Singapore’s biggest bank cuts CEO’s salary by millions over digital banking outage international business news
DBS Group Holdings Limited Chief Executive Officer removed Piyush GuptaLast year the lender was paid S$4.1 million ($3 million) in compensation after it suffered a series of digital banking disruptions and was reprimanded by the central bank.
pay cutAnnounced on Wednesday along with DBS’s earnings, the variable represents a 30% cut in pay for Gupta, one of the highest-paid executives in the country, who earned a total of S$15.4 million in 2022. Payments and ATM transactions were halted due to last year’s outage. The city-state resulted in a collective 21% reduction in variable compensation for the group management committee compared to a year earlier.
“We have taken accountability,” Gupta said in an earnings briefing. “I think it’s a good element of governance.”
The pay decline came even as DBS’s full-year results hit a record high. The bank’s net profit for 2023 exceeded S$10 billion, a target it set for itself for the medium term. It posted a return on equity of 18%. The lender also proposed issuing a bonus share and increasing its final dividend, and said it saw opportunities to deliver higher returns to shareholders this year.
DBS shares rose 2.8%, the most in six weeks, outperforming the city-state benchmark stock index.
“The hefty punitive step highlights management’s commitment to minimizing future disruptions,” IG market analyst Yep Jun Rong wrote in a note about the pay cuts. Yep also noted that DBS’s dividend yield levels are above its peers, raising expectations for others to follow.
Meanwhile, net profit, excluding one-time items, rose 2% to S$2.39 billion ($1.78 billion) in the three months ended Dec 31, Singapore’s biggest lender said in a statement on Wednesday. That compares with the S$2.44 billion average estimate of analysts surveyed by Bloomberg News.
DBS is the first of Singapore’s major banks to report its results, which show its strong performance has peaked as rates are expected to fall this year.
Rivals United Overseas Bank Ltd. and Overseas-Chinese Banking Corp. will report results later this month.
In November, the Monetary Authority of Singapore banned DBS from acquiring new business ventures and reduced local branch and ATM networks for six months after the digital banking service was shut down.
The action follows repeated and prolonged disruptions to DBS’s online banking services last year, prompting Gupta to apologize to customers and assure them that the bank was addressing the issues “with the utmost priority”. . DBS said on Wednesday that customers can expect greater service reliability, as well as alternative channels for payments and inquiries if problems occur.
Under Gupta’s leadership since November 2009, DBS has expanded operations in India, Taiwan and mainland China through acquisitions and organic growth. He has also grown the bank’s wealth management business, which is now one of the largest in Asia in terms of assets under management.
Gupta said that even though interest rates are expected to remain subdued and geopolitical tensions to persist, the bank should maintain its performance in the coming year.
Here are more details about the DBS results:
pay cutAnnounced on Wednesday along with DBS’s earnings, the variable represents a 30% cut in pay for Gupta, one of the highest-paid executives in the country, who earned a total of S$15.4 million in 2022. Payments and ATM transactions were halted due to last year’s outage. The city-state resulted in a collective 21% reduction in variable compensation for the group management committee compared to a year earlier.
“We have taken accountability,” Gupta said in an earnings briefing. “I think it’s a good element of governance.”
The pay decline came even as DBS’s full-year results hit a record high. The bank’s net profit for 2023 exceeded S$10 billion, a target it set for itself for the medium term. It posted a return on equity of 18%. The lender also proposed issuing a bonus share and increasing its final dividend, and said it saw opportunities to deliver higher returns to shareholders this year.
DBS shares rose 2.8%, the most in six weeks, outperforming the city-state benchmark stock index.
“The hefty punitive step highlights management’s commitment to minimizing future disruptions,” IG market analyst Yep Jun Rong wrote in a note about the pay cuts. Yep also noted that DBS’s dividend yield levels are above its peers, raising expectations for others to follow.
Meanwhile, net profit, excluding one-time items, rose 2% to S$2.39 billion ($1.78 billion) in the three months ended Dec 31, Singapore’s biggest lender said in a statement on Wednesday. That compares with the S$2.44 billion average estimate of analysts surveyed by Bloomberg News.
DBS is the first of Singapore’s major banks to report its results, which show its strong performance has peaked as rates are expected to fall this year.
Rivals United Overseas Bank Ltd. and Overseas-Chinese Banking Corp. will report results later this month.
In November, the Monetary Authority of Singapore banned DBS from acquiring new business ventures and reduced local branch and ATM networks for six months after the digital banking service was shut down.
The action follows repeated and prolonged disruptions to DBS’s online banking services last year, prompting Gupta to apologize to customers and assure them that the bank was addressing the issues “with the utmost priority”. . DBS said on Wednesday that customers can expect greater service reliability, as well as alternative channels for payments and inquiries if problems occur.
Under Gupta’s leadership since November 2009, DBS has expanded operations in India, Taiwan and mainland China through acquisitions and organic growth. He has also grown the bank’s wealth management business, which is now one of the largest in Asia in terms of assets under management.
Gupta said that even though interest rates are expected to remain subdued and geopolitical tensions to persist, the bank should maintain its performance in the coming year.
Here are more details about the DBS results:
- Net interest margin for its commercial book fell to 2.75% in the fourth quarter from the previous quarter
- Net fee income increased 31% from a year ago due to higher wealth management, card and loan-related fees as well as the integration of Citi Taiwan.
- Assets under management for wealth management rose 23% to a new high of S$365 billion, driven by net new money inflows.
- Treasury market net income fell 45% from a year earlier due to higher funding costs
- Issuance of bonus on the basis of one bonus share for every 10 existing ordinary shares offered.
