Staff costs fall at OCBC as bank keeps tight control on pay

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Staff costs fall at OCBC as bank keeps tight control on pay

The results update that OCBC has issued for the third quarter isn’t as comprehensive as its half and full-year earnings reports. It doesn’t reveal its latest headcount numbers, for example. But the update still provides some details that are relevant to careers at the bank.

If you work for OCBC, or if you’re thinking about applying for a role there, here’s what its Q3 numbers mean for jobs.

Don’t expect a big bonus

OCBC has been pursuing a policy of “active cost management” this year, and overall expenses have fallen for three consecutive quarters. Staff costs of S$672m were down 2% year-on-year and 3% quarter-on-quarter. The bank said “staff compensation and other discretionary expenses were tightly controlled”. OCBC did not release its end-September headcount figure, although for the first six months of the year it was up by 113. This suggests that the reduction in comp costs wasn’t achieved through redundancies and was more likely due to cuts to bonuses and other areas. Moreover, CEO Tsien pledged in August not to make “retrenchments in the midst of Covid-19”, while in June OCBC said it wanted to take on 2,100 full-time staff in the second half, although natural attrition will mean its headcount will not rise by this amount.

There was a recovery in Q3, but don’t get too excited

Group net profits for Q3 fell 12% year-on-year to S$1,028m, but compared with Q2 they were up 41%. DBS also noted a third-quarter bounce-back in its results. OCBC chief executive Samuel Tsien suggested that this did not necessarily mean that profits would continue to improve over the coming quarters. “While 3Q20 saw a recovery from the trough of the previous quarter, we may not have seen the full

extent of the lagging economic impact of the crisis yet, which will have more visibility next year,” he said.

Tech professionals are still busy at OCBC

In the first half, Singapore banks were keen to tout dramatic increases in the usage of their digital platforms. This trend is continuing at OCBC, where “first-time digital customer sign-ups” rose more than 50% quarter-on-quarter. While cost has been “tightly managed”, OCBC said it will “continue to invest in digital transformation to boost customer engagement, increase productivity and achieve greater cost efficiencies”. OCBC has been hiring consistently in tech this year, albeit not at the same level as DBS. It now has 48 IT vacancies on its careers site.

Private bankers are managing more assets

If you’re wondering why so many private banks in Asia still want to grow their headcounts during the pandemic, it’s partly because their assets under management are still rising. Bank of Singapore, the OCBC subsidiary, is no exception. Its AUM grew 5% year-on-year to US$116bn, “underpinned by net new money inflows and better market valuations”. Meanwhile, group wealth management income (which also includes income from areas such as insurance, asset management and stockbroking) reached S$938m, the highest quarterly figure since 2018.

Traders peaked in Q2

Traders at most banks in Asia had a stellar quarter in Q2 as market volatility boosted their income, but there’s been a downward trend in the third quarter, and OCBC is no exception. Trading income in Q3 was up 5% year-on-year to S$255m, but it was 21% lower than in Q2.

Image: unsplash

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