“Looking into 2020, with global uncertainties anticipated to remain on the horizon, we will continue to balance our long-term priorities around digital innovation and client centricity, with our short-term goals around productivity improvements and staying vigilant to credit quality.”
Tan Su Shan
Institutional Banking, DBS Bank
2019 was a year marked by macroeconomic and geopolitical headwinds. The much talked about US-China trade war contributed to the slowest global economic growth in a decade, which in turn dented business confidence. Despite the challenging operating environment, income from our institutional banking business reached a new high of SGD 6.1 billion. We also achieved respectable growth from our businesses in Greater China and Singapore, and registered stellar double-digit income growth in India.
Our award-winning digital capabilities and Asian insights-led approach of supporting our clients continued to deliver results. Our cash management income grew 14%, with broad-based growth across all markets. With market volatility returning and improvement in market demand for high-quality yielding assets, we capitalised on our innovative equity and debt solutions to drive fee income growth. As a result, the capital markets business achieved a record year.
This year, we actively worked with clients to incorporate environmental and social considerations into their business strategies.
As the world’s leading digital bank, we were able to tap into our own digital transformation experience to help our clients, and digitally re-engineer their respective client experience journeys, making them more agile and competitive.
Making digital transformation simpler for our customers
Since launching the world’s largest banking Application Programming Interface (API) platform in 2017, we were able to connect software developers, customers and our bankers to make banking simpler. In 2019, we launched our first multi-tier financing facility on a China-based logistics blockchain platform to help suppliers, many of which are SMEs, to get access to trade financing in just seconds. This was a process that would usually have taken weeks.
The relevance and efficacy of our digital solutions have resulted in us closing more than 500 new API mandates, with particular success in the real estate, education, healthcare, insurance, transport, logistics and e-commerce sectors in 2019.
Harnessing data and analytics to derive positive outcomes
With contextual marketing the name of the game in today’s world, we continued to build on our data and analytics capabilities to offer our clients relevant and timely financial products and solutions.
Through data analytics, we identified new-to-bank client prospects by data mining the supply chain network of large anchor clients and created cross-sell opportunities through hyper-personalised product recommendations. Quick wins to date include positive interest from one in five contacted leads across the agricultural, technology, media and telecom (TMT), textile, Western Multinational Corporation (WMNC) and SME segments.
Helping SMEs in the region thrive
We delivered on our SME strategy, registering strong growth in topline and fee income. In particular, growth in China and India were bright spots with income up 26% and 25% respectively year-on-year. The double-digit growth was led by customers seeing increasing value in our liabilities and digital solutions.
The bank was proactive in helping our SME client base simplify their business processes. For example, customers in the region are now able to open an account virtually so that time-strapped SMEs can get on with their business instead of spending precious time in queue. This contributed to a 10% rise in new-to-bank customers in Singapore.
In recognition of our efforts, the SME Finance Forum named DBS “Global SME Bank of the Year” for the second year running.
Global Finance also named us “Best SME Bank” in the world.
Supporting the growth of WMNCs in Asia
We deepened banking relationships with WMNCs and registered an 8% growth in new-to-bank WMNC customers across a spectrum of industries, including auto, industrial, consumer goods and garments, and oil and gas. The business also saw over 20% growth in revenue from treasury and markets, open account trade and guarantees.
Continued leadership in capital markets
DBS continued to be in pole position in Singapore’s equity space, leading all Main Board initial public offerings (IPOs) and participating in 93.2% of the total equity funds raised on the Singapore Exchange in 2019.
Continuing to play a key role in deepening Asia’s real estate investment trust (REIT) market, we led notable transactions such as the IPOs of Lendlease Global Commercial REIT and Prime US REIT. We also led the SGD 1.3 billion rights issue of Ascendas REIT, the largest-ever follow-on equity fund raising by a REIT. Other notable transactions led by DBS include the equity issuances of Mapletree Commercial Trust, CapitaLand Retail China Trust, Keppel DC REIT, Frasers Centrepoint Trust and Manulife US REIT.
On the fixed income front, as one of Asia’s leading bond houses, we continued to play a pivotal role in encouraging issuers to diversify their sources of debt funding.
Financing our customers’ growth ambitions responsibly
Asia has significant infrastructure development requirements and commercial banks as well as debt and equity markets have a key role to play in financing these needs. As we support the region’s growth, we acknowledge the importance of incorporating environmental and societal considerations into our lending decisions.
With responsible financing being one of the key tenets of our sustainability agenda, we provided about SGD 5 billion in financing for sustainability-linked loans, renewable and clean energy-related loans and green loans in 2019. New milestones for sustainability-linked loans were also established across the region.
Supporting Asia’s growing infrastructure needs, we led several landmark transactions in the renewable energy space, including the financing of three offshore wind farms in Taiwan worth SGD 8.5 billion. We also advised the financing of Vena Energy’s 70MW ground mounted solar project, the largest in Taiwan to-date, and are providing advisory on two other floating solar projects in Asia. In recognition of our efforts, DBS’ project finance team was named “Best Project Finance Advisory House of the Year” in Asia and “Project Finance House of the Year” in Singapore by The Asset in 2019.
We also became the first bank headquartered in Southeast Asia to adopt the Equator Principles.
Looking into 2020, with global uncertainties anticipated to remain on the horizon, we will continue to balance our long-term priorities around digital innovation and client centricity, with our short-term goals around productivity improvements and staying vigilant to credit quality.
In the near term, we will use new digital tools to drive internal productivity gains and to improve our cross-sell capability to our customers. We will also focus on building new ecosystem partnerships to drive the growth of new business verticals.
With the use of our enhanced data analytics capabilities and technology architecture, we will continue to experiment and build new business models in the SME space to accelerate and scale our businesses especially in the growth markets.
With the discontinuation of LIBOR (London Interbank Offered Rate) at the end of 2021, regulators globally are encouraging banks to shift toward offering new alternative rates. This would have an impact on the SGD SOR (Singapore Dollar Swap Offer Rate) which is currently being used. With the upcoming changes, DBS is committed to partnering our clients to achieve a smooth and seamless transition.
With sustainability a global imperative, we are accelerating our efforts to integrate environmental and societal factors into our interactions with customers and the way we prioritise business. We will continue to differentiate ourselves through innovating green products and structures for our clients.
Despite the headwinds, we expect steady momentum in our IBG business, driven by our clients’ continued need for industry insights, innovative financial structures, connectivity solutions and differentiated digital products.
Tan Su Shan
DBS Group Holdings
2020 Focus Areas
Further develop sustainability and renewable financing portfolio
Drive and scale ecosystems agenda
Build and execute on Greater Bay Area strategy
Harness data and technology to identify and drive business value and provide a differentiated customer experience
To advise and partner clients to smoothly navigate LIBOR and SOR transition