Singapore banks see fall in wealth management fees as rich clients turn cautious


skyscrapers, singapore, city-3184798.jpg

Singapore – Asian millionaires’ reduced risk appetite is hitting Singapore banks at a time when they are welcoming more funds than ever from the wealthy.

Lenders in Singapore, which is seen as a safe haven, are seeing less fees from these customers, who are shying away from taking bets in the markets amid United States-China tension and an uncertain economic outlook.

OCBC Bank posted below-expectation quarterly profit on Friday as fee income tumbled due to “subdued customer investment activities”.

OCBC’s results wrap up Singapore’s latest bank earnings season, where local rivals DBS Bank and UOB also suffered from lower fees managing rich clients’ funds. These banks have been expanding their wealth franchises, seeking to compete with global peers, including UBS Group, with Asia held up as among the regions that hold the most promise for this business.

“Last year was a volatile investment landscape,” Mr Sunny Quek, OCBC’s head of global consumer financial services, said at a briefing on Friday, explaining why customers were cautious and stayed on the sidelines.

There was also less financing, given the higher interest rates, he added.

Despite their reluctance, clients’ new inflows surged to a record of about $25 billion in 2022 for OCBC’s wealth unit and Bank of Singapore, its private banking unit. There are signs of trading activity picking up in 2023 and the “huge” inflows set the stage for more activity as sentiment improves, Mr Quek said.

OCBC group chief executive Helen Wong said at the same briefing that she expects wealth fees to rebound in 2023 and grow at a faster pace than net interest income. The lender is pushing ahead to further grow services, with onshore private banking in China and regional wealth teams in key markets.

Bloomberg Intelligence analyst Rena Kwok said: “The lenders could see a recovery in their wealth management income from current low levels in 2023, as many family and high-net-worth clients might look to deploy their funds to generate higher returns.”

‘Dry powder’

At DBS, Singapore’s largest lender, net new money also reached fresh highs in 2023. Still, its net fee income in the fourth quarter fell 19 per cent from a year ago due in part to lower wealth management fees.

UOB also reported lower fees from wealth management in the latest quarter, even as its assets under management rose.

“People were not taking margin financing as rates got higher and animal spirits were low,” DBS CEO Piyush Gupta told a press briefing last week, explaining why wealth management fees were lower. “A lot of this money is now dry powder waiting to be invested.”

He sees a brighter outlook ahead for the business as the bank opened almost 50 per cent of all new family offices that set up in Singapore over the last quarters, he said at last week’s briefing.

“We have a lot of dry powder and the money is likely to be put to work as market sentiments turn optimistic,” he said. – BLOOMBERG

Image by: Pixabay





Related Content

Edmund Shing, PhD

Global Chief Investment Officer
BNP Paribas Wealth Management

Edmund has over 29 years of experience in financial markets in a wide variety of positions, ranging from proprietary trading to portfolio manager in a number of financial institutions in London and Paris.  He previously held the role of Global Head of Equity and Derivative Strategy at BNP Paribas in London from 2015 to 2020, and has been Chief Investment Officer at BNP Paribas Wealth Management since November 2020.

Edmund is responsible for piloting our investment strategy and will continues to rollout out recommendations and themes with actionable advice that brings our expertise to our clients and support to our client-facing teams.  In this time of change, his expertise in following and anticipating markets is a true value added for both our customers and those at Wealth Management who serve them.

Edmund has a PhD in Cognitive and Computing Science from the University of Birmingham in the United Kingdom, and has done advanced studies in Knowledge-Based Systems and in Experimental Psychology.  He is an EFFAS-certified financial analyst. He has also authored the book “The Idle Investor” published by Harriman House in 2015, proposing 3 simple investment strategies that take only a few minutes to execute per month.

Media Kit

    Data Protection

    The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

    The Digital Banker Summit

    Moving on from FTX: is 2023 the year of CBDCs?

    Indonesia, Jakarta

    Thailand, Bangkok

    Philippines, Manila

    Contact Us

      Data Protection

      The information you provide will be held on our database and may be used to keep you informed of our and our associate companies’ products and for selected third party mailings. Please tick the box if you would prefer not to be contacted for these purposes:

      Request Nomination Pack

      Error: Contact form not found.

      The world’s preeminent Private Banks and Wealth Managers are demonstrating a committed drive in innovation, advisory, new products and services to meet the sophisticated needs of their clients.

      Amid economic activity revival on the back of the Covid-19 vaccine program, organisations moving from business continuity plans to stable working environments, together with the slightest improvement in unemployment numbers, forced the world to adjust to new realities. Coming to terms with the “new normal”, global investors are now on the look-out for attractive and stable investment opportunities.

      Needs of Private Wealth customers and families worldwide have drastically changed due to the pandemic and banks have had to accelerate efforts to deploy a multi-channel service strategy and safeguard clients’ businesses and wealth against negative impacts of economic uncertainly.

      The Global Private Banking Innovation Awards will recognise the world’s best private banks, wealth managers and asset managers that are championing innovation across advisory, service, products, customer experience and more.

      Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. 

      Request Nomination Pack

      Error: Contact form not found.