OCBC’s share prices advanced 1% on Tuesday to $10.55.
The breaking news that the company plan to take over National Australia Bank’s private wealth business in Singapore and Hong Kong – which is expected to add $1.7bn of mortgage loans and $3bn deposit to its portfolio - sent its share price to its highest level in over two years.
The purchase is expected to complete by the end of this year at a price approximately at its book value at the time the transaction is completed.
This will remind investors of OCBC’s recent move to acquire Barclay’s private wealth business in Hong Kong and Singapore just a year ago, which boosted Bank of Singapore’s AUM by 33%. At a time when foreign banks are spinning off their non-core businesses in the APAC region, Singapore’s deep-pocket buyers are taking the opportunity to bargain hunt and broaden their portfolios.
In its first-quarter earnings, wealth management income surged 50% year-on-year to S$724m, which accounts for 32% of group income. The compound annual growth rate (CAGR) of Bank of Singapore’s earning asset base has been 17% over the last six years, far exceeding its insurance group, Great Eastern’s, CAGR of 8%.
Wealth management income has become Singapore banks’ profit driver in a relatively low-interest-rate environment. Continuous expansion will help local banks to tap into Asia’s rising middle class and fast-growing affluence.
Noble Group, on the other hand, tumbled 33% yesterday as the company incurred a net loss of US$129 million in the first quarter due to disruptions in the coal market. The result disappointed shareholders and dampened the already extremely fragile market sentiment. Technically, Noble’s share price looks like a ‘falling knife’ as it fell over 75% from a February high and is now hitting a fifteen-year low.
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