DBS CEO Piyush Gupta
For some time now, DBS has delivered a convincing narrative: that its investments in technology and digital banking will drive the cost-income ratio down, making the bank more profitable.
Late last year, DBS calculated, and published, a methodology showing that a digitally engaged customer delivers a cost-to-income ratio fully 20 percentage points lower than traditional clients.
CEO Piyush Gupta has argued that the digital banking channel in India, digibank, ought to settle at a cost-income ratio around 30%, with Indonesia following a similar model, and that the whole bank should be heading in that direction.
Why, then, did DBS on Thursday report a fourth-quarter cost-income ratio of 44%, up from 41% in the previous quarter?
The answer is fairly simple, but it raises a bigger question.
The quick answer is the acquisition of ANZ’s wealth management businesses in Asia, announced in late 2016. The acquisition brought across S$11 billion of deposits and S$8 billion of loans by the end of 2017, but a book of business operating under quite different metrics than those that were prevalent at DBS.
