Building an Asian Transaction Banking Franchise

Transcription

1 Building an Asian Transaction Banking Franchise Tom McCabe Global Head, GTS 19 March 2012 Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. DBS Bank accepts no liability whatsoever with respect to the use of this document or its contents.

2 Executive Summary Financial Performance: Broad based revenue growth & increased profitability. Market opportunity: Participating in large & rapidly growing profit pools. New Products capturing large, high value, revenues streams with a strong element of annuity earnings. Sustainability: Reducing risks through product structuring, customer due diligence & portfolio management. Investment in new capabilities is creating revenue opportunities across Asia. 2

3 GTS: Strong Revenue Growth & Operating Leverage +46% 1.08B +66% 740M +24% 657M 426M -16% 344M 396M 47% 39% Revenue Expenses Profit before allowance Cost to income Diversified revenues across Asia; higher income growth from ex-sg & HK % of GTS Income Income Growth Rate 34% 81% 28% 9% Ex SG&HK Ex SG&HK Source: 2011 Financials 3

4 GTS: 7 Consecutive Quarters of Growth Earnings Momentum Across All Markets and Products Income (S$m) Cash Trade 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Strong customer deposit and loan growth (S$b) 81 Loans 14 Deposits Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 Source: 2011 Financials 4

5 GTS growing contribution to institutional banking and Bank results Revenues Profit before allowance $7.1b $7.6b Other Businesses 50.3% % 9 $4.1b $4.3b 37.8% Institutional Bkg (excl GTS) 39.2% % 42.2% % 48.2% GTS 10.5% 14.2% 9.6% 15.2% Source : 2011 Financials 5

6 Our Journey towards becoming a leading Regional GTS Bank Assessment of Capabilities & Gaps Strategy Development Future Focused Organization Key Product Priorities Deploy Technology Investments Resource allocation to high ROE Revenue Pools 10,000+ New Sales Calls Alignment with RM Organization Commodity Trade Finance Team Focus on Materiality Talent Recruitment/Development New Product Launches - Suite of RMB Services - Supply Chain - Sub Acct Structure, (Cash Mgt) - Bulk Payments - USD Mini Max Acct - e-advising - AR Purchasing - Distributor Financing Geographic Expansion Regional Sales Team Expanded FI Business ERP Systems Capability Trade Asset Distribution Desk Performance Mgt Tools Talent Development IDEAL 3.0 Redefining Internet Banking New Products - Interest Reallocation Structures - Pan Asia Sweeping Capabilities - Bundled Product Sets - Expanded Payment Capabilities Commercialization of new technology - STP, Scale, Capacity Decision Analytics Automated Risk Tools Record Marketing Spend ROE Balance Sheet Strategies Deepen Wallet Penetrations Talent Development 6

7 Asia Wholesale Banking Revenue Pools by Product CAGR, % Post Risk Revenues; USD Bn Source: McKinsey Global Banking Pools 1 At constant 2010 exchange rates 2 Capital Markets and Investment Banking 7

8 Fundamentals driving Asia's Trade Growth Asia 8 Domestic Exports to China and US % share of total exports, 3mma To China To USA Jan-11 Jan-10 Jan-09 Jan-08 Jan-07 Jan-06 Jan-05 Jan-04 Jan-03 Jan-02 Jan-01 Jan-12 Asia - Exports to China & USA US$ terms, Jan02=100, seas adj, DX for HK, SG Asia Asia X Real Global Consumption Consumption Growth Since 3Q08 3Q08=100, seas adj Asia The growth that came 108 "from nowhere" 104 US, 100 EU17 96 JP Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 USD bn, 3Q08-3Q10, seas adj Asia Asia-10 (ex-ch, IN, ID) USA Japan EU-17 Source: DBS Research 8

9 Large & Growing Open Account Trade Opportunity Country 2010 GDP (USD Bn) 2010 ARP Turnover (USD Bn) 2010 ARP Turnover as a % of GDP (%) Hong Kong China 5, Taiwan South Korea 1, Japan 5, Singapore Indonesia (1) Thailand Malaysia India 1, Source: CIA World Factbook and FCI (1) Indonesia not included in FCI Research Opportunity for growth in both mature and emerging markets. 9

