Tag: Finance

  • Stanchart Pushes Back Target as Earnings Surge

    Stanchart Pushes Back Target as Earnings Surge

    Standard Chartered on Thursday has pushed back its target return on tangible equity, despite posting a commendable increase in annual profits. The revenue growth came from its main markets.

    The lender posted a pretax profit of $3.71 billion for 2019, up from $2.55 billion in 2018, according to its results statement. The 45.5 percent increase in profits defied the headwinds of global trade tensions and protests in Hong Kong.

    However, this is slightly below the $3.94 billion average of analysts’ forecasts compiled by the bank.

    The bank highlighted that its target of a 10 percent return on tangible equity, previously set for 2021, would be pushed back. In October, the global lender said that the goal had become more difficult amid worsening global economic conditions.

    These headwinds are expected to be transitory, but we now believe it will take longer to achieve our RoTE target of 10 percent than we previously envisaged,” it said in an earnings statement to the stock exchange.

    Stanchart’s results announcement comes after rival HSBC Holdings warned it could suffer loan losses of up to $600 million if the virus outbreak continues into the second half of the year.

    The bank added it has approved the buyback of up to $500 million worth of shares, which will commence shortly. It is in the midst of reviewing whether to do further capital return upon completing the sale of its stake in Indonesian lender Permata.

  • BNP Paribas Negative On India’s Consumption Recovery

    BNP Paribas Negative On India’s Consumption Recovery

    The expectation for India’s consumption to recover in 2020 is getting pushed out further, according to forecasts by BNP Paribas.

    Given that the nation’s slowest economic expansion in 10 years has led to a deceleration in local consumer staples sales for the sixth straight quarter, the brokerage expects India’s consumption recovery to be delayed.

    There is a lack of meaningful catalysts for consumption to recover to its potential in the year to December, Kunal Vora, a Mumbai-based analyst at BNP Paribas Securities India wrote in a note to clients. A sustainable recovery in rural income growth and a sharp uptick in consumer sentiment index are necessary for recovery.

    The brokerage last month turned negative on the consumer goods sector, pointing out that lower raw material prices and tax cuts were masking underlying weakness in sales. Consumer sentiment in the nation has worsened to an almost five-year low while manufacturing slack at companies widened to the most on record, data from the Reserve Bank of India showed this month.

    The federal budget for the year starting April 1 didn’t offer much in terms of big-bang stimulus to boost rural incomes. Meanwhile, economic growth is still weighed down by bad debts in its banking sector. The three months to Dec. 31 marked the sixth consecutive quarter of moderation in aggregate revenue growth for consumer staples, and management commentaries indicate companies are uncertain about the timing of recovery.

  • Axa Mandiri Lays Out Plans to Grow Premium Income

    Axa Mandiri Lays Out Plans to Grow Premium Income

    Axa Mandiri Financial Services, one of Indonesia’s major insurance companies, expects to maintain double-digit growth in premium income this year, by tapping into the large customer base of its parent company, Bank Mandiri.

    Axa Mandiri Financial Services (Axa Mandiri)’s president director Handojo G. Kusuma said that the insurer would market its products more intensively to customers of Bank Mandiri, which has one of the largest customer bases in the country.

    We hope to book double-digit growth in premium income by tailoring insurance products to the special needs of Bank Mandiri customers,» said Kusuma, who was quoted.

    Despite having worked together with Bank Mandiri for many years, Axa Mandiri’s penetration among the bank’s clients was still below optimal levels, he noted.

    To realize the targeted double-digit growth in premium income, Axa Mandiri did a data analytics study on Bank Mandiri’s market segmentation. «By understanding the needs of each segment better, we will be able to improve upselling and cross-selling,» Kusuma added.

    To effectively market to the millennials, the company would study the behavior and characteristics of customers in that segment and offer an affordable and easy-to-understand retail package that would be relevant and convenient for them, Handojo explained.

    For the growing halal market, the company planned to expand its portfolio of sharia-compliant products to between 20 percent and 25 percent of its business in the upcoming year from 4 to 5 percent at present.

    If we look at the market share potential, we can say that 90 percent of Indonesians are Muslims, [hence] we will continue to grow our sharia business, said Axa Mandiri sales director Henky Oktavianus.

