DBS Group Holdings, one of the largest banks in Southeast Asia, has shown that size is no hindrance to delivering returns that are better than that of its peers, several of which are almost as big, or bigger than itself. In addition to being named the overall sector winner, DBS is named the company with the best returns to shareholders as well.
In the three years to June 30, which was the cut-off date used to calculate shareholder returns, DBS scored a CAGR of 0.1%. Even so, it was able to outperform its peers, in a market that was grappling with the volatility triggered by Covid-19.
The bank, with Singapore as its core market, has over the years expanded significantly into 17 other markets such as Hong Kong and Indonesia. Most recently, the bank was “matchmade” by the Reserve Bank of India (RBI) with a local Indian bank. According to the RBI, DBS was chosen to amalgamate with the troubled local lender because of its strong capital strength.
Upon completion of the deal, DBS’ local subsidiary would be able to significantly expand its footprint, especially in the southern part of one of the world’s most populous markets.
Within Singapore, DBS, already a household name, has made a name for being at the forefront of the digitalisation of its operations, products and services. By doing so, the bank is able to not just be more efficient, but also generate additional revenue possibilities.
Great Eastern Holdings, a leading regional insurance player, has more than a century’s history in this field. Besides its two core markets Singapore and Malaysia, it has established a presence in Indonesia, Brunei, China and Myanmar as well. It is best known for life insurance but offers general insurance too. To date, it has built up an asset base of more than $90 billion and has more than eight million policyholders, including five million from government schemes.
To better manage the funds, Great Eastern has an asset management subsidiary, Lion Global Investors. Great Eastern, in turn, is a closely-held subsidiary of OCBC Bank, itself another pillar of the financial services industry in Singapore and the region.
For the year ended December 2016, the company recorded earnings of $589.3 million. This figure surged to just over $1 billion for FY2019, representing a CAGR of 19.4% over this period, thereby earning the company recognition for growth in the profit after tax category within this sector.
Last but not least, Prudential, another leading insurer, is recognised for having the best weighted return on equity (ROE) within this sector. While its ROE ranged from as low as 4.26 times to as high as 24.11 times, its overall weighted ROE was 12.47 times. From its headquarters in UK, it serves around 20 million customers for its life insurance business, around the world, including a large proportion in Asia — that is partly why it added a listing in Singapore as well.
Even with the significant presence in the key markets, Prudential has continued to make significant investments and cement ties. In 2019, for example, it renewed its regional strategic bancassurance alliance with United Overseas Bank for an initial fee of US$853 million ($1.144 billion).
Prudential’s Asia-based asset manager, Eastspring, enjoyed steady growth too. In 2019, average assets under management increased by 15% while earnings were up by 18%.