Winners rationale

Asia’s private banking industry buckled under the pressure of confounding markets in 2018. Top lines were hit hard by a slump in transactional activity, deleveraging was widespread, and clients demanded intensive hand-holding, quality ideas, and capital preservation. No bank was immune, and yet some fared better than others for the simple fact that they were able to offset revenue pressure and keep clients engaged. Yes, business models matter, but not as much as a bank’s philosophy towards wealth management which to a large extent determines how it prepares and guides clients through such turbulence.Few banks have gone to greater lengths than UBS to espouse an investment philosophy that centres on wealth growth and preservation across life stages. And fewer still, particularly of the universal variety, have had more success in imparting upon Asian clients the virtues of long-term house-aligned investing. Thus, in a year when investors and their private banking providers were put to the test, UBS underscored its credentials as APAC’s consummate global wealth manager by virtue of its disciplined CIO-led guidance and advice, compelling solutions suite, and a willingness to break new ground.

Nowhere had this been more evident than in the robust growth of UBS’s managed solutions business in 2018. In particular, its mandates offering — the broadest and deepest in the region — bested most peers in terms of performance consistency, and in 2018 had the welcome effect of providing a revenue buffer amid the downturn in brokerage activities. On the discretionary side, UBS’s flagship Systematic Allocation Portfolio mandate proved its worth amid two signal changes, while advisory mandate inflows reached record levels, showing the way forward for an industry that is still getting to grips with the fee-for-advice model.

Moreover, UBS remained at the forefront of a sustainable investing wave by launching and successfully distributing the industry’s first truly sustainable cross-asset solution for private clients in Asia, in the process demonstrating the bank’s ability to mobilise its resources around a new initiative to great effect. Indeed, where others have struggled to stimulate client uptake of sustainable investment mandates, UBS achieved a client advisor participation rate of over 90% in APAC off the back of client and advisor education and training, and the deep partnership between its sales management and investment specialists teams.

This success is emblematic of UBS’s ability to engage and prepare clients of all tiers via incisive information and research, and to follow up with relevant solutions. Such was the case with the bank’s ‘Volatility is Back – Are You Prepared?’ campaign that framed the investment environment for clients at the outset of 2018. Accordingly, UBS’s HNW clients benefitted from access to a best-in-breed hedge funds offering that delivered in terms of performance and dovetailed perfectly with the bank’s SAA, which at one stage called for an 18% allocation. Similarly, UBS, recognising that clients were keen to follow the bank’s funds advice but would perhaps struggle to do so in an organised manner, was quick to rollout a ‘best ideas’ fund selection mandate, garnering north of US$100 million in a relatively short time frame.

UHNW clients, too, were well-furnished with thematic-based research and insights that captured the zeitgeist of current investing trends and spoke to their own business interests — specifically around disruptive technology and healthcare. Indeed, UBS’s vaunted UHNW business fired on all cylinders in 2018, with the bank utilising its full firepower to provide solutions spanning personal and corporate advisory and execution. At the same time, UBS has stayed true to its ‘less is more’ mantra by focusing on selective, quality opportunities of strategic import — an approach that clearly resonated with clients, with the division registering double-digit profit growth, improved efficiency, and a healthy increase in wallet share from existing clients, with APAC contributing the lion’s share of global ultra NNM in 2018 (as at Q3).

With an eye on the long-term sustainability of the business, UBS also embarked on a number of long-term strategic initiatives in 2018, headlined by the merger of its international and Americas wealth management units which should unlock growth opportunities and shore up operational efficiencies, including here in Asia. While this falls outside the ambit of these awards, what does deserve particular mention is the steady progress UBS is making in China. Make no mistake: this is a long play that is strategically significant and not yet material in terms of financial contribution. But again, UBS deserves credit for achieving a number of milestones including becoming the first foreign financial institution to take a majority shareholding in its onshore securities partnership, receiving licences for insurance and funds distribution onshore, and more importantly for these awards, taking the initiative to launch an asset allocation for onshore Chinese investors.

Factor in the bank’s consistent investments into client experience spanning its digital offering, events and thought leadership, alongside investments into its staff pool, and UBS in 2018 sent a strong message that as Asia’s largest wealth manager, it is anything but complacent.

Ultimately, UBS demonstrated just how robust its business is through market cycles with healthy increases in PBT underpinned by a double-digit growth in recurring revenues, continued NNM momentum, and a business-wide increase in productivity largely on account of platform investments as at 3Q18.

UBS is Asian Private Banker’s Best Private Bank – Asia Pacific for 2018.