|
HONG KONG | |
Best Bank: DBS Bank | ||
For the first time in many years, Hong Kong has a new winner. Singapore-based it may be, but DBS Bank’s financials alone justify it securing this award – one that tends to usually go to a larger UK-headquartered rival.
DBS posted net profit of HK$6.9 billion ($880 million) in 2021, up 27% year on year, with non-interest income up 21%, average cheque and savings account balance up 30%, and the ratio of non-performing loans to all lending down to 0.73%.
This flew in the face of logic. Each of DBS’s rivals saw localized profits fall sharply, as torrid prevailing conditions mitigated against success. Hong Kong has struggled through a series of awful years, only to suffer again in early 2022 when the Omicron variant of Covid tore through the city.
Not so DBS. A host of factors helped the Singapore-based lender land this award, some dating back years. One was the resolve not to focus on China’s big property firms. Pretty much every other local bank did – to their detriment, as a decades-long cycle began to turn, leaving overleveraged developers mired in debt and struggling to meet repayments. It was a conscious decision, and DBS stuck to its guns.
Instead, it chose to focus on core services: wealth management, capital markets, multinationals and larger small and medium-sized enterprises, retail banking, and corporate banking. DBS is no longer the little kid in the playground. It has grown fast but quietly and is now larger than its local peers.
Group-wide investment in digital paid off in spades in the pandemic. In 2021, 55% of smaller firms were onboarded digitally, against 31% a year ago.
It is not a one-off year... we are fully committed to the Hong Kong market, and we will continue to be
Strong digital foundations help it to save money and allot capital better, further boosting the bottom line. In the period 2017 to 2021, DBS saw non-interest income rise at a compound annual rate of 10%, against a local industry average of 2%. Its cost-to-income ratio fell by one percentage point last year, against an average sector-wide rise of 10 percentage points.
In April 2021, DBS bought 13% of Shenzhen Rural Commercial Bank, becoming its largest shareholder. It signed strategic partnerships with SRCB and Postal Savings Bank of China under the aegis of China’s Wealth Management Connect – a sign the bank is planning for a proliferation of new business when the borders between Hong Kong and China finally reopen.
So – 2021 was great for DBS Bank in Hong Kong. But can it maintain its momentum?
“It is not a one-off year,” says Sebastian Paredes, the long-time chief executive of DBS Bank (Hong Kong). “Our performance has been consistent through the years. We are a neutral and very friendly bank, we are fully committed to the Hong Kong market, and we will continue to be.”