Singapore Bank DBS Cuts CEO Pay on Digital Disruptions Despite Record Profit
DBS Group Penalizes CEO for Digital Banking Disruptions
DBS Group has reduced CEO Piyush Gupta’s pay by S$4.1 million ($3.05 million) due to digital banking disruptions last year. This comes even as Singapore’s largest lender achieved a record 2023 profit, with fourth-quarter earnings exceeding expectations.
Reduction in Variable Compensation
The pay cut represents a 30% decrease in annual variable compensation for Gupta, according to DBS. In 2022, Gupta was one of the highest-paid CEOs in Singapore, earning a total of S$15.4 million. Additionally, the variable pay of members of DBS’ group management committee was reduced by 21%.
Management’s Commitment to Minimize Future Disruptions
Yeap Jun Rong, IG Asia’s market analyst, noted that the significant pay cut reflects management’s dedication to reducing future disruptions. He added that the cuts may also help offset higher compliance and operational costs, as well as costs allocated to enhance system resiliency.
Positive Financial Performance and Market Response
Despite the pay cuts, DBS maintained its guidance for net interest income for 2024 at around last year’s levels. The bank’s shares rose nearly 3% on Wednesday, outperforming the benchmark index’s 1% gain.
CEO’s Perspective and Financial Projections
CEO Gupta acknowledged the importance of establishing accountability and taking responsibility for addressing issues. He also expressed optimism about the bank’s return on equity and fee income growth for the current year. Additionally, DBS expects net interest margin for the full year to be slightly below the fourth quarter’s margin of 2.13%.
Record Profit and Financial Outlook
DBS reported a 2% increase in fourth-quarter net profit, surpassing analyst expectations. The bank’s net interest margin during the quarter rose to 2.13% from 2.05% a year earlier. Full-year annual profit surged by 26% to S$10.3 billion, while return on equity reached a record high of 18%.
Focus on Technology Resilience
In response to being barred from acquiring new businesses or making non-essential IT changes, DBS stated its progress in enhancing technology resilience. CEO Gupta assured that the bank is making good strides in this aspect.
Conclusion
DBS’ decision to reduce CEO pay amid record profits demonstrates the bank’s commitment to addressing digital disruptions and ensuring accountability. The bank’s positive financial performance and strategic focus on technology resilience position it for continued success in the evolving banking landscape.
