JAKARTA (TheInsiderStories) – Indonesia publicly listed lender, PT Bank OCBC NISP Tbk (IDX: NISP), unit of Singapore’s Oversea-Chinese Banking Corporation (OCBC) will start a private banking unit. The announce came after the bank said that it has entered into an agreement to acquire National Australia Bank’s (NAB) Private Wealth business in Singapore and Hong Kong on May 11.
Based on the OCBC statement, by end of February, mortgage portfolio of the bank recorded about US$1.7 billion worth of mainly residential mortgage loans, and a deposit portfolio made up of about $3.05 billion worth of deposits of a mix of currencies. The business serves a total of about 11,000 customers across the two markets, primarily from the affluent segment.
The purchase consideration will be at around the book value, or net asset value, of the business at the time of completion. The consideration, arrived at on a willing buyer willing seller basis, takes into account OCBC Bank’s assessment of the value and potential of the business.
OCBC explained, the deal is expected to be completed before the end of the year, subject to regulatory approval, is not expected to have a material impact on OCBC Bank’s capital position. The business will be earnings accretive to OCBC Bank within the first year of completion.
OCBC Bank is a leader in the bancassurance business in Singapore for many years, and Bank of Singapore has been growing its assets under management (AUM) at a compound annual growth rate of 20 per cent between 2010 and 2016. As at 31 March 2017, AUM reached $85 billion.
“This deal makes financial and strategic sense to us. A mortgage loans book of more than S$2 billion is not small. It would have taken us time and money to grow our mortgage loans organically by that amount. We are now getting an immediate boost to our mortgage loans book. The mortgage portfolio to be transferred to us is a high quality and wellsupported one. And the customers are in the affluent segment that we have been building. We are therefore pleased to acquire this base of customers that we can extend additional banking services to,” Ching Wei Hong, Chief Operating Officer, OCBC Bank said in a press statement.
OCBC as a group reported a net profit after tax of S$973 million for the first quarter (Q1) of 2017. This was 14 percent above S$856 million a year ago, and 23% higher than S$789 million in the previous Q4 2016. The robust year-on-year performance was largely driven by sustained growth in wealth management income, higher profit from insurance operations as well as increased earnings in local currency terms from all of the Group’s overseas banking subsidiaries, particularly from Indonesia.