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DBS Holdings Limited’s Unique Strategy In Taiwan

I was in Taiwan for a holiday recently (16th November 2016) when I picked up their free newspaper, Upaper, on their metro station. I was surprised to find that DBS Group Holdings Ltd  (SGX: D05) made the news for launching its new mobile App which targets the residential mortgage market.

The Upaper article stated that DBS Taiwan, is the only bank in Taiwan that provides a full suite of housing loan related service on their App. If you are a home buyer in Taiwan, you can look for your dream house, get the valuation of your house, find the lowest mortgage interest rate and finally apply for the loan all on the App.

Other services include looking for houses who had depreciated in value, transaction costs, calculating your monthly mortgage payment and general housing news to help you buy or even refinance your properties. All these services are very interesting but still unavailable in Singapore.

DBS is targeting customers who are looking to buy cheaper houses in Taiwan. The Taipei Times noted at the beginning of the year that prices in Northern Taiwan had been on a steady decline of more than 10% since its peak of 2014 due to the oversupply of houses and lack of demand. Government cooling measures which involved credit controls and tax hikes have also served its purpose with 4.3% decline in Taipei and 5.5% decline in Taoyuan in the property value from the previous year.

Better Prospects In Taiwan

The situation might be better in Central and Southern Taiwan. The latest data from Trading Economics, which pulled housing index data from XinYi Realty shows that prices might have bottomed out in Q1/2016 and has since stabilized.

BMI Research had also upgraded its growth prospect for Taiwan from 0.7% to 1.1% for the full year of 2016 on stronger than expected Q3/2016 growth.

Change In DBS Strategy Over The Last 6 Years

For a brief background, DBS Holdings started its Taiwan presence in 1983 and expanded its presence in 2008 with the acquisition of Bowa Commercial Bank during the global financial crisis. Recently in September 2011, DBS incorporated its local subsidiary in Taiwan. According to DBS CEO Piyush Gupta then, DBS’ role is to intermediate trade and investment flow between Taiwan, Hong Kong and China as well as to seize a larger pie of the wealth management business.

DBS Taiwan was able to grow from its acquisition of Bowa Commercial Bank, seeing its profit grew from NTD 317 million in 2009 to NTD 421 million for the first 7 months of 2010 alone.

It seems that DBS is not slowing down its acquisition strategy, given its recent acquisition of ANZ in October 2016.

The Foolish Bottom Line

The arrival of this app shows a shift in the strategy of DBS in Taiwan. It had previously been targeting commercial flows and the high-net-worth individuals in Taiwan as articulated 6 years ago. Today, DBS is aiming for the hearts and mind of the average Taiwanese consumer with new technology.

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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 contributor Ong Kai Kiat owns shares in DBS Holdings.