Asia's best bank 2016: DBS

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Awards for Excellence 2016

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It is time to acknowledge a home-grown banking champion that, while still lacking the pan-Asian scope of some international rivals, has demonstrated consistent excellence and a commitment to innovation. At a time when many western banks are in retreat from Asia, it is right to applaud one that is increasing market penetration almost everywhere it attempts to do business.

Yet it is a surprisingly rare model in Asia. Asean-focused banks abound, but DBS is the only local house that seems to want to take on Greater China, India and Indonesia. As CEO Piyush Gupta notes: half the world lives there. There is plenty to do.

DBS is of sufficient scale now that it can stand comparison with global banks. Full year total income hit S$10.8 billion ($8 billion) in 2015 and net profit S$4.45 billion, roughly what UBS earned in financial 2014; more importantly, both revenues and profits were up 12% year on year in a difficult environment.

Gupta is fond of a chart that cross-references year-on-year revenue growth and return on equity on a grid, comparing DBS with global peers. DBS is way out in the top right corner, its 11.2% return on equity number one of the best in the business. The other chart he loves is one that shows 27 consecutive quarters of earnings growth – a relentless upward march. We’re only aware of two other banks in Asia that can say that; both are in China and it’s fair to say neither is going to keep that streak alive much longer.

Piyush Gupta. DBS is synonymous with Singapore
Piyush Gupta, DBS
Better still, the growth is broad-based. When consumer banking income is up 20% year-on-year, wealth management up 29%, small and medium-sized enterprise banking 9%, transaction services 31% and even China-addled institutional banking, up 6%, it’s clear that the business is not reliant on a single cylinder and can withstand a downturn in any one area. And resilience is something the bank takes very seriously: despite non-performing loans of just 0.9% at the end of 2015, its coverage ratio was 148% at the end of December, with a fully phased-in common equity tier-1 ratio of 12.4%.

So, the numbers tell us DBS deserves to be in the mix. But there’s more to it than that.

Firstly, there’s the bank’s commitment not just to digital innovation, but, as Gupta likes to say, to reimagining banking. It pervades everything the bank does, and the digital bank launch in India has the potential to be enormously influential (see Asia’s best digital bank).

Second is the fact that as these businesses have grown, they have come to have both regional relevance and a distinct identity. In wealth management, with the Société Générale acquisition now fully bedded in with minimal loss of people or cash, DBS is a shade outside the top five in the region by assets, with a model closely tuned to the needs of Asian entrepreneurs. It is highly ranked in corporate trade finance, a longstanding DBS priority. It has one of the best SME operations in Asia, getting deeper all the time.

Its dominance of Singapore dollar debt and Singaporean IPOs is to be expected, but the bank is also Asia’s leading and most sophisticated real estate investment trust house, a big player in non-vanilla perpetual securities and other structured financing instruments, and a force in M&A far beyond Singapore. Its advice to Citic Private Equity on its acquisition of Biosensors International, and the privatization of XinRen Aluminium Holdings, shows growing status in China – as does its idea to introduce Alibaba to Singapore Post, which has led to two stake purchases by the Chinese group. Almost a third of group income was from Greater China in 2015; the endgame will see India and Indonesia providing more to the total.

DBS’s Foundation warrants mention too. The bank has a sophisticated corporate social responsibility programme, centred around championing social entrepreneurship through grant funding, and encourages its staff not only to volunteer but to lead. More than 4,000 staff out of a Singapore headcount of about 10,000 did so in 2015.