DBS not opening crypto services to retail market 'anytime in the immediate future': Piyush Gupta

DBS DBS will not extend crypto trading services to retail consumers in the near future, its chief executive Piyush Gupta said at the bank's annual general meeting on Thursday (Mar 31), in what appears to be a U-turn of its stance on the asset class.

Gupta had said in February that it plans to extend crypto trading services to retail clients by the end of 2022. Its DBS Digital Exchange, launched in 2020, is currently a members-only exchange available to accredited and institutional investors. Its full-year trading volume for 2021 stood at about S$1.1 billion.

While acknowledging the growing popularity of crypto as an asset class, Gupta, in response to a shareholder's question, said that most regulators are "rightfully concerned" about allowing it in the retail market.

"Left to ourselves, as I have said before, I think over time, digital currencies and crypto assets are going to be pervasive. And therefore, sooner or later, I think the world will have to come to terms with this as an asset class. Not to replace money... but certainly as a store value, I think it will have a role to play," he said.

The banking sector will eventually have to look at designing guidelines for retail investors to have a play in this space.

"But I'm not holding my breath," he said. "I don't think the environment will allow us to make it available to retail anytime in the immediate future."

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In January, the Monetary Authority of Singapore (MAS) launched guidelines to discourage crypto trading by the man on the street. It spelt out that digital payment token (DPT, or more commonly known as cryptocurrency) service providers should not market or advertise DPT services in public areas here. It also said the services should not be marketed through the engagement of third parties like social media influencers.

At the virtual meeting attended by about 300 shareholders, Gupta also shared several upcoming plans on how his bank plans to champion sustainability.

By the first half of 2022, the bank will publish baseline emission intensities for 9 "critical" sectors covering close to 3,000 clients and 34 per cent of its credit portfolio. It will also set interim and long-term targets for these sectors by the second half of the year.

The bank's latest sustainability report identifies the 9 sectors as power, real estate, automotive, aviation, shipping, oil and gas, agriculture, chemicals, and metals and mining.

Early results have shown that the bank's emission intensities are "substantially lower" than targets set by the International Energy Agency in its roadmap for organisations to reach net-zero by 2050, he said.

DBS also intends to launch a carbon offset programme for retail consumers, but declined to share further details on the initiative. Businesses and governments often purchase offsets to compensate for their emissions of greenhouse gases by funding projects that reduce emissions elsewhere, but such programmes are less available to retail consumers.

The bank is also targeting net-zero operational carbon by 2022. While it is looking at achieving this by reducing energy consumption and buying more renewable energy, Gupta said it will have to "rely heavily" on buying offsets and emission reduction credits to achieve the goal by the end of this year.

Another shareholder also questioned why dividends have not kept in pace with growth in the bank's profits, unlike Gupta's remuneration.

DBS's net profit for the year went up 44 per cent to S$6.8 billion. Its dividend per share for Q4 2021 stood at 36 cents, up 9 per cent, while its full-year dividend stood at S$1.20. Gupta's salary, on the other hand, jumped 47.8 per cent to S$13.6 million.

The bank's chairman Peter Seah maintained that DBS's dividend policy is fair and takes shareholders' interest into account. Gupta saw a "deservedly good increase" in his total compensation, he said, noting that the chief executive took a 25 per cent pay cut in FY2020, amid the pandemic.

During the meeting, Gupta also acknowledged uncertainties in global growth outlook given the ongoing Russia-Ukraine conflict, inflationary concerns and unevening reopening of countries post-pandemic.

But he maintains that the bank's asset quality remains resilient, noting that its direct exposures to Russia and Ukraine remain minimal. It also expects net interest margin to benefit from impending interest rate hikes to a larger degree than its peer banks, as its current and savings deposit base (or CASA) is about twice the size of other local banks'.

DBS shares closed at S$35.83, down 0.83 per cent or S$0.30 after the meeting.