Singapore’s leading lender, DBS Group, reported record-breaking full-year results, yet Chief Executive Officer Piyush Gupta faced a significant reduction in compensation due to digital banking disruptions witnessed last year.
This is based on a report published by Bloomberg.
The bank announced a net profit of S$2.39 billion ($1.78 billion) in the quarter ending December 31, marking a modest 2 per cent increase, amidst margin pressure.
While slightly below analyst estimates, DBS proposed a bonus share issue and increased its final dividend.
For the entirety of 2023, the bank surpassed its medium-term net profit target of S$10 billion, achieving a return on equity of 18 per cent, leading to a surge in DBS shares.
However, last year’s digital banking outages prompted a collective 21 per cent cut in variable pay for DBS’ group management committee, with CEO Gupta experiencing a deeper 30 per cent reduction amounting to S$4.1 million.
DBS’s stellar performance comes amid a challenging backdrop as it grapples with the aftermath of digital banking disruptions that paralysed payment and ATM transactions across Singapore last year.
The repercussions of these outages have led to regulatory actions, with the Monetary Authority of Singapore imposing a six-month ban on DBS from acquiring new business ventures and reducing its local branch and ATM networks.
Despite Gupta’s public apologies and assurances of prioritising the resolution of digital banking issues, the bank faced scrutiny over service reliability.
However, DBS reiterated its commitment to enhancing customer experience, promising greater reliability and alternative channels for payments and inquiries in case of future issues.
Gupta, at the helm of DBS since November 2009, has overseen the bank’s expansion into key markets such as India, Taiwan, and mainland China, both through acquisitions and organic growth.
Under his leadership, DBS has strengthened its wealth management arm, becoming one of Asia’s largest in terms of assets under management.
Despite the anticipated softening of interest rates and geopolitical tensions, Gupta expressed confidence in sustaining the bank’s performance in the upcoming year.
DBS’s results set the tone for major Singapore banks, with rivals United Overseas Bank Ltd. and Oversea-Chinese Banking Corp set to report their results later this month.
While DBS’s performance has been propelled by elevated interest rates, analysts speculate on the sustainability of this growth trajectory amidst expectations of declining rates in the coming year.
The outcomes of DBS’s strategic initiatives to address digital banking disruptions and maintain customer trust will likely influence market perceptions of the bank’s long-term resilience and growth prospects.
(With inputs from Bloomberg)