U.S. Markets open in 1 hr 1 min

Edited Transcript of D05.SI earnings conference call or presentation 13-Feb-20 2:30am GMT

Full Year 2019 DBS Group Holdings Ltd Earnings Media Briefing

SG Feb 15, 2020 (Thomson StreetEvents) -- Edited Transcript of DBS Group Holdings Ltd earnings conference call or presentation Thursday, February 13, 2020 at 2:30:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Edna Koh

DBS Bank Ltd. - Executive Director of Group Strategic Marketing & Communications

* Piyush Gupta

DBS Group Holdings Ltd - CEO & Executive Director

* Sok Hui Lim

DBS Group Holdings Ltd - CFO

================================================================================

Presentation

--------------------------------------------------------------------------------

Edna Koh, DBS Bank Ltd. - Executive Director of Group Strategic Marketing & Communications [1]

--------------------------------------------------------------------------------

Good morning, and a very warm welcome to DBS' Fourth Quarter and Full Year 2019 Financial Results Briefing. As you know, we typically have a physical results briefing every quarter. But this time around because of the coronavirus situation, we thought it'd be more prudent for us to be engaged virtually instead. So to everyone joining us on the webcast and telecon, thank you for your time.

This morning, we announced another record performance with 2019 net profit at $6.39 billion. ROE at 13.2% was also new high. For the fourth quarter, earnings rose 14% to $1.51 billion.

And so to tell us more, we have, as usual, our CEO, Piyush Gupta; and our CFO, Chng Sok Hui Lim.

--------------------------------------------------------------------------------

Sok Hui Lim, DBS Group Holdings Ltd - CFO [2]

--------------------------------------------------------------------------------

Thanks, Edna. Good morning, everyone. We achieved another record performance in 2019 as net profit rose 14% to $6.39 billion. Total income increased 10% to $14.5 billion from loan growth, a higher net interest margin and double-digit percentage growth in (inaudible). The broad-based business growth was achieved despite external headwinds prevailing throughout the year. Expenses rose 8%. The positive draw of 2 percentage points resulted in a 1 percentage point improvement in the cost-to-income ratio to 43%. This reflected gains in operating efficiency as well as strong growth in noninterest income.

Return on equity rose from 12.1% a year ago to reach a new high of 13.2%. For the fourth quarter, net profit also increased 14% from a year ago to $1.51 billion. Total income rose 7% to $3.46 billion from loan growth and a 17% increase in fee income, led by Wealth Management and Investment Banking.

The balance sheet remains healthy. The NPL rate was unchanged from the previous quarter at 1.5%. Specific allowances for the fourth quarter were 21 basis points of loans, in line with recent quarters. Regulatory capital and liquidity ratios were all comfortably above regulatory requirements. We are raising the quarterly dividend by 10% from $0.30 per share to $0.33. This brings the dividend for the financial year 2019 to $1.23 per share. Barring unforeseen circumstances, the annualized dividend going forward will rise to $1.32 per share.

Full year net profit rose 14% to a record $6.39 billion as total income grew 10% to a new high of $14.5 billion for the fourth quarter. This was from our broad-based business momentum and despite external headwinds.

Net interest income increased 7% or $670 million to $9.63 billion. Net interest margin was 4 basis points higher at 1.89%. Loans grew 4% in constant currency terms or $15 billion to $358 billion. Net fee income increased 10% or $272 million to $3.05 billion. Wealth management fees led the way as demand for investment products accelerated in the second half. Other noninterest income grew 29% or $419 million to $1.87 billion from higher trading income and gains from investment securities.

Expenses grew more slowly than income rising 8% or $460 million to $6.26 billion. The positive draw resulted in a 1 percentage point improvement in the cost-to-income ratio to 43%. Profits before allowances increased 12% to $8.29 billion. Total allowances were 1% or $7 million lower at $703 million. Specific allowances were 20 basis points of loans, little change from 19 basis points a year ago.

