The 5 Biggest Profit Generators for Oversea-Chinese Banking Corp Limited
Oversea-Chinese Banking Corp Limited (SGX: O39) or OCBC is one of the three main local banks listed in Singapore.
Given the complex structure of a financial institution like OCBC, it is important that investors have a good understanding of the different profit sources of the company, yet not get lost in all the details.
In this article, I would like to give you an overview of the main profit contributors within OCBC to help you better understand the business.
Source: OCBC 2016 Annual Report
From the above, we can see that there are five main parts to the overall equation.
The biggest profit generator, namely Global Corporate/Investment Banking, focuses mainly on institutional customers (think of companies, big or small, public or private and others).
This part of the business offers comprehensive services to straight-forward services like loans and trade financing to more complex arrangements like initial public offering, structured financing and others.
The second biggest profit contributor in 2016 was Global Consumer/Private Banking.
Here, OCBC provides almost all the products/services that individuals will require for their daily banking activities, ranging from current account, fixed deposit, loans, credit cards, wealth management and others. Furthermore, the private banking also focuses on providing specialized services to high net worth individuals.
The third biggest profit generator was OCBC’s Insurance undertaken by 87.8%-owned subsidiary Great Eastern Holding Limited (SGX: G07) and its subsidiaries, which provide both life and general insurance products to its customers mainly in Singapore and Malaysia.
Next, Global Treasury and Markets provides financial products like foreign exchange, interest rate, debt, credit, equity and other structured products to customers.
Last but not the least, OCBC Wing Hang operates mainly in Hong Kong, Macau and China. It offers a comprehensive range of commercial banking and related financial services such as consumer financing, share brokerage and insurance.
A Foolish conclusion
In all, we see that OCBC generates its profit mainly from five business units. By breaking down OCBC’s profits into the respective business units, investors can have a more holistic understanding of the group, yet, not get lost in the complexity of the group’s various businesses.