DBS CEO says bank eyeing strong profit growth in 2017 despite oil and gas woes

DBS Group Holdings chief executive Piyush Gupta.
DBS Group Holdings chief executive Piyush Gupta.PHOTO: DBS

SINGAPORE - DBS can achieve a "double digit" net profit growth in 2017, excluding one time costs for integration of ANZ assets, according to chief executive Piyush Gupta, who expects the bank to see less financial impact this year from the still struggling oil and gas services sector.

DBS will fork out "substantially less" for allowances this year, he told a results briefing on Thursday (Feb 16), after setting aside S$1.49 billion in 2016 to cover for bad loans.

For 2016, full year net profit dipped to S$4.24 billion, down 5 per cent from 2015.

Mr Gupta noted that the oil and gas services sector has yet to see improvements in businesses activity levels, which will require oil prices to stay consistently at or above US$60 a barrel. Brent crude futures currently stand at around US$55 a barrel.

Local banks are under close scrutiny over the oil and gas sector woes, with DBS caught off guard by Swiber Holdings' implosion in the second quarter last year.

Of the over S$700 million exposure to Swiber, DBS has only recovered around S$50 million so far, Mr Gupta revealed.

Still, having proactively set aside large provisions for bad loan exposure to the sector, DBS is eyeing a positive outlook, saying multiple business lines show strong growth momentum.

Wealth management income has enjoyed a compound annual growth of 21 per cent to a record high of S$1.68 billion last year, said Mr Gupta. The integration of the ANZ retail and wealth management units it acquired late last year will further contribute to the top line this year, he said.

DBS has also acquired more market share for mortgage loans, to some 29 per cent, Mr Gupta said, adding that loans growth this year will maintain at mid-single digit.