SINGAPORE – Some Asian countries have recovered from the economic pain of the coronavirus pandemic and that bodes well for the 2021 outlook, according to Piyush Gupta, executive director of DBS.
He told Tanvir Gill of CNBC that “clearly” there has been an economic recovery in most of the bank’s markets, and that gives him some confidence.
“I’m a little more optimistic about asset quality and the credit environment than I was a few months ago,” he said on Wednesday.
Gupta said the recovery can be seen through a recovery in loan demand, consumer spending and commodity prices.
“Oil has indeed recovered very well, 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 biggest lender is also seeing borrowers start paying off their loans, instead of continuing with extended moratorium schemes. Many banks have allowed customers to postpone debt payments or pay only interest on their loans last year as part of Covid’s relief packages.
Only a “very small percentage” of individuals and companies are migrating to the new programs, and those who came out of the moratoriums have been able to service their debts, said Gupta.
“It gives me a certain degree of comfort, that in the SME space, in the individual space, things are not that bad,” he said.
He also noted that the sharp increase in defaults on unsecured consumer credit loans fell “quite sharply” at the end of the year.
Earlier on Wednesday, DBS reported that its fourth quarter net profit fell 33%, in line with analysts’ estimates, amid the coronavirus pandemic.
Like many banks worldwide, DBS has set aside billions to cushion the pandemic’s economic blow. In the fourth quarter, the bank said it had set aside another $ 577 million from Singapore (about $ 435 million) for potential losses. This brings DBS ‘total grants for 2020 to Singapore’s $ 3.07 billion (about $ 2.32 billion).
DBS shares rose slightly on Wednesday, gaining about 0.27%.