For the fourth quarter, net profit rose 14% from a year ago to $1.51 billion from broad-based business momentum. Fourth quarter total income rose 7% or $216 million to $3.46 billion. Net interest income rose 4% or $96 million to $2.43 billion as loans grew 4% or $15 billion to $358 billion.

Net interest margin was 1 basis point lower at 1.86%. Fee income increased 17% or $106 million to $741 million, led by an increase in wealth management fees due to buoyant investor sentiment. A significant number of transactions led to a near tripling of investment banking fees.

Other noninterest income rose 5% or $14 million to $294 million from higher gains on investment securities. Trading income was stable.

Expenses increased 7% or $99 million, in line with income growth to $1.60 billion. The cost-to-income ratio was unchanged at 46%. Profit before allowances grew 7% to $1.86 billion. Total allowances were 40% or $83 million lower at $122 million due to lower specific allowances and a higher general allowance write-back.

Compared to the previous quarter, fourth quarter net profit was 7% lower as total income fell 9% to $3.46 billion. Net interest income was 1% or $34 million lower as net interest margin declined 4 basis points to 1.86%. Fee income fell 9% or $73 million from a seasonal decline in wealth management fees and from lower loan-related fees. This was moderated by higher fees from investment banking and transaction services.

Other noninterest income was 46% or $255 million lower from quieter markets at year-end. Expenses declined 1% or $14 million and profit before allowances was 16% lower at $1.86 billion. Allowances were 52% lower at $122 million.

Compared to the previous quarter, net interest income fell 1% to $2.43 billion. While loans rose 2% in constant currency terms, the impact was offset by a 4 basis points decline in net interest margin to 1.86% due to lower interest rates. For the full year, net interest margin was 1.69%, up 4 basis points from full year 2018.

Net interest margin was higher in the first 3 quarters of 2019 than a year-ago period and was stable in the fourth quarter.

Loans grew 2% or $7 billion in constant currency terms during the quarter. The growth was broad-based. Nontrade corporate loans grew $3 billion from broad-based growth, led by commercial property in Singapore and Hong Kong. Trade loans also rose $4 billion. Consumer loans increased $1 billion from housing loans and other loans. Housing loans grew after declining for the previous 3 quarters.

For the full year, loans grew 4% or $15 billion from nontrade corporate loans and wealth management customer loans. Deposits rose 2% or $8 billion in constant currency terms during the quarter to $404 billion. The increase was led by Sing dollar and U.S. dollar CASA account. For the full year, deposits grew 3% or $13 billion. The deposit growth over both periods was in line with loan growth.

Our liquidity coverage ratio at 139% and a net stable funding ratio at 110% were above regulatory requirements.

Fee income. Compared to a year ago, fourth quarter fee income rose 16% to $876 million. Leading the increase were wealth Management and investment banking. Wealth management fees increased 31% to $286 million from buoyant market sentiment in contrast to the market sell-off the year before. Investment banking fee almost tripled to $80 million from significant number of transactions. Transaction service fees were also higher, rising 8% to $200 million from higher cash management activities.

Compared to the previous quarter, gross fee income was 8% lower. Wealth management fees fell 20% due to lower year-end activity. Loan-related fees and brokerage commissions were also lower. Moderating these declines was a 45% increase in investment banking fees.

For the full year, gross fee income increased 10% to $3.57 billion from broad-based growth, led by wealth management, cards and investment banking. For the full year, expenses rose 8%, less quickly than a 10% increase in total income. The positive draw resulted in a 1 percentage point improvement in the cost-to-income ratio to 43%. For the fourth quarter, expenses rose 7% from a year ago, in line with total income.

Compared to the previous quarter, expenses were 1% lower as the third quarter included $22 million in impairment for some computerization investments.

