OCBC’s wealth management business sizzles as loan growth fizzles out

Expect solid contributions from Great Eastern.

OCBC’s wealth management business will pick up some of the slack left by slowing loan growth, according to a report by DBS.

DBS said that OCBC’s strong non-interest income franchise will drive the group’s earnings in 2016, particularly from its private banking activities and from its insurance arm, Great Eastern Holdings.

“OCBC differentiates itself from peers when looking at its noninterest income composition. Its focus to grow its non-interest income franchise, especially its wealth management business is aimed at buffering potential moderation in net interest income due to sluggish loan growth. Its insurance business, 87%-owned subsidiary, Great Eastern Holdings, remains a dominant part of its non-interest income,” said DBS.

“We expect wealth management income to continue its upward trajectory, potentially contributing up to 20% of non-interest income (excluding insurance). Since the acquisition of Bank of Singapore in 2010, we have seen its wealth management income growing steadily; this trend is expected to be sustainable,” DBS added.