Trading profit doubles at DBS, but bonuses fall

Traders at DBS enjoyed a stellar year as the Singapore lender added thousands to its headcount in 2020. But bonuses across the bank fell.

Treasury markets – which houses DBS’s traders – was arguably the best unit to work in last year. Full-year profit before tax more than doubled to S$788m. Total income increased 54% to S$1.44bn, “mainly due to higher contributions from interest rate, equity, foreign exchange and credit activities”. DBS is not alone here. Later this month, OCBC and UOB are expected to announce strong 2020 results from trading in volatile markets. Global banks have enjoyed similar surges in trading revenue.

Meanwhile, DBS’s headcount increased by 4,583 (or 16%) year-on-year at end-December to 33,002. Most of this wasn’t from recruitment: 3,951 of the newbies came from the November acquisition of India’s Lakshmi Vilas Bank (LVB), according to DBS’s full-year financial results.

Of the remaining 632 non-LVB roles, 256 (40%) were for what the firm classifies as “insourced” tech professionals – people who previously worked on DBS tech projects at vendors but are now employed by the bank. Technology professionals almost certainly account for a much greater proportion of the non-LVB additions to DBS’s payroll last year, because the firm would have also poached people from competitors. This suggests that DBS hit its target, first outlined last May by CEO Piyush Gupta, of creating about 360 new technology jobs in 2020.

Among the hottest tech projects to work on at DBS is its new digital exchange, which was highlighted by Gupta during his results presentation as one of the firm’s “new platforms for growth”. The exchange uses blockchain technology to provide an ecosystem for fund raising and secondary trading of digital assets including cryptocurrencies. Technology, digital and analytics roles make up 56% of DBS’s current Singapore-based vacancies.

Despite the huge rise in overall headcount, staff costs at DBS inched up by only 1% year-on-year. An increase in total base-salary costs from the higher staff count was offset by government grants and lower bonuses, says the bank’s earnings report. Moreover, most of DBS’s new employees are located in India, where salaries are lower than in Singapore. Global pay per head at DBS – total employee expenditure (such as salaries and bonuses) divided by total headcount – was therefore down 13% year-on-year to S$107,569, according to figures calculated from the earnings results. It is unlikely that average pay for Singapore staff would have fallen.

DBS reported a net profit of S$4.72bn for 2020, 26% below the previous year’s record, as allowances more than quadrupled to S$3.07bn because of potential risks arising from the pandemic. Profit before allowances was up 2% to a new high of S$8.43bn. While treasury markets performed well, the institutional banking and consumer banking/wealth management divisions saw their profit declines 39% and 27%, respectively.

Still, CEO Gupta was upbeat about DBS’s prospects for 2021, saying that the latest economic data supports a solid rebound this year. He highlighted the bank’s strong performance in January, including a significant rise in treasury markets income, strong loan and deposit growth momentum, and a 21% year-on-year rise in wealth management revenue. This bodes well for continued hiring at DBS in 2021 and suggests that the bank is not contemplating any large-scale job cuts.

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