DBS warns virus out­break could hit its rev­enue

The Pak Banker - - FRONT PAGE -

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 mids­in­gle 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.

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