    He added that the company was still studying the sharia market segmentation of its sister company, Bank Syariah Mandiri, to understand what products to offer its clients and how best to sell them.

    Axa Mandiri booked a gross premium income of 9.5 trillion rupiahs ($698.5 million) in 2019, an increase of 11 percent from 8.59 trillion rupiahs in 2018. Net investment touched 668 billion rupiahs in 2019, following a deficit of 1.68 trillion rupiahs in 2018.

    As a result, revenue totaled Rp 10.74 trillion in 2019, a 44 percent year-on-year increase. Net profit, therefore, rose 6 percent to  1 trillion rupiahs in 2019.

    Axa Mandiri is jointly owned by Bank Mandiri, which has a 51 percent stake, and Axa Group’s National Mutual International, which holds 49 percent.

  • DBS Enhances Advice and Client Engagement for HNWIs

    DBS Enhances Advice and Client Engagement for HNWIs

    DBS is ramping up its portfolio advisory capabilities to provide Private Bank and Treasures clients with more insightful and comprehensive investment reviews.

    DBS is introducing a portfolio review tool, co-developed with wealth technology provider EdgeLab, to give clients in-depth assessments of their portfolio performance and risk exposures, the bank announced in a statement on Thursday.

    According to the bank, the tool addresses gaps in traditional client investment reviews, which often miss valuable contextual information such as the performance of each investment against the wider portfolio or equivalent benchmarks, and where the overall portfolio risk exposures lie.

    Understanding what you own and how each investment impacts your portfolio is fundamental to making robust investment decisions. It is key to navigating today’s uncertain markets, where it is important to go back to basics, and not leave things to luck or chance,» Sim S Lim, group head of Consumer Banking and Wealth Management, said in the statement.

    A report with this information takes only five minutes to generate, and will allow relationship managers (RMs) to offer more personalized and relevant investment recommendations, DBS said. The report will also be provided as supplements to monthly client statements.

    The bank said that in the next phase of the development of the tool, it will equip RMs with the ability to stimulate investments into existing portfolios, as well as propose and construct new client portfolios.

    Among its efforts to enable more informed decision-making, DBS also recently added MSCI ESG Ratings, which measures a company’s resilience to long-term, financially relevant environmental, social and governance (ESG) risks, into its suite of wealth products, advisory and discretionary portfolio services.

  • Stanchart Pushes Back Target As Earnings Surged

    Stanchart Pushes Back Target As Earnings Surged

    Standard Chartered on Thursday has pushed back its target return on tangible equity, despite posting a commendable increase in annual profits. The revenue growth came from its main markets.

    The lender posted a pretax profit of $3.71 billion for 2019, up from $2.55 billion in 2018, according to its results statement. The 45.5 percent increase in profits defied the headwinds of global trade tensions and protests in Hong Kong.

    However, this is slightly below the $3.94 billion average of analysts’ forecasts compiled by the bank.

    The bank highlighted that its target of a 10 percent return on tangible equity, previously set for 2021, would be pushed back. In October, the global lender said that the goal had become more difficult amid worsening global economic conditions.

    These headwinds are expected to be transitory, but we now believe it will take longer to achieve our RoTE target of 10 percent than we previously envisaged,” it said in an earnings statement to the stock exchange.

    Stanchart’s results announcement comes after rival HSBC Holdings warned it could suffer loan losses of up to $600 million if the virus outbreak continues into the second half of the year.

    The bank added it has approved the buyback of up to $500 million worth of shares, which will commence shortly. It is in the midst of reviewing whether to do further capital return upon completing the sale of its stake in Indonesian lender Permata.

  • DBS Converts Bank Guarantee Facility to Green Facility

    DBS Converts Bank Guarantee Facility to Green Facility

    With the new green facility, Spanish wind turbine manufacturer Siemens Gamesa, which has over 100 gigawatts of installed wind capacity and aims to be carbon-neutral by 2025, will be able to issue green guarantees.

    DBS has converted its €500 million ($542.45 million) bank guarantee issuance facility with Siemens Gamesa to a green facility, the bank said in a statement on Monday.

