Credit Suisse private banking APAC posts record performance

Singapore

MOMENTUM is accelerating for Credit Suisse's Asia Pacific private banking business, with all its main markets posting record performances.

Net new assets from APAC for nine months 2014 were 16 billion Swiss francs (S$21.4 billion), up an impressive 82 per cent, half of the group's 31.6 billion Swiss francs, disclosed Francesco de Ferrari, Credit Suisse head private banking APAC, in a recent interview.

"In the past few years, net new assets has averaged CHF9-10 billion a year - this year, only nine months, it's already CHF16 billion," said Mr de Ferrari.

A few factors have been driving growth - the bank's focus on the ultra high net worth individuals and lending to them, hiring more relationship managers (RMs) and higher productivity from existing RMs, he said.

For nine months 2014, assets under management (AUM) in APAC rose 27 per cent to 143 billion Swiss francs from a year ago; RMs totalled 480, up 12 per cent, while ultra high net worth lending surged 600 per cent to 1.4 billion Swiss francs.

Credit Suisse is the third-largest private bank in Asia, behind UBS and Citi, according to a 2012 Private Banker International survey.

Credit Suisse has been particularly effective in the ultra high net worth segment defined as individuals with at least US$50 million, he said.

The ultra high net worth now makes up 65 per cent of its Asian AUM, he said.

The lending strategy, an initiative launched in 2012, coincided with Mr de Ferrari's arrival in Singapore to head the APAC private bank.

Lending means putting the bank's balance sheet and resources or using expensive bank capital to deepen client relationships and expand market share, a strategy which is working well, he said.

Asia's millionaires are mainly business people who need credit to grow ever bigger empires.

APAC's 1.4 billion Swiss franc lending to ultra high net worth individuals outstrips that of other regions, making up some 36 per cent of the 3.9 billion Swiss franc group total.

Focusing on the ultra high net worth individuals is also paying off through higher investment bank revenues when the private bank's clients require corporate finance services.

Credit Suisse's collaboration revenues - generated through investment banking solutions to private banking clients - have grown over 200 per cent since 2011.

"This year has been a fantastic year for most of our markets," Mr de Ferrari said.

Its Singapore business is leading the surge, and the asset base has almost tripled in three years, he said.

Its main markets in South-east Asia are Singapore, Indonesia and Malaysia, while in North Asia are Hong Kong, China and Taiwan.

Credit Suisse in 2012 acquired HSBC's private banking unit in Japan. That has also been doing well, with new offices in Osaka and Nagoya, doubling the staff, and the asset base grew fivefold by end-2013, he said.

According to a 2014 report by the Royal Bank of Canada and consultants Capgemini, the number of millionaires in Asia - about 4.3 million - is expected to surpass that in North America this year.

Asia's combined wealth was up 18 per cent to US$14.2 trillion, while America's grew 17 per cent to US$14.88 trillion.

In Singapore, there were 105,000 individuals last year with at least US$1 million in investable assets, up 4.5 per cent from a year ago, the report said. The combined wealth held by this group jumped 7 per cent, from US$489 billion to US$522.5 billion.

As to profitability which has always been a challenge given APAC's higher costs due to the fiercely competitive market for experienced RMs, Mr de Ferrari said the bank is profitable in Asia.

The cost-to-income ratio has been falling, and it's now 69 per cent, similar to the group average, he said. The bank does not disclose profit by region.

He noted that the growth has been "quality" - pointing to the 174 per cent AUM gain over the past three years while the number of RMs has increased only by 17 per cent in the same period.