Singapore’s second-largest bank, Oversea-Chinese Banking Corp., has reported a slide of 14 percent for the first-quarter citing provisions for bad loans and weakened contribution from its insurance unit.
At the private banking unit of Oversea-Chinese Banking Corp (OCBC) operating profit after allowances rose by 16 percent year-on-year to S$253 million, from S$218 million in the first quarter of 2015, driven by net interest income growth, and partly offset by higher expenses. Quarter-on-quarter, operating profit after allowances was down 10 percent, mainly attributable to lower fee income, which more than offset reduced expenses and allowances.
However the increase in income from private banking was offset by lower fees and commissions from other wealth management activities as a result of weak investment appetite of customers during the first half of the quarter. OCBC Bank’s private banking services are provided by its wholly-owned subsidiary Bank of Singapore.
Private Banking Earnings Diluted
At OCBC wealth management income comprises the consolidated income from insurance, asset management, stockbroking and private banking subsidiaries, plus the Group's income from the sales of unit trusts, bancassurance products, structured deposits and other treasury products to consumer customers.
The Group’s overall first quarter 2016 (1Q16) wealth management income, comprising income from insurance, private banking, asset management, stockbroking and other wealth management products, was down 17 percent to S$482 million, from S$583 million a year ago. The decline in insurance contributions more than offset growth in private banking income. As a proportion of the Group’s total income, wealth management contributed 23 percent, as compared with 28 percent a year ago.
«The Group’s banking operations in the first quarter of 2016 achieved total income growth of 4percent year-on-year, and saw operating profit growth of 3 percent. Given the weak economic environment and further stresses noted especially in the oil & gas support services sector, we continued to adopt a conservative approach and this was reflected in the increased level of provisions set aside for the quarter,» said Samuel Tsien, OCBC Chief Executive.
Wealth Management Acquisition
OCBC Bank announced on 7 April 2016, that its wholly-owned private banking subsidiary, Bank of Singapore, entered into an agreement to acquire the Wealth and Investment Management business of Barclays Bank in Singapore and Hong Kong for approximately S$429 million. The transaction is expected to be completed towards the end of 2016.
finews.asia will report next week on the first quarter results of Singapore’s largest banking group and biggest wealth management DBS.
