed across the region with the gradual easing of movement controls’. Meanwhile, trading and investment income was down 28.6% to SG$210m QoQ, or 31% YoY.

Expenses were reduced by three percent to SG$1 billion QoQ, or by 15% YoY.

Click to read the Q3 20 report of DBS and UOB.

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