EUR 850.00 For Business Accounts Only

Morningstar | DBS Group Is Leveraged for Regional Growth in Greater China and Southeast Asia

DBS Group is Singapore's largest bank, with operations spanning Hong Kong, Greater China, and Southeast Asia. The bank has expanded its reach through acquisitions over the past decade, but organic growth is the key focus. DBS will build on its existing infrastructure and increase products through its distribution channels, including the launch of a digital bank in India and Indonesia. Small to midsize enterprises, transactional banking, and wealth management are key areas of focus. All are leveraged to an increase in trade in the Asian region and a rising middle class and income levels as regional economies thrive.We believe DBS' heavy investment in technology on its client-facing platforms, internal platforms, and back-end systems will differentiate the bank from its peers. The bank is already benefiting from its investments in customer experience and client acquisitions, which are occurring at lower cost through its online platform. The former led to improvements in survey rankings against peers, while the cost/income ratio for its digital channel is 45% compared with 53% for its traditional channel. Productivity has also increased, with management citing internal platforms allowing better engagement with customers. On the back end, processes have been automated while systems have transitioned to the cloud. Consolidation has seen its data centers' footprint decline. In our view, the investments should lead to a decline in cost/income ratio in the long term. Scalability of the platforms means they can be deployed across the bank's geographies.An appetite for acquisitions remains, though opportunities are limited. Bolt-on acquisitions that enhance the scale of existing operations, create cross-selling opportunities, and broaden its product lineup are possible. The purchase of Societe Generale's Asian private banking business in early 2014 is an example. The deal lifted total assets under management by 15% at the time, with DBS' private clients also gaining access to SocGen's European products and services. DBS also acquired ANZ's retail and private wealth assets in five regions in Asia, adding asset under management and scale to its wealth-management business.