DBS to Boost Investments, Hiring in China’s Greater Bay Area

DBS Group Holdings Ltd., Southeast Asia’s largest bank, will increase investment and hiring in China’s Greater Bay Area as it expects growth in the region to outpace the rest of the country, according to the lender’s head of North Asia.

(Bloomberg) — DBS Group Holdings Ltd., Southeast Asia’s largest bank, will increase investment and hiring in China’s Greater Bay Area as it expects growth in the region to outpace the rest of the country, according to the lender’s head of North Asia.

“There’s no reason not to be optimistic about the future and the long-term prospects of China,” Sebastian Paredes, who is also the chief executive officer of DBS Bank in Hong Kong, said on Bloomberg TV Wednesday.

Paredes pointed to industries such as electric vehicles, batteries and semiconductors, which are highly concentrated in the Greater Bay Area, as opportunities in the country. The China operations should be viewed holistically, and have had a positive effect on the rest of DBS as business from Chinese clients at the bank’s Hong Kong and Singapore segments have seen double digit growth in the last few years, he said. 

The Singapore-based bank has been keen to expand its business in Greater China and grow outside its home market. Earlier this year, it signaled its interest to raise its 13% holdings in Shenzhen Rural Commercial Bank in China. The bank will also complete its acquisition of Citigroup Inc.’s consumer banking business in Taiwan this month.

DBS’ growing efforts in China comes at a time when the world’s second largest economy is on shaky grounds. China’s exports fell 14.5% last month, and the country slid into deflation in July as both consumer and producer prices fell for the first time since 2020.

The lender’s head of Institutional Banking Tan Su Shan also said China’s economy faces short-term issues in separate interview with Bloomberg TV. 

“The market lacks some short term confidence,” Shan said. There was “a lot of supply side help, but until we solve the demand side issue, there’s still going to be a bit of a gap.” 

Still, Shan said Chinese exports to the ASEAN region were growing. 

The expected 4.5% to 5% growth in China’s economy this year and next provides almost $1 trillion of incremental growth, Paredes said.

In Hong Kong, the lender’s second-largest revenue generator after Singapore, Paredes said he expected interest rate hikes to pare back and that fees income will make up for decreases in interest revenue in 2024. 

DBS recently reported second-quarter profit that topped estimates as net income soared 48% to S$2.7 billion ($2 billion), fueled by higher lending margins while fees also expanded.

DBS has become one of Singapore’s largest listed companies under the leadership of CEO Piyush Gupta, who has led the holding company for 13 years. Recently, the lender has wrestled with the question of succession once Gupta retires. 

Shan, who is seen as a potential candidate, said the bank has robust succession planning in place. 

“There are many candidates that are highly worthy and up for the job,” she said. “I am but one of many.”

–With assistance from Adrian Wong, Shery Ahn and Haidi Lun.

(Updates throughout with new details and quotes.)

More stories like this are available on bloomberg.com

©2023 Bloomberg L.P.