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DBS Group Holdings Limited, Singapore’s largest bank, faced a setback in its fourth-quarter profit, falling short of analyst predictions, amidst pressures on margins. The notable decline in profitability has led to significant adjustments in Chief Executive Officer Piyush Gupta’s compensation, attributed to the digital banking disruptions experienced last year.
According to DBS’s statement on Wednesday, net profit, excluding one-time items, rose by a modest 2 per cent to S$2.39 billion ($1.78 billion) in the three months ending December 31. This figure fell below the S$2.44 billion average estimate by analysts surveyed by Bloomberg News.
The digital banking outages witnessed last year, causing interruptions in payment and ATM transactions across Singapore, have directly impacted the variable pay for DBS’ group management committee. As a result, Gupta, one of the highest-paid executives in the country, saw a substantial reduction of 30 per cent in his compensation, totaling S$4.1 million.
DBS’s performance decline signals potential challenges ahead for major Singaporean banks, particularly as interest rates, a key driver of profitability, are anticipated to decrease this year. Rivals such as United Overseas Bank Ltd. and Oversea-Chinese Banking Corp are expected to report their results later this month.
In November, the Monetary Authority of Singapore imposed restrictions on DBS, barring it from acquiring new business ventures and reducing local branch and ATM networks for six months following the series of digital banking service disruptions.
Gupta, who has led DBS since November 2009, expressed regret over the outages, assuring customers of the bank’s commitment to addressing these issues with utmost priority. DBS aims to enhance service reliability and provide alternative channels for payments and inquiries to mitigate future disruptions.
Despite challenges, DBS remains optimistic about sustaining its performance in the coming year, according to Gupta. Under his leadership, the bank has significantly expanded its operations in key markets such as India, Taiwan, and mainland China, bolstering its wealth management business to become one of the largest in Asia in terms of assets under management.
For the fiscal year 2023, DBS exceeded its net profit target of S$10 billion and achieved a return on equity of 18 per cent. While uncertainties loom, Gupta remains confident in the bank’s ability to navigate challenges ahead, including softening interest rates and geopolitical tensions.
Sources By Agencies
