DBS Group Holdings Ltd expects to achieve earnings of more than S$10 billion ($7.4 billion) in the medium term, driven by a strong balance sheet and an ongoing digital transformation.
Return-on-equity is expected to be in a range of 15% to 17%, Southeast Asiaâ€™s biggest lender said in an investor day presentation, referring to a time frame of three to five years. Its profit goal would be more than a 20% increase from 2020â€™s performance, and close to that of Japanâ€™s largest lender Mitsubishi UFJ Financial Group Inc.
To achieve its goals, the Singapore lender is seeking faster growth in capital-light, high return businesses like wealth management, global transaction services and treasury market sales. Led by Chief Executive Officer Piyush Gupta, DBS also sees room for higher distributions to shareholders through dividends or share buybacks.
The stock was little changed Monday, in line with the Bloomberg Asia-Pacific Banks Index. DBS shares have lost more than 7% this year, compared with a nearly 4% gain in the index.
The lender has poured billions of dollars in investments in technology, including digitalisation of banking services that has lowered costs for client acquisitions and boosted efficiency. Yearly net income has risen at a compounded average rate of 9% since 2015, after Gupta embarked on transforming the bank via technology that includes cloud and data.
A series of digital banking disruptions over the past few years, which saw customers lose access to banking services via its mobile apps and website, have however hit the bankâ€™s reputation.
The city-stateâ€™s financial regulator called the glitches this year â€œunacceptableâ€ and boosted the bankâ€™s capital requirements for the second time in over a year, with DBSâ€™s required capital rising by $1.2 billion in total.
The two incidents this year happened in a matter of weeks, though the most recent one early this month was resolved within an hour. In 2021, the bank suffered one of its worst digital disruptions in the past decade.
It takes time to build technology capabilities, DBS said in its presentation, highlighting firms from Alphabet Incâ€™s Google to Amazon.com Inc, which have been undertaking this for about 20 years.