Segment performance. Consumer Banking and Wealth Management's full year total income rose 11% to $6.30 billion. The broad-based growth was from higher deposit margin, deposit volumes, wealth management product sales and cards transactions. Income for the Wealth Management Customer segment rose 16% to $3.08 billion as assets under management expanded 11% to $245 billion. Income from the Retail Customer segment increased 8% to $3.22 billion. We had a market share of 53% for Singapore dollar savings deposits and 31% for Singapore housing loans, unchanged from the previous quarter. Expenses rose 8% to $3.28 billion. The positive draw resulted in a 2 percentage point improvement in the cost-to-income ratio to 52%.

Institutional Banking. Institutional Banking full year total income rose 5% to $6.07 billion. The growth was due to cash management and investment banking. Cash management deposits were little changed at $140 billion as some high-cost deposits have been managed out earlier in this year. Assets rose 6% to $278 billion from growth in nontrade loans.

Treasury Markets. Treasury Markets' full year interest and noninterest trading income rose 39% to $932 million. The quarterly average of $233 million was in line with our guidance of around $225 million a quarter. The performance for all 4 quarters of the year were better than the corresponding period of the previous year, which had been affected by flat yield curve and wider credit spreads. The second and fourth quarters of 2018 have been the 2 lowest on record.

Treasury's customer income for the full year increased 7% to $1.28 billion. Both institutional banking and consumer banking contributed to this income growth.

Hong Kong. Hong Kong had recorded a property gain of $86 million in 2018. This chart excludes the property gain to show the underlying full year performance. In constant currency terms, net profit rose 11% to a record $1.43 billion. Total income rose 9% to $2.93 billion. Both earnings and income were at new high. Net interest income rose 9% to $2.01 billion. Loans increased 5% from growth in nontrade corporate and consumer loans, which was partially offset by a decline in trade loans.

Net interest margin rose 6 basis points to 2.07% from higher interest rates. Fee income grew 7% to $667 million. Cash management, loan-related activities, investment banking and wealth management contributed to the increase. Other noninterest income increased 20% to $250 million from stronger trading income. Expenses rose 4% to $1.11 billion, and a positive draw of 5 percentage points resulted in a 13% increase in profit before allowances to $1.82 billion. Total allowances rose 40% to $102 million. The increase was due fully to higher general allowances.

The NPL rate was unchanged from recent quarters at 1.5%. Nonperforming assets fell 3% from the previous quarter to $5.77 billion as new NPA formation was more than offset by write-offs and recoveries. Currency effects also contributed to the decline. The majority of new NPA formation during the quarter were from exposures that were fully secured.

Specific allowances amounted to $199 million and 21 basis points of loans, in line with recent quarters. There was a general allowance write-back during the quarter of $77 million, which was a result of reclassifying general allowances to specific allowances for new nonperforming loans.

The common equity tier 1 ratio rose 0.3 percentage points from the previous quarter to 14.1% from net profit accretion. The leverage ratio of 7% was more than twice the regulatory minimum of 3%.

The Board proposed a final dividend of $0.33 per share for approval at the forthcoming Annual General Meeting. Barring unforeseen circumstances, the annualized dividend going forward will be $1.32 a share, an increase of 10%. The increase in the quarterly dividend is in line with our policy of paying sustainable dividends that rise progressively with earnings. Based on yesterday's closing share price, the annualized dividend yield is 5.2%.

In summary, we achieved another year of record performance in 2019. The results were achieved despite the macroeconomic headwinds and geopolitical uncertainties that pervaded the year. Return on equity rose to a new high of 13.2%. The results demonstrate the improved profitability and quality of our franchise. The near-term outlook has been clouded by the coronavirus outbreak, and Piyush will cover this in his observation. We will weather the uncertainties with our nimble execution supported by our strong balance sheet with ample extra capital and liquidity.

Thank you for your attention. I'll now hand you over to Piyush.

--------------------------------------------------------------------------------

Piyush Gupta, DBS Group Holdings Ltd - CEO & Executive Director [3]

--------------------------------------------------------------------------------

Thank you. Thanks, Sok Hui. So again, everybody, apologize for doing this on the webcast, but just think it's more prudent for everybody all around.

