Tag: DBS

DBS revises India’s FY2023 growth forecast by 100 bps to 7%

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DBS has revised India’s FY23 growth forecast upwards to 7 per cent year-on-year (y-o-y) (CY2022 6.5 per cent) from 6 per cent earlier.

The Singapore-based Bank’s economic research team observed that the 7 per cent y-o-y growth rate in FY23 will be amongst the fastest in its Asia-10 universe.

The MNC bank maintained India’s full-year FY22 forecast at 9.5 per cent y-o-y. It noted that with a receding Covid case count, India’s recovery is turning more broad-based.

The DBS team assessed that into FY23, beyond the thrust from reopening gains, precautionary savings and sectoral normalisation to pre-pandemic levels, capex generation is likely to be the next driver in raising and maintaining growth on a higher plane.

“With the government needed at the wheel in the initial phase, we expect the private sector to participate thereafter when ongoing deleveraging is complete. State elections are lined-up ahead, majority of within H122,” said DBS’ economic research team comprising Radhika Rao, Senior Economist; Philip Wee, Senior FX Strategist; and Eugene Leow, Senior Rates Strategist.

Mapping the monetary policy exit strategy

In their report, “India 2022 Outlook: Shifting to a higher gear”, the DBS economic research team assessed that inflation is likely to quicken into late-2021 and Q122 towards 6 per cent owing to a passthrough of higher input prices, imported energy costs, narrowing output gap and seasonal bouts of food/perishables.

Average inflation is likely to stay above the 4 per cent midpoint target for a third consecutive year in FY22, with DBS’ forecast at 5.4 per cent y-o-y.

With growth expected to gain traction in FY23 and assuming firm commodity prices, the bank expects FY23 inflation to also average a firm 4.5 per cent y-o-y, overcoming a high base.

DBS said while on-track recovery and above-target inflation make a case for policy normalisation, authorities are likely to be watchful of the new risk on the horizon – the Omicron variant.

Notwithstanding the caution, the bank still expects a gradual exit from the ultra-accommodative policy settings to continue.

The move to conduct a longer-duration 28-day VRRR auctions is likely to be followed by a staggered increase in the reverse repo rate – by 20 basis points (each at the December 2021 and February 2022 rate reviews. One basis point is equal to one-hundredth of a percentage point.

The report said a change in the policy stance is likely within first half of 2022, likely to followed by the start of policy tightening by mid-2022 (50 basis points hikes), when inflation will hover above the mid-point of the target range.

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DBS Bank India introduces an industry-first digital & paperless trade financing solution, BFSI News, ET BFSI

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Mumbai (Maharashtra) [India], November 30 : In the current environment, there is a need to drive digitised trade for Corporate customers to reduce processing turnaround time and drive businesses efficiently. In light of the latent need, DBS India has introduced a paperless proposition for the financing of domestic invoices by buyers and sellers. The bank now digitally validates the e-Way Bill (i.e. proof of movement of goods) for the purpose of establishing the genuineness of underlying trade transactions. The adoption of this approach has enabled DBS to process transactions quicker without the need to obtain underlying physical documents.

The bank has also executed its first paperless domestic trade financing transaction with Lincon Polymers Pvt. Ltd., marking a significant milestone in the bank’s digital transformation journey.

With this solution, the bank will eliminate the need for cumbersome documentation, making the entire financing journey paperless and seamless. Customers can share details of their transactions through IDEAL (DBS’ digital banking platform that enables companies to initiate, monitor, and secure business transactions). The data is then validated against the Government-enabled Eway bill portal via GSTN after receiving a one-time authentication from the customer. The bank has partnered with Rezofin, an online invoice financing platform for this process.

Following the amalgamation of LVB with DBS Bank India, the bank is well-positioned to offer this solution to the country’s large SME base, which has traditionally grappled with significant documentation for their financing requirements.

Divyesh Dalal, MD & Head – Global Transaction Services, DBS Bank India, said, “We have been leveraging our digital capabilities to design intelligent solutions that benefit time-strapped enterprise owners. Using the eWay bill verification, we’ve helped clients to reduce the time taken for financing an invoice. The solution is a significant step towards making the underlying trade finance process truly digital and paperless, which has historically been document-intensive.”

