DBS reports Q4 earnings, 2020 outlook as coronavirus spreads

on Feb13
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DBS Group Holdings in the central business district of Singapore.

Nicky Loh | Bloomberg | Getty Images

The ongoing spread of a new coronavirus disease, recently named COVID-19, could hit the revenue of Southeast Asia’s largest bank this year, its chief executive said on Thursday.

Piyush Gupta, the CEO of Singaporean bank DBS, said the impact on its full-year revenue is estimated to be 1% to 2%, assuming the virus outbreak is controlled by summer. Much of that impact will come from areas such as the bank’s credit card and wealth management businesses, said Gupta.

“It’s kind of hard to call how long this crisis will last and what the full scale and impact of this might be,” he told CNBC’s “Capital Connection.”

“There’s certainly some business lines where you can see the slowdown in. The obvious one is credit card where fewer people are going out to restaurants, fewer people are buying things in the shops — that obviously filters through to our card spend and our fees,” he said.

In the wealth management space, he attributed a fall in activity to “psychology,” explaining that clients tend to hold back investing when there’s “doom and gloom.”

Gupta’s comments came after DBS posted a fourth-quarter net profit of 1.51 billion Singapore dollars ($1.09 billion). That’s a 14% rise from the same period a year ago and above a Refinitiv estimate of 1.48 billion Singapore dollars.

Total income for the October-to-December quarter rose 7% year-on-year to 3.46 billion Singapore dollars, helped by growth in loans and fee income business.

DBS shares were up by 0.35% in afternoon trade on Thursday, while the benchmark Straits Times Index was down by 0.18%.

Gupta said before the coronavirus outbreak, the bank had been on track to meet its 2020 target of mid-single percentage growth in loans. He added that the additional economic challenge posed by the virus spread could hurt the ability of some small businesses and consumers to repay their loans.

On that front, the CEO announced that DBS would allow certain clients to suspend their loan repayments for six months. Such an arrangement — subject to criteria such as credit profile — is available for property loans for small and medium-sized enterprises in Singapore and Hong Kong, and mortgages for retail customers in Singapore.

The bank has also set aside funds for potential losses amid unforeseen circumstances such as the latest epidemic, which Gupta said is sufficient to tide the bank through this period.

Singapore, a Southeast Asian city state, has reported one of the highest numbers of confirmed coronavirus cases outside China. As of Wednesday noon, the country has 50 confirmed cases, with 15 already recovered and discharged, according to the country’s Ministry of Health.



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