DBS chief Piyush Gupta to remain in his role 'for foreseeable future'

Singapore

DBS reviews its succession plan for senior management roles annually, with its chief executive Piyush Gupta to remain in his position "for the foreseeable future" after more than 10 years at the bank, said South-east Asia's largest lender on Thursday.

The bank said, however, that it is "committed to grooming talent from within" when it comes to its leadership renewal, which entails giving potential leaders exposure to new roles, whether in businesses or geographies.

This was in response to shareholder queries submitted earlier to DBS for its virtual annual general meeting (AGM), and subsequently published on the bank's website. Close to 1,000 shareholders attended the virtual meeting.

Over the course of an hour, Mr Gupta addressed shareholder concerns about the bank's future, as the Covid-19 pandemic and falling oil prices led many to ask about DBS' business, credit cost and dividend outlook.

Earlier in the day, DBS posted a 29 per cent drop in its first quarter net profit from a year ago that brought its earnings to its lowest level since 2017. The bank reported a surge in general provisions in anticipation of the Covid-19 economic fallout as well as specific allowances, mainly for new exposures recognised as non-performing during the quarter.

During the AGM, Mr Gupta said that the bank will maintain the payment of quarterly dividends.

"At this point in time, our assessment of our earnings capacity and the kind of credit environment we are in gave us the confidence that for this quarter, we can definitely sustain this dividend," he said.

This comes amid pressure faced by banks elsewhere in the world to slash dividends to conserve cash during the pandemic.

Given the uncertainty and tail risks on the horizon, however, Mr Gupta said that it is appropriate for the board to take stock every quarter and adjust dividend policy if needed.

DBS also covered a broad swathe of other questions, ranging from its performance in India to the competition posed by the upcoming digital banks.

DBS said that it expects its overall India franchise to be profitable this year even amid the pandemic.

"To be a leading Asian bank, it is important that we have a meaningful presence in the region's largest markets. We continue to invest in India and Indonesia, and that has weighed on earnings," said the bank.

On the upcoming digital banks in Singapore, DBS noted that the new entrants will be free from the burden of legacy and have access to large resources, and are "not to be underestimated".

Even so, the bank's view is that "it will not be easy" for these entrants to be successful in the short to medium term due to Singapore's high banking penetration and incumbents such as DBS having made strides in their digital offerings over the years.

The capital requirements will also be a challenge, according to the bank.

"On the back of the Uber and WeWork IPOs, it is unlikely that investors will have appetite for continued unlimited cash burn without a line of sight to Ebitda and returns," said DBS.

"While any new competition must be taken seriously, the incumbent players will hold our own."

At the end of the session, all 13 resolutions on the agenda were passed.

DBS is the first among the Singapore banks to hold its AGM. OCBC's AGM will take place on May 18, while UOB will convene its AGM on June 5.

DBS' shares rose 76 cents to close at S$19.96 on Thursday.

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