Commenting on the transaction, CA Anish Shah, Finance Manager from Lincon Polymers Pvt. Ltd., said, “The domestic financing using E-waybill verification is a unique proposition by the bank. By being digital and paperless, the solution enables us to raise financing requests seamlessly. It has eliminated the need to send physical documents, which needed a dedicated resource to manage transactions. We are happy to have partnered with DBS as they understand our requirements and have extended a solution that enhances efficiency.”

DBS has been proactive in identifying customer needs and creating customised banking solutions for large enterprises and small and medium businesses that meet their end-to-end requirement. Last year, DBS introduced a completely digital and innovative payments solution in partnership with Transport Corporation of India Limited (TCIL). The partnership empowered truck drivers by enabling real-time payments through the DBS RAPID solution. Recently, the bank partnered with ODeX to introduce ODeX Pay Later Solutions powered by DBS- a hassle-free credit solution for freight forwarders. DBS has also launched real-time online tracking for cross-border collections for businesses in India in partnership with SWIFT Global Payments Innovation (gpi).



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Corporate exclusion from banking shrinks buyer pool for PSBs, BFSI News, ET BFSI

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The Reserve Bank of India’s decision to keep corporates away from bank licences will help the government sidestep allegations that it is selling banks to big business. However, the number of prospective buyers for public sector banks (PSBs) will shrink.

In the absence of any deep-pocketed corporate house, the bidders for PSU banks would have to be either private or multinational banks, or private equity investors who would be in a position to come up with a couple of billion dollars to buy a bank. The challenge in the case of private equity investors is that they would look for an exit after a few years, while multinational banks are increasingly reducing their retail exposure as retail banking is becoming a domestic activity because of compliance costs.

Private players like HDFC Bank, Kotak, ICICI and Axis have the equity-raising capacity, but the pension liabilities would be a deterrent. In March this year, finance minister Nirmala Sitharaman had said that the salary and pension of bank employees will be protected in the case of privatisation. “The deal-breaker would be the pension liabilities of these banks,” said a private banker. The fact that the pension is inflation-linked makes it worse for any buyer.

The source added that this is the reason why the banks are trading at low valuations despite having cleaned up their loan books.

For private banks, a bank licence or a branch network does have the same appeal that it would have for a corporate house. More so given the disruption that digital is causing. “Unlike in the past when a domestic bank licence would draw a lot of interest, there was only one serious bidder for Lakshmi Vilas Bank — DBS. When the RBI was looking for someone to take over PMC Bank, despite the lure of a licence of a Mumbai-headquartered bank, there was again only one bidder,” pointed out a banker.

While the PSBs are in better financial shape, a buyer would need to put in more capital and probably see a hike in the cost of funds as the government ownership, which provides a cushion to depositors, will no longer be there. Since liberalisation, the central bank has taken the safe route of issuing bank licences to financial institutions. The first round of banks that got their licence was largely sponsored by financial institutions, including HDFC, ICICI, UTI, IDBI and some non-banking finance companies such as Centurion, Kotak Mahindra and Bandhan. The experience in granting licences to professionals has not been good (Global Trust Bank and Yes Bank). The absence of private non-bank financial institutions makes the divestment more challenging.



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Singapore’s DBS suffers second day of online banking disruption, BFSI News, ET BFSI

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SINGAPORE -DBS Group Holdings Ltd, Southeast Asia’s largest bank, is facing disruptions in its online banking services for the second consecutive day on Wednesday after service outages began on Tuesday morning, leading to complaints from customers.

“Services were restored early this morning. Unfortunately yesterday’s digital banking issue has recurred and this has affected our services,” Singapore-based DBS said on its Facebook page on Wednesday.

The disruption in its online services, including a payments app, is the biggest faced by DBS in about a decade.

Singapore is the biggest retail and wealth management market for DBS, which also has operations in places including Hong Kong, Indonesia and India.

DBS did not elaborate on the cause of the disruption.

