DBS Group Holdings Ltd Continues To Grow Its Wealth Management Business

DBS Group Holdings Ltd (SGX: D05) announced on Monday that it will be buying the wealth management and retail banking business of Australian bank ANZ in five markets. These markets include China, Taiwan, Hong Kong, Singapore and Indonesia.

Here is what you need to know about the deal.


The business that is up for sale generates a total of S$825 million in revenue. Across the five markets, the business has S$11 billion of loans and S$17 billion worth of deposits.

In Singapore, which is the largest market of the five, the business unit is generating S$319 million in revenue. It also has S$6 billion of loans and S$8 billion of deposits – these numbers are over 50% of the group’s total.

The five business units also hold a collective S$23 billion in assets under management, of which S$6.5 billion are considered as investment-related AUM. These assets are spread across 100,000 private wealth clients and 1.2 million retail customers.

This marks the fifth acquisition DBS Group has taken since 2008. Interestingly, DBS Group would only be paying S$110 million for the whole portfolio, a sum that is easily digestible for the bank.

The reason

According to DBS Group, the acquisition makes sense as it gives the bank an opportunity to scale-up digitally in Indonesia and Taiwan. It also reinforces DBS Group’s strong position as a regional wealth manager. The bank is confident that cost synergies can emerge and the acquisition would give DBS Group good value with earnings in the future.

To the last point, DBS Group expects the acquisition to add S$200 million to the banking group’s income in 2017 and S$600 million in 2018.

The acquisition is expected to be completed in stages over 15 months. At the moment, the bank is trading at just 8.8 times its trailing earnings and offers a 4.0% dividend yield.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.