DBS CEO says bank hunting for bolt-on deals, not game-changing ones

SINGAPORE - DBS Group is looking for bolt-on acquisitions that would support its geographic and business strategy but has ruled out making a major buy to save itself from distraction, its chief executive Piyush Gupta said on July 9.

In an interview at the Reuters Next forum in Singapore, Mr Gupta also said that despite growing geopolitical risks, DBS remained optimistic on Asia because of its economic growth rates of 4 per cent to 5 per cent. That rate, he said, was almost double that recorded elsewhere in the world.

DBS is the largest bank in Singapore and South-east Asia by asset size.

Mr Gupta said DBS had chosen to focus its geographical growth during his 15-year tenure at the helm on the four major markets of China, India, Indonesia and Taiwan.

In August 2023, DBS completed the acquisition of Citigroup’s consumer banking business in Taiwan, making it Taiwan’s largest foreign bank by assets.

“We have focused on building out a wealth business, we have tried to grow SME (small and medium-sized enterprise) retail business, we have tried to build out transaction services business, and so as long as we can do bolt-on deals that play to that strategy in the big markets and the lines of business we will always look for opportunity,” he said.

“We have stayed away from any earth-shattering, game-changing M&A (mergers and acquisitions). We are convinced that in tomorrow’s world it’s about digital, it’s about AI (artificial intelligence), it’s about changing the culture and the way you work. Any large-scale acquisition will take too long, be too messy and distract from the future.”

The bank is now the largest shareholder in China’s Shenzhen Rural Commercial Bank, which it said gave it a good footprint in the Greater Bay Area, according to its annual report published in March.

“It’s a nice bank, it’s wholly in Shenzhen... we are the largest shareholder, it’s in the small-to-medium enterprise space, it has nothing in property or real estate, it’s relatively clean,” Mr Gupta said when asked if DBS wanted to increase its ownership stake.

“Over time, as it grows, there is an agenda for it to IPO (initial public offering). We are so bullish on the Greater Bay Area... we think activity is good. We think it’s a great platform.

“But before we do that there is opportunity for two-way flow of business, and frankly, our returns on our investment are great.”

DBS in May posted record-beating quarterly results and said it expected its 2024 net profit to exceed 2023’s record. Shares of DBS have risen 23.1 per cent so far in 2024, outpacing its peers OCBC Bank, which is up 16.3 per cent, and UOB, which has gained 15.8 per cent. The share gains have come on expectations of a higher-for-longer interest rate environment, analysts have said. REUTERS