DBS’ Facebook post attracted more than 2,000 comments, with users saying they were unable to log in onto their digital bank accounts, while some asked for compensation.

“How long is this going to take to get it fully restored and running? This is incredibly frustrating when I need to have access to my funds,” said user Nicole Lou.



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Union Bank hiring young engineers; average age of employees is 38, BFSI News, ET BFSI

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-By Ishwari ChavanWith the onset of the digital age, banking is not only about finance anymore. Rapid developments in technology are making banks look like tech firms, where one technology is replaced by a newer one in a matter of time.

These developments have made it imperative for the banking sector to hire employees who can adapt to these technology changes swiftly. The “tech-savvy young”, in the words of Raj Kiran Rai, CEO, Union Bank, is where the banks are looking at.

Union Bank MD Rajkiran Rai

Tech-savvy workforce

Banks are heavily recruiting the younger population while skilling and reskilling them. Rai says that the average age of his employees has come down to 38. He added that the “tech-savvy” young can be easily skilled and reskilled through e-learning modules that are being introduced. Prioritising the employees who can read and analyse large data over traditional number-crunching can be increasingly seen as a pattern.

Rai said, “ Actually even though it is not planned, we are recruiting only engineers now. About 60-70% of the officers joining us are only engineers. This is not a planned thing but then it is happening. In fact, if you interact with these young officers, one out of every two will turn out to be an engineer. So that is the position.”

“When we look at the public sector bankers, we think of an aged banker. It is no longer the case. The average age of my employees has come down to 38 years now. So we have quite a young population. We don’t find any problem in skilling and reskilling them,” he said.

Rai says that the average age of his employees has come down to 38.
Rai says that the average age of his employees has come down to 38.

Millennials dominate

The average age of public sector bank employees has been above 40. These jobs are now being infiltrated by especially millennials who are born between 1986-1991. This pattern is likely to gain pace in the coming years as banks shift their focus to tech and interpersonal skills.

Banks have already started investing heavily in critical thinking, collaboration, communication and creative thinking aspects for their growth. And they believe that the younger generation makes a suitable fit.

Furthermore, millennials are believed to be more socially and environmentally conscious.

With the growing concern of banks about their ethical status, they are increasingly focusing on non-financial factors like Environmental, Social, and Governance. The young are thus looked at as worth investing in.

Globally, banks like DBS are far more aggressive in hiring candidates with diverse skills such as psychology, philosophy, history and ethnography, etc along with the engineers.

Also read: How PSU banks are catching up in the digital world



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Not ICICI Bank or HDFC Bank, this lender is the best in India, as per Forbes, BFSI News, ET BFSI

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DBS Bank has been adjudged the best bank of India, ahead of top private banks HDFC Bank and Kotak Mahindra Bank and top lender State Bank of India.

In the third edition of the ‘World’s Best Banks’ list released by Forbes. DBS Bank has clinched the top position in a list of the best banks in India, DBS Bank has won the title for the second consecutive year among 30 domestic and international banks operating in India. The list was compiled by Forbes in partnership with market research firm Statista.

The order

CSB Bank is in the second position, ICICI Bank in the third, HDFC Bank in the fourth. Kotak Mahindra Bank follows at the fifth position while Axis Bank is at the sixth spot. The country’s top lender State Bank of India is in seventh position, followed by Federal Bank at eighth, Saraswat Bank at ninth and Standard Chartered Bank at the tenth spot.

The survey

Over 43,000 banking customers across the globe were surveyed on their current and former banking relationships. Banks were rated on general satisfaction and key attributes like trust, fees, digital services and financial advice, according to Forbes.

DBS Bank India was also recognised as ‘India’s Best International Bank 2021’ by Asiamoney. DBS was named ‘Safest Bank in Asia’ for the 12th consecutive year by New York-based trade publication Global Finance in 2020.

The bank was also Global Finance’s pick for ‘Best Bank in the World’ in the same year, making it the third consecutive global Best Bank accolade received by DBS. Previously, DBS was named ‘World’s Best Bank’ by leading financial publication Euromoney in 2019.

