Singapore banks' non-interest income to increase by up to 15%

Thanks to wealth management fees and net trading income.

Maybank Kim Eng analysts expect non-interest income to increase by 4-15% / 3-6% / 4-6% for FY17-19E across the Singapore banks.

"We think the increases could come from wealth management (WM) fees and net trading income. We expect UOB to have bigger headroom to drive net trading income, if it is willing to take on more risks as it repositions its trading capabilities."

Here's more from Maybank Kim Eng:

For WM fees, we expect decent growth as Singapore banks built up their AUM quite substantially, with 5-years CAGRs of 11-23%, through organic and inorganic growth.

Non-interest income formed c.38-44% and c.35-44% of total income across the banks in 1H17 and 2Q17 respectively. In 1H17, non-interest income rose by 10-32% YoY, helped mainly by higher net fee and commission income (for DBS, OCBC and UOB), and net trading income (for OCBC and UOB).

Comparing 2Q17, non-interest income rose by 2-34% YoY for OCBC and UOB, but declined by 5% YoY for DBS. DBS’s underperformance in 2Q17 was mainly attributed to lower fee and commission income (+1% YoY) from lower investment banking fees, and lower net trading income (-4% YoY).