At the last annual general meeting, DBS Group CEO Piyush Gupta predicted that interest rates would remain stable throughout 2023 and decrease starting in 2024. While the rate cut hasn’t materialised yet, recent developments seem to align with his forecast, suggesting a high possibility of it happening in 2024.
Investors are anticipating a potential interest rate cut this year and are concerned about the impact on bank stocks, particularly a decline in their net interest margin (NIM). This year, I attended the DBS Group AGM to gain insight into the management’s perspective on interest rates and the implementation of Basel 4, which could potentially free up more capital for DBS and allow for strategic capital allocation.
Here are seven things I learned from the 2024 DBS Group AGM.
1. CEO Piyush Gupta opened the AGM by highlighting that DBS Group had achieved record total income, net profit, and return on equity (ROE). He mentioned that the achievement is not due to an increase in NIM alone, as there was also a strong rebound in fee income and effective cost management, which allowed the bank to record a cost-to-income ratio of 39%. He further emphasised that only a few banks in the world are able to achieve a 40% cost-to-income ratio.
2. Over the past three years, DBS Group has successfully integrated banks it acquired in India and Taiwan. CEO Piyush Gupta highlighted the benefits of these acquisitions, which are already reflected in rising market share and total income. For instance, the Indian business experienced a growth of 20% last year.
3. CEO Piyush Gupta discussed commentary suggesting that DBS Group’s recent performance is primarily attributed to rising NIM. He countered this notion, presenting data from Bloomberg to illustrate that in 2015, DBS Group’s ROE ranked 46th among the world’s 100 largest
