DBS goes big on the affluent

It sees bigger growth opportunities in this segment than the ultra-high net worth group

 

By Siow Li Sen

DBS Bank is making rapid headway into that segment of banking customers who are rich, but not rich enough to own a yacht or a private jet - at least not yet.

For these "affluent" customers, however, ponying up for a Ferrari or some such expensive toy is not an issue.

DBS managing director Koh Kar Siong would know, as he is also the regional head of the bank's "Treasures" and "Treasures Private" wealth-management platforms.

A Treasures Private client (TPC) carries a DBS Insignia card with a credit limit of up to $1 million and would "regularly" blow a quarter of a million bucks on high-end cars, he said.

Such a client would have placed between $1.5 million and $5 million in assets with the bank, which has built a base of more than 10,000 such clients since launching Treasures Private three years ago.

It is today the fastest-growing segment of the group's wealth-management business, Mr Koh told reporters yesterday.

The bank's "Treasures" clients are those who have placed between $350,000 and $1.5 million with the bank, while its private bank division looks after the top tier - clients with more than $5 million.

"There's big room for growth because a lot of these people are now in priority banking," he said.

DBS has homed in on its TPC clients, assigning more than 200 TPC relationship managers to them, because it saw opportunities in this segment - more than in the segment of ultra-high net worth, yacht-owning magnates with at least $30 million to their names.

A 2012 study by international management consulting firm Oliver Wyman found that in Asia-Pacific, these super-rich - with at least US$25 million in assets - jointly hold about US$3 trillion. In contrast, those below this stratosphere - the "poorer" ones with between US$1 million and US$5 million - jointly hold US$5 trillion.

And the best thing? Sixty per cent of this US$5 trillion or so is under-served, or, in bank parlance, "unmanaged".

DBS's strategy to attracting TPCs is to offer them private bank services, and these include access to pre-IPO sales, discretionary portfolio management and other investment services.

These clients also have dedicated luxury airport lounges at Changi, which offer massages, a full suite of banking services and free limousine rides (in Singapore, Jakarta, Surabaya and Taiwan).
Last year, revenues from group wealth management rose 10.3 per cent to almost $1 billion - faster than its growth rate of 9.7 per cent in 2012.

The increase came from strong gains in fee income (from product sales), which rose 30 per cent last year; in contrast, the increase from lending activities or net interest income was only 4 per cent.
The most popular investment products are equities, bonds and funds, and the amount traded has steadily risen. "The ticket size has gone up," said Mr Koh.

TPC made up 18 per cent of group wealth-management revenues last year, up from 3 per cent in 2011; it is projected to hit 25 per cent next year, he said.

More TPC-type customers are projected to be knocking on DBS's door too - Mr Koh expects 15 to 20 per cent more in the next few years.

Assets under management from wealth management clients, that is, those with at least $350,000, grew to $109 billion last year, up from $94 billion in 2012.