“We will continue to focus on capturing cross-border trade recovery, tapping on our strong foundation in digital transformation, regional connectivity and industry expertise. Sustainable financing will remain a key priority as we work with customers to redirect capital towards more sustainable outcomes.”
Tan Su Shan
In 2021, the global economy saw uneven recovery across different markets. IBG overcame headwinds from a low interest rate environment and achieved broad-based growth through an unrelenting focus on customers, ecosystems and partnership strategies.
As global trade rebounded, we saw increased client activities, loan demand, deal flows and capital market volumes. The digital acceleration that started last year continued and we saw good traction on the usage of our digital tools and applications.
Steady performance amidst pandemic
IBG delivered solid revenue of SGD 5.98 billion, up 4%, supported by broad-based loan growth and record current and savings account (Casa) volumes. Record Casa volumes were achieved as clients recognised the value of our digital innovations, cash management solutions and safe franchise. Amidst a low interest rate environment, net interest income was stable at SGD 4 billion.
We registered record non-interest income, up 13% and achieving the SGD 2 billion mark for the first time. Allowances were below pre-pandemic levels owing to heightened credit vigilance through proactive and continuous monitoring of our portfolio. Profit before tax grew 65% to SGD 3.76 billion, primarily driven by lower allowances. The cost-income ratio was little changed at 35%.
There was strong broad-based growth across most industries, with Financial Institutions (FI), Technology, Media and Telecommunications, and Real Estate industries demonstrating particularly good momentum. In particular, our FI business registered double-digit growth in revenues across all key capital markets of Singapore, United Kingdom (UK) and Greater China, primarily through targeted expansion of our FI customer base and deepening relationships with institutional investors looking to invest in Asia.
We executed well on our market strategies. In Greater China, we sharpened our Greater Bay Area strategy to capture business flows from new industries, promoted sustainable financing and continued to embed our trade and financing solutions deeper into supply chains, with a focus not just on large corporates, but SMEs as well. We also strengthened client relationships in Taiwan.
Our business in India saw strong traction as we focused on deepening relationships and delivering valuable solutions to help our clients succeed. To better serve them, we introduced platform-based financing programmes, offshore treasury and market solutions, as well as digital collection and payment solutions. As a result, revenues from India grew 21%. We expect these efforts to drive meaningful future growth.
Outside core markets, our business saw steady momentum as we focused on driving new client acquisitions through differentiated capabilities in supply chain, digitalisation and sustainability. We registered a 12% increase in income led by the UK, Australia and Vietnam.
Fortifying our business for the future
Even as we scale our business across the region, we are innovating and building for the future. We identified key trends such as hyper-digitalisation, supply chain shifts and an increased focus on sustainability which would re-shape the post-pandemic economy.
To capture rising venture capital flows across the region, we beefed up our proposition in the digital economy space. Our Digital Economy Group and FI Group plugged into the startup and private equity ecosystem across the region to identify opportunities to nurture and finance the growth of Asia’s future unicorns. This was well-received by digital economy companies, entrepreneurs and investors, and we won multiple mandates to support leading digital economy players throughout our key markets. We supported our long-time customer, Carro, with a range of auto facilities and increased our limits for a block discounting facility to support its strong growth.
We also partnered Temasek to jointly launch a USD 500 million growth debt financing platform, EvolutionX Debt Capital, to provide non-dilutive financing to growth-stage technology-enabled companies across Asia.
We expect to leverage on our Securities Business licence granted by the Chinese Securities Regulatory Commission to provide best-in-class onshore investment banking products and services for both domestic and international customers.
Our digital asset ecosystem anchored by the DBS Digital Exchange (DDEx) gained good traction since its launch in 2020. We closed the year with over SGD 800 million in digital assets in our digital custodial services.
Treasury Markets – Tapping new opportunities
We launched DBS Fixed Income Execution (FIX) Marketplace, Asia’s first fully digital and automated fixed income execution platform, to empower issuers to directly engage the market and investors. Keppel Corporation self-executed the first tranche of its USD 1 billion Euro-Commercial Paper Programme with its maiden issuance on the platform. As at end 2021, 20 issuances amounting to SGD 4 billion were done on FIX Marketplace.
To further capitalise on growth opportunities arising from the pandemic, DBS entered into an agreement to be an anchor investor in Muzinich Asia Pacific (APAC) Private Debt I, a private debt fund focused on special situations opportunities in Asia Pacific. DBS was also the first bank in Asia to be issued a membership with the London Metal Exchange outside of London, enhancing our support to corporate clients in Asia accessing an international, robust, and regulated metals market. Revenues for our TM business grew by a record 13%.
