Conservatism reigns but wealthy bank customers are primed for market opportunities

Wealthy bank customers are preparing to pounce on buying opportunities, says the head of NAB’s JBWere.

NAB’s Michael Saadie said wealthy customers were cautiously optimistic about the outlook for the domestic economy.

Conservatism is reigning among wealthy bank customers during the heightened financial market volatility, but they are also preparing to pounce on buying opportunities.

That’s the view of National Australia Bank’s Michael Saadie, who leads JBWere, the private bank and nabtrade. He told The Australian wealthy customers were cautiously optimistic on the outlook for the domestic economy and the local bourse’s prospects.

“We’re seeing a lot more conservatism in the marketplace where clients are fairly much sitting on the sidelines, sitting on fixed interest and also domestic and offshore government bonds,” said Mr Saadie, who is in his 11th year at NAB and started in his current role in January. “They are watching markets very closely to trigger whenever they’ve got opportunities that they see.

“We’re certainly seeing a lot more flow in terms of liquidity and there might be a bit of a thematic of that flight-to-quality piece again.”

Mr Saadie said the yield curve and bank bill markets were already pricing in interest rate cuts in 2024, which also had implications for how investors were positioning. “Clients are even thinking should they be fixing their deposit rates for longer today if it’s (rates) going to dial back in 12 or 18 months,” he said.

Despite the challenging macroeconomic climate, Mr Saadie said his business units were seeing robust credit quality and demand for philanthropic services.

“Most people are thinking about what can they give back and how do they actually set that up … most families are really aligned on that,” he said. “Predominantly it’s about them building a fund that can generate returns that then goes into support different community aspects that they’ve got a real alignment to.”

NAB has been ramping up its strategy to get the business, private bank and JBWere divisions working more closely together, and boosting employee numbers in the process.

“In the last 12 or 15 months now we’ve put on … probably anywhere between 50 and 60 new private bankers, to work on a specific strategy that we’re driving with the business bank,” Mr Saadie said. “We’ve hired all these private bankers and they’re working hand-in-hand with business bankers and domiciled in the business banking centres to identify and work with clients around succession planning, what they’re doing, their thoughts about handing (over) or transitioning out of the business.

“We’re doing roughly an additional $500m-$600m of (average) FUM (funds under management) a month that’s fairly much been referred to JBWere (and investment advisers).”

JBWere’s funds under management were $41.6bn as at September 30, edging up from $40.7bn a year earlier.

Separately, NAB’s purchase of Citigroup’s local retail banking unit also saw it add 123 wealth staff. Mr Saadie last week signalled NAB was open to further acquisitions in the private banking and wealth space.

While market participants are watching how UBS executes a takeover of beleaguered Credit Suisse – including its local private bank – the suitor is aiming to retain that division in Australia.

On slated changes to the tax treatment of superannuation earnings on balances of more than $3m, Mr Saadie said customers were asking questions about the proposal but it didn’t seem to be causing angst.

Questions JBWere advisers and NAB bankers were fielding from customers included whether they could split their super with their partner or redirect more to a spouse with a lesser balance.

The change – which won’t come into effect until 2025-26 – will tax superannuation income on balances of more than $3m at 30 per cent, compared to the 15 per cent rate currently for amounts of more than $1.7m. The system is uncapped for the 15 per cent concessional tax treatment, with retirement balances below $1.7m not attracting any tax.”