Jirawat Supornpaibul, head of Private Banking Business and executive vice president
KBank sets up real estate service to target wealthy clients
December 12, 2016 01:00 By SUCHEERA PINIJPARAKARN THE NATION
KASIKORNBANK has taken another step to strengthen its private banking business by positioning itself as a real estate adviser to the hi-net-worth individuals (HNWIs).
The new land and building tax bill provides an opportunity for the bank to move into this advisory role because hi-net-worth customers the bank managed had a lot of land and these were hidden assets that should bear fruit, said Jirawat Supornpaibul, head of the private banking business and executive vice president.
He said the bank would officially inform the Bank of Thailand about the real estate advisory service as it believed that the central bank regulating the service would lift its overall standard.
KBank’s private banking looks after 10,000 HNWIs who are defined as a person with asset of at least Bt50 million. Of those clients, it has assets under management of Bt780 billion, of which almost 100 per cent of those clients own land and |90 per cent are family businesses, Jirawat said.
He said the land and building tax bill had resulted in HNWIs asking the bank about how to manage their assets.
He said KBank had a network to match deals for HNWIs who wanted to purchase or sell land, which benefited customers.
Jirawat also said the bank hoped its advisory service would help the nation’s land development be more efficienct to comply with the government intention of increasing the country’s productivity.
If the bank can service real estate management, assets under management could double from the current amount, he said.
KBank’s private banking this year has expanded its capability to extend wealth planning to family businesses, and the bank has set up the KBank Private Banking Academy to provide wealth planning and asset allocation to the next generation of family businesses.
Apart from the family wealth-planning service, KBank services its HNWIs’ investments by partnering Lombard Odier Bank, a leading Swiss private banking service provider.
Revenue from giving advice on investments is KBank’s key revenue source for private banking, followed by revenue from offering insurance and deposits. The low returns of deposit products has encouraged some HNWI, who used to invest in deposit products, to shift to foreign investment funds, KBank said.
The bank offers the K Strategic Global Multi-Asset Fund (K-SGM), managed according to Lombard Odier’s risk-management standards, to customers who can accept a medium risk, with the fund manager in Hong Kong adjusting the portfolio to comply with a given situation.
However, the financial market this year has experienced high volatility, resulting in a return on investment of 2.3-2.4 per cent, well down on the targeted 5-7 per cent.
Between 70 and 80 per cent of HNWIs have invested in K-SGM, representing investment money of Bt16 billion.
KBank said customers had a better understanding of non-deposit products, with deposits representing 40 per cent of the bank’s investments compared to 60 per cent in the previous two years.
The bank has targeted its assets under management to grow 7 per cent in 2017, the same percentage as this year, while the number of HNWIs is projected to grow by 3 per cent, also the same as this year.
The growth of AUM will not expand much based on the country’s gross domestic product growth of 3 per cent.