Malaysia’s growing economy is providing a fertile ground for a rising high net worth population and presents myriad opportunities for the wealth management and private banking industry. A recent WealthInsight report looks into the trends of wealthy individuals in Malaysia in a review from 2010-14, and provides forecasts for growth in the period up to 2019
The Malaysian economy is the third largest in south-east Asia, following the city states of Singapore and Brunei. The region’s GDP per capita value of $10,538.06 grew by 6% in 2014, prompted by the region’s growth industrialization and strong tourism sector. The favorable performance of the country has prompted the growth of its wealthy population.
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The population of Malaysian high net worth individuals (HNWIs) stood at 26,621 in 2014 – a rise of 2.4% following an increase of 1.7% in 2013. The total private wealth of these wealthy individuals amounts to $160.4bn.
WealthInsight forecasts that total HNWI numbers will grow by 14.4% to reach 31,663 in 2019, with their wealth growing by 27.8% to reach $210.7bn.
Malaysia also has a modest population of ultra high net worth individuals (UHNWIs). The number stood at 572 in 2014, of which 14 were billionaires. UHNWs in the region had an average per capita wealth of $176.6m in 2014. During the review period of 2010-2014, the population of UHNWIs grew by 10.6% from 517 to 572. WealthInsight forecasts that this number will grow by 16% to reach 709 in 2019.
However, although there has been a growth in HNWI numbers, the recent slump in global oil prices has adversely affected some of the country’s wealthiest individuals. Mokhzani Mahathir, an investor in SapuraKencana Petroleum – Malaysia’s largest oil and gas service provider – had his net worth plummet by half a billion dollars, resulting in his billionaire status being revoked.
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By GlobalData
Private banking landscape
Malaysia’s private banking industry is still in its early stage of development, having been established for about 10 years. There are only a few domestic private banks operating in the country, primarily focusing on Islamic private banking. These include Maybank and Alliance Bank Malaysia. Domestic private banks in Malaysia are currently facing competition from international private banks also offering Islamic products as well as portfolio management services, asset management and philanthropy.
The Domestic private banks are also facing pressure from private banks in Singapore and Hong Kong due to a wider range of services offered by them. Hence, Malaysian HNWIs are becoming more exposed to offshore wealth management, putting the country’s private banks at a disadvantage. A lack of experienced and skilled relationship managers within the domestic market is also a key challenge for the country’s private banking industry.
International private banking players are developing their presence in Malaysia in response to the increasing demand from wealthy individuals who are looking for more sophisticated provisions than the local banks can offer.
Foreign private banks have increased their focus on investment advice to wealthy individuals, rather than pushing to sell the products. Standard Chartered, for example, has focused on offering clients with tailored investment advice through its network of investment advisors and relationship managers.
The leading foreign private banks in Malaysia are Citi Private Bank, UBS, JPMorgan Private Bank, Al Rajhi, HSBC, OCBC Malaysia, Standard Chartered, UOB Malaysia, Deutsche Bank and BNP Paribas.
