DBS Group Holdings CEO Piyush Gupta has been given a big pay hike of some 48% for 2021 following a cut in the preceding year.
According to the company’s annual report published earlier this morning, Gupta received a total package of $13.58 million, the bulk of which is from shares worth more than $7.1 million.
The pay raise comes on the back of DBS’s “best year ever” in 2021 in terms of its financial performance, as well as a range of key scorecard goals, according to the report.
“With Covid-19 in the second year, global interest rates remained at rock-bottom levels. China idiosyncratic risks also increased, following moves by the government to temper exuberance in the property market. Against this backdrop, DBS’ sterling financial performance underlined the strength of our broad-based franchise and the success of multi-year transformation efforts,” reads the report.
For FY2021 ended December, the bank reported record earnings of $6.8 billion, up 44% y-o-y. During the period, the bank saw a return on equity of 12.5%, which is the second-highest in over a decade.
In contrast, for FY2020, Gupta suffered a pay cut of 24% to $9.18 million, no thanks to the pandemic.
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In the report, the CEO of DBS explained the rationale behind DBS’s recent acquisitions of Lakshmi Vilas Bank, Shenzhen Rural Commercial Bank (SZRCB) and Citi Consumer Taiwan, stating that the bank needs to be “more deeply embedded” in one or more of its four markets outside of Singapore and Hong Kong.
The markets include China, India, Indonesia and Taiwan.
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“The three transactions we did over the last 18 months… will position DBS well for growth as we look out into the next decade,” declared Gupta in the report.
According to him, India remains a very attractive banking market, especially in the small- and medium-sized enterprises (SME) and retail segments.
With the Chinese market, despite the recent policy adjustments in the country, Gupta says the acquisition of the stake in SZRCB will allow DBS to accelerate its greater bay area (GBA) strategy via Shenzhen, which is the bay area’s fastest-growing city.
“We also see mutually-beneficial collaboration between SZRCB and our franchises in Hong Kong and China. While the stake is a minority one, it is the largest held by a single shareholder. We may have the opportunity to increase our shareholding in future as well,” says Gupta.
Finally, DBS’s acquisition of Citi Consumer Taiwan will accelerate DBS Taiwan’s growth by at least 10 years, making the group’s Taiwan arm the latest foreign bank by assets, reveals Gupta.
“This will provide synergies from economies of scale, including reduction of global and regional overheads. Citi Consumer Taiwan’s strong low-cost deposit base will also support the expansion of DBS Taiwan’s institutional and SME banking business,” he adds.
All three transactions will add some $1.2 billion to $1.3 billion to DBS’s revenue base and an added $0.5 billion to the bank’s bottom line, says Gupta.
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In the same report, Gupta adds that cryptocurrencies will "continue to grow as a meaningful store of value, much like gold is today".
However, privately-backed coins like Bitcoin are unlikely to take over the role of state-backed money.
"While the technology used to issue these coins (blockchain) is indeed very powerful, and does form a basis for creating immutability and transparency, the truth is that it will still be a while before the common man will universally accept this when it comes to regular monetary transactions," he says.
"I also expect that regulators (and politicians) will be loath to give up control of monetary policy and economic management tools, and will therefore be very circumspect about letting private money grow," he adds.
Since the start of 2021, DBS’s share price has gained around 16%.
