Thailand’s largest securities firm wants to reduce its dependence on trading commissions by developing wealth management and other non-brokerage lines.
Maybank Kim Eng Securities (Thailand) would like commission fees to fall to about 60 percent from almost 100 percent of revenue now.
Boonporn Boriboonsongsilp, chief executive of the company’s retail arm, said industry liberalisation earlier this year and the resulting price competition have made business difficult.
Maybank Kim Eng has been able to maintain the highest market share in the sector, 12-13 percent, but its margins continue to decline as trading commissions are now freely negotiated.
The company needs to develop other streams of revenue to maintain income growth in the long term.
Boonporn said wealth management and investment banking will become the brokerage’s main focuses in the years ahead.
She projects that wealth management will generate about 20 percent of total revenue in the long term and that assets under management in that business will total 1.5-5 billion baht. Minimum investment for customers will be 3-5 million baht.
The brokerage has about 80,000 accounts, of which 50,000 are actively traded.
Included in the total are about 200 high-net-worth accounts trading a minimum of 50 million baht.
Returns on wealth management portfolios are higher than the rate of inflation, or about 5-6 percent.
Investors in the high-net-worth category must pass a suitability test before they are accepted as clients.
Maybank Kim Eng’s wealth management services cover investment planning, provision of investment advice regarding investment alternatives and financial instruments, and trading services for onshore and offshore products.
In providing offshore trading services, Maybank Kim Eng will utilise the network of the Maybank Group, which has offices in 17 countries globally.
The brokerage expects to provide complex financial instruments, such as equity-linked notes and insurance-related products, to its clients in the second half this year.
Montree Sornpaisarn, Maybank Kim Eng’s co-chief executive, said three deals are in the pipeline and set to be introduced this year including infrastructure and property funds with combined assets of around 10 billion baht.
In times of high market volatility, investment in high-dividend stocks with low betas was recommended, and infrastructure funds were said to be a good choice as they offer returns of 8 percent in the first year of investment.
Maybank Kim Eng expects long-term investment in the stock market to return 10-12 percent and forecasts the SET index in the second half of this year, rising to 1,320 points. The US economy is expected to remain weak and the European crisis is seen persisting, so global interest rates will likely stay low.
Andrew Stotz, Maybank Kim Eng’s managing director for international business, said Thailand has a dividend yield of 4.1 percent compared with Asia excluding Japan of 1.8 percent.