MC EXCLUSIVE Aiming to increase wealth AUM to Rs 15 lakh cr by 2030: SBI Chairman

CS Setty, SBI Chairman

The next big focus for State Bank of India is targeting the high net worth and the uber rich of the country. Speaking to Moneycontrol, the bank’s chairman, CS Setty, gave tall projections, which the bank wants to accomplish in the next five years. “Our idea is whether we take wealth AUM, which is about Rs 4 lakh crore now to Rs 15 lakh crore,” he said while laying down the plans for the segment and he is particular that out of the Rs 15 lakh crore AUM, at least Rs 4 lakh crore of that should be in the form of investment AUM. “We would like to do it by 2030."

Wealth management and private banking have been the buzz words for the banking sector in the last two years. Whether big players in the private sector such as ICICI Bank, Kotak Mahindra Bank or Axis Bank or the mid-sized players such as Yes Bank or RBL Bank, wealth is a space that everyone is aiming at. The past three years have also witnessed the ballooning of several boutique wealth management outfits such as 360 One WAM, IIFL Capital, Ionic Wealth and Dezerv, which is a fintech platform. SBI is clear that it should not miss out on this fast growing, reasonably rewarding segment.

Why wealth?

“Wealth is a natural extension of what we are currently doing,” Setty said, adding that the business will be done within the bank. “I don't think subsidisation in wealth works really for our customer base. We have customers who want to have a good quality banking services, coupled with some investment products,” he explained. He also clarified that wealth for SBI isn’t the same as what a typical private banking business could be for a foreign bank. “We have large number of customers whose relationship value is significant with us. How do we keep them happy, by providing extra and excellent customer service in the conventional banking services, and also based on their risk appetite what kind of investment services we can provide is what are looking at."

While the bank hasn’t segmented wealth as a standalone outfit just yet, Setty points out that the business would have an assets under management of Rs 4 lakh crore. At this size, should wealth management be a standalone outfit like competitors, SBI may have overtaken the rest by a huge margin. The catch though is that unlike most dedicated wealth firms, for SBI, the business is largely deposits based and the investment AUM is quite limited. “We have predominantly a CASA-based AUM,” said Setty. The plan is to ensure that investment AUMs also expand over time so that SBI could be one-stop shop for its customers. “Wealth is critical to create value for our own customers who have a strong relationship value with us. It fits well with our natural business model and combines the trust of SBI and agility of YONO. We are combining our internal resources and market resources to serve our customers”.