Wealth management a growing market

Chinatrust Commercial Bank (中國信託商銀), the nation's largest credit card issuer, reported brisk growth in the increasingly competitive personal finance business last year, with the segment's pre-tax profits surging 45 percent from a year ago.

"Wealth management has become an important battlefield among financial institutions after the credit and cash-advance card market was hard hit by mounting bad loans," said Oliver Shang (尚瑞強), president of the retail group at Chinatrust Financial Holding Co (中信金控), the parent company of Chinatrust Commercial Bank, during a press briefing yesterday.

The bank started tapping into the segment five years ago, focusing on customized services rather than promoting uniform products. The business had posted double-digit growth per annum over the past three years.

Shang said pre-tax profits from the wealth management business reached around NT$5.4 billion (US$163 million) last year, becoming one of the major contributors to the bank's earnings.

Considering the huge comparison base last year, the bank expects the business to expand by a milder 15 to 20 percent this year, said Huang Su-kuo (黃思國), the bank's executive vice president and managing director of the retail banking group.

To attract interest in its financial planning services, Chinatrust launched an online service called Financial Advisory in January last year. The service helps customers get a clearer understanding of their risk capabilities and drafts customized investment portfolios with the aim of helping them achieve their financial goals.

The system has boosted the transaction rate in investment-linked assets from 28 percent to 40 percent and raised the productivity of its 700 personal finance specialists by 62 percent, bank statistics showed.

"Although we have one of the biggest personal finance teams in Taiwan, what's more important is the backup support we provide these first-tier personnel," Huang said.

The bank has also set up a financial planning advisory team of 60 people and asset management centers to assist the 700 specialists in serving their customers.

Chinatrust's data showed that Taiwan's wealth management market had a client base of around 640,000, with individual assets of NT$3 million, last year, up from 520,000 in 2004.

Chinatrust estimated that its market share in this high net worth segment rose to 17 percent last year from 11 percent in 2004. This would place the bank at the top spot, followed by Citibank Taiwan's (花旗銀行) 10 percent to 12 percent and First Financial Holding Co's (第一金控) 9 percent to 10 percent.

Meanwhile, Union Bank of Taiwan (聯邦銀行), the nation's fourth-largest credit card issuer, was mulling plans to further develop this market to boost its earnings.

Bank president Jeff Lin (林鴻聯) said last week that the bank was considering introducing a new credit card product featuring integrated personal finance management as part of its efforts to double its handling fee income this year.