    Under the new green facility, Siemens Gamesa will be able to issue Green Guarantees to support its supply of equipment and services for wind energy projects internationally, and promote and assure higher standards of sustainable sourcing and deployment, the statement said.

    Demand for sustainable financing to support the renewable energy sector in Asia is growing, said Terence Yong, group head, Western Multinationals, DBS.

    It is therefore important to support clients such as Siemens Gamesa who not only want to make clean energy more affordable and reliable but also ensure high standards of sustainability in its supply chain, Yong said.

    According to the bank, in the past two years, it has provided over S$3 billion in financing and advisory services to the renewable energy sector across nine markets in Asia Pacific. Last year, the bank closed about S$5 billion in sustainable finance transactions, comprising green loans, sustainability performance-linked loans and renewable energy financing.

  • UBS’ Elite Squad of Top Bankers

    UBS’ Elite Squad of Top Bankers

    Three years ago, top executives including ultra-rich banker Josef «Joe» Stadler; domestic trouble-shooter Karin Oertli; Evidence Lab boss Barry Hurewitz; investigative head Emma Molvidson; and top Japanese private banker Victor Chang met for a twice-yearly confab overseen by CEO Sergio Ermotti near Zurich.

    After a day of meetings, the executives, part of a cadre of influential bankers at the Swiss wealth manager in the rank of «group managing director,» or GMD, were grouped for a team-building event. The challenge? The bankers had to change a race-car tire. Caroline Stewart, now finance chief of UBS’ investment bank, was on the winning team.

    As ING CEO Ralph Hamers prepares to take the top spot at UBS in November, the elite squad is coming into clearer focus: the title was introduced in 2010, and ranks have swelled under current CEO Sergio Ermotti. Several sources report that the system clogs the pipes in decision-making – something Hamers will have to tackle when he takes over.

    Now at more than 100, the executives form a kind of Praetorian Guard around the C-Suite, as one observer put it. For the most promising of the top executives, the GMD status is a way for the bank to illustrate the glide path into top management.

    It would be natural for Hamers to begin trimming their ranks. Besides being numerous, they are costly: GMDs make up part of 675 key UBS risk-takers, a group that took home a cumulative $1.25 billion on pay and bonuses last year (or nearly $2 million on average). They outrank the ladder of associate directors, directors, executive directors, and even MDs.

    Because they outrank nearly everyone and because they tend to be well-connected, GMDs can propel projects or ideas and mobilize resources even when times are tight. They are a powerful faction to woo because they wield great influence at UBS, which remains a hierarchically-run bank. Unlike vice-chairmen, aa role considered a largely symbolic consolation prize, the GMDs are operationally active.

    Perks for the GMDs like a private gym at one of the bank’s Zurich offices have raised eyebrows at home. The group is undoubtedly high-octane: part of the aim of designating a banker even more than a managing director is to keep them from defecting.

    That’s what long-standing wealth manager Juerg Haller, who has held both the GMD as well as subsequently the vice-chairman title, did recently: Haller is now chairman at family-controlled rival J. Safra Sarasin, a rival to UBS.

    GMDs enjoy other perks too: they are part of the same bonus pot that top management enjoys – so-called equity ownership plans – but their lock-up is shorter. The awards, like for Ermotti and his C-suite colleagues, can be clawed back if the wider unit’s performance disappoints.

    Part of the reason the rank – not the people themselves – are likely in for more scrutiny is that the process of getting there is completely opaque and at least partly political. Other banks have similar «super MD» statuses. Goldman Sachs, for example, held onto the «partner» designation when it went public.

    But unlike at the U.S. investment bank, where prospects are vetted by a committee and subjected to a series of interviews with partners around the world, UBS’ process is murky. The GMD status just appeared, and UBS has never given a satisfactory explanation of what the criteria is, a former UBS banker said. The bank also doesn’t disclose who is a GMD.

    UBS said its GMDs are its most senior leaders, under top management with a key responsibility to drive success for the whole group across businesses and functions, together with their teams‎. The Swiss bank declined to detail their role, number, or criteria for advancing to the rank of GMD.

