Sat, Feb 22, 2020 – 5:50 AM


UNITED Overseas Bank (UOB) has been de-risking its loan book in North Asia and Singapore amid uncertainties brought on by the novel coronavirus outbreak. It sees businesses accelerating their plans to diversify to South-east Asia as a result of the current supply chain…

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Sat, Feb 22, 2020 – 5:50 AM

HSBC Holdings is embarking on a radical overhaul while it continues the hunt for a permanent chief executive. For investors, the strategic muddle of this bizarre situation should be at least as troubling as the stinging cuts, US$7.3 billion in charges and suspension of buybacks that the bank announced with its earnings on Tuesday.

The London-based lender will cut as many as 35,000 jobs, reduce gross assets by more than US$100 billion by 2022, shave annual costs by US$4.5 billion and slash the size of its investment bank in Europe and the United States in the biggest raft of changes for years.

All this will be overseen by interim chief executive officer Noel Quinn, pending the appointment of a permanent successor to John Flint, who was ousted last August.

Mr Quinn was left to present the plan even as HSBC declined to confirm him in the job. This is bad on two levels:

First, it undercuts the authority and investor confidence that he might otherwise be expected to enjoy, should he eventually be appointed. At the very least, the delay signals that the board has harboured doubts about his suitability.

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Second, going ahead with the revamp may impede the search for a replacement.

A personal stamp

Any chief executive worth his or her salt will expect to put a personal stamp on the company. But the biggest decisions have already been made. This reshaping will have Mr Quinn's fingerprints all over it. That may narrow the options for HSBC chairman Mark Tucker.

Stephen Bird, Citigroup Inc's former top executive in Asia and the leading external candidate for the job, already has ruled himself out, the UK's Sunday Times reported last weekend, citing unidentified sources.

HSBC might argue that waiting was not an option after years of sub-par performance. Mr Quinn said in Tuesday's statement: "Parts of our business are not delivering acceptable returns."

HSBC will shift resources to higher-returning markets, while squeezing the cost base and exiting some business lines. "The current strategy is in no man's land," as one investor told Bloomberg News pre-earnings.

No one could accuse HSBC of sparing the knife this time. The job cuts are equal to about 15 per cent of the workforce, and also an answer to those who, like this writer, have criticised the bank for being overly timid in the past. Still, the overhaul may end up exacerbating some of the vulnerabilities the bank seeks to address.

The restructuring makes the bank even more hostage to the fortunes of Hong Kong and mainland China, two economies struggling with slowing growth aggravated by the coronavirus outbreak. Hong Kong was already the source of 90 per cent of HSBC's profit in the third quarter. The city is going to become an even more glaring presence in its books.

Besides an economy in recession, competition is getting tougher for HSBC in the city, as online lenders backed by Tencent Holdings Ltd and Alibaba Group Holding Ltd prepare to launch this year.

Hong Kong's dominant bank has also had to navigate political minefields, including being the target of the public ire last year after it closed an account linked to pro-democraRead More – Source


Fri, Feb 21, 2020 – 4:23 PM

UPDATED Fri, Feb 21, 2020 – 5:43 PM

SWEPT into fresh uncertainty from the virus outbreak, Singapore banks are cautious over the next three to six months, with about 10 per cent of their total loan portfolio seen to be exposed to vulnerable sectors for now.

The trio wrapped up the full-year 2019 results season that met or…

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Fri, Feb 21, 2020 – 10:24 AM

DBS Group on Friday announced it will issue US$1 billion of 3.3 per cent perpetual capital securities.

These are expected to qualify as additional tier-1 (AT1) capital of DBS Group. The unsecured, subordinated securities rank senior to DBS ordinary shares, pari passu with DBS's AT1 capital securities, but junior to all other claims of the group.

The coupon rate of 3.3 per cent is said to be the lowest for any AT1 US dollar deal done in the world.

The deal is NC5, which means it cannot be called or redeemed before the five-year mark. DBS has the option to redeem the securities on the first call date of Feb 27, 2025 or on any coupon payment date thereafter, subject to the prior approval of the Monetary Authority of Singapore.

If they are not called, the coupon rate will reset on Feb 27, 2025 and every five years thereafter to a rate equal to the then-prevailing five-year US dollar Treasury rate plus 1.915 per cent per annum.

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The securities are expected to be issued on Feb 27, 2020, under the groups US$30 billion global medium-term note programme.

More than US$5.5 billion of orders from 304 accounts were received for the deal, according to deal statistics seen by The Business Times (BT).

The bulk of the orders came from Asia (77 per cent), while the rest originated from Europe, the Middle East and Africa.

