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Digitalisation Is Gaining Traction For DBS Group Holdings Ltd

DBS Group Holdings Ltd (SGX: D05), or DBS in short, is one of the three major banks based out of Singapore.

As a leading financial institution, DBS is currently facing threats from new technology such as blockchain, cryptocurrency, and artificial intelligence that put its existing business model at risk.  Moreover, with new fintech companies constantly improving on their capabilities, investors might wonder whether the incumbents can remain competitive.

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The good news for investors is that DBS is not standing still either. It has invested heavily in new technologies to keep its relevance. Here, I will look at three metrics to demonstrate the bank’s performance on its digital segment.

Key Financials

Source: DBS Group’s 2018 Annual Report

The above is a table that DBS’s CFO shared in its 2018 annual report on the key indicators of its digital segment. Overall, the numbers illustrate how profitable the segment is.

To begin with, the total income per customer for the digital segment is twice that of the traditional customers. Not only that, income per customer has been rising on a year-on-year basis.

Next, the cost-income ratio for the digital segment of 34% in 2018 is 20% lower than the traditional banking segment. Moreover, this ratio is lower on a year-on-year basis, indicating that there’s room for further improvement as this segment scales further.

Last but not least, the combined performance of higher income per customer and lower cost-income ratio results in a higher return on equity of 32% (10% higher than the traditional segment).


From the above, we can see that having a digital segment not only allows DBS to defend itself against disrupters, it also allows the bank to improve its overall profitability. Or in other words, the bank is killing two birds with one stone.

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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 Lawrence Nga doesn’t own shares in any companies mentioned. Motley Fool has a recommendation for DBS Group Holdings Ltd.