2 Positive Trends That Will Allow DBS Group to Grow Its Thai Business
DBS Group Holdings Ltd (SGX: D05) is one of Singapore’s three big banks and provides a comprehensive range of banking services to individuals, SMEs and multinational corporations. The group has a presence in 18 markets and employs around 27,000 staff.
DBS continues to grow from strength to strength as it reports loan growth and rising net interest margins. H1 2019 net profit rose to a record high of S$3.25 billion, with return on equity hitting 13.7% from 12.5% a year ago. Net interest margin stayed healthy at 2.18% for Q2 2019, while gross loans grew 5% year-on-year to S$15 billion, driven mainly by non-trade corporate and consumer loan growth.
The group has identified various methods of growing its business, not just in terms of identifying suitable market segments to target, but also by expanding into certain territories or regions. One of these regions where the bank sees promising growth in Thailand, and here are two positive trends within the country that should allow DBS to do well there.
1. Increasing pool of HNWI
DBS has an aim to grow its assets under management (AUM) in Thailand from S$4 billion currently to S$8 billion by 2023. The country is seeing an increasing pool of high net worth individuals (HNWIs) as the economy, stock market and real estate markets have all done well.
More HNWIs are also turning to banks and financial institutions to have their burgeoning wealth managed professionally, thus opening up more opportunities for the bank to tap on this trend.
2. Relaxation of rules for foreign investment
The Thailand Central Bank has, in recent years, relaxed rules regarding existing exchange controls in Thailand. These include areas such as account structures and reporting as well as investment requirements.
Such changes have liberalised the sector and made it easier and more accessible for Thais to look at overseas investments. Demand for holistic wealth management services is growing and DBS is well-positioned to tap on this to grow its AUM.
A steady, long-term endeavour
With an ambitious four-year target to double its AUM in Thailand, DBS needs to take a slow, steady and measured approach to growing its presence in the country. While opportunities are ripe for the picking, the bank also needs to ensure that it has a comprehensive plan and process to onboard these HNWI and to provide them with excellent service in order to retain them for the long-term.
Investors can look forward to significant growth in AUM managed by DBS in Thailand if the bank manages to successfully carry out its plans to capture market share there.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. The Motley Fool Singapore has recommended shares of DBS Group H0ldings Ltd. Motley Fool Singapore contributor Royston Yang does not own shares in any of the companies mentioned.