Date
11 December 2017
Allen Lo says the Hong Kong government should support the long-term development of the private banking and wealth management industry. Photo: HKEJ
Allen Lo says the Hong Kong government should support the long-term development of the private banking and wealth management industry. Photo: HKEJ

Hong Kong private banking margins seen shrinking

Private banking and wealth management margins are likely to fall in Hong Kong and other Asian markets despite ample room for expansion and development, the Hong Kong Economic Journal reported Wednesday.

Gross profit margin has shrunk to 0.65 to 0.8 percent from a peak of 1.15 percent and downward pressure is expected to continue as the market matures, the report said, citing Allen Lo, country head and Hong Kong chief executive of UBS A.G.

Market conditions will be determined by the investment climate and the type wealth product, but rising operating costs, intensifying competition and changing investor behavior will exert pressure on margins, he said.

However, given faster economic growth in Asia and a shift in wealth creation from West to East, private banking has ample room to grow in the region.

Lo said Hong Kong should adopt a well-organized qualification and competence regime to unlock the benefits of these opportunities.

Also, the government should support the long-term development of the sector. For instance, there is no mainstream training program for financial professionals, unlike doctors, lawyers and others, he said. 

A lack of competent professionals could dampen Hong Kong’s competitiveness as an international financial center, Lo was quoted as saying.

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VW/RA

Freelance journalist

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