We can get into the first slide, please?

So let me just start off from where Sok Hui wound down. We are extremely pleased with our performance for 2019. And just to recap the highlights, our top line grew 10% to $14.5 billion. That's very strong. Cost-to-income ratio showed a full 1 percentage point improvement to 43%. NPL rate is stable at 1.5%. SPs again stable at about 20 basis points. We've been there for a couple of years now. Bottom line increased 14% to $6.39 billion, so very strong growth in the bottom line. And ROE at 13.2%, very pleased because we've finally hit our aspirational ROE target of north of 13%. So extremely pleased with that ROE performance. Sok Hui also referred to the fact that we are recommending an increase in the dividend by 10% to $1.32. So net-net, extremely good set of results.

In some ways, I see the results for 2019 as a bit of an exclamation mark on what I think of the defining decade. In the course of the decade, we've been able to deliver our bottom line CAGR, net profit CAGR of 13% over, I guess, 40 quarters, which is, I think, a really good hallmark for consistent growth over time.

Perhaps more important, we've been able to structurally change the shape of our income, our earnings profile. So for 2019, between wealth management, cash management and treasury sales, that's well over 40% of the earnings of the bank. This used to be less than 20% a decade ago. And all of these, as you can imagine, are low capital consumptive, high-return businesses. So structural change in the bank has been extremely important over the decade.

The good news is that a lot of this business momentum in lines like wealth and cash came through in this last quarter as well. And as you'll see from this slide, our total Wealth Management income went up by 16% to over $3 billion for the year. This is a 7x -- 8x growth over the decade, 16% year-on-year growth. Our AUMs also grew at 11%. That includes obviously net new money as well as market action. But wealth management momentum, therefore, continues to be very strong.

Cash, again extremely good growth. Just a tad short of $2 billion now, up 14% for the year. And again, a 5x growth over the decade. So again, very strong performance on these 2 underlying businesses.

The SME business, notwithstanding the environment, I was quite pleased that we continue to grow it quite nicely, in a sensible way. We had 6% growth on SME. But now the SME business also contributes more than $2 billion of our total income. The loan book grew well. The nontrade loan book grew at 6%. We gave up a little on other areas to get an overall 4% growth for the year. But the momentum and pipeline of nontrade loans is good and continues to look good as we go into 2020.

And finally, other consumer areas in Singapore, like the mortgage book and the savings deposit book have been very resilient. As you know, over the years, we grew our market share. And now in the last year or so, we've been able to hold our market share despite a shrinking market. So there's a degree of resilience, both in the mortgage portfolio as well as in the savings portfolio. So overall, 17% growth in fee income in the last quarter. We're quite pleased with that performance.

So let me shift into a couple of things. Obviously, the big thing on everybody's minds, including us, is the coronavirus situation. So just a brief recap. For us, China and Hong Kong have been under what we call red alert now for some period of time, aligned with the National Alert System. In Singapore, we are at orange. However, we've been taking the same kinds of precautions in Singapore as we have in China and Hong Kong.

We went into contingency mode some time ago. What that means is that we have implemented both split teams in our operations as well as created the capacity of a large number of people to work from home. As we speak, about 1/3 of our people in Singapore and Hong Kong are working from home, and that number is about 2/3 in China. The good news is, because of all our technology investments and digital capabilities, we have been able to carry on pretty much business as usual. So there's been minimal service disruption at this point in time.

Quite clearly staff welfare is a priority. So we spent a lot of time in the last couple of weeks ensuring that the adequate supplies of protective equipment, we made sure we shipped masks and other kinds of sanitizers, thermometers to all of our countries and locations. I think we're fairly well covered for stuff of that sort.

