Net New Money Surges at DBS Private Bank
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DBS’s private banking arm saw net new money inflows surge in the first half of 2020 driven by a diversified range of client segments.
Net new money inflows surged by 170 percent in the first half for DBS Private Bank which saw assets under management (AUM) climb 9 percent in the same period, according to a report.
Our business has really gone up to higher than pre-Covid times, said Joseph Poon, group head of the private bank, noting that it was on course to register 7-8 percent AUM growth this year. The rebound has been very strong. We hope we’ll see this growth maintained all the way to the end of the year.
Although DBS does not break down absolute figures, its private banking business is part of its broader wealth management unit which saw AUMs rise 7 percent year-on-year to S$251 billion ($184 billion).
The bank has benefited from its traditional markets in the ASEAN or Greater China region and is eyeing further expansion specifically in the Philippines and Thailand where wealthy families are keen on diversification. In the latter market, Poon noted that the bank was on track to double AUM to reach $5.86 billion by 2023.
Outside of Asia, DBS Private Bank also saw inflows from western markets, especially from family offices looking to establish a presence in Singapore.
“Our business has really gone up to higher than pre-Covid times, said Joseph Poon, group head of the private bank, noting that it was on course to register 7-8 percent AUM growth this year.”
European and U.S. family offices see Singapore as a lighthouse from which they can see the rest of Asia, whether for financial market investments or actual businesses they may want to invest in or partner with, Poon said.
On investments, the bank is currently advising clients take a barbell approach to focus on growth and income. The «DBS CIO Barbell Portfolio» strategy covers over 50 securities and the bank is also offering a structured note tracking its performance which has delivered net returns of 11 percent, outperforming its benchmark by around 6 percent.
Also gaining traction at DBS is sustainable investing where the bank has adopted MSCI ESG ratings for the portfolios of its wealth management clients. The bank also created a structured product to provide exposure to the theme and the ESG MSCI Asia Outperformance Note has generated an average alpha of 12.2 percent since its inception in 2018.
And should Asian investors seek to add exposure to such themes, ample cash holdings await them as DBS saw clients boost allocations to 40 percent during the crisis, up from the traditional 30 percent allocation.
According to Poon, clients are increasingly cash allocations not only in anticipation of distressed asset opportunities but also to boost liquidity in case of urgent business needs, especially given the high share of entrepreneurs amongst the region’s high net worth individuals.
Questions & Answers
Q.Which specific regions are contributing to DBS Private Bank's growth?
Which specific regions are contributing to DBS Private Bank's growth?
The bank has benefited from its traditional markets in ASEAN and Greater China. It is also seeing further expansion in the Philippines and Thailand, and inflows from Western markets, particularly from family offices.
Q.What investment strategies is DBS Private Bank currently advising its clients to use?
What investment strategies is DBS Private Bank currently advising its clients to use?
The bank is advising clients to adopt a barbell approach, focusing on both growth and income, through its 'DBS CIO Barbell Portfolio' strategy. Sustainable investing using MSCI ESG ratings is also gaining traction.
Q.Why have clients increased their cash holdings during the recent crisis?
Why have clients increased their cash holdings during the recent crisis?
Clients have boosted cash allocations to 40 percent, up from 30 percent, to anticipate distressed asset opportunities and improve liquidity for urgent business needs. This is especially relevant for the region's high net worth entrepreneurs.
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