DBS Bank has been present in India for 26 years and has grown consistently by strengthening its small and medium-sized enterprise business and consumer lending operations to build scale and become a full-service bank.



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DBS can fund $2 billion bid for Citi India unit, Bernstein says, BFSI News, ET BFSI

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By Chanyaporn Chanjaroen

DBS Group Holdings Ltd. has sufficient capital to bid for Citigroup Inc.’s consumer assets in India valued at S$2.7 billion ($2 billion) without needing to raise additional funds, Sanford C. Bernstein & Co. analysts said.

It’s a case of “either go big or go home” for DBS to further expand in India where the Singapore-based bank also acquired Lakshmi Vilas Bank Ltd. in November, Bernstein analysts led by Kevin Kwek wrote in a report Thursday. DBS Chief Executive Officer Piyush Gupta last month said he is interested in the U.S. bank’s assets that are for sale in the South Asian country, as well as in China, Taiwan and Indonesia.

A takeover of Citi’s India unit would be DBS’s largest acquisition since 2001, when the Singapore firm spent $5.4 billion buying the Hong Kong unit formerly known as Dao Heng Bank Group Ltd. Among the U.S. bank’s assets for sale, India stands out as “the crown jewel,” Kwek wrote. Its credit card and wealth business would be attractive to any bidder given the country’s economic growth rate and population size, he added.

DBS has pledged to make more income outside its home turf, where the bank derived 70 per cent of its S$4.7 billion profit in 2020.

DBS remains very disciplined on acquisitions and wouldn’t be drawn into any “bidding frenzy,” Gupta said April 30 when asked about his interest in Citi’s asset sale.

Citi plans to exit retail banking in 13 markets across Asia, Europe, the Middle East and Africa, as part of a strategy by CEO Jane Fraser, who took over in March.

In April, DBS said it would pay S$1.1 billion for a 13 per cent chunk in China’s Shenzhen Rural Commercial Bank Corp., and Gupta has indicated an interest to raise the size of that stake.

Including the amount spent on the Chinese bank, the Bernstein analysts assumed a total budget of S$4 billion for acquisitions this year, which would bring the bank’s common equity Tier 1 ratio down to 13.1 per cent, from 14.3 per cent as of March 30. While that would still be above the regulatory minimum requirements, it may impact the firm’s dividend payout for 2021, Kwek said.

“But to be fair, earnings momentum this year looks promising, and management rhetoric will likely be that it comes back later by way of earnings, and subsequently higher payouts,” Kwek said. “Investors should ask: what does DBS believe it can do better than Citi?”



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SBM Bank bets on tie-ups to grow India ops; not to add branches, BFSI News, ET BFSI

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SBM Bank India, the wholly-owned subsidiary of the Mauritian government’s SBM, is betting on partnerships with fintechs and non-bank entities to grow its business here and is not interested in growing its branch network like DBS Bank India did with an acquisition, a top official has said. SBM Bank India wants to grow its business through granular liabilities collection and booking fees by aiding in various banking transactions, its managing director and chief executive Sidharth Rath said.

It can be noted that DBS, the only other wholly-owned subsidiary, acquired struggling private sector lender Lakshmi Vilas Bank last year, which gave it access to 563 branches.

“DBS has their own strategy. Yes, they have gone for inorganic growth … we are also doing inorganic but through partners, let me put it this way,” Rath said.

When asked specifically if it will be interested in tie-ups or deals where equity changes hands – which are otherwise referred to as ‘inorganic’ growth – Rath said at present, it is focused to grow through technology-led and digital-led platforms.

“Going forward, one doesn’t know what it (SBM) would be, how it is going to look, but it is going to be under them (parent State Bank of Mauritius) only,” he said, not discounting the possibility of a strategic partnership, a public issue or even an acquisition like DBS.

The bank is not keen on adding to its brick and mortar branch network, which right now consists of six outlets in metro cities and two in unbanked rural areas, Rath said, adding that it may at best look at adding two more branches in FY22.

The strategy for the new fiscal year will be to scale up on the foundation of the partnership-led model by getting new customers or forging new tie-ups.

