“2016 was a year of a `perfect storm’,” said Sebastian Paredes, CEO of the Hong Kong branch of the Singapore bank. The aftermath of the depreciation of the renminbi in August 2015 was felt well into 2016, as companies failed to honour their currency-hedge derivatives contracts and cost of credit was impacted, he explained.
China’s financial liberalisation created loose monetary policy and a decrease in interest rates so that many borrowers shifted their loans from Hong Kong to mainland China, impacting the bank’s revenues, said Paredes.
Furthermore “with a commodity collapse, financing of trade in Hong Kong almost halved,” he added.
DBS Group posted a SG$11.5bn ($8.1bn) income in 2016, a 6% growth underpinned by a broad-based 8% increase in fee revenue.
Wealth management up
The bank’s wealth management division across all regions recorded a 19% increase in annual income, to SG$1.7bn ($1.2bn). Assets under management grew by 14%, to SG$166bn, and total earning assets by 13%, to SG$204.
Wealth management fees grew by 19%, to SG$714m, constituting the largest, and fastest growing contribution to the bank’s fee revenue in 2016.
Fee income of DBS Hong Kong was 4% lower due to the unfavourable market sentiment, but the “momentum resumed in the second half of the year,” according to the bank’s statement.
DBS Hong Kong does not post financial results for its wealth management arm.
