April 2

2024 Post-AGM: What investors need to know from Piyush Gupta about DBS’ share price


On a warm Thursday afternoon, hundreds gathered in the fancy rooms of Marina Bay Sands Expo, listening to Piyush Gupta, the CEO of DBS.

It was almost like listening to a sermon on a Sunday morning in church.

The crowd was understandably expectant, especially after DBS reported record profits of $10 .3 billion, and a Return of Equity (ROE) of 18%.

But how did those performances square with the 5 outages in 2023 alone?

And was DBS at the end of its growth cycle, with interest rates beginning to come down again?

What should you, as an investor take note of?

Is DBS really here to stay, and can it maintain its intense growth potential?
Is DBS really here to stay, and can it maintain its intense growth potential?

Piyush is a great man (and salesman)

Watch Piyush, and you would experience a masterclass in how to get people to trust you.

During the Annual General Meeting (AGM), someone happened to ask,

What keeps you up at night?

Piyush joked,

My chairman,

Here, Piyush puts a friendly hand on Peter Seah, the Chairman of the Board, beside him,

he keeps me up at night.

The crowd laughs.

It’s little wonder why Piyush has been able to push through such substantial changes in the bank.

What is the sustainable advantage that Piyush is building at DBS?
What is the sustainable advantage that Piyush is building at DBS?

As investors, we tend to overweight changes, and how the management deals with changes.

Jeff Bezos once said this, which I quote verbatim (hat-tip to Morgan Housel, who pointed this out in his book Same as Ever),

I very frequently get the question: ‘What’s going to change in the next 10 years?’

And that is a very interesting question; it’s a very common one.

I almost never get the question: ‘What’s not going to change in the next 10 years?’

And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time.

In a world where we are tempted to jump on everything that’s changing, such as the AI bandwagon, Bezos encourages us to look at what doesn’t change.

In our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now.

They want fast delivery; they want vast selection.

It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon; I just wish the prices were a little higher,’ or ‘I love Amazon; I just wish you’d deliver a little more slowly.’ Impossible.

If we are honest, the people aspect of banking, remains unchanged.

And that’s why over and over again, Piyush’s natural charisma and ability to work with people, should not be understated.

The belief in purposeful banking

And whether you believe the board or not, the depth of expertise and experience on this board is world-class.
And whether you believe the board or not, the depth of expertise and experience on this board is world-class.

Piyush pointed out about how people were initially confused when they first came up with the vision to

make banking joyful.

If you look back at the subprime crisis, and how many people were affected, you might find it hard to believe that banking can be inherently good.

Of course, if you think about banking, it does great good.

It gives loans to help people fulfil dreams they want – like a new house.

The car they always desired.

Even the insurance to do crazy, silly things, like start a business.

Over and over again, if you look at how DBS has executed, they have tried as best to help customers to ‘bank less, live more’.

It’s not just a fancy catchphrase.

But it does mean more. Look at banking 10 years ago, and it would be hard to imagine that you could do so much through internet banking.

Today, what I find most ‘joyful’ is that you can (compared to other banks like UOB and OCBC):

  1. Buy a regular savings plan online, and redeem it
  2. Being able to do 0% fees telegraphic transfers, without needing to go into the bank

Because if you’re really honest with yourself, you don’t really want to be spending your time on the banking part of life.

Like going through stupid buttons to try and figure out just how to set up a standing instruction.

That’s why Piyush has repeatedly emphasised how digitalisation has increased their fee income exponentially, and at a faster velocity.

Whatever way you look at it, these are an incredible set of numbers.
Whatever way you look at it, these are an incredible set of numbers.

For example, if you look at their multi-currency account initiative, whilst they boast a 0% fee for overseas remit, they make money off the spread.

Few banks in Singapore can offer a 0% fee for remit, at the FX rates that DBS offers.

Digitalisation isn’t just a new trend that they are catching, but something that they fundamentally see as driving profits.

Whereas if you look at how most other banks do it, IT tends to be an outsourced capacity, a cost centre, rather than a profit centre.

Just look at UOB. They outsourced their banking systems to Silverlake Axis, a fintech provider listed in Singapore. Not that there’s anything bad in that, but it simply shows a differing focus, compared to DBS.

