DBS banks on wealth
(28 February 2017 – Asia) Singapore’s largest domestic bank, DBS Group is expanding its wealth management business and expects the segment will account for as much as a fifth of its revenues in a few years as it capitalises on a trend of Asia growing richer, its CEO Piyush Gupta said.
In an interview with Reuters, Gupta noted that the bank said will seek out “bolt on” acquisition opportunities to grow its wealth unit, in addition to those it deals it has made to become one of the top-five private banks in the Asia-Pacific region.
He said the bank’s wealth management business has doubled in the last five years now accounts for around 15 percent of total revenue. "Our ambition in the next few years is to get it to 20 percent of the bank,” he added.
DBS Group's emphasis on wealth management comes as Asia Pacific has become the fastest growing wealth region in the world in recent years, with nearly 5 million individuals estimated to have $1 million in liquid assets.
Income from DBS' wealth management unit jumped 19 percent to S$1.7 billion (A$1.59 billion) in 2016. The bank's high net-worth assets under management (AUM) will grow to $85 billion and total wealth AUM to $137 billion after it consolidates assets bought from Australia and New Zealand Banking Group last year.
Under Gupta’s management, which commenced in 2009, the bank has more than doubled its group profits and turned around its underperforming Hong Kong unit.
But while DBS has diversified its business franchise to focus more on transactional banking and wealth management, the bank still earned about 70 percent to 80 percent of its profits from Singapore in recent years, highlighting its dependency on its home market.
Gupta told Reuters that the bank’s goal is for Singapore's share to fall to 50 percent over the next decade as the city-state's economy grows at subdued rates of 2-3 percent. DBS will aim to increase it's presence in China, India and Indonesia.
DBS's core strategy is to grow organically and digitalise, he said, adding he does not believe acquisitions "at scale" are the way to go for the bank. "Trying to acquire a large bank might be playing yesterday's game as opposed to playing tomorrow's game," Gupta said.
According to East & Partners Asia’s Wealth Management Index, between 2013 and 2017, Asia’s High Net-Worth Individuals’ use of private banks to manage their wealth has quadrupled, while instances of self-managed wealth has dropped by a third.
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