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DBS CEO sees pay cut after digital banking hitches amidst profits.

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TLDR:

DBS Group, Singapore’s leading lender, reported record-breaking full-year results with a net profit of S$2.39 billion ($1.78 billion) in the quarter ending December 31. However, CEO Piyush Gupta experienced a significant reduction in compensation due to digital banking disruptions witnessed in the previous year. Despite the disruptions, DBS expressed commitment to enhancing customer experience and assuring greater reliability in the future. Gupta remains confident in sustaining the bank’s performance in the upcoming year.

Singapore’s DBS Group achieved record-breaking full-year results, reporting a net profit of S$2.39 billion ($1.78 billion) in the quarter ending December 31. This marked a modest 2% increase amidst margin pressure. While slightly below analyst estimates, DBS proposed a bonus share issue and increased its final dividend. For the entirety of 2023, the bank surpassed its medium-term net profit target of S$10 billion, achieving a return on equity of 18%, which led to a surge in DBS shares.

However, the bank also faced digital banking disruptions last year, which prompted a 21% cut in variable pay for DBS’ group management committee. CEO Piyush Gupta experienced a deeper 30% reduction, amounting to S$4.1 million. These disruptions led to regulatory actions, including a six-month ban imposed by the Monetary Authority of Singapore on DBS from acquiring new business ventures and reducing its local branch and ATM networks.

DBS has expressed its commitment to enhancing customer experience and addressing digital banking issues by promising greater reliability and alternative channels for payments and inquiries. Gupta, who has been at the helm of DBS since November 2009, has overseen the bank’s expansion into key markets such as India, Taiwan, and mainland China. Under his leadership, DBS has strengthened its wealth management arm and become one of Asia’s largest in terms of assets under management.

Despite the anticipated softening of interest rates and geopolitical tensions, Gupta remains confident in sustaining DBS’s performance in the upcoming year. The bank’s results will set the tone for other major Singapore banks, with rivals United Overseas Bank Ltd. and Oversea-Chinese Banking Corp set to report their results later this month.

The outcomes of DBS’s strategic initiatives to address digital banking disruptions and maintain customer trust will likely influence market perceptions of the bank’s long-term resilience and growth prospects.

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