OCBC Bank's wealth management business has been doing well and expects to continue growing at a steady clip as it leverages its private bank unit, asset management arm and insurer Great Eastern.
Wealth management income and assets under management (AUM) have been growing in double-digit percentage terms per year for the past five years, revealed the bank on Tuesday.
Wealth management income is projected to reach a record S$2.6 billion this year, double the S$1.3 billion in 2011. Wealth management income is slated to make up 30 per cent of group income in 2015, up from 23 per cent in 2011.
OCBC group AUM stood at S$195 billion at end-June 2015, up from S$121.6 billion in 2011. Group AUM includes OCBC Bank, private bank Bank of Singapore and asset manager Lion Global Investors.
"We still expect double-digit growth," said Ching Wei Hong, OCBC chief operating officer giving an update of the wealth management business of South-east Asia's second-largest bank.
China will be one of the drivers for growth as the country opens up, he said.
Despite an economic slowdown in China, Mr Ching said that wealth continues to be generated in the world's second-largest economy.
Foreign banks are betting on China as it liberalises its financial sector and frees up the renminbi.
He notes that China's Qualified Domestic Institutional Investor programme which allows locals to invest in overseas assets is available only in five cities. At the moment a Chinese citizen can only move US$50,000 per year overseas.
Last year, OCBC bought Hong Kong's Wing Hang Bank, now renamed OCBC Wing Hang, which expanded the group network to more than 630 branches and offices. OCBC Wing Hang alone has 94 outlets.
OCBC's core markets are Singapore, Malaysia, Indonesia and Greater China. The group has almost 1,000 relationship managers made up of 650 in premier banking and 320 in Bank of Singapore.
The bank's strength is its vast network serving the wealthy business people in parts of Asia not on the radar screen of the big private banks, he said.
"This differentiates us from the Big Boys. We're flying below the radar - Surabaya, Manado, Batu Pahat and Georgetown," said Mr Ching, ticking off some of the smaller towns in Indonesia and Malaysia which have low-key wealthy people.
One client wanted to move his yacht for six months to Kota Kinabalu and needed funding for this crew, he related.
How can OCBC help, he asked and was startled when the yacht owner said that his captain needed S$100,000 and then understood when he was told cost of refuelling would be S$80,000. OCBC helped the captain get a credit card, he said.
Many of Asia's business owners are retiring and their children are not interested in taking over, this is where OCBC steps in, helping these clients monetise their assets.
For example, a lot of Taiwanese went to China 15 years ago to set up manufacturing plants, said Bahren Shaari, Bank of Singapore chief executive.
"They're now retiring, selling the business - we're targeting these liquidity flows," said Mr Shaari.
Demand for wealth products is strong, and this is where the asset management arm Lion Global Investors comes in.
This year, a new emerging market bond fund - the Lion-Bank of Singapore Emerging Market Bond Fund - has garnered AUM of US$585.4 million as at June 30. The minimum amount of investment is US$/S$/AU$100,000. The fund has a quarterly dividend policy and targets about 4 per cent per annum dividend. The first dividend pay-out was declared on Sept 30, 2015.
The fund was aimed at clients who had been buying individual bonds and with volatile markets, there is a need to diversify, he said. The fund has over 200 securities.
Although the rate of return of the fund "has not been stellar", "it's in line with the market", and fundholders enjoy cashflow in terms of the coupon payout, he said.
"That diversification is important given today's volatility and so the emerging bond fund works," he said.
Another fund which invests in capital strapped companies, the Lion-OCBC Capital Asia Fund had applications of S$700 million when launched, double the initial target. The minimum investment for the five-year fund was U$1 million.
The final close of the fund was completed in end-August 2015, with S$550 million raised.
