Wealth management fees buoy Singapore banks earnings in Q1

DBS, OCBC, and UOB all registered double-digit growth in fee income.

Double-digit growth in fee income smashed analyst estimates and buoyed the first quarter earnings of Singapore’s top banks, according to UOB Kay Hian.

UOB led the charge after fees rose 17.8% YoY in Q1 whilst DBS and OCBC clocked in similarly stellar fee growth at 11.9% and 11.4%.

The growth in fee contributions was buoyed by a surge in wealth management fees with DBS taking the crown after fee growth ballooned 49%. The wealth management fees of UOB and OCBC also grew 30% and 18.6% over the same period.

Also read: Singapore banks poised for widening NIMs

Quarterly loan growth was similarly stable after hitting 1.6% for DBS, 3.9% for OCBC and 2% for UOB amidst strong demand for trade loans and residential property projects.

Also read: MAS tightening to bolster Singapore banks' performance

Bad loan levels also eased across the board with new NPLs at DBS easing by a massive 63%, 24% for OCBC, and 1.9% for UOB as banks recognised more stressed assets during the second half of the year due to a change in financial reporting standards.

Here’s more from UOB Kay Hian:

NIM expanded 5bp qoq for DBS and 3bp qoq for UOB due to higher 3-month SIBOR and SOR, which gained 32bp and 48bp respectively in February and March. NIM was flat qoq for OCBC due to NIM compression of 17bp qoq for OCBC NISP.

DBS and UOB are extremely well capitalised with CET-1 CAR at 14.0% and 14.9% respectively. OCBC’s CET-1 CAR was slightly lower at 13.1% but could be boosted if it divests 30% of Great Eastern Life (Malaysia) through an IPO or trade sale in 2H18 to comply with the limit on foreign ownership. OCBC plans to implement IRBA for OCBC Wing Hang in 2019.