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DBS CEO’s pay shrinks as digital banking disrupts with record profits

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TLDR:

– DBS Group, Singapore’s leading lender, reported record-breaking full-year results
– Despite the bank’s strong performance, CEO Piyush Gupta experienced a significant reduction in compensation due to digital banking disruptions witnessed last year.

Singapore’s DBS Group, the country’s leading lender, announced a net profit of S$2.39 billion ($1.78 billion) in the quarter ending December 31, marking a modest 2% increase. While slightly below analyst estimates, the bank proposed a bonus share issue and increased its final dividend. DBS surpassed its medium-term net profit target of S$10 billion for the entirety of 2023, achieving a return on equity of 18%, leading to a surge in DBS shares.

However, Chief Executive Officer Piyush Gupta faced a significant reduction in compensation due to digital banking disruptions witnessed last year. Last year’s outages led to a collective 21% cut in variable pay for DBS’ group management committee, with Gupta experiencing a deeper 30% reduction amounting to S$4.1 million.

DBS’s stellar performance comes amid the aftermath of digital banking disruptions that affected payment and ATM transactions across Singapore. The Monetary Authority of Singapore imposed a six-month ban on DBS from acquiring new business ventures and reducing its local branch and ATM networks as a result of these outages. Gupta has publicly apologized and assured customers of prioritizing the resolution of digital banking issues. The bank is committed to enhancing customer experience and has promised increased reliability and alternative channels for payments and inquiries in case of future issues.

Under Gupta’s leadership, DBS has expanded into key markets such as India, Taiwan, and mainland China. The bank has also strengthened its wealth management arm, becoming one of Asia’s largest in terms of assets under management. Despite anticipated challenges such as declining interest rates and geopolitical tensions, Gupta expressed confidence in sustaining the bank’s performance in the upcoming year.

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. The results of DBS also set the tone for other major Singapore banks, as rivals United Overseas Bank Ltd. and Oversea-Chinese Banking Corp are set to report their results later this month. Analysts speculate on the sustainability of DBS’s growth trajectory in the face of declining interest rates.

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