Why Net Interest Margins have peaked in Q1

No major signs of SME loan defaults

Impact of ABSD hikes on DBS

How much China reopening upside left?

AI will put white collar jobs at risk

DBS benefitting from flight to safety inflows

Lessons from my younger self

DBS Bank CEO Piyush Gupta shares his optimism in achieving a milestone $10 billion profit this year, following another record Q1 lifted by higher margins and resilient business momentum.

He discusses how much we should worry about the latest ABSD hikes, SME loan defaults amid a slowing economy, the disruption from AI on jobs, as well as reflects on some "lessons from his younger self".  

(00:00) Introduction 

(00:34) - Let's dive into the numbers. Congrats on another record quarter. So let's recap it - first quarter, DBS reported a stronger than expected 43% jump in net profit to a new high from a year earlier. How would you describe the quarter, especially coming off another record?  

(02:02) - On the back of higher net interest margins, sustained business momentum, and resilient asset quality, so pretty much putting you comfortably on track to hitting that milestone $10 billion in net profit this year, Piyush?  

(02:40) - Alright, so lots of moving parts and I think one of them is, of course, the net interest margins. And looking at it, you've got it at 2.12% in the first quarter, and that's up 66 basis points, so it is a pretty good jump. And if you look at the guidance, you're looking at 2.05, 2.1% this year, worth noting your earlier guidance was for the peak to be at around 2.2%, so it's a bit of a cut back in expectations and you've signaled that the peak has been reached in Q1. So what's changed in past three months?

(04:17) - And also what's playing out in the wider economy, you've got a bit of a slowdown, some signs of that happening with the Q1 numbers for Singapore's GDP. I think over the weekend, we saw some headlines about more signs of retrenchment creeping up, more SMEs also going bust. How does that fit into your outlook when you're looking at dashboards - are you seeing that play out when it comes to some of your, for example, SME loan defaults?

(06:50) - Alright, so some degree of resiliency in some of the sectors that you're looking at for SME front at least. The other part that is also going up is ABSD and of course last week, we saw the Singapore government rolling out yet another round of cooling measures for the property industry. So on that front, how much impact do you see the latest ABSD hikes having on DBS?

(08:26) - Now looking at some of the catalysts that we might be expecting for DBS, some tailwinds perhaps, the China reopening story is also going to help with the travel side of things I imagine. So that's going to be a big part in generating fee income, especially for credit cards. How much more upside is there when it comes to China reopening?

(09:31) - Okay, and talking about some of the exciting stuff we can look forward to, ChatGPT has been making the ripples across many sectors and we've heard about the potential of the metaverse. How do you see these technologies playing a role in banking going forward?

(12:23) - That is a lot of watch out for, and another thing that investors are watching out for is the implications of what's playing out in the banking sector in the US, and this is of course, with the fallout from the collapse of SVB. And of course over the weekend, questions about First Republic; now to some extent, we've seen some concerns being answered with the acquisition by JP Morgan. You mentioned that DBS, back in your AGM in end March, benefited from inflows amounting to a few hundred millions in the aftermath of the SVB collapse, so how much is that translating to income and activity, or are we still seeing these monies stay on the sidelines?

(14:34) - And finally Piyush, just to wrap things up on a personal note, there's this book that has been making the rounds, creating quite some buzz - it's called 'Lessons for my Younger Self', and it features a chapter on you, your own reflections. So looking back, you used to talk about how you're really into nature, especially bird-watching, and of course many other lessons as well - walk us through some of those reflections.