A large part of the focus is on driving retail business, which consists only 10 per cent of the Rs 3,500 crore loan book as of March 31, and take it to 25 per cent by end of the next fiscal, Rath said.

Neeraj Sinha, the head of consumer and retail banking at SBM explained that there a slew of fintechs who have developed the right platform, user interface and also a customer base, which are looking at growing, and can help by tying up with a bank.

Being an upstart venture, SBM is open to tie-up with such entities so as to create win-win proposition for both the partners and also the end customer, he said, giving out details of some of the over 20 partnerships it has.

He said as part of one partnership, it has tied up with an entity which will help connect it with those having credit rejections repeatedly. Against a fixed deposit with the bank, SBM will lend the person and help her build a better credit history over a period of time, he said.

Similarly, given the working capital shortage with small businesses, it has a tie-up where a non-bank gives it access to those desirous of getting the card. The customer makes a fixed deposit (FD) with the bank to get the card and enjoy a 30-day credit like the one available for any consumer, he said.

Sinha said that already, over a fourth of its current account deposits are courtesy such tie-ups and the number of customers onboarded through such pacts is 1.5 lakh.

“I am not competing with them (the partners), and hence, I am also the natural choice for the fintechs to come and work with. Lack of size becomes an advantage for me there. This is a typical challenger bank strategy,” Sinha said.

The bank’s overall balance-sheet including both advances and deposits stood at Rs 6,000 crore as on March-end, the share of the low-cost Current Account Saving Account (CASA) deposits was 21 per cent and the capital buffers were at 24 per cent.

When asked if the bank will need any capital, Rath hinted that there will be no need, pointing out that one needs to deliver on the capital as well. He, however, added that whenever needed, the parent will be giving the capital.



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DBS Bank says its system not compromised, leaked messages don’t have sensitive info, BFSI News, ET BFSI

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DBS Bank on Wednesday said there is no compromise of its system, and the messages leaked by hackers do not contain any personal or sensitive information. The bank issued a statement after hackers leaked a sample of transactional messages allegedly taken from the system of enterprise communications firm Route Mobile had some details which referred to DBS Bank.

“DBS Bank systems have not been compromised in any way. The bank is committed to protecting customer data and adopts a robust layered defence approach.

“We use SMS services through a few service providers for customer notifications. However, none of these messages contain any personal or sensitive information,” DBS Bank said in a statement.

Hackers have allegedly compromised servers of enterprise communications firm Route Mobile, even as the company claimed that data of its customers is safe and its cybersecurity team is investigating the matter.

According to cybersecurity experts, data of companies like Tata Communications, Bharti Airtel and DBS Bank have been leaked due to the alleged breach in Route Mobile’s system.

A sample screenshot of the leaked database showed the mobile number of customers, amount transferred by them and one-time passwords allegedly sent from the bank to its customers.

“Messages with authentication codes are valid only for extremely short durations and in any case cannot be used to access any customer information without the customer’s user ID and password,” DBS Bank said.

Route Mobile has said it is investigating the incident, adding that it has not come across any evidence that shows impact on its customer’s personal data.

The company further said it takes all data security claims seriously and has “engaged a third party cybersecurity consultant to independently verify and audit our findings”.



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Singapore’s DBS Bank to focus on India and China for growth, BFSI News, ET BFSI

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By Lee Kah Whye

Singapore: Singapore’s DBS Bank, which acquired India’s Lakshmi Vilas Bank (LVB) last November, plans to accelerate its business by doubling down on growth markets of India and China.

DBS Group CEO, Piyush Gupta, said this when briefing investors, analysts, and the media at its virtual annual general meeting (AGM) last week.

In spite of the health crisis and economic chaos caused by the COVID-19 pandemic, Southeast Asia’s largest lender by total assets achieved its highest ever operating profit of SGD 8.4 billion (USD 6.3 billion). This was an increase of two per cent over the previous year. Total income held steady at SGD 14.6 billion (USD 10.9 billion) which was about the same as in 2019.