    Several sources said the group is currently 100+ bankers, 60 of them in Switzerland, mainly in Zurich. The group is viewed as special within UBS, but the GMD status isn’t a shield against their stars dimming, a person familiar with UBS’ staff practices said.

    Typically, GMDs are afforded more time to look for another option at UBS if their roles are restructured: the process if somewhat more collaborative than with regular managing directors or other employees. «The GMDs are very actively managed, but it’s a much friendlier process than elsewhere,» the person said.

  • Broad-Based Franchise Growth Brings UOB Record Earnings

    Broad-Based Franchise Growth Brings UOB Record Earnings

    The bank’s total income for 2019 grows 10 percent to cross $10 billion, led by healthy client franchise growth and stronger trading and investment income. It is recommending a full-year dividend of S$1.30 per ordinary share.

    UOB achieved record net earnings of $4.34 billion ($3.1 billion) in 2019, up 8 percent from 2018, the bank announced on Friday.

    In particular, it noted higher net interest income, fee growth from wealth management and credit cards, and stronger trading and investment income. At the same time, its expenses grew by 12 percent year-on-year due to talent and technology investments, with a cost-income ratio of 44.6 percent.

    Wholesale banking income grew 6 percent to S$4.1 billion in 2019, with 8 percent growth in non-Singapore income, 6 percent growth in non-real estate income, and 8 percent growth in non-loan income. Its retail business, which includes business banking, grew 9 percent from 2018 to S$4.3 billion. Income from high affluent customers increased 14% year on year, while assets under management in this segment grew by 14 percent to S$127 billion – 61 percent from overseas customers.

    The bank’s net profit rose 10 percent in the fourth quarter to S$1.01 billion, up from S$916 billion a year ago, driven by growth in net interest income and trading and investment income.

    Compared to its strong third-quarter, earnings fell 10 percent, but this was chalked up to seasonally lower fees and trading and investment income.

    UOB said it is focused on riding Southeast Asia’s long-term growth potential, and will «grow selectively and seize opportunities within [its] target segments.»

    It is positioning its wholesale banking business to capture growing cross-border trade and investment flows. Its retail business hopes to ride on the growing affluence and wealth potential of the region’s rising middle class, using an omnichannel and ecosystem partnerships strategy.

    In a presentation accompanying the results announcement, UOB said it would be rolling out its digital bank TMRW to Indonesia this year.

    It noted the S$10 billion market opportunity in ASEAN, and said the digital bank is on track to be marginal cost positive within five years.

    The bank said it expects downward pressure on customer margins in 2020, with a slight uptick in credit costs, given current conditions. However, it hopes to sustain momentum in fee income growth led by wealth management and to keep its cost/income ratio stable with a paced investment approach.

    Wee Ee Cheong, deputy chairman and chief executive officer, acknowledged the challenging environment, particularly due to the effects of the Covid-19 epidemic, but noted the bank’s relief assistance measures to cushion its impact on customers.

    We believe the region will weather this storm and are confident of ASEAN’s long-term potential. We will continue to invest in our capabilities, including digital, and seize the opportunities arising from the shifting economic environment, Wee said in the results statement.

  • UBS Appoints New CEO

    UBS Appoints New CEO

    Switzerland’s largest bank, UBS, has named Ralph Hamers as its new Group Chief Executive Officer, effective November 1, 2020, according to a media release. Hamers currently serves as CEO of Dutch ING Group.

    Ralph Hamers will join UBS as a member of the group executive board on 1 September 2020 in order to ensure a smooth leadership transition. Effective 1 November 2020, Hamers will become group chief executive officer (CEO) and president of the executive board of UBS.

    The 53-year-old Dutch banker Hamers will succeed group CEO Sergio Ermotti who has been with the bank for more than nine years. He joined ING Group in 1991. During his career, he progressed through a series of roles across business segments and geographies before becoming CEO in 2013.

    Under his leadership, ING Group has implemented a fundamental shift in its operating model and is now considered one of the best examples of digital innovation in the banking sector.

    Hamers holds a Master of Science in Business Econometrics and Operations Research from Tilburg University in the Netherlands and is chairman of the European Banking Group, the leading European banking association.

