Piyush Gupta sees strength in most of DBS’s markets

SINGAPORE – Some Asian countries have recovered from the economic pain of the coronavirus pandemic and that bodes well for the outlook for 2021, said Piyush Gupta, DBS CEO.

He told CNBC’s Tanvir Gill that there is “quite clearly” an economic recovery in most of the bank’s markets, and that gives him some confidence.

“I’m a little more optimistic about asset quality and the credit environment than I was a few months ago,” he said Wednesday.

Gupta said the recovery can be witnessed by increases in loan demand, consumer spending and commodity prices.

“In fact, oil has recovered quite well, so some sectors that were more vulnerable are showing better signs of strength,” he said.

Singapore’s largest lender is also seeing borrowers begin to repay their loans instead of continuing with extended moratorium arrangements. Many banks last year allowed customers to delay paying off their debts or only pay interest on their loans as part of Covid aid packages.

Only a “very small percentage” of individuals and companies are transitioning to the new programs, and those who left the moratoriums have been able to pay off their debts, Gupta said.

“That gives me a degree of comfort, that in the SME space, in the individual space it’s not so bad,” he said.

He also noted that the sharp increase in delinquencies on unsecured consumer credit loans declined “quite markedly” towards the end of the year.

Earlier Wednesday, DBS reported that fourth-quarter net profit fell 33%, in line with analyst estimates, amid the coronavirus pandemic.

Like many banks worldwide, DBS has set aside billions to deal with the economic blow of the pandemic. In the fourth quarter, the bank said it would set aside an additional 577 million Singapore dollars (about $ 435 million) for potential losses. That brings DBS’s total allowances for 2020 to $ 3.07 billion Singapore dollars (approximately $ 2.32 billion).

Shares of DBS were up slightly on Wednesday, with a gain of about 0.27%.