Digitalisation as a profit centre, not a cost centre

But if you look at DBS’ continual investments in creating Centres of Excellence, in organising workshops to figure out (more than 300) use cases for Artificial Intelligence, you would quickly see how they are spending money where it matters.

Piyush kept reminding the audience that their growth this year didn’t just come because of the fatter Net Interest Margins they were experiencing because of the higher interest rates, but because of a wider, structural transformation they were experiencing.

Take this graph that Piyush showed during his management presentation.

Singapore is not a traditionally high NIM environment, which makes DBS’ performance all the more credible
Singapore is not a traditionally high NIM environment, which makes DBS’ performance all the more credible

Is it just a good sales pitch?

Of course, a veteran investor recently warned me that whilst everything looked great on the outside, and the presentation by Piyush was no doubt impressive, one could not discount the fact that in a bank, numbers do matter.

So beyond just past performance, what matters is,

Can DBS keep up its performance?

What are the risks to that performance?

If you look at where DBS when Piyush first came in 2009, DBS was far behind the pack.

They have since climbed to the top of the pack.

But the question is,


And can they continue to sustain it?

Whilst digitalisation is helping them to smoothen the mediums whereby people transact, what was interesting to see was how they are moving forward.

You see from the above how the digital capabilities has helped them to capture a bigger share of the market.

Today, you would be more prone to paying with the DBS Multi-Currency Card because you can pay in the currency you want. What you don’t realise is that DBS earns money with every transaction that you make off that card.

Are the digital problems really over?

During the meeting, I asked Olivier, chair of the tech subcommittee whether his review had shown any deeper, systemic issues with culture that were causing these repeated outages.

His reply was brief, but he mentioned how he was pleased with the progress made.

Also, it was about how this might be a good pause, after 9 years of intense work building up the digital capabilities of DBS.

If you look at how there have been no outages since November, that is a considerable achievement.

What’s next?

What Piyush pointed out was the way forward for DBS
What Piyush pointed out was the way forward for DBS

If you look at how far and fast DBS has come compared to its peers, you might wonder if they still have room to grow.

In Piyush’s eyes, of course there’s room to grow.

Piyush spoke about how they are banking on the sustainability wave. If you look at that piece of business, it’s about green financing, funding innovative businesses tackling demographic and climate change issues, and helping them to grow.

But beyond the wider theme of sustainability, they have also focused on several key geographies.

Focus on 6 key geographies

When I asked Piyush about how he would be allocating capital moving forward, he pointed out there were 2 main areas:

  1. Their current businesses
  2. DBS India, which has yet to reach a self-sustaining pace without new capital injected

But what’s also interesting to note is how they have focused on 6 key geographies, rather than every single country in ASEAN.

  1. Greater Bay Area, including Hong Kong and Taiwan
  2. India
  3. Indonesia
  4. Singapore
  5. Malaysia
  6. China

Belly up in China?

For the rest, they have actively sought to either hold their position or actively dispose of it. What was interesting was the perspective on China.

There have been a few analysts that have focused on DBS’ exposure to China, given the media attention on how infrastructure in China is going belly up.

But Piyush repeatedly assured markets that they were not taking on massive amounts of risk in China.

Beyond that, they were also taking on interesting positions in banks such as the Shenzhen Rural Commercial Bank.

Piyush joked about how if you were in Shenzhen, there was very little that you could see rural about the area.

But they were growing their position in the bank because of how it was not state-owned, but owned by communities around the bank.

It gave them good exposure to China, without taking on too much of the risk of running it operationally.

Who’s your money on?

Whilst I do acknowledge that the outages have been painful to experience, and that it’s damaged significant goodwill, what’s noteworthy to see was how there was collective reasonability, with the senior management deciding to take paycuts.

Piyush himself took a 30% paycut, despite the record profits that he delivered.

Whilst the pace of digitalisation will accelerate, Piyush’s focus on creating centres of excellence, to develop more in-house capabilities, is a refreshing disconnect from what other banks do – in outsourcing IT capabilities.

My money is on them because of three reasons.

  1. I think the investor sentiment is overweighting the IT outages still, and downplaying just how good they are executing operationally across geographies, and businesses.
  2. They are executing their IT strategy very well. Just look at how many things you can do now online, and you will quickly realise that their costs of service will only go down, whilst the amount of fees through banking will go up.
  3. Their management team, has strong depth.

The question is,

Who’s your money on?



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