10 DBS well positioned to tap into Open Acct Trade Opportunity Americas % Africa % Australasia % Asia % CAGR World 8% Americas % Africa % Australasia % Asia % 2007 (US$1,835 bn) Asia 27% 2010 (US$2,325 bn) Core 39% Europe 1, % Europe 1, % Source : 2007 & 2010 FCI Annual Statistics 10

11 Value to Client Value to DBS Selling into the Working Capital Cycle Company as Buyer - Payables + Inventory Company as Seller - Distribution - Receivables Improve Info flow Shortening Order cycle Stretch Payables Reduce, manage & finance Inventory Strengthen Distribution Network Finance (incl. Nonrecourse) for Receivables (timing and B/Sheet) Reduce Collection Costs and outsource for increased efficiency (Channels) Stocks / Inventory Management Receivables Management Doc Prep Shipping Manufacturing Doc Prep Shipping Buyer & Distributor Mgmt Request For Quote Purchase Order Issued Goods Shipped Goods Rec vd Paym t Made Inventory/ WIP Finished Goods Ready Receive PO Goods Shipped Goods Arrive Paym t Rec vd Profit Generation / Surplus Acquisition Fixed Assets Expansion CapEx Doc Prep Vendor Financing FX Fwd LC Issuance Bonds / Guarantees LC Acceptance FX Spot Payment Svc Cash Mgmt Inventory Financing FX Fwd LC Confirmations Bonds / Gtee LC Nego Pre-Ship Fin Post-Ship Fin FX Spot Cash / Credit Card Collections Cash Mgmt Receivables Securitisation Fxd Depo Liab Mgmt Term Lending Fxd Asset Financing Financing via Term Loans / Overdraft Distributor Financing 11

12 Managing risk for profitability & sustainability Trade Finance Products Trade loans carry less risk relative to other bank products Self-liquidating and short tenors. Working Capital Loans are the life blood of organization. Provide more secure sources of repayment & quicker insight to potential risks. Ownership of underlying goods. Network of Trade Eco System: Surveyors, International Maritime Bureau, Bonded Warehouses, Insurers, Shippers/Logistic Companies, etc. DBS s Governance, Compliance Procedures, Risk Policies, KYC. Expertise to structure solutions mitigates risk for DBS. DBS s depth of staff with trade DNA across sales, risk, & operations. 12

13 IDEAL 3.0 Redefining internet banking General Availability Official Launch May 12 NORTH ASIA China, Hong Kong, Taiwan Jun/ Jul 12 SOUTH ASIA Singapore, India, Indonesia Jul 12 onwards REGIONAL Full scale launch events and marketing activities 13

14 A Leadership Position in Global Transaction Services Marquee Awards Top 5 Cash Management Bank in Asia Best MNC/Large Corps Bank in Treasury & Working Capital Singapore, China and Indonesia Best Cash Management Bank in Singapore Best Sub-Custodian Bank in Singapore Best Trade Finance Provider - Singapore Best Cash Management Bank - Singapore Best Trade Finance Bank - Singapore Best Treasury & Cash Management Bank, Foreign in China 14

15 Leadership across Asia, MNC s, Large Asia Corporates, SME s The Asset Triple A Transaction Banking Awards 2012 Best Trade Finance Solution - Indonesia US$100 million financing facility Best Bank for Emerging Corporates in Asia Best Cash Management Solution - China Host to host and entrustment loan solution Best Cash Management Solution - Singapore Bill collections, lockbox and migration of direct debit authorizations Best Cash Management Solution Indonesia Payments integration and workflow management Best Trade Finance Solution - Singapore Supplier financing programme Best Trade Finance Solution in India - Idia US$60 million preexport structured trade advance facility Best Structured Trade Deal - Hong Kong US$100 million backto-back and front-toback trade credit issuance structure 15

16 Future Focus - The Foundation for Sustained Growth Acquiring new customers Flight to quality new US & European clients Increased need for Pan Asia services Materiality of mid market names DBS s strong balance sheet Willingness to lend Delivering high ROE revenues Multi geographic deals Higher credit quality names Larger deals..less operating costs Multi product deals: Trade, Cash, & FX Positive operating leverage Creating new product revenues Broad range of RMB trade & cash products Supply chain & open acct programs Innovative USD deposit account Liquidity mgt structures Ideal 3.0: Redefining internet banking Expanded Sales Capacity Across Asia Over 30,000 sales calls per annum Working capital approach to building solutions RM team over 1,400 strong Increased spend on marketing and brand 16

17 Q & A 17