As we go forward, we're actually trying to see what more we can do, recognizing that both our customers and the community at large will be anxious, and perhaps in the case of our customers, financially stretched. So we're trying to see what kind of support we can provide them. We will announce details of this later in the day, but we plan to offer a 6-month moratorium on principal repayment available for all SME property loans in Singapore and Hong Kong as well as for all mortgage loans to retail customers in Singapore. This is assuming you've a good credit record and you need liquidity relief.

We were also looking at announcing additional measures, which are more on the working capital side. So we're probably going to finalize that in the course of the day.

We're also trying to take some measures to provide support for our customers. And a couple of the things that we are trying to launch by the end of this week play a little bit to our digital capabilities. One of the big issues, which we recognize, is that our customers are concerned about the kids and kids having to go to school or go for tuition and so on. And so through our partner 88Tuition, we are going to offer unlimited free online lessons at home up till the 30th of April. These are for kids who are in primary and secondary and they do the PSLE in Singapore. So we think this will be a good measure, give people the capacity to keep the kids engaged into their work without exposing them to undue risk.

We're also going to announce later today our partnership with Comfort to offer discounted fares to people who are willing to use cashless payments. Now the idea behind this is to aid in contact tracing. When people pay back cash, it's hard to figure out somebody does get the virus. But if you actually leave a digital trail, then it becomes much easier to do contact tracing on the back of that. And to facilitate the contact tracing, we're going to offer the discounted fares through Comfort. Again, we'll announce a set of measures later in the day, so watch this space.

So with obviously a lot of questions about what does the virus make to the macroeconomy and to our own DBS outlook and performance, so let me first start by pointing out that previrus. In fact, if you look through late December and into the first half of January -- actually all of January, we were seeing very clear green shoots. The PPI numbers were north of 50, exports are picking up and business was -- actually momentum was looking quite good. And therefore, we were quite comfortable that our previrus outlook, which we had given guidance, we've given at the end of the third quarter, was quite safe, which is just to refresh you, we're talking about sort of mid-single-digit loan growth rate. And we thought that, that is something that the business momentum would support.

Now we've tried to do some estimation of what the virus impact might be on that outlook. And so let me first point out that this is really hard stuff because nobody really knows what is the scale and impact of the virus all around. Base case is that consistent with most research, the virus should start coming under control and die down once we get to the summer months. The virus should get impacted by heat and so on. And so our base case really assumes that we have about a quarter of impact, much like SARS in 2003. On that base case, we see that we could probably have some revenue headwinds. I've said 1% to 2%, our bottoms-up analysis shows it's likely to be closer to a 1% number than a 2%.

Where does the revenue headwind come from? Particularly, the cards business is slow because of spending on cards, both in Hong Kong and Singapore in February is beginning to come off a bit. Interestingly, online spending is picking up. But net-net, we think that will be a little bit of a drag. Wealth management is a usual suspect. As people get antsy and the environment gets more uncertain, people's willingness to do deals comes off. January was strong, but in February, we are beginning to see some early signs of slowdown.

Our treasury sales might get a little bit impacted, particularly from the SME customer segment. Interestingly though, on the other side, the interest rate environment is such that a lot of our large corporate customers are keen on doing interest rate hedging and swaps. So there is a little bit of a tailwind as well. But net-net, we think there might be some impact on that account.

In general, however, our large corporate customers, we think will be quite resilient, and we continue to see a degree of resilience in that space. And the trading business is looking okay, looking good. So if you put all of that together in the course of a quarter, our bottoms-up figure suggested that we might face some revenue headwinds of in the region of $100 million, $150 million. But if it gets much longer than that, maybe it's 2%, but we don't expect it to be much more than that.

So the second question is, what does it mean for cost of credit? And what impact could that have? So here's how we're thinking about the situation. Again, this is work in process. Think about first supply chain, the manufacturing part of the system. To my mind, what we're really going to see is a shift in the performance, which means there might be a P&L impact on those customers this year. But it's not a complete displacement of demand or volume. We're already seeing that some customers are operating at less than full capacity. That's true in the auto sector. That's true in the TMT sector, for example, partly because they're trying to leverage their inventory stocks, which is getting depleted, partly because workers haven't all come back into work. So you'll see some reduction in capacity, but our own take is that 2, 3, 4 months down the road, these customers will get back to full capacity and get back to production.

