Wealth management units in Singapore banks have proved resilient despite weak market sentiment this year.
In the third quarter, DBS, OCBC and UOB generated SGD 292 million ($212.9 million), SGD 217 million ($158.2 million) and SGD 133 million ($97 million) in wealth management-related fees and commission income.
While fee incomes for both DBS and Bank of Singapore were down over 2% quarter-on-quarter, they were up 7% and 6% year-on-year respectively.
UOB’s fee income, while being marginally higher since the last quarter, fell 6% compared to the same period last year, when it had seen significant gains from investment securities.
For the first nine months of 2018, combined wealth management fees and income for the three banks grew 15% on-year to SGD 2.05 billion ($1.5 billion), according to Singapore Exchange estimates.
DBS reported a 29% on-year increase in total wealth management income to SGD 2.03 billion ($1.48 billion), supported by bancassurance income.
OCBC’s overall wealth management-related income, comprising insurance, private banking, asset management, stockbroking and other wealth management products, rose 5% year-on-year to SGD 2.24 billion ($1.6 billion).
Similarly, assets under management (AUM), too, have steadily increased in the third quarter.
DBS’ wealth AUM grew 13% on-year to SGD 220 billion ($160.3 billion). The bank includes DBS Treasures, Treasures Private Clients and the private banking division in its calculations.
‘Wealth management AUM and revenue is expected to see continued growth from growth in GDP, market share, productivity improvements and non-cyclical revenue pools like estate planning, and discretionary portfolio management,’ Jefferies analyst Krishna Guha wrote in a research note. He is maintaining a buy rating on the bank.
Bank of Singapore’s AUM has grown to $105 billion, rising 11% in the past 12 months. ‘Despite the weakened regional market sentiments as a result of global trade tensions, the growth in our wealth management franchise continued, with sustained net new money inflows that drove our assets under management to an all-time high,’ said OCBC group CEO Samuel Tsien.
UOB, however, does not disclose its AUM in quarterly reports. The bank had SGD 104 billion ($75 billion) at the end of 2017.
Ratings agency S&P is maintaining its AA- long-term rating and a stable outlook on all three banks.
‘DBS' bottom line will be further supported by its diversification into more stable fee income businesses such as wealth management and bancassurance, as well as the enhanced cost efficiencies from its digitization strategy,’ S&P analyst Ivan Tan wrote in a report.
‘OCBC has built a comprehensive wealth management platform--including private banking services via Bank of Singapore and insurance products through Great Eastern Holdings--to drive fee income growth and complement its core lending business,’ he added.