  • UBS Hires a Proven Digital Transformer in Ralph Hamers

    UBS Hires a Proven Digital Transformer in Ralph Hamers

    Ralph Hamers brings with him a track record of not only profitability but also effective transformation to compete with tech giants that threaten to take the financial sector’s lunch.

    As expected, Sergio Ermotti stepped down from UBS’s top role succeeded by 30-year ING veteran Ralph Hamers. Though ending on a less than ideal note with 2019 results missing both profit and cost targets, Ermotti leaves behind a legacy of successfully transforming the business from being investment banking-focused to wealth management-focused.

    In Hamers, UBS has also hired a chief with a proven track record for transformation. His thoughts, speech and subsequent results at ING may very well paint him as the poster boy for the current zeitgeist in banking.

    In mid-2019, ING’s app was reportedly ranked 10th by daily usage in the Netherlands, behind mainstays like Facebook or Google. The reasons are almost purely non-financial. In addition to regular online banking, it was the biggest outlet for Philips products in the country through an e-platform that sells a vast array of non-food products including barbecues, TV sets, clothing and discount tickets for theaters.

    The Amazons, the Facebooks, the Googles of this world – knowing what people are looking for – are involved much earlier in this decision-making process, Hamers said. They know the trajectory of this customer going through that process and already have more intelligence than we will ever get. The question for me is whether I can build this platform, which is open, so I extend my activities into this decision-making process.

    Stemming from this strategic focus on mind share, the bank in 2018 purchased Makerlaarsland, a sizeable digital housing broker and agent (4-5 percent market share), precisely to be involved earlier in the decision-making process.

    While Europe does not house as many household tech names as the U.S. or Asia, its regulatory environment in finance is nonetheless in many ways more liberal and progressive. Since 2017, regulators leveled the playing field in payments through the Payment Service Directive 2 (PSD2), breaking banks’ monopoly on customer data.

    Fintechs force us to be more efficient, as a consequence of which we can deal more easily with low-interest rates and tougher regulations. If you open up to trends and try to make them yours, then it can still be fun to run a bank, Hamer said in a 2015 report with German newspaper Handelsblatt.

  • HSBC’s Revamp Less Reliant on External Factors

    HSBC’s Revamp Less Reliant on External Factors

    HSBC’s overhaul this time will be different, said interim chief executive Noel Quinn, relying less on external factors such as the economic environment.

    Following disappointing results, HSBC made announcements to further restructure the business including through 35,000 job cuts. According to its interim head, the current revamp will be less dependent on assumptions based on the macroeconomic environment.

    I believe this plan is predicated on three things we can control, which are costs, simplification of the business, and capital efficiency, rather than being dependent on revenue growth assumptions influenced by the macroeconomic environment,” Quinn said.

    Meanwhile, the spotlight continues to shine on the issue of stability at the top as the bank’s appointment of a permanent chief executive remains unconfirmed. HSBC CFO Ewen Stevenson reportedly made a call to staff this week to provide assurance and inspire commitment.

    Internally, expectations had built up in the run-up to the strategy update that Quinn will be confirmed as the group CEO, the report said, citing an unnamed source that was on the call. But the way the whole thing is being handled … it has created more confusion about the strategy and whether the bank will stick to it for the next three years even if there is a change at the top.

    This is a significant restructuring that is being driven by an interim CEO who may not be the person that delivers it, added another unnamed source that claimed to be a top-20 investor in the bank.

  • Standard Chartered Hires Fintech Leader

    Standard Chartered Hires Fintech Leader

    The bank is bringing on board a fintech evangelist, who will focus on strengthening data analytics and channel capabilities at its transaction banking business.

    Standard Chartered has announced that fintech leader Kahina Van Dyke has joined its Corporate, Commercial and Institutional Banking division (CCIB) team in Singapore as global head, digital channels, and client data analytics. Her career in financial services spans more than two decades, during which she focused on the access and delivery of financial services worldwide.

    She previously spent just under two years at blockchain payments company Ripple, where she was senior vice president of business and corporate development. She also held executive roles at Facebook, MasterCard, and Citi.

    She moves to Singapore for her new role and reports to CCIB chief executive Simon Cooper. She will also be a part of the CCIB management team, the statement said.

