SINGAPORE – Some Asian countries have returned due to the economic pain of the coronavirus pandemic and this bodes well for the 2021 outlook, according to Piyush Gupta, DBS executive director.
He told CNBC’s Tanvir Gill that there was “quite clearly” an economic recovery in most of the bank’s markets, and that gives him some confidence.
“I am a little more optimistic about the quality of assets and the credit environment than a few months ago,” he said on Wednesday.
Gupta said the recovery can be seen in an increase in loan demand, consumer spending and commodity prices.
“In fact, oil has recovered quite nicely, so some sectors that were more vulnerable are showing better signs of strength,” he said.
Piyush Gupta, CEO of DBS Group Holdings.
Paul Miller | Bloomberg | Getty Images
Singapore’s largest lender also sees loans starting to repay their loans instead of continuing extended moratorium programs. Many banks have allowed customers to defer debt repayment or pay interest only on their loans last year as part of Covid’s exemption packages.
Only a “very small percentage” of individuals and businesses are moving to the new programs, and those who have left the moratoriums have managed to meet their debts, Gupta said.
“This gives me a certain degree of comfort, that in the space of SMEs, in the individual space, things are not so bad,” he said.
He also noted that the sharp rise in credit offenses for unsecured consumer loans fell “quite significantly” by the end of the year.
On Wednesday, DBS reported that fourth-quarter net profit fell 33 percent, according to analysts’ estimates, amid the coronavirus pandemic.
Like many banks globally, DBS has set aside billions to cushion the economic blow of the pandemic. In the fourth quarter, the bank said it had set aside another $ 577 million from Singapore (about $ 435 million) for potential losses. This brings the total DBS allocations for 2020 to 3.07 billion Singapore dollars (approximately $ 2.32 billion).
DBS shares rose slightly on Wednesday, gaining about 0.27%.