Singapore banks' trading income to decline by 7% in 2013

See how DBS, OCBC, and UOB will fare.

According to CIMB, in 2012, excluding gain from sale of assets, sector non-interest income grew a whopping 15.9% yoy.

This came on the back of 3.1% yoy increase in fee income and 33% increase in trading and other income.

Here's more from CIMB:

Fee income growth was 2.1%/2.5%/4.7% for DBS/OCBC/UOB. Compared to 2011, capital markets were more active and markets related fees did better in 2012.

Trade and loans related fees also bounced back in 2012 after taking a breather in 2H11. A favourable investment environment also meant stronger wealth management fees.

DBS would have registered a stronger fee income growth in 2012 if not for exceptionally strong investment banking performance in 2011.

DBS was the only bank with a decline in trading and other income on the back of its strong performance in 2011. OCBC saw a 64.7% yoy jump in trading and other income (we include insurance contributions).

This was largely due to a low-base effect (OCBC’s trading income suffered in volatile markets in 2011) and strong marked to market gains for its non-par insurance portfolio which led to higher contributions from insurance.

UOB was able to grow its trading and other income by 52% on the back of a dividend bonanza from its associates (2011: S$75m; 2012: S$135m).

2013, we expect fee income to grow 7-8% for the sector. DBS should be able to ride on the recent revival of trade financing loans in China. Assuming buoyant capital markets hold up, we see ample opportunities for DBS to turn in strong investment banking earnings in 2013.

OCBC could see an increase in trade and loans related fees as offshore initiatives start to bear fruit. Wealth management fees should also grow nicely for OCBC. We expect a broad-based increase in fee income for UOB.

However, trading and other income is likely to come off from a high base in 2012. We expect sector trading income to decline by 7% in 2013. Contributions from insurance should also taper. Overall, we expect sector non-interest income to grow a mere 2.2% in 2013.