    The move signals the bank’s continued commitment to building its digital capabilities as fintech players continue to encroach on its turf, especially in Asia. In January Standard Chartered announced the appointment of Rene Keller as a chief information officer, CCIB.

    Projects to boost its tech capabilities include a mobile token rolled out for corporate clients in more than 38 markets; the joining of the Enterprise Etherium Alliance to develop blockchain research and application in banking; and a new venture with five other banks to address unmet financing demand from the early stages of supply chains.

  • AXA Names Asia Chief Strategy and Customer Officer

    AXA Names Asia Chief Strategy and Customer Officer

    AXA appoints a chief strategy and customer officer for Asian markets to place an even greater emphasis on the region including a doubling down on mainland China.

    AXA appoints Dongjun Choi in his newly expanded role in addition to the strategic development office. Choi will be responsible for finance and operations & technology alongside health and distribution, reporting to Gordon Watson, CEO of AXA Asia.

    Choi has over 20 years of experience in the insurance and financial sector. Prior to joining AXA, he was a managing director with Barclays U.K.’s Strategic Analytics Centre of Excellence responsible for optimizing the bank’s commercial performance. Previously, he had also worked for Cigna, Standard Chartered and McKinsey & Company.

    Choi brings vital expertise to this important function within AXA’s Asian Markets business as we focus on our strategic pillars ­– an enhanced health business, expanded distribution, building our brand and doubling down on mainland China, said Watson, commenting on the new hire.

  • DBS Reports Second Staff Infected With Coronavirus

    DBS Reports Second Staff Infected With Coronavirus

    Another staff of DBS has tested positive for the novel coronavirus, according to a media report. This time around, the latest patient is based in one of the bank’s satellite offices, a DBS spokesman said in Singapore, without disclosing the location. The new case – Case 77 – is understood to be a staff at DBS’s Ngee Ann City office on Orchard Road.

    DBS Treasures has a branch on the fifth story of the property. This satellite office has been deep cleaned as per MOH and National Environmental Agency guidelines, the spokesman added. Case 50 involved a 62-year-old male DBS employee who works at Tower 3 of Marina Bay Financial Centre.

    Case 77 was a first-degree contact, which means he was in close contact with the first DBS employee infected, Case 50, the spokesman added.

    The Ministry of Health (MOH) had announced two more cases in Singapore on Monday evening, with one of them being Case 77, a 35-year-old Singaporean man with no recent travel history to China.

    The affected office space and floor in Tower A have been cordoned off, and common areas such as lifts and toilets are being deep-cleaned and disinfected.

    The DBS spokesman said the bank has a framework for contact tracing, which is done through a mix of physical interviews and data analytics. Through this, we are able to contact-trace up to three degrees of separation, said the spokesperson.

  • Standard Chartered to Double Relationship Manager Headcount

    Standard Chartered to Double Relationship Manager Headcount

    In anticipation of the growth of international banking clients, Standard Chartered will look to double the number of relationship managers it houses over the next four years.

    With an existing affluent segment business (priority) and a high and ultra-high net worth segment business, Standard Chartered decided several years ago to pursue the mid-tier client segment, akin to major competitors like HSBC Jade, Citigold Private Client, and DBS Treasures Private Client.

    According to a release, the bank subsequently launched its «priority private client» segment in March 2018 which has since seen the client base more than double.

    Unsurprisingly, the segment also exhibits global tendencies and currently makes up about one-third of Standard Chartered’s international banking clients.

    In fact, international banking now makes huge contributions to the retail business, according to Standard Chartered’s retail banking head Dwaipayan Sadhu, which subsequently led to more investments not only in talent but a newly launched wealth center based in Singapore.

    Located in Ngee Ann City, the first-ever flagship center will focus on international banking and priority private clients. Standard Chartered’s priority private clients, defined as those with S$1.5 million ($1.1 million) or above in assets under management with the bank, will have access to an extended range of investment opportunities, preferential pricing, and an experienced relationship management team.

    International banking services include foreign investments, multi-currency payments or funding of child education. Sadhu noted that over 20 percent of its affluent clients are from around the world and the center could act as an oasis for them to catch up on their financial needs whenever they are in town.