Axis Bank expands wealth management biz rapidly in non-metro cities

Axis Bank, the country’s third largest private sector lender, is rapidly expanding its wealth management business for the affluent class – Burgundy Private – beyond the metros, providing customised products to the clientele seeking diverse investment options.

“We are seeing a significant accretion of wealth in the purported Tier-II and Tier-III cities. To capitalise on this trend, we have expanded our high net worth individual (HNI) wealth management presence to 42 locations from 27 locations in the last few months, and the new cities have shown good early results,” Arjun Chowdhry, Group Executive –Affluent Banking, NRI, Cards/ Payments and Retail Lending, Axis Bank, told Business Standard.

 

Some of the new cities the bank has added include Patna, Raipur, Ghaziabad, Jodhpur, Udaipur, and Meerut.

According to Chowdhry, the pace of growth of affluent Indians is outstripping almost every country in the world, driven by a healthy gross domestic product (GDP) growth in the country. This is creating wealth for entrepreneurs, salaried people, and self-employed people, he said.

Overall Burgundy’s assets under management (AUM) stood at Rs 5.99 trillion in the quarter ending June 2024 (Q1FY25), up 40 per cent year-on-year (Y-o-Y) and 12 per cent sequentially compared to Rs 4.29 trillion in Q1FY24. Burgundy Private, the bank’s proposition for high and ultra-high net worth clients, has a client base of 13,071 families, and an AUM of Rs 2.09 trillion, up 31 per cent Y-o-Y and 14 per cent sequentially.

For Burgundy Private, the cut-off is the same for every city, which is Rs 5 crore, Chowdhry said, adding that with wealth getting created in the smaller towns, people are looking at multiple channels for investment. "Hence, it is not necessary to have multiple cut-offs for different cities. We have not had any customers telling us that the cut-off is high”, he said.

According to Chowdhry, the high-net-worth customers behave differently from the emerging affluent and the mass market customers, they are sophisticated and fairly discerning.

Interestingly, the bank is also seeing an increasing trend where the affluent class is looking at investing overseas under the Reserve Bank of India (RBI) liberalised remittance scheme in permissible areas, such as equities, deposits, or property.

“The growth rate in this segment is quite healthy and we expect it to continue. For HNIs, it’s a logical approach, to diversify currency risk, and also get money to spend for aspects such as education, and when they travel”, Chowdhry said, adding that they are also seeing a lot of interest in GIFT City.

In India, wealth management is a competitive space, with banks and non-banks competing against each other to corner a bigger share.

Among banks, HDFC Bank, Axis Bank, ICICI Bank, and State Bank of India (SBI) are some of the most active players.

Chowdhry believes banks have an inherent advantage in this space because they operate in a conglomerate structure and offer all the investment options that the clientele may require.

“Banks like ours (Axis Bank) have an inherent advantage because we operate in a conglomerate structure. We have a bank, a mutual fund, and a securities company. So, we have an advantage over the monoline players,” he said.

Recently, the lender launched ‘Primus’ – an ultra-premium credit card, aimed at ultra-high network individuals, in partnership with Visa. This was in line with Axis’ strategy of attracting premium customers to accelerate growth.