So what you're likely to see is some liquidity tightness for a few months. And because these customers generally are large, the companies like the Foxconns of the world, we think there's a capacity to be able to see through 3, 4 months of undercapacity utilization. So not overly concerned on that front within the banking system. We'll support them with the liquidity they need for this 3, 4-month period.

The second sector, which is of greater concern, is what I think of is the consumer consumption sector or the services sector. You put in that hotels, tourism, travel, food and beverages, the aviation industry and so on. In this sector, it's quite clear that demand displacement is permanent. It's not just -- it doesn't just shift by 3, 4 months. If somebody doesn't go to a restaurant, I mean that meal is gone. So this sector is likely to see more permanent revenue loss, which will impact their numbers for this year.

This total portfolio for us in China, Hong Kong, Singapore altogether is in the order of about $20 billion. The majority of that is in Singapore. And in this portfolio, the bulk of it, 90% of that is, again, large companies. So we count in that companies like Singapore Airlines or Shangri-La Hotels or the Genting Group, et cetera. These companies, to our mind, are also very resilient. So while they will see some revenue shortfalls this year, we do think they will continue to be supported by the banks, and they have the capacity to be able to take a few months of cash flow shortfall.

About 10% of the book, so call it about $2 billion, are companies who are likely to be a little bit more vulnerable. Even in that space, the companies that we've actually been corralling for the last year because of the Hong Kong protests, because of the general tightness situation, so we've been actually managing that portfolio very judiciously over the last year. Nevertheless, in that part of the portfolio, you could see some stress in the course of this year.

The third part of the thing I look at is the other, what I think of ancillary or downstream impact. In that, I would include, say, the construction industry in Singapore where the workers don't come back from China, so there might be some problems in terms of finishing contracts, or the shipping industry, where cargoes will be short, and so you'll see some impact, or oil and gas, where oil prices have come off quite sharply. So this is the third order impact, as I call it. Again, our exposures to these companies and industries are actually quite robust, and they tend to be large companies. So again, have the capacity to be able to take some of the headwinds that we see.

Outside of the corporate bank, in the consumer bank, quite clearly, there will be some impact on particularly the unsecured portfolio. Delinquencies in these kinds of situations tend to go up. Again, it's not a large portfolio for us. It's about $8 billion totally across the region. The Singapore, Hong Kong part of that is $5 billion, $6 billion. And in our back-to-the-envelope book, some degree of stressing, we feel that if delinquencies go up by 2 or even 3x, the total impact of the credit cost in that will be probably plus/minus $40 million, $50 million, it's not a big number.

When you put all of these together, I think our assessment is that sort of 4, 5 basis points of credit cost is what you might get. Let's assume we're wrong and it's double that, it could be maybe 8, 10 basis points on the outside. That will be somewhere like $250 million, $300 million of incremental credit cost if that were to happen.

Now the reality is that our general provisions are actually very robust. In the course of the last year, we had built provisions for what I think of as an uncertain world. So we put aside cushion for the U.S.-China trade issues, we put aside a cushion for the Hong Kong slowdown, we put aside an issue -- cushions for other such activities. And those cushions are actually large enough to take this order of magnitude of SPs, anything from 4, 5 basis points to even maybe 7, 8, 9 basis points without having to flow it through the P&L. So we do think that we have a degree of robustness around the credit lines. So there will be some revenue impact. With a little bit of luck, I don't think we'll see an impact on the cost of credit flowing through the P&L because of the GP cushion.

I'll stop there now. And between Sok Hui, now we're happy to take any questions.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Edna Koh, DBS Bank Ltd. - Executive Director of Group Strategic Marketing & Communications [1]

--------------------------------------------------------------------------------

Thank you, Piyush. [Erin], can we see whether there are any questions from the media? We're just waiting for a couple of moments.