Leadership in capital markets
DBS remained in pole position in Singapore’s equity space, advising and lead managing the largest number and value of equity deals on the SGX, accounting for 95% of the total equity proceeds from the Singapore market. We continued to play a dominant role in growing Singapore as an international financial centre for REITs and business trusts, contributing close to 90% of the total equity proceeds raised from the REIT market.
DBS continued to dominate the SGD bond market with close to SGD 18.9 billion in issuances and around 31% market share. We continue to make headway in the Asia ex-Japan G3 bond markets with issuances of close to USD 73 billion.
We were ranked by Bloomberg as the top advisory house in Singapore and second in Southeast Asia for mergers and acquisitions by transaction value. Key deals included CapitaLand’s strategic restructuring where we served as sole financial advisor.
SMEs – Supporting them as they recover and grow
Over the course of the pandemic, we proactively engaged SMEs to extend working capital and business transformation support. Since 2020, DBS has approved over 14,000 collateral-free loans totalling more than SGD 6.4 billion to SMEs in Singapore, with over 90% of the loans going to micro and small enterprises.
In Singapore and India, we simplified processes where our online corporate account opening process for SMEs made use of facial biometrics to speed up information authentication and verification.
Executing on our ecosystems strategy
Through our ecosystem-led platforms, we onboarded more than 3,000 suppliers to expedite access to financing solutions, without the hassle of manual paperwork. We also expanded our platform and ecosystem partnerships and leveraged alternate lending solutions for trade to provide working capital to SMEs, merchants and suppliers. Our Supply Chain Finance assets grew 44%.
Trade fees benefited from higher regional trade volumes and fulfilment of pent-up demand. Corporate Trade Services grew 19% driven by strong momentum in structured and commodity trade.
Overall, transaction services fees were up 13% to a new high of SGD 925 million from growth in trade finance and cash management fees.
In recognition of our efforts, DBS achieved the Euromoney Cash Management Survey 2021 “Global Best Service Overall” accolade among corporates for the fourth consecutive year, and “Asia-Pacific Market Leader Overall” among financial institutions.
Committed to sustainable financing
We made good progress in growing our sustainable finance business during the year, committing SGD 12.4 billion of sustainability-linked loans and SGD 6.9 billion of green loans. Since 2018, we have completed SGD 39.4 billion in sustainable financing transactions, bringing us closer to our SGD 50 billion sustainable finance target by 2024. In addition, we raised more than SGD 23.5 billion in ESG bonds for our customers in 2021 – more than double the proceeds raised the previous year. Our commitment to clients’ sustainability fundraising needs catapulted us to pole position in South and Southeast Asian Offshore ESG Bonds League Tables for 2021.
We arranged National Environment Agency’s SGD 1.65 billion inaugural bond issuance, the largest by a Singapore statutory board, contributing towards Singapore’s ambition of becoming the green finance capital of Asia.
As a testament to our leadership in sustainable financing, sustainable loans, green and social bonds, we won eight out of 10 segment awards in Global Finance’s inaugural Sustainable Finance Awards.
A smooth IBOR transition
With the discontinuation of interest rate benchmarks such as the London Inter-bank Offered Rate and Swap Offer Rate, DBS has been partnering our clients to achieve a smooth and seamless transition to alternative Risk-Free Benchmark Rates.
We achieved many firsts for Singapore Overnight Rate Average (SORA)-pegged facilities in Singapore, including the SGD 500 million SORA-based sustainability-linked loan to Sembcorp Marine Financial Services, the wholly-owned subsidiary of Sembcorp Marine.
Covid-19 remains a lingering threat to economic recovery. However, we are optimistic that business momentum will be sustained in the coming year. The pick-up in interest rates and a largely positive credit environment should bode well for our bottom-line. We will continue to focus on capturing cross-border trade recovery, tapping on our strong foundation in digital transformation, regional connectivity, and industry expertise. Sustainable financing will remain a key priority as we work with customers to redirect capital towards more sustainable outcomes.
Tan Su Shan
DBS Group Holdings
2022 Focus Areas
Differentiate DBS as a leader in sustainable finance
Capture cross-border and trade recovery
Deliver on digital leadership from API and connectivity solutions
Continued credit vigilance, KYC/ AML and credit processes