Presenter: Ryan Huang

Producer: Yeo Kai Ting (ykaiting@sph.com.sg)

DBS Bank CEO Piyush Gupta shares his optimism in achieving a milestone $10 billion profit this year, following another record Q1 lifted by higher margins and resilient business momentum.
He discusses how much we should worry about the latest ABSD hikes, SME loan defaults amid a slowing economy, the disruption from AI on jobs, as well as reflects on some "lessons from his younger self".  
(00:00) Introduction 
(00:34) - Let's dive into the numbers. Congrats on another record quarter. So let's recap it - first quarter, DBS reported a stronger than expected 43% jump in net profit to a new high from a year earlier. How would you describe the quarter, especially coming off another record?  
(02:02) - On the back of higher net interest margins, sustained business momentum, and resilient asset quality, so pretty much putting you comfortably on track to hitting that milestone $10 billion in net profit this year, Piyush?  
(02:40) - Alright, so lots of moving parts and I think one of them is, of course, the net interest margins. And looking at it, you've got it at 2.12% in the first quarter, and that's up 66 basis points, so it is a pretty good jump. And if you look at the guidance, you're looking at 2.05, 2.1% this year, worth noting your earlier guidance was for the peak to be at around 2.2%, so it's a bit of a cut back in expectations and you've signaled that the peak has been reached in Q1. So what's changed in past three months?
(04:17) - And also what's playing out in the wider economy, you've got a bit of a slowdown, some signs of that happening with the Q1 numbers for Singapore's GDP. I think over the weekend, we saw some headlines about more signs of retrenchment creeping up, more SMEs also going bust. How does that fit into your outlook when you're looking at dashboards - are you seeing that play out when it comes to some of your, for example, SME loan defaults?
(06:50) - Alright, so some degree of resiliency in some of the sectors that you're looking at for SME front at least. The other part that is also going up is ABSD and of course last week, we saw the Singapore government rolling out yet another round of cooling measures for the property industry. So on that front, how much impact do you see the latest ABSD hikes having on DBS?
(08:26) - Now looking at some of the catalysts that we might be expecting for DBS, some tailwinds perhaps, the China reopening story is also going to help with the travel side of things I imagine. So that's going to be a big part in generating fee income, especially for credit cards. How much more upside is there when it comes to China reopening?
(09:31) - Okay, and talking about some of the exciting stuff we can look forward to, ChatGPT has been making the ripples across many sectors and we've heard about the potential of the metaverse. How do you see these technologies playing a role in banking going forward?
(12:23) - That is a lot of watch out for, and another thing that investors are watching out for is the implications of what's playing out in the banking sector in the US, and this is of course, with the fallout from the collapse of SVB. And of course over the weekend, questions about First Republic; now to some extent, we've seen some concerns being answered with the acquisition by JP Morgan. You mentioned that DBS, back in your AGM in end March, benefited from inflows amounting to a few hundred millions in the aftermath of the SVB collapse, so how much is that translating to income and activity, or are we still seeing these monies stay on the sidelines?
(14:34) - And finally Piyush, just to wrap things up on a personal note, there's this book that has been making the rounds, creating quite some buzz - it's called 'Lessons for my Younger Self', and it features a chapter on you, your own reflections. So looking back, you used to talk about how you're really into nature, especially bird-watching, and of course many other lessons as well - walk us through some of those reflections.
Presenter: Ryan Huang
Producer: Yeo Kai Ting (<a href="mailto:ykaiting@sph.com.sg">ykaiting@sph.com.sg</a>)

Get a head start to your work day with Ryan Huang, Emaad Akhtar and Audrey Siek from 6am to 9am. 

Listen to insightful discussions on the stories and issues that matter the most to you and be apprised of the markets and the companies to watch.

Get a head start to your work day with Ryan Huang, Emaad Akhtar and Audrey Siek from 6am to 9am. 
Listen to insightful discussions on the stories and issues that matter the most to you and be apprised of the markets and the companies to watch.

Breakfast with Ryan Huang, Emaad Akhtar and Audrey Siek

Get a head start on your workday with Ryan Huang, Emaad Akhtar and Audrey Siek from 6 am to 9 am. 

Listen to insightful discussions on the stories and issues that matter the most to you and be apprised of the markets and the companies to watch.

Get a head start on your workday with Ryan Huang, Emaad Akhtar and Audrey Siek from 6 am to 9 am. 
Listen to insightful discussions on the stories and issues that matter the most to you and be apprised of the markets and the companies to watch.

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