By Esther Teo

NEW DBS Group Holdings boss Piyush Gupta is wasting no time in setting a bold new agenda for South-east Asia's largest bank.

Unveiling a strong set of fourth-quarter results yesterday, he revealed an aggressive strategy to slash the proportion of its revenue which it makes in Singapore from about 70 per cent to just 40 per cent.

He wants DBS to pull in more revenue from abroad - and to lend out more of the bank's huge deposit base.

At a media conference at DBS Tower Two, he said he was pleased with a better-than-expected 67 per cent jump in fourth-quarter net profits year-on-year to $493 million. But he aims to do even better through boosting the DBS brand abroad.

DBS hopes to earn 40 per cent of its revenue from Singapore, 30 per cent from Greater China and the other 30 per cent from South Asia and South-east Asia within the next five years, he said.

'Singapore will be our anchor market, our home market, and we need to be big here, but we would like maybe an equal business presence in Greater China and South and South-east Asia as well.'

The bank earns slightly over 60 per cent of its net profits from Singapore and close to 30 per cent from Greater China - the mainland, Hong Kong and Taiwan.

But if Asia is to be the future global growth engine, then as an Asian bank, DBS' current mix of business needs to be balanced over time, said Mr Gupta.

'Our aspiration is to continue to focus on this playing field... We're unlikely to look at expanding our business in domestic franchises in Europe, in North America and frankly even the Middle East.

'We have enough to do in our backyard and that's where we hope to focus and build our future, certainly for the next five or 10 years,' he said.

Mr Gupta, who in November took over as DBS chief executive from the late Richard Stanley, also outlined the need to 'rebalance the balance sheet'.

DBS was flush with deposits, he said, and was more susceptible to the vagaries of interest rates than other banks.

DBS chief financial officer Chng Sok Hui said low inter-bank interest rates during the financial crisis had hurt its deposit margins. 'The loan to deposit ratio is at about 71 per cent currently so I think we need to do more... although we don't have a specific target.'

Mr Gupta said DBS also aims to work harder at expanding home loans and unsecured lending, and loans to small and medium-sized enterprises. DBS has set a priority of helping SMEs grow through measures such as trade finance.

He said POSB, the heartland bank under the DBS umbrella, was 'fantastic' but DBS would 'need to do a lot more'.

'We will focus on building a more full-service relationship with POSB customers so that it can be more than just a savings bank but also a broader relationship that includes financing, mortgages, and the right sort of investment choices.'

Key drivers for DBS' better-than-expected profits were advances in investment-banking fees and lending earnings, and a $47 million tax writeback boost.

The $493 million bottom line beat the $464 million average estimate of seven analysts surveyed by Bloomberg. It took total earnings to $2.06 billion last year, unchanged from the previous year.

Fourth-quarter net interest income rose 1 per cent to $1.127 billion.

Ms Chng said the non-performing loan (NPL) rate rose to 2.9 per cent in the fourth quarter from 2.6 per cent the quarter before, mainly due to clients outside Asia, especially in the Middle East.

She added that higher allowances were set aside to maintain coverage of NPLs at a prudent level, with 43 per cent of NPLs still current in interest and principal.

Full-year revenue in 2009 was broad-based and up 9 per cent to $6.6 billion.

Loans growth also received a boost with $4.6 billion in new loans, more than 13 per cent over the previous year's level.

DMG & Partners analyst Leng Seng Choon said that DBS' fourth-quarter results were fair.

'Net interest income is still doing well, and loans are up 2 per cent on quarter and 3 per cent on year so we know that there is still expansion,' he said.

This article was first published in The Straits Times.