• For many years,
Singapore has been Asia’s most mature and respected
wealth management centre, benefitting from international clients (representing about 80 % of AMA) who value its stable environment. Singapore’s regulatory regime (one of the world’s most prudent) causes a high level of stability which, in turn, supports growth; measures by the authorities to ease ways of doing business, together with low tax rates, additionally attract clients.
• As a result, the Singapore wealth management clientele is – in comparison to other Asian locations – particularly international: The centre attracts significant funds from Europe and North America (17 % and 19 %, respectively, of total AMA) and is a prime location for clients throughout the Asia-Pacific region.
• Covering such diverse markets, however, requires major efforts from both compliance and offering perspectives, and the centre’s average cost margin is the third-highest (66bps in 2017E). Meanwhile, cost margins have increased at a CAGR of only 0.3 % in recent years, which exemplifies Singapore’s maturity with regard to infrastructure and regulation.
• Some reasons for the high costs are: heavy
investment by banks in the capabilities to serve clients digitally, and typical drawbacks of a mature sovereign microstate such as high prices and limited pools for talent and real estate.
• On the revenue side, Singaporean banks have achieved the second-highest margin among the wealth centres (92bps in 2017E, with CAGR of 1.5 % in the revenue margin 2013–2017E). A noteworthy driver is the comparatively good capitalisation of the local banks – their capital provides room for investment and, therewith, growth.
• Singapore has managed to capitalise on its yet unmatched reputation – in Asia – as a stable wealth management hub, enabling the centre to expand following the strong local (U) HNI wealth growth (14 % in APAC, compared to 1 % in the rest of the world). Clients have become acquainted with private bank offerings and now demand more sophisticated, higher-margin services (illustrated by a growth of 9 % in discretionary mandate volume in 2016), and they are willing to pay a price premium for the capabilities that Singapore offers.