SINGAPORE (Feb 18): Looking to the future, DBS CEO Piyush Gupta sounded a cautious note. For one, mortgage bookings have fallen by 30% to 40% since additional cooling measures were announced in July last year, he said. However, loan growth should continue and is likely to come from the corporate sector.
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“We guided for mid-single digit loan growth and we are keeping to this loan growth estimate. I anticipate we will still see choppy markets and macro-economic slowdown,” Gupta says. Among the factors that markets are likely to be nervous about are Brexit, Europe, the US-China trade tussle, and elections.
While elections in India, Indonesia and Thailand may lead to some volatility, governments could also implement both monetary easing and fiscal stimulus. For instance, the Reserve Bank of India cuts its repo rate (the rate at which RBI lends) by 25bps to 6.25%. In Singapore, large infrastructure projects such as Changi Airport Terminal 5 could provide a counter-cyclical boost to GDP. In addition, a few mega-deals such as the CapitaLand-Ascendas Singbridge Group transaction and the Keppel Corp- Singapore Press Holdings- M1 transaction need to be financed.
And, although the region is suffering from a China slowdown, supply chains are unlikely to change much in the short term. “It’s quite clear that the structural shift of trade away from China is a glacial process. People are not really moving capacity out of China. But If they have capacity outside of China, they are ramping it up. People who are looking at adding capacity outside of China are looking in the region to economies such as Thailand and India. Our clients are talking about building up incremental capacity in India,” Gupta says.
Meanwhile, DBS is prepared to capture the move by companies to India should it materialise. The banking group is going to launch its Indian subsidiary on Mar 1 and implement a phygital strategy (digital and physical). DBS already operates a digibank in India. “We will start rolling out branches in Mumbai and Delhi and open more kiosks targeted at building our SME portfolio,” Gupta says.
