Tapping the South East Asian Wealth Markets

SUMMARY

Analyses the opportunities for wealth managers in South East Asia, focusing on India, Malaysiaand Thailand. The report covers macroeconomic drivers, investor tendencies, offshore preferences,competitive landscapes and forecasts through 2008.

Scope of this report

• Macroeconomic and savings and investment data drawn from sources like the Reserve Bank of India,Bank Negara Malaysia and the Bank of Thailand
• Insight into the South East Asian financial services market obtained through in-depth interviewswith the main wealth managers and private bankers
• Sizing and forecasting of mass affluent and high net worth individuals generated fromDatamonitors proprietary Global Wealth Model

Research and analysis highlights

In the view of many in India there is a challenge of client education that must be addressedgoing forward. The primary area of concern is in equity investment and the need to invest long-termrather than short-term. This is not a problem that is confined to India, many other countries aroundthe globe have similar problems.

The majority of Malaysian companies targeting affluent individuals are competing in the massaffluent segment and have relatively simplistic product and service propositions.

The provision of specialist services in Thailand for affluent individuals seems to be theexception rather than the rule. Of the major domestic banks, only Thai Military Bank, Bangkok Bankand Krung Thai Bank have an affluent offering outside of their normal retail banking services.

Key reasons to read this report

• This report forecasts the market to 2008, allowing competitors to plan strategies on the basisof detailed market information
• Allows wealth managers to monitor threats and opportunities posed by their main competition
• Helps competitors plan products and services by giving key information on their customersfinancial services preferences

TABLE OF CONTENTS

CHAPTER 1 INTRODUCTION

What is this report about?

Who is the target reader?

How to use this report

Report Methodology

CHAPTER 2 INDIA

Introduction and macroeconomic background

Population and GDP

Indias population is large and - for the most part - poor

Economic growth is strong, but GDP per capita remains low

Interest rates

FDI

Retail Savings & Investments

Regional wealth

Affluent individuals

Customer profile

Offshore tendency

Restrictions on offshore investment

Return on investment

Though there is some money flowing offshore

Non-resident Indians (NRIs)

Affluent individuals and their assets

Mass affluent

High net worth

Financial services

Liberalization of rules surrounding foreign entry

Regulations prohibit foreign majority ownership

Domestic banks are in need of capital

Changes in ownership rules are just part of a broad range of regulatory changes

The stock market

Banking structure

Local players

Foreign entrants

Onshore private banking and wealth management

Wealth management is at an immature stage in India

Private sector retail banks dominate wealth management

Products and services are relatively simplistic

Competition is clustered around the mass affluent customer segment with few true private bankingservices availiable

Restrictions on portfolio management

The competitors

ABN AMRO

Deutsche Bank

HSBC

HDFC Bank

ICICI Bank

Future outlook

Customer outlook

Mass affluent segment

High net worth segment

Wealth market outlook

Domestic banks scale advantages are highly important in an unaware and immature market...

...but international competitors have greater product and service capabilities

Foreign competitors investment management propositions are more sophisticated

Product manufacturing expertise is needed, and being utilized in India

Indias advantages will continue to attract wealth managers

Data

CHAPTER 3 MALAYSIA

Introduction and macroeconomic background

Population and GDP

Malaysias population is diverse

Economic growth has been varied in recent years

Inflation and interest rates

FDI

Retail Savings & Investments

Islamic assets and liabilities

Affluent individuals

Offshore tendency

Malaysians contribute heavily to flows into the main offshore centers

Singaporean competitors are looking to attract money out of Malaysia

Affluent individuals and their assets

Mass affluent

High net worth

Regulatory environment

Financial services

The Financial Sector Master Plan

Capital markets

Securities and fund management companies

Banking structure

Local players

Foreign entrants

Onshore services

Competition is clustered around the mass affluent customer segment with few true private bankingservices availiable

