Mashreq Bank's head of wealth management Ishrat Kiyani said the Dubai-based lender is beefing up its mutual fund range and portfolio solutions as clients increasingly invest excess funds through local banks and financial services firms.
"We are seeing a new development in the wealth management sector," Mr Kiyani told The National. "A few years ago, a lot of our clients' money was being moved overseas but now the tendency is to invest that money onshore."
The bank doubled the number of mutual funds it offers clients to 80 last year and will soon increase them to 150, he said. It also introduced tailored portfolios for different risk appetites. The moves come after the bank's assets under management had double digit growth last year amid buoyant markets and an increase in subscriptions.
"Banks are waking up to the fact that this is a very profitable business for them and therefore more and more banks are vying foe a share of the pie and expanding their local presence," said Mr Kiyani.
The executive said that due to increased competition in the wealth management space in the UAE, the number of investment opportunities was rising with products available becoming more sophisticated. These include bond funds that increase the yield they pay out by borrowing money to enhance the return of the investment, he said.
The UAE has been increasing its attractiveness as an onshore hub for private banking to compete with other more developed arenas such as Switzerland and Singapore. As a result, private banks have been making a beeline to Dubai to set up shop. Over 60 private banks and asset managers are based in the emirate to service the wide region.
Local banks have also been building up their wealth management divisions to reap more profits from non-interest income as they look to diversify their sources of revenues away from loans amid one of the longest stretches of low interest rates on record. Over the past two and half years, Mashreq has doubled the number of its relationship managers to 70 and may add more this year, the executive said. That comes as the bank overall expects a reduction in headcount due to more digitisation.
"Over the past decade, this region has earned its status as a global financial hub," Mr Kiyani said. "Also the growth opportunities for wealth management in the GCC are immense. Over the past 10 years, there has been a huge boom in oil prices that has generated wealth not only for individuals but for governments in terms of sovereign wealth funds.
"Wealth management is an integral part of that and that's an area that many banks are concentrating on because they feel they can make more income from that. That's been our case too, we've been driving up our wealth business and its paid good dividends in the past two years for us. So that's the emphasis for 2018 for us as well," Mr Kiyani said.
And even though there are a number of geopolitical headwinds this year, there are also a number of catalysts for economic growth for in the region that include Saudi Arabia's economic transformation plan and infrastructure projects undertaken Dubai's Expo2020, he said.