Year to date the Bank On It Vue has generated a total return of -2.09% (as of 31 May 2018). Over the same period, ASX 200 posted a total return of +0.99%.
Recent political turmoil in Italy and Spain during May has pressured a number of our European holdings (after solid performances in the first four months of the year) but we view this as temporary and we expect a recovery in the European financial sector in 2H 2018.
Strong performances from Singapore’s DBS Group (+22.42%) and China Construction Bank (+13.11%) were the greatest positive contributors to the overall return.
Detractors to performance were Banco Santander (-13.27%) and Mitsubishi UFJ (-13.93%).
Vue Company Updates
DBS Group Holdings (SGX:D05)
DBS Group, the largest bank in Southeast Asia, recently reported a stellar earnings result. Net profit in the first three months of 2018 rose to record levels driven by strong growth in its loans business and a strengthening economy in its home economy of Singapore. The bank's first-quarter net profit jumped 26% year-on-year to S$1.52 billion. That performance was also powered by better lending margins due to higher interest rates, according to a statement by the company. Net interest margin (or NIM), which measures lending profitability, is likely to improve further from the first quarter's 1.83% as interest rates in Asia are poised to move higher alongside rates in the U.S., according to Piyush Gupta, DBS Group's chief executive.
China Construction Bank Corporation Class H (HKG:0939)
China Construction Bank has opened a branch completely managed by robots. China Construction Bank which is China’s second largest lender by assets, opened the branch in Shanghai in April of this year. It is run by pure technology including facial recognition (FR), artificial intelligence (AI) and virtual reality (VR). CCB believes this is a first for the Chinese banking industry and says it has already installed 1,600 smart machines at its 360 branches in the city to ramp up its appeal to tech-savvy customers and trim staff costs. Walking through the front door of the branch, users first meet a friendly looking robot that answers inquiries via voice recognition. First time visitors have their ID card scanned before gaining access and customers are then offered a queue number by the robo-assistant. On subsequent visits, facial recognition will be enough for the system to access customer information.
Banco Santander SA (BME:SAN)
Santander has just launched a new and sophisticated online investment initiative called “SOFIA” (Santander Orienta: Finanzas, Inversión y Ahorro) which intends to improve the customer experience, facilitate decision-making and place Santander well ahead of the competing digital platforms in the marketplace. This new platform covers mutual funds, pension plans and securities and enables portfolios to be viewed individually or in aggregate, including all investment products. The user can also view the returns on their investments received in the current year, and on a monthly, quarterly and annual basis, and their current status (pending, executed or both). Designed for any customer profile, from the most sophisticated to the novice investor, another of the objectives of the new tool is to guide customers and help them progress from savers to investors. It also verifies whether the investments made are in line with the risk expectations communicated by the customer and the recommended time horizon.
Mitsubishi UFJ Financial Group Inc (TYO:8306)
Mitsubishi UFJ and U.S. based Akamai Technologies Inc. have recently announced the development of a new blockchain service, in order to create the world’s most scalable and fastest payment processing platform with a capacity to process a million transactions per second and the ability to finalise individual transactions in less than 2 seconds. By combining MUFG’s payments business expertise with advanced blockchain technology implemented on Akamai’s global cloud delivery platform, they aim to offer a new global payment network service from FY 2019, compatible with the “Internet of Things” (IoT) and other new technologies.
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