The concepts of wealth management and private banking are developing in Malaysia

Premier banking is a more populated market

Islamic banking

Offshore services

Malaysian offshore territories

HSBC the only player to advertise offshore services

Future outlook

Customer outlook

Mass affluent segment

High net worth segment

Wealth market outlook

A population ripe for wealth creation

Strong commitment to financial reform

Stock market development

And an offshore market to back it up

Data

CHAPTER 4 THAILAND

Introduction and macroeconomic background

Population and GDP

Thailands population is diverse

The Thai economy has seen boom and bust in recent years

Inflation and interest rates

FDI

Retail savings & investments

Affluent individuals

Offshore tendency

Thailands investors contribute to flows into Singapore and Hong Kong

Affluent individuals and their assets

Mass affluent

High net worth

Regulatory environment

Financial services

The Financial Sector Master Plan

Capital markets

The Capital Market Master Plan

Banking structure

Local players

Foreign entrants

Onshore services

There is a distinct lack of specialist domestic banking services

Opportunities in the mass affluent space

There is more competition in private client services

Offshore services

Attracting money out of Thailand

Bharat Overseas Bank offers the only NRI service in Thailand

Future outlook

Customer outlook

Mass affluent segment

High net worth segment

Wealth market outlook

Regulatory overhaul is a boon

Opportunities to be taken at the mass affluent level

Local players should make a move on HNWs

Bancassurance is key and developing

Data

CHAPTER 5 APPENDIX

Definitions

AAGR

CAGR

Gini index

Liquid assets

Liquid asset bands

Research methodology

The Global Wealth Model

The UK sub model

Asia-Pacific sub model

Forecasting methodology

Datamonitors wealth numbers compared with others numbers

Bespoke Wealth Market Sizing

Further reading

Datamonitor Asia-Pacific Wealth Reports

Datamonitor Asia-Pacific Insight Reports

Datamonitor Global Wealth Service: Competitor Tracking

Datamonitor Financial Services Consulting

Asia-Pacific contacts

List of Tables

• Table 1: Datamonitors wealth market coverage
• Table 2: Deposits held by population at all commercial banks split by state of branch, September2004
• Table 3: Total deposits and credit outstanding by banking group, September 2004
• Table 4: Major wealth managers within India, 2004
• Table 5: Comparison of domestic and foreign competitors private banking product and servicerange, 2004
• Table 6: GDP and S&I growth over the 1998-2003 period
• Table 7: Indian retail liquid assets, 1998-2003
• Table 8: NRI deposits by type, 1999-2003
• Table 9: Number of Indian mass affluent individuals, 1998-2003
• Table 10: Liquid assets of Indian mass affluent individuals, 1998-2003
• Table 11: Number of Indian high net worth individuals, 1998-2003
• Table 12: Liquid assets of Indian high net worth individuals, 1998-2003
• Table 13: Forecasted retail liquid assets, 2003-2008
• Table 14: Forecasted number of Indian mass affluent individuals, 2003-2008
• Table 15: Forecasted liquid assets of Indian mass affluent individuals, 2003-2008
• Table 16: Forecasted number of Indian high net worth individuals, 2003-2008
• Table 17: Forecasted liquid assets of Indian high net worth individuals, 2003-2008
• Table 18: The local players have a large share of the Malaysian banking market
• Table 19: Services offered by financial institutions in Malaysia
• Table 20: GDP and S&I growth over the 1998-2003 period
• Table 21: Interest rates, inflation and adult population, 1998-2003
• Table 22: Components of GDP, 2003
• Table 23: Malaysian retail liquid assets, 1998-2003
• Table 24: Number of Malaysian mass affluent individuals, 1998-2003
• Table 25: Liquid assets of Malaysian mass affluent individuals, 1998-2003
• Table 26: Number of Malaysian HNW individuals, 1998-2003
• Table 27: Liquid assets of Malaysian HNW individuals, 1998-2003
• Table 28: Forecasted retail liquid assets, 2003-2008
• Table 29: Forecasted number of Malaysian mass affluent individuals, 2003-2008
• Table 30: Forecasted liquid assets of Malaysian mass affluent individuals, 2003-2008
• Table 31: Forecasted number of Malaysian HNW individuals, 2003-2008
• Table 32: Forecasted liquid assets of Malaysian HNW individuals, 2003-2008
• Table 33: The local players have a large share of the Malaysian banking market, 2004
• Table 34: Specialist offerings available in Thailand
• Table 35: GDP and S&I growth over the 1998-2003 period
• Table 36: Bank rate, adult population and inflation, 1998-2003
• Table 37: Thai retail liquid assets, 1998-2003
• Table 38: Components of GDP, 2003
• Table 39: Number of Thai mass affluent individuals, 1998-2003
• Table 40: Liquid assets of Thai mass affluent individuals, 1998-2003
• Table 41: Number of Thai high net worth individuals, 1998-2003
• Table 42: Liquid assets of Thai mass affluent individuals, 1998-2003
• Table 43: Forecasted retail liquid assets, 2003-2008
• Table 44: Forecasted number of Thai mass affluent individuals, 2003-2008
• Table 45: Forecasted liquid assets of Thai mass affluent individuals, 2003-2008
• Table 46: Forecasted number of Thai high net worth individuals, 2003-2008
• Table 47: Forecasted liquid assets of Thai high net worth individuals, 2003-2008
• Table 48: Wealth markets that have been modeled using the Global Wealth Model

