Top 20 Chinese private banks AUM up 12.2%

Despite an uncertain environment, most notably ongoing strict COVID-19 restrictions and weak market conditions, China’s private banking and wealth management sector grew steadily in terms of AUM and client base in 2022.

According to the 2022 China Wealth Report by APB Insights, the total AUM of the private wealth arms of the country’s biggest 20 banks increased by an average of more than 12%, or RMB 20.74 trillion (US$2.9 trillion) from 2021, while the total number of clients increased by almost 10%. To put that in perspective, the average level of AUM growth across Asia-Pacific private banks in APB Insights’ Asia 2022 Private Banking AUM league table was just 3.5%.

Client preferences increasingly personalised

The headline figure in China reflects the explosive growth seen in the country’s onshore private wealth sector over the last decade. According to recent research by McKinsey focusing on the regional wealth industry post-COVID-19, the personal financial assets of Chinese residents hit RMB 250 trillion at the end of 2022, making China the second-largest wealth management market in the world.

In the next ten years, the needs of HNW clients in China are expected to diverge significantly due to several factors such as age, sources of wealth, investment objectives and risk appetite, which will in part define the trajectory of the industry.

Furthermore, client preferences will become increasingly personalised in many ways. Among these will be demand for equity products with greater risk exposure, cross-border investment opportunities, advisory services and holistic wealth planning. As a result, private banks and wealth managers will need to examine how products and service solutions are structured to provide distinct value propositions to affluent clients. This is among the crucial challenges that private banks and wealth managers in China face.