DBS aims to boost lending: unit head

SAFETY ZONE::DBS Taiwan intends to continue shunning credit card lending, as it is hesitant about the risks involved in tapping that business, the unit head said

By Crystal Hsu  /  Staff reporter

Mon, Feb 18, 2013 - Page 13

DBS Taiwan (星展銀行) aims to increase its revenue by 15 percent to 20 percent this year from last year, as the nation’s improved economic outlook will help boost consumer and corporate lending, general manager and head of the bank’s local unit, Jerry Chen (陳亮丞), said recently.

The local unit of the Singaporean bank may be able to keep a majority of the revenue as income after it made the necessary hardware and software investments to upgrade its Taipei branch to a subsidiary in February last year, Chen said.

The lender posted NT$638 million (US$21.45 million) in pretax income last year, down 10.89 percent from NT$716 million in 2011, according to data on the Financial Supervisory Commission’s Web site.

“We intend to keep cost growth under 10 percent this year since we no longer need to invest as much money as in the past four years,” Chen said.

DBS Taiwan is looking for balanced growth in consumer and corporate lending operations, with the loan book expected to gain 20 percent this year from the current NT$190 billion, an increase of 20 percent from 2011, Chen said.

“A loan book of NT$220 billion is desirable and practical as it accounts for only 1 percent of market share,” he said.

To that end, DBS Taiwan has to increase its customer numbers and strengthen its brand awareness so prospective customers will think of DBS when asked to name the top three foreign banks here, Chen said.

Profitability, advertisements and customer-friendly services help, as well as corporate social responsibility campaigns, he said, adding that the bank will address all these aspects.

DBS Taiwan tops its foreign peers in terms of lending to small and medium-sized enterprises (SME), but lags in credit card lending, as DBS is hesitant about tapping that business due to risk concerns, Chen said.

DBS will continue to court SME customers and shun credit card loans, he said.

Currently, the bank limits its credit card business to wealth management customers who generally have no need for revolving credit, Chen said.

However, DBS Taiwan will pursue fast growth in mortgages and car loans as they involve lower risks, Chen said.

This approach partly resulted from concerns that last year’s economic slowdown might heighten default pressures, Chen said.

The worries are likely unmerited as Taiwanese banks exercise more restraint following the credit card debt problems of 2006 and the global financial crisis of 2009, he said.

DBS Taiwan aims to increase its net interest margin (NIM) by 10 basis points this year through portfolio adjustments, though it expects the central bank to keep its policy rates unchanged amid mild inflationary pressure.

The bank’s NIM edged down last year from a year earlier due to share price competition, Chen said.

“We have taken steps to improve the situation, but it will take some time to see the intended change,” he said.