Asset managers and facility managers accounted for 73 per cent of the order book.

Net proceeds will be used for the finance and treasury activities of DBS Group, including the provision of intercompany loans or other forms of financing to DBS Bank and its subsidiaries.

DBS Bank waRead More – Source


Fri, Feb 21, 2020 – 7:43 AM

UPDATED Fri, Feb 21, 2020 – 8:26 AM

UNITED Overseas Bank's (UOB) net profit for its fourth quarter rose 10 per cent from the year-ago period, driven by growth in net interest income and trading and investment income, the bank announced on Friday.

Net profit for the three months ended Dec 31, 2019 stood at S$1.01 billion, compared with S$916 million from the year-ago period.

Annualised earnings per share stood at at S$2.35 for the quarter, up 9.3 per cent from S$2.15 a year ago.

The directors recommended a dividend of 55 Singapore cents and a special dividend of 20 cents per share for the period. This is up slightly from 50 Singapore cents and a special dividend of 20 cents for the year-ago period.

Together with the interim dividend of 55 cents, the total dividend for the financial year ended Dec 31, 2019 amounts to S$1.30 per share.

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Net interest income for the quarter grew 2 per cent cent to S$1.64 billion, on the back of a 3 per cent loan growth.

Net interest margin nudged down four basis points to 1.76 per cent for the quarter, from 1.80 per cent a year ago.

Net fee and commission income was up 2 per cent to S$476 million from a year ago, driven by healthy momentum in wealth management and highercredit cards fees, said UOB.

Trading and investment income rose to S$224 million from S$59 million a year ago, led by improved gains from investment securities on market recovery and stronger customer flows, said the lender.

UOB's non-performing loans ratio for the quarter stood unchanged at 1.5 per cent from the year-ago period.

Total allowances grew 14 per cent to S$146 million due to higher allowances for impaired assets, said the bank.

“We started 2020 on a strong footing, having achieved record earnings last year on the back of broad-based growth across our business segments," said UOB chief exeRead More – Source


Fri, Feb 21, 2020 – 7:54 AM

OCBC Bank on Friday upped its dividend payout as it turned in stronger profits for its fourth quarter, but flagged a weaker-than-expected outlook for the global economy ahead.

Singapores second largest lender proposed a dividend of S$0.28 per share, up from S$0.23 a year ago. Together with the interim dividend of S$0.25 per share, the total dividend for FY2019 amounts to S$0.53 per share, up 23 per cent from S$0.43 in the previous year.

The dividend payout ratio now stands at 47 per cent, up from 40 per cent in FY2018.

The bank's net profit grew 34 per cent to S$1.24 billion for its fourth quarter, from S$926 million a year ago, driven mainly by wealth management, higher income from trading, sale of investment securities and properties, and its insurance franchise.

Annualised earnings per share stood at S$1.11 for the quarter, up from S$0.85 a year ago.

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Against the backdrop of its full-year results for 2019, OCBC chief executive officer Samuel Tsien also flagged that the global economic outlook is “weaker than originally expected”.

“We are watchful of the impact to our business and customers from the continuing trade tensions, heightened geo-political risks and the Covid-19 outbreak, and will extend support to customers to help them overcome the market challenges,” he said in a media statement.

In Q4, net interest income grew 6 per cent on the year to S$1.61 billion, on the back of loan growth and improved margins. Average customer loans increased 3 per cent from a year ago, mainly from lending to corporate customers.

Net interest margin (NIM) rose 5 basis points to 1.77 per cent largely due to the management of funding costs, up from 1.72 per cent a year ago.

NIMs are a key gauge of profitability for banks, measuring the difference between income earned from loans and the interest paid to depositors.

Non-interest income climbed 58 per cent to S$1.31 billion for the quarter, from S$830 million in the previous year.

Net fees and commissions grew 17 per cent to a quarterly high of S$556 million, led by higher fees from wealth management, credit card, loan and transaction banking activities.

Net trading income increased to S$316 million from S$9 million a year ago, driven by higher gains from treasury activities, a rise in customer flow income, and mark-to-market gains. Net gains from the sale of investment securities were also higher at S$35 million, up from S$2 million a year ago.

Income from life and general insurance grew 25 per cent to S$308 million from S$247 million in the previous year, as a result of improved investment performance, and higher year-on-year sales, new business embedded value (NBEV) and margins.

The banks non-performing loans (NPL) ratio remained at 1.5 per cent as at Dec 31, 2019, from a year ago.

For the full year, OCBCs net profit was 8 per cent higher at S$4.87 billion, led by sustained earnings growth across the groups banking, wealth management and insurance franchise.

Earnings per share for FY2019 wRead More – Source