Breaking down its performance, the bank said that net interest income was impacted by lower interest rates, but this was offset by growth in loans, deposits and wealth management fees, investment gains, and strong treasury performance.

Total full year income from treasury markets rose 33 per cent to SGD 2.9 billion. This was aided by improved digital pricing capabilities, enhanced processes, and application resiliency. The bank was able to take advantage of the trading opportunities created by last year’s market volatility to increase trading income by 54 per cent.

With economic and business uncertainties weighing heavily last year, the bank tightened budget controls and managed to lower expenses by two per cent. General expenses such as travel, and advertising declined. Staff costs benefitted from government grants.

The bank experienced a low rate of delinquencies from borrowers and loan moratoriums have declined significantly from their peaks.

However, it warned that the low interest rate environment will continue to be a challenge.

Looking ahead, it says that it will continue to invest in enhancing its digital capabilities in both retail wealth management and supply chain digitalisation. It plans to launch a digital exchange leveraging blockchain to enhance efficiency of wholesale payments and grow capital solutions.

It will also double down on growth markets of India and China.

In China, DBS chief, Gupta outlined three key areas of focus, which are its upcoming securities joint venture (JV), the consumer finance market and the China Greater Bay Area.

The new JV in China which was announced last September should be ready to go to market in the next few weeks. He added, “We are convinced that China’ s opening-up in the capital account is going to present tremendous opportunities. We’ re already seeing some benefits of that, as institutional investors from China come out and international investors go into China. So that’ s hopefully a big area of growth for us.”

Known as DBS Securities (China), the JV company will provide onshore products and services for both domestic and international customers. Businesses that DBS Securities will engage in include brokerage, securities investment consulting, securities underwriting and sponsorship, as well as proprietary trading. DBS has a 51 per cent stake in the JV and has four Chinese investment and asset management firms as partners.

DBS which currently has a consumer finance JV with the Postal Savings Bank of China, is on the verge of launching a wholly owned consumer business in China.

With regards to the Greater Bay Area, DBS continues to be optimistic about the area and is looking to use its presence in Hong Kong to integrated deeper into the market. The Greater Bay Area consists of nine cities and two special administrative regions in South China, including the cities of Hong Kong, Macau and Guangzhou.

As for its plans in India, the bank plans to leverage its acquisition of Lakshmi Vilas Bank (LVB) to expand its India franchise. It is looking to overlay DBS’s digital capabilities with LVB’s customer base and network to accelerate its business. For SMEs (small medium sized enterprises), it plans to broaden asset-backed businesses.

For retail, it aims to scale up personal savings and current accounts and expand its personal loan portfolio and grow its wealth management proposition plus address the needs of niche non-resident Indians.

Amid market speculation surrounding its takeover of LVB, Gupta assured shareholders that it was not a “forced marriage”. The cash-starved LVB was amalgamated with DBS Bank India to accelerate the group’ s digital banking push in South India. “The reason we put our hands up is because we knew it will give us the opportunity to expand both organically and inorganically,” he said.

The deal significantly increased DBS India’s retail customer base from 23 per cent pre-merger to 48 per cent, by adding two million retail and 125,000 corporate customers.

Gupta said: ” This is very important because to grow in a country like India, we need a good source of retail sticky deposits and LVB is able to achieve that. When we overlay our digital capabilities on top of this base that we amalgamated, we think the prospects for us are very good.”

DBS had recorded amalgamation expenses of SGD 33 million and general allowances of SGD 87 million for LVB, with provisional goodwill of SGD 153 million.

Maha lockdown to cost Rs 40k crore: Report
For the LVB acquisition, the non-performing loan assets (NPAs) transferred to DBS stood at SGD 212 million. It is fully secured with general provisions at a conservative 9.5 per cent of performing loans or SGD 183 million. Coverage of NPAs was 76 per cent which is considered aggressive.

“At this point in time, we do not believe that we have to take on anymore incremental cost of credit on the LVB portfolio. We think we provided for anything that we might have expected to see in the course of this year,” said Gupta. DBS expects the merged entity to achieve profitability in the next 12 to 24 months. (ANI)



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