In this interview we talk to the private banking head at DBS for the North Asia market, how it is handling the challenges of difficult markets, and the opportunities that arise when people re-think where they want to bank.
Bank clients have been rattled by crises in several lenders in the US and Switzerland. And this has encouraged customers to look at spreading custom around – to the benefit of firms such as DBS, the head of private banking for North Asia at the group has said.
Jittery sentiment was fuelled by the demise two months ago of Credit Suisse – now being taken over by UBS – and Silicon Valley Bank and First Republic Bank in the US. The adage of “not putting all your eggs in one basket” has never been so poignant.
That has been the view of Carol Wu, who spoke to WealthBriefingAsia recently from her office in Hong Kong. Overall, Wu is upbeat and pleased about the progress DBS has made in recent years – gathering revenues, raising its profile and shifting towards a financial advisory-led model.
“We do have clients coming to us from European, Swiss and American private banks,” Wu said. In the past, clients might place assets in one bank while some wealthy clients might place in two to three banks, for example: one European bank, one Asian bank and one US bank. Recent bank woes reminded clients about the risks of not being diversified.
Wu, who is responsible for leading about 400 people in Hong Kong, said that her main role is serving North Asia clients, most of whom are from Hong Kong, mainland China, and Taiwan. Many of the clients in Hong Kong, for example, are mainland Chinese with firms listing or having already listed in the Hong Kong stock market.
Wu, who joined DBS in 2007, was previously CEO of Vickers Hong Kong and head of research – Hong Kong at DBS Bank Hong Kong. Joseph Poon, meanwhile, is the managing director and group head of DBS Private Bank, Southeast Asia.
DBS has grown organically and by M&A in the past decade. The acquisition of the Asian private banking businesses of ANZ and Societe Generale almost a decade ago was part of the mix, Wu said. There are hard numbers to back up such claims – more necessary after the equity market selloff of 2022 and the shift by central banks in raising interest rates. (That said, higher rates increase net interest margins.)
Full-year consumer banking/wealth management income rose 25 per cent to S$6.65 billion ($4.92 billion) as higher interest rates more than offset the impact of lower wealth management product sales, DBS said in its 2022 results statement. Wealth management customer segment income increased 20 per cent on a year earlier, as higher interest rates and a doubling of net new money inflows more than offset lower fee income from investment sales. The private bank’s net new money rose significantly in 2022 from 2021, it said. (An assets under management figure for the private bank was not disclosed.) DBS has been recognised as the safest bank in Asia by Global Finance (2009-2022), for strong financial performance, stability and low risk. It also ranked as AA- in S&P rating and Aa1 in Moody’s ratings.
Singapore-headquartered DBS's brand is getting more recognition. The brand wasn’t as well-known five years ago as it is today, Wu said. “We have a lot of focus, and we are seeing the results. We spent a lot of effort to upskill our bankers to be more advisory-focused.”
Bankers are learning to look at portfolios in a more strategic way and there has been a lot of training in the past five years, Wu said. “Our RMs are trained to carry on conversations about clients’ investment portfolios, and to understand clients’ needs in cash management, financing and investment banking, and have been adopting a more holistic approach to catering to their needs on investments and wealth planning,” Wu said.
An important area of business for DBS and a number of other banks are family offices. Hong Kong and Singapore are pushing their credentials as family office hubs – something this news service was made well aware of when speaking to industry figures in Singapore last week. According to the Monetary Authority of Singapore, for example, about 700 family offices were in the Asian city-state as of 2021. In Hong Kong, there are about 400 family offices, and the territory intends to attract more. This creates an important client source for banks such as DBS who help to create these entities and later serve their needs.
Wu told WealthBriefingAsia that DBS recorded a fivefold increase in family office-funded entities since 2020.
The rise of NextGen wealth holders, and related wealth-transfer concerns, have been important new business areas for DBS, she said.
Talk of “NextGen” led Wu to reflect on what the upcoming cohort of HNW individuals is interested in, and that includes ESG investing.
“DBS continues to support ESG and drive green financial products and will be launching ESG rating display in clients' portfolio, so clients will understand more about what they are investing into as part of the total investment portfolio,” she said.
“We ensure our relationship managers are seasoned around the bank’s platform offerings to continuously uncover and update their understanding of our clients’ evolving needs,” Wu continued.
As far as key performance indicators are concerned, Wu noted how these are measures of how bankers and RMs are performing in their first and second year. DBS needs all RMs to undergo different type of training for areas such as corporate banking and investment banking which require 100 per cent completion rates. The bank also has a portfolio advisory model called PAET, so RMs’ usage and completion can be tracked.
Putting it all together
For a large bank such as DBS, an important element is enabling private bank clients to draw on what the corporate and investment bankers can offer, she said.
Clients in the private bank have more enquiries on corporate banking and investment bank service. Conversations about business growth have grown in recent years…this is all about how the private bank can help “connect the dots” for clients, she said.
WBA asked Wu about how DBS has made digital technology a central feature of its strategy.
“Our mobile apps are among the best in the world. Around 45 per cent of our app users are active,” Wu said, noting that this is a high percentage. “In the past, private bank clients didn’t often like these digital systems and preferred to call a banker before placing a trade.”
“Our staff are trained to be digitally orientated. We have a good client database and use the insights to better serve our clients,” she added.
Recent banking problems mean that DBS, like its peers, cannot afford to be complacent. What does seem clear is that the profile of this Singapore-listed institution is likely to be increasingly prominent.