Unexpectedly Singapore’s OCBC Bank has reported a drop in profit in 2016. Wealth management income was offset by rising net allowances and a lower trading income. The dividend remains unchanged.

Oversea-Chinese Banking Corporation (OCBC Bank) reported a net profit after tax of S$3.47 billion for the financial year ended 31 December 2016, according to the annual figures presented on Tuesday.

Against a strong prior 2015 performance, which included a substantial investment gain from insurance subsidiary Great Eastern Holdings (GEH), net profit after tax was 11 percent lower.

Including Barclays

The decline in earnings was also driven by a rise in net allowances and lower trading and insurance income, which more than offset the impact of strong wealth management fee income growth and increased contributions from our Indonesia and Hong Kong banking subsidiaries, the bank writes.

The full year earnings also included the one month consolidated results of the former wealth and investment management business of Barclays in Singapore and Hong Kong (Barclays WIM) which was acquired by Bank of Singapore (BoS) at the end of November 2016.

Assets under management of $13 billion were transferred to BoS for a consideration of $228 million. The one month profit contribution was not material relative to the Group’s 2016 earnings.

Unchanged Dividend

The Board has proposed a final tax-exempt dividend of 18 cents per share, bringing the full year total dividend to 36 cents per share, unchanged from 36 cents in 2015. The Scrip Dividend Scheme will not be applicable to the final dividend. The estimated total dividend payout will amount to S$1.51 billion, representing 43 percent of the Group’s core underlying net profit in 2016.

The Group’s cost-to-income ratio was 44.6 percent as compared to 42.0 percent in the previous year.

Higher Expenses

Excluding the consolidation of Barclays WIM and the associated integration expenses, operating expenses were 2 percent higher than in 2015, which reflected overall continued cost discipline and tightly controlled headcount growth, the bank writes.

Allowances for loans and other assets of S$726 million were higher than S$488 million a year ago, mainly led by an increase in specific allowances for corporate accounts in the oil and gas support services sector which the Group has been closely monitoring.