Banks pin their hopes on wealth management as loan growth dwindles

Foreign assets drove growth in Q2.

Singapore’s listed banks are turning to affluent clients to boost income growth. As lending fizzles out in the city-state, the country’s three largest lenders are relying on their wealth management prowess in search for growth.

According to Macquarie, wealth management was a key growth driver for DBS, OCBC and UOB in the second quarter.
Wealth management made up 14% of the banks' overall income in the quarter. DBS' wealth management arm contributed 14% of its total revenue in 2Q15, up from just 11% in 2014.

The wealth management segment made up 15% of both UOB and OCBC's revenues, up from 13% in 2014. Including contributions from Great Eastern Holdings, OCBC’s wealth management segment made up 26% of earnings in the quarter.

Macquarie said that revenue contribution from wealth management grew partly because of higher trading volumes from the Hong Kong – Shanghai stock connect.

Assets under management for the three banks showed good growth momentum, especially for assets sourced outside Singapore. 

Bancassurance, unit trust and fund management fees and commission, which account for around half of wealth management income, reported double-digit year-on-year growth for all banks during the quarter.

“Going forward, we continue to believe that Singapore banks will remain key beneficiaries from the Asia Wealth Management growth theme,” said Macquarie.