--------------------------------------------------------------------------------

Operator [2]

--------------------------------------------------------------------------------

(Operator Instructions) Our first question [Annabelle].

--------------------------------------------------------------------------------

Unidentified Analyst, [3]

--------------------------------------------------------------------------------

I understand that full year wealth management fees rose 13% because of increased demand for investment products in the second half of the year. Can you give me more details on like what sort of investment products customers were looking at specific to wealth management?

--------------------------------------------------------------------------------

Piyush Gupta, DBS Group Holdings Ltd - CEO & Executive Director [4]

--------------------------------------------------------------------------------

The growth in wealth management was very broad-based. So we saw growth in, obviously, people buying equity-linked products, equity-linked note and structured products. We saw increase in people buying unit trusts. We saw increase in just basic T&M offerings. And we saw increase in bancassurance sales into the wealth bases. So it is actually quite diversified.

--------------------------------------------------------------------------------

Edna Koh, DBS Bank Ltd. - Executive Director of Group Strategic Marketing & Communications [5]

--------------------------------------------------------------------------------

Are there other questions, [Erin]?

--------------------------------------------------------------------------------

Operator [6]

--------------------------------------------------------------------------------

There are currently no questions in queue. (Operator Instructions) Our next question [Angela] from CME.

--------------------------------------------------------------------------------

Unidentified Analyst, [7]

--------------------------------------------------------------------------------

Just a query. You mentioned the outlook for -- generally. It sounds pretty near term. Is it because of the current coronavirus situation?

--------------------------------------------------------------------------------

Piyush Gupta, DBS Group Holdings Ltd - CEO & Executive Director [8]

--------------------------------------------------------------------------------

Well, yes, the outlook, which I just pointed out is because of the coronavirus situation. I said that ex the coronavirus, we thought our previous guidance was pretty much on track. But because of the coronavirus situation, we do think that there will be some impact on revenues. A lot of people are not going out to the restaurants. They're not going out shopping and so on. So there will be some impact on revenues. We also see that while there will be some pickup in cost of credit, we think we have ample general provision reserves that should be able to take care of it.

--------------------------------------------------------------------------------

Edna Koh, DBS Bank Ltd. - Executive Director of Group Strategic Marketing & Communications [9]

--------------------------------------------------------------------------------

Piyush, I will ask a question that's coming from Leslie Shaffer from

DealStreetAsia. She wants to get an update on Digibank in Indonesia, both in terms of sign-ups and profitability. And also has DBS had to delay closing deals to the coronavirus situation?

--------------------------------------------------------------------------------

Piyush Gupta, DBS Group Holdings Ltd - CEO & Executive Director [10]

--------------------------------------------------------------------------------

So on Digibank, India and Indonesia are both tracking to our revised model. Again, as I've indicated before, the Indonesia Digibank is doing better because we were more targeted in customer selection from day 1. And frankly, margins in Indonesia are much better. So while we're still making a loss there, we're beginning to get our pathway to profitability. We were able to launch unsecured lending digitally as well. And so that's been quite helpful.

India, as I said earlier, we had to pivot. We were earlier trying to bring on customers quantity over quality. Early last year, we pivoted our strategy and started looking for a better quality of customer profile. And so we've reduced our customer onboarding from about 100,000 a month, we're now down to about 40,000 a month. The new customers we're getting are of much better quality. And therefore, the new customers are driving -- will drive cash flow profitability in about a couple of years from onboarding. Nevertheless, the overall India Digibank business will continue to be a loss-making business for the next few years before we're able to get it to breakeven.

