Average pay at OCBC surged by more than 10% year-on-year in Q2 as the bank boosted base salaries and hired more staff in well-paid teams such as private banking and technology.
Staff costs per head at the Singaporean bank – total employee expenditure (such as salaries and bonuses) divided by total headcount – went up by 10.2% (S$2,190) to reach S$23,566 for the second quarter, according to data calculated from OCBC’s financial results. By comparison, average comp rose by ‘only’ 6% at DBS compared with a year previously.
What might have caused average staff costs to skyrocket at OCBC? The firm highlighted “annual salary increments” as one of the main reasons for an increase in overall operating expenses, suggesting that average pay hikes across the bank may have been more generous than usual.
Operating expenses were also up because of a “rise in headcount to support business needs” – OCBC added 643 employees in the year to end-June, taking its workforce to 30,255. While OCBC’s Q2 report doesn’t provide details of these new hires, the large jump in pay per head makes it likely that many of them are working in well-rewarded roles.
The firm’s private banking offshoot, Bank of Singapore (BoS), for example, increased its assets under management (AUM) 9% year-on-year, “underpinned by continued net new money inflows”, to a record high of US$111bn. Hiring of new (and costly) relationship managers typically contributes to large AUM rises at private banks because they bring new client assets with them.
It’s likely that BoS has hired more RMs this year because most front-office recruitment happens in Q1 and Q2, after bonuses are paid. Moreover, its RM workforce has been heading upwards for a while.
It increased by 20 to reach 450 last year, giving BoS the fourth highest RM workforce of any private bank in Asia, according to the latest data from Asian Private Banker.
Any recent recruits have come on board at an opportune time. In Global Consumer/Private Banking (the division that includes BoS), operating profit after allowances was S$376m in Q2, a rise of 20% year-on-year. Wealth management-related income (which also includes products such as asset management and stockbroking) increased 12% from a year ago to S$1.67bn in the first half, and represented 34% of the firm’s total income in Q1.
OCBC’s new financial results make no mention of investments in technology. However, recruiters in Singapore say OCBC has been increasing its tech and digital headcount, which may partly explain the high levels of salary inflation at the firm. Singapore’s competitive tech job market is helping to push up pay for tech professionals across the city state.
OCBC currently has 75 information technology vacancies on its website. The firm’s Q3 2018 results stated that “technology and digital investments” had “strongly contributed” to its recent business expansion. Technology spending, excluding IT staff costs, could reach S$500m or more this year, chief executive Samuel Tsien told the Straits Times.
Image credit: Getty
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