DBS bets on 'poisoned chalice' of India banking to lift profits

DBS CEO Piyush Gupta officiating at the opening of a new DBS branch in Mumbai on March 4, 2019.
DBS CEO Piyush Gupta officiating at the opening of a new DBS branch in Mumbai on March 4, 2019.PHOTO: DBS

MUMBAI (BLOOMBERG) - DBS Group Holdings, South-east Asia's biggest bank, aims to bolster loans to Indian consumers and small businesses as part of a plan to reduce its reliance on Singapore.

DBS will push credit through its newly-formed wholly-owned unit in India, chief executive officer Piyush Gupta said in an interview in Mumbai, where the bank is beefing up both its brick-and-mortar branches as well as its digital presence to tap the world's second-most populated nation. Retail accounts for about 1/10th of DBS loans in the nation.

"The reality is that for most foreign banks, trying to build retail and small and medium businesses outside their home market has been a poisoned chalice," Gupta said on Monday (March 4). "We are making this bet on India as we believe discontinuity caused by digital channels offer a once-in-a-lifetime opportunity of skinning this cat differently."

DBS's push into large, developing markets such as India is necessary as the lender seeks to reduce its reliance on Singapore, a tiny island state with mature economy where it derived 62 per cent of revenue in 2018. Timing might be favourable given that several Indian homegrown banks are hobbled by the world's worst bad-loan ratio while some foreign rivals like Standard Chartered Plc considers cutting presence in the country.

The Singapore bank is the only sizable foreign bank to have taken steps to set up a local unit after India announced relevant rules in 2013. The three largest foreign banks in the country - Citigroup, Standard Chartered and HSBC Holdings - are yet to announce plans on ringfenced units in the country.

"While other foreign banks in India are sticking to the top end of the market we want to go deeper. With the market growing so quickly in India even if we manage to grow with it we will do quite well," Gupta said.

DBS which started its India business as a representative office in 1994 has about 13 branches in the country. It plans to scale up its presence to about 100 touch points - branches and manned kiosks - over the next 18 months and will also triple its balance sheet to 1.5 trillion rupees (S$28.69 billion) by 2023, India unit's CEO Surojit Shome told reporters in Mumbai.