DBS will stop financing projects that burn low-grade coal - what is known as "dirty coal" - by the end of the year, said chief executive Piyush Gupta yesterday.

But the bank will continue to lend to projects in emerging markets that burn "higher quality" coal, while at the same time start developing a portfolio of renewable energy projects to shift the mix of its loans.

Mr Gupta told a results briefing: "In respect of coal, we start with one caveat: We've got to remember that the bulk of energy needs in our part of the world are from coal."

He cited reports noting that by 2040, coal will still account for about 40 per cent of the power generation mix. "It is important to understand that you can't turn this off," he said. "It's not that straightforward an outcome, for either society or the environment. So you've got to be thoughtful about how we transition."

DBS has still struck a few deals linked to burning such "low-grade" coal this year, and will not pull out of these loans due to pre-commitment.

A report last month by Australian environmental advocacy group Market Forces said DBS, OCBC and UOB have financed 21 coal project deals since 2012 worth US$2.29 billion (S$3 billion). Of these, more than half were for coal-fired power stations that are mostly in Indonesia and Vietnam.