DBS, UOB, OCBC chiefs’ salary packages still lag global peers

[SINGAPORE] Piyush Gupta, who on Mar 28 stepped down as chief executive of DBS after 15 years at the helm, saw his salary package more than double since the start of his tenure.

In his first full-year compensation from DBS in the 2010 financial year, after joining from Citigroup in late 2009, Gupta received a total pay package of S$8 million, including a cash bonus of S$2.7 million.

Last year, Gupta took home S$17.6 million – up 56.5 per cent year on year. This comes after he took a steep 27 per cent pay cut the previous year due to a series of disruptions to DBS’ digital banking services, which brought his total compensation for FY2023 to S$11.2 million.

While the increase in Gupta’s pay package might seem eye-watering, it must be noted that his basic salary grew by just 25 per cent to S$1.5 million for FY2024, from S$1.2 million in FY2010.

The bulk of his FY2024 package comprised a S$6.6 million cash bonus and deferred remuneration of S$9.4 million. Of the deferred amount, around 17.1 per cent or S$1.6 million was in cash, with the remaining issued in the form of shares.

DBS is also quite the different animal from when Gupta first took charge.

In FY2024, the bank raked in a total income of S$22.3 billion, compared with just S$7.1 billion in FY2010.

Full-year net profit jumped to S$11.3 billion in the latest period, from S$2.7 billion in FY2010. Net profit for FY2010 would have been even lower, taking into account a S$1 billion goodwill impairment charge for its Hong Kong business.

Gupta’s pay bump in FY2024 came as the trio of local banks on Singapore’s Straits Times Index (STI) logged record-high revenues and net profits for the year.

OCBC CEO Helen Wong received S$12.8 million in total remuneration for FY2024, up 5.8 per cent from S$12.1 million in the prior year.

This came as OCBC reported record net profit of S$7.6 billion for FY2024, up 8.1 per cent from the previous year. The increase was on the back of lower allowances and robust income growth, which brought total income up 7.2 per cent to a new high of S$14.5 billion.

Over at UOB, CEO Wee Ee Cheong’s annual salary package dipped, despite the bank also reporting a record-high net profit for the full year.

Wee’s S$15 million pay package in FY2024 was 5.5 per cent lower than the S$15.9 million he received the year before, even as UOB posted a 5.8 per cent increase in net profit to a record S$6 billion, boosted by strong net fee income and trading and investment income.

Total income edged up 2.6 per cent to S$14.3 billion in FY2024, from S$13.9 billion the year before.

Lagging global peers

Compared with their global peers, the remuneration packages of the local bank CEOs are still lagging.

Citigroup CEO Jane Fraser, for example, took home US$34.5 million in FY2024, some 33 per cent more than the previous year.

This came as Citi’s total revenue climbed 3 per cent year on year to US$81.1 billion in FY2024, while net income rose 37 per cent to US$12.7 billion.

Over at UBS, CEO Sergio Ermotti earned some 14.9 million Swiss francs (S$22.7 million) in FY2024 – a whisker over the 14.4 million Swiss francs he was compensated for just nine months of work in FY2023, when he returned to lead the bank following UBS’ emergency takeover of Credit Suisse.

Ermotti’s FY2023 pay package caused an uproar in Switzerland last year, and lawmakers recently backed a parliamentary motion to limit bankers’ total annual compensation to between three and five million Swiss francs.

For now, Ermotti remains one of Europe’s highest-paid bank CEOs.

UBS’ total revenue grew 19 per cent to US$48.6 billion in FY2024, but net profit slumped 81.4 per cent to US$5.1 billion.

Meanwhile, Standard Chartered CEO Bill Winter’s pay package swelled 45.8 per cent to £10.7 million (S$18.6 million) in FY2024, following a turnaround in the bank’s performance and a surge in its shares.

The London-headquartered bank reported a 13 per cent increase in total operating income to US$19.7 billion, and a 17 rise in net profit to US$4 billion.

Tackling uncertainties

While the Singapore banks are still smaller than their global counterparts in terms of revenue, they appear to be doing a good job punching above their weight. And the CEOs must be given credit for this.

For example, the trio of local banks are generating double-digit returns on equity (ROEs) – a metric that gauges a bank’s profitability and how efficiently it generates those profits.

Calculated by dividing net income by total shareholders’ equity, a higher ROE suggests that the bank is more adept at converting its equity investments into profits.

In this aspect, leading the pack is DBS with ROE at 18 per cent. ROE of its Singapore peers OCBC and UOB is at 13.7 per cent and 13.3 per cent, respectively.

On the other end of the spectrum are UBS and Citi, with ROE at 6 per cent and 6.1 per cent, respectively.

The Singapore banks also appear to be better capitalised to take on global macroeconomic uncertainties, with higher Common Equity Tier 1 (CET1) ratios.

A core measure of a bank’s financial strength, the CET1 ratio indicates how well a bank can withstand stress.

In this regard, OCBC and DBS are at the top of the table, with CET1 ratios of 17.1 per cent and 17 per cent, respectively.

Profitability and stability in the banks will be closely watched by investors, amid some major job cuts as major corporations undergo restructuring and adapt to changing market conditions.

Fraser’s Citi has set out a target to reduce jobs by 20,000 by the end of 2026, as it seeks to streamline its operations and lift profitability to compete more closely with its rivals.

Ermotti’s UBS has already cut more than 10,000 roles since it bought Credit Suisse, bringing its global headcount down to 108,648 at the end of last year, from a peak of 119,100 at the end of June 2023.

Another Swiss bank, Julius Baer, had also announced around 400 job cuts in Switzerland – equivalent to about 5 per cent of the workforce – due to a radical revamp of its leadership and a cost-cutting drive.

The Singapore banks are not immune to these cuts. For example, DBS in February said it plans to cut about 4,000 of its contract and temporary staff – or about half of the 8,000 to 9,000 of such staff it employs – over the next three years.

Gupta said the move is due to the further adoption of artificial intelligence by the bank, which is replacing roles carried out by human beings.