Wealthy Australian investors are increasingly turning to fixed interest and cash as they await market movements in an uncertain 2024, according to the boss of National Australia Bank’s Private Wealth business.
Michael Saadie, who heads up NAB’s Private Wealth arm — which banks some of the country’s wealthiest families and businesspeople — said investors were looking to secure 6 to 7 per cent and lock in ongoing returns.
He said many of the investment decisions made in the coming years would drive the massive wealth transfers set to shape the next decade.
Mr Saadie, who took on the top job at NAB Private Wealth last January after the departure of Justin Greiner, said the business was banking on growing its customer base as wealthy families handed over assets to the next generation.
NAB expects 30 per cent of wealth to change hands in the next decade, with almost one in three businesses set to be sold or handed down.
“The high net wealth segment is very large and one of the fastest growing in the marketplace,” he said.
Mr Saadie said investible assets had grown from $1.6 trillion five years ago to more than $2.3 trillion.
NAB Private Wealth boasts Australia’s largest personal banking business, JBWere, which joined the bank through a partnership deal inked in 2016, along with the bank’s credit card and retail trading arm.
Mr Saadie said wealthy investors were “in a good position”, with many looking at securing long-term returns from fixed interest assets and products.
“They’re relatively cautious, but have still got quite a balanced portfolio in equities, international equities and domestic investments,” he said.
“We are noticing a substantial lift in liquidity … it’s up 20 per cent for the year.”
All this growth has proven a boon for NAB, Australia’s biggest business lender.
NAB posted a $7.4bn profit in November, with the business and private banking arm, which is overseen by Andrew Irvine, returning $3.3bn in net profit for the 2023 financial year.
Mr Saadie said the private bank was a “true relationship” business, with bankers increasingly allocated to work alongside NAB’s business lending arm.
He said NAB was increasingly picking up multiple members of a family as clients. “That’s why we are getting in there early as a really important part of this process and supporting those children is part of that,” he said.
Mr Saadie said NAB was conscious of the almost $900bn held in self-managed superannuation which would either be put to use or change hands in the coming years as wealthy Australians entered retirement.
NAB has moved to bulk up the private wealth business, with its $1.2bn purchase of Citibank’s consumer lending business swelling the bank with $12.2bn in loans and almost $9bn in deposits.
Mr Saadie said this had grown customers numbers by almost 4000, with NAB also picking up a 60-strong investment advisory group in the deal, which was now advising sophisticated investors.
The Citi business has been fully integrated into NAB, with the only outstanding operations being the mortgage lending arm.
Mr Saadie said NAB had capitalised on the Citi acquisition to launch a bond platform for investors to buy local or international bonds. “It launched about three months ago and we’ve certainly seen huge volumes going through it,” he said.
NAB is looking to keep costs down, as part of a broader push by the bank to rein in expenditure. “We’re getting clear about what we don’t do, we’re stopping activities that don’t make much sense for us,” he said.
NAB recently struck a $700m deal to combine its New Zealand JBWere private wealth business with Jarden under the FirstCape brand with backing from Pacific Equity Partners. Mr Saadie said the deal showed the opportunity to create a “leading wealth management vehicle for New Zealanders”.
“It helps us pull together all the BNZ wealth assets and support the consumer and private bank customers through better wealth products,” he said.
“With Jarden in there as well, we create the biggest advisory force that’s supporting high net wealth individuals.”
Mr Saadie said NAB would not look at a similar transaction in Australia, as the bank had all the capabilities in-house.
NAB took a look at the Australian assets of Credit Suisse, which UBS was pushed to take over after the European lender teetered on the verge of collapse.
Credit Suisse’s private wealth division was a competitor to NAB, alongside UBS Australia’s former wealth operation LGT Crestone and Morgan Stanley.
Mr Saadie said he was confident NAB would maintain its pre-eminent position in the Australian market, noting clients could “walk in and do everything from transactional, investment and full advisory”.
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