In terms of deals, we've actually -- I'm actually quite -- just yesterday overnight, we did primary placement for the new bidding of about $150 million or $200 million big deals, and we did it completely on BCP mode. So all our salespeople, all our bankers were all able to operate from home digitally. And the issue was 4.8x oversubscribed. So it tells me that the market is still open for the right deals. And as long as we can focus and get the right customers to market, there is still opportunity. Now some of the deals, which have come from China might be a little bit slower. We're still in discussion with clients. On the other hand, this is probably a good time to take things to market, particularly if you want to do fixed income and debt capital markets deals, pricing is very attractive. And therefore, I think a lot of clients might be seduced by the attractive pricing to try and actually get the deals done.

--------------------------------------------------------------------------------

Edna Koh, DBS Bank Ltd. - Executive Director of Group Strategic Marketing & Communications [11]

--------------------------------------------------------------------------------

Are there other questions, [Erin], on the line?

--------------------------------------------------------------------------------

Operator [12]

--------------------------------------------------------------------------------

There are currently no questions in queue. (Operator Instructions)

--------------------------------------------------------------------------------

Edna Koh, DBS Bank Ltd. - Executive Director of Group Strategic Marketing & Communications [13]

--------------------------------------------------------------------------------

While we wait for questions on the queue, Piyush, there's one more that I'll read out to you from The Asset. So this is whether you expect to see insurance sales grow?

--------------------------------------------------------------------------------

Piyush Gupta, DBS Group Holdings Ltd - CEO & Executive Director [14]

--------------------------------------------------------------------------------

Frankly, we discussed this briefly at our management team that there's quite clearly concern in the population. So you might expect insurance sales to go up. With our partner Manulife, we're actually looking at launching 2 insurance products, principally for this, almost as a community service as opposed to a business imperative. So I do think the anxiety will cause people to try and do more insurance. But frankly, it's too early to say how people will behave. We haven't actually seen any evidence of this yet in our business.

--------------------------------------------------------------------------------

Edna Koh, DBS Bank Ltd. - Executive Director of Group Strategic Marketing & Communications [15]

--------------------------------------------------------------------------------

And one more question from Bloomberg. What are you -- what are the measures that we are prepared for should the virus last beyond summer?

--------------------------------------------------------------------------------

Piyush Gupta, DBS Group Holdings Ltd - CEO & Executive Director [16]

--------------------------------------------------------------------------------

Well, our measures are going to be pretty much intact. So like I said, the principle thing is that we are confident that we can keep the bank running with as much as 50% to 60% of the population working from home. That gives us a degree of resiliency to be able to continue to service our customers and to continue to keep the lights on, even if a larger number of people have to work from home. In the meantime, we are taking all of the precautions with respect to staff. We're making sure, like I said before, we have the right protective gear. We're trying to make sure that people are well taken care of. The people who do come into office, we're trying to give them additional support as well. I think at this point in time, those are the best provisions we can put in place. And if it just carries on for a few months, then we will continue to extend that set of provisions.

--------------------------------------------------------------------------------

Edna Koh, DBS Bank Ltd. - Executive Director of Group Strategic Marketing & Communications [17]

--------------------------------------------------------------------------------

Okay. Thanks, Piyush. [Erin], just one last check whether there's any final question? If not, we'll probably wrap up.

--------------------------------------------------------------------------------

Operator [18]

--------------------------------------------------------------------------------

(Operator Instructions) There are currently no questions in queue. Over to you, Edna.

--------------------------------------------------------------------------------

Edna Koh, DBS Bank Ltd. - Executive Director of Group Strategic Marketing & Communications [19]

--------------------------------------------------------------------------------

Okay. In that case, thank you, everyone, for joining us for this quarter's webcast, and we'll see you in the next quarter. Thank you, everyone.

--------------------------------------------------------------------------------

Piyush Gupta, DBS Group Holdings Ltd - CEO & Executive Director [20]

--------------------------------------------------------------------------------

Thank you, all.

--------------------------------------------------------------------------------

Sok Hui Lim, DBS Group Holdings Ltd - CFO [21]

--------------------------------------------------------------------------------

Thank you.