Oversea-Chinese Banking Corporation (OCBC Bank), the Singapore headquartered public services organisation, has reported its third quarter results were boosted by income from wealth management, which houses the bank's structured products operations. United Overseas Bank (UOB), another bank with a strong foothold in Singapore, recorded another quarter of decline in wealth management profit, although profits for the first nine months of 2016 for the banks global markets division, which provides treasury products and services across multi asset classes including equities and structured investment products, rose by 3% (before tax) to S$197m (US$141m), according to its 3Q report.
As at September 30, 2016, OCBC had S$1,457m of unsecured structured notes outstanding, an increase from a year ago and the previous quarter. The outstanding for fixed and floating rate notes, at S$3,831m, was down year-on-year and quarter-on quarter. Both structured notes and fixed and floating rate notes form part of the banks funding sources.
OCBC reported that pre-tax profit for the third quarter climbed from S$1,116m to S$1,167m, with strong performance in non-interest income, particularly fees from wealth management and profit from life assurance.
Non-interest income grew 25% to S$970m, and wealth management's contributions to this grew from 22% to 28%, the bank reported. Out of S$428m income generated from fees and commissions in the third quarter, S$155m were from the wealth management division, where income grew 11.5% on an annual basis.
OCBC's private banking business, Bank of Singapore, saw assets under management grow 20% year-on-year to S$85bn as of September 30. This increase does not include the acquisition of Barclays Wealth and Investment Management, which is expected to complete later this year.
OCBC's total operating profit for the nine months ended September 30 was S$3,012m, down from S$3,363m for the first nine months of 2015. The Global Consumer (GS) group, which includes structured deposits, and the Private Banking (PB) operation, which sells open-architecture products, together accounted for S$808m of those, up from S$722m for the same period of 2015. On a quarterly basis, Q3 GS/PB generated S$282m, up from S$239m for the third quarter of last year.
OCBC's 9M16 wealth management income, comprising income from insurance, private banking, asset management, stockbroking and other wealth management products, was S$1.63bn.
Meanwhile, regional rival UOB reported earlier today (October 28) that fee and commissions income for the nine months to the end of September totaled S$1,400m, of which S$293m were generated from wealth management operations. These compare with S$1,403m and S$321m for the same period of 2015.
Profit before tax increased 20% to $1,231 million in 9M16 from a year ago. The double-digit growth was supported by higher net interest income on healthy loan growth but partly offset by lower fee income from wealth management products, the bank said.
Due to the open architecture and bespoke nature of OCBC's and UOB's structured products operations, only 19 and 23 products from the two banks, respectively, were added to the SRP database this year. OCBC's offering, which was split between dual currency, autocallable and digital products, were distributed to investors in China (nine products), Malaysia (seven) and Singapore (three), while UOB's products have slightly more diverse payoffs and are available to investors in China (14), Hong Kong (three) and Singapore (six).
Click the respective link to see OCBC's and UOB's full third quarter reports.
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