List of Figures

• Figure 1: Methodology diagram and report structure
• Figure 2: Major components of Indian GDP, %, 2003
• Figure 3: Indias bank rate has been reduced by the Reserve Bank in recent years in an attemptto stimulate investment
• Figure 4: Savings and investment assets in India have exhibited strong growth over the last fiveyears
• Figure 5: Deposits remain the primary investment vehicle but are decreasing in importance amongIndian investors
• Figure 6: The market for NRI deposits is valuable and growing fast
• Figure 7: The liquid wealth of mass affluent individuals in India grew at a rate of 17.2% CAGRover the 1998-2003 period
• Figure 8: The number of Indian HNW individuals in the USD3M+ liquid asset band grew by 20.6%AAGR over the 1998-2003 period
• Figure 9: Positioning of key wealth mangers according to wealth of customer segment and breadthof product range, 2004
• Figure 10: Those individuals with more than USD150,000 will own approximately 50% of totalretail liquid wealth in 2008
• Figure 11: The mass affluent population will grow at a rate of 10.4% over the 2003-2008 period
• Figure 12: There will be 45,300 more high net worth individuals in India in 2008 than in 2003
• Figure 13: Major components of Malaysian GDP, %, 2003
• Figure 14: Malaysias interest rates have fallen in recent years alongside US rates
• Figure 15: Savings and investment assets in Malaysia have exhibited strong growth over the lastfive years
• Figure 16: Deposits were the slowest growing investment vehicle for Malaysian investors between1998 and 2003
• Figure 17: The liquid wealth of mass affluent individuals in Malaysia grew at a rate of 8.6%CAGR over the 1998-2003 period
• Figure 18: The number of Malaysian HNW individuals grew by 9.3% AAGR over the 1998-2003 period
• Figure 19: The Islamic banking logo, which must be used alongside all Islamic products inMalaysia
• Figure 20: HNW individuals will own more than a third of total retail liquid wealth in 2008
• Figure 21: The mass affluent population will grow at a rate of 7.6% over the 2003-2008 period
• Figure 22: There will be 22,500 more high net worth individuals in Malaysia in 2008 than in 2003
• Figure 23: Major components of Thai GDP, %, 2003
• Figure 24: Thailands interest rates have fallen in recent years in keeping with the globaltrend
• Figure 25: Retail savings and investment assets in Thailand have grown faster than the economyover the last five years
• Figure 26: Deposits were the slowest growing investment vehicle for Thai investors between 1998and 2003
• Figure 27: The liquid wealth of mass affluent individuals in Thailand grew at a rate of 6.8%CAGR over the 1998-2003 period
• Figure 28: The number of Thai HNW individuals grew by 7.2% AAGR over the 1998-2003 period
• Figure 29: HNW individuals will own almost half of total retail liquid wealth in 2008
• Figure 30: The mass affluent population will grow at a rate of 9.8% over the 2003-2008 period
• Figure 31: There will be 39,000 more high net worth individuals in Thailand in 2008 than in 2003