View From The Top
Chng Sok Hui, CFO
Global Finance: What makes DBS a safe bank?
Chng: I would highlight five key factors that make DBS a safe bank: strong franchise, sound strategy and strong execution; capital strength; sound risk management; funding and liquidity; and pedigree parentage. We are an Asia-centric commercial bank, distinct from local lenders and global players. We are anchored in Singapore and Hong Kong, two well-regulated markets, with a growing presence in Greater China, India and Southeast Asia. The diversification of our customer base, geographical spread and product mix in one of the highest-growing regions in the world adds to the resilience and safety of our franchise.
Our Common Equity Tier-1 (CET1) ratio of 12.2%, based on final rules, is in excess of Singapore’s stringent capital requirements, which are above global standards. Our leverage ratio, which is an alternative indicator of capital strength, is, at 7.1%, significantly above the minimum 3% required under the new Basel III rules. Our internal models are conservative, compared to global peers, as measured by the ratio of risk-weighted assets to total assets. Our subsidiaries are also well capitalized.
Our asset quality is extremely healthy, with nonperforming loans at 0.9% of total loans. We are prudent in assessing specific provisions and routinely set aside general allowances to provide us with a healthy buffer against cyclical headwinds. Our board ensures that we have a strong risk management framework that encompasses credit, liquidity, market and operational risk. We continue to be vigilant in enhancing our network and system resiliency and strengthening our defense against cybercrime. Our remuneration policy is structured to align compensation to appropriate risk-taking behavior.
We have stable and diversified sources of liquidity. We have more than 50% market share in savings deposits in Singapore, which provides us with ample Sing-dollar funding. In addition we have widened our sources of US dollar funding. Based on Basel III liquidity requirements, our liquidity coverage ratio and net-stable-funding ratio have remained comfortably above 100%.
Our customers, depositors and investors also find comfort in our pedigree parentage. Our largest shareholder is the Singapore government, which has a 30% stake and is one of the few AAA‑rated sovereigns in the world. Our own credit ratings of AA- from S&P and Fitch, and Aa1 from Moody’s, are also among the highest in the world.
GF: What are your concerns? What keeps you awake at night?
Chng: Digital revolution. Rapidly changing technology and customer behaviors are causing a digital disruption to the banking industry. New business models will emerge, and banks will have to find new ways to compete with nonbanks such as Alibaba, PayPal and Square or risk being increasingly marginalized over the long term. At the same time, we need to be mindful of cybersecurity and privacy issues which are becoming ever more acute.