Standard Chartered Taps Asean’s Rich for Growth: Southeast AsiaBerni Moestafa, Yudith Ho and Howard Mustoe
Standard Chartered Plc, which generates more than three quarters of operating profit in Asia, will tap rising demand for wealth management products in Southeast Asia to bolster growth, Chief Executive Officer Peter Sands said.
Standard Chartered is “very positive about Asean as a whole,” Sands, 51, said in an interview, referring to the 10-member Association of Southeast Asian Nations. “You have so many people across the region who are getting to a level of income and wealth where wealth-management products become much more relevant to them.”
The London-based bank posted income growth of 13 percent in Indonesia and 18 percent in Malaysia last year, Sands said in the interview yesterday in Jakarta, where the bank was celebrating its 150th anniversary in the country.
The number of millionaires in Southeast Asia is expanding faster than in the developed world, boosting demand for financial services. The region’s economy, home to more than 550 million people, may expand 5.4 percent this year and 5.7 percent in 2014, according to the Asian Development Bank.
“Generally speaking wealth management is going to be a very significant opportunity,” Sands said.
The global number of people with $30 million or more in net assets is set to rise 50 percent to 285,665 individuals in 2022, with the number in Asia growing 88 percent to 43,726 people, according to The Wealth Report 2013 by London-based real estate consultancy Knight Frank LLP. The report forecasts fivefold growth in Indonesia, almost eightfold expansion in Myanmar and 63 percent in the Philippines.
Wealth management in the Asean markets offers “a big opportunity” for the bank, said Simon Willis, an analyst at Daniel Stewart Securities Plc in London with a buy rating on the stock.
Within the lender’s consumer unit, small and medium-sized enterprises are “an important part of our business” and offer growth potential, Sands said.
Standard Chartered this month also agreed to buy Morgan Stanley’s Indian wealth management assets for an unspecified price. The unit “gives us scale in our private-banking business in India,” Sands said.
Asia, including the Middle East, contributed 87 percent or about $7.1 billion of the bank’s operating profit in 2012. The region provided 80 percent, or $15.2 billion of operating revenue.
Sands said the bank isn’t concerned about an unexpected slowdown in China’s economy to 7.7 percent in the first quarter from 7.9 percent a quarter earlier.
“The quality and sustainability of China’s growth is actually improving,” Sands said in an interview with Bloomberg TV Indonesia’s Tommy Tjokro. “It’s becoming less resource sensitive and less dependent on investments and exports” with a “greater degree of domestic demand in the composition of growth,” he said.
The lender’s income in China has risen to about $1 billion from about $33 million a decade ago, Sands said. It increased 21 percent last year and the bank will “continue to see good double-digit growth for the foreseeable future,” he said.