He said DBS was not directly seeking to challenge the market dominance of ANZ Bank, Commonwealth Bank, National Australia Bank and Westpac. DBS has a market capitalisation of S$52 billion, about half that of Westpac, and its license does not currently allow it to deal with retail customers. But in comments that highlight the competition in lending to large corporations, he said a squeeze on profit margins in this part of the market was likely to persist. "I think the pressure on margins will be there to stay, and one of the things that it results in is that the Australian banks have to get into environments they are not used to," Mr Gupta told journalists. "The truth is that we come from an environment where margins are already much tighter," he said. The squeeze on institutional lending margins was last month highlighted by ANZ Bank chief Mike Smith, who said the trend was particularly apparent in its domestic institutional loan book. Mr Smith said there was little demand for credit from the top end of town, and competition from international banks was "fierce." DBS aims to expand the size of its Australian loan book from about $500 million today to up to $5 billion within a couple of years. DBS, which is 29 per cent owned by the Singapore government's sovereign wealth fund Temasek, had "deep pockets" and would take a long-term view on the economy's prospects, Mr Gupta said. "Our views are driven by long-term megatrends for what is happening around the region, not where the short-term cycles are," Mr Gupta said. "In that context we are of the belief that Australia's integration into Asia is inexorable." While the resources sector is feeling the pain of weak commodity prices, the bank is expecting growth in inward investment into Australia's services sector, including in hotels, health care and education. Before obtaining the local licence, DBS has already been involved in syndicated lending deals in Australia, including as lead arranger for Woodside Petroleum on some deals, and it has helped to fund various public private partnerships. Instead of taking business from the big four lenders, he argued DBS was targeting new business being created by growth in financial flows around the region. He also noted the scaling back of several European banks in the region including RBS, Barclays and Deutsche Bank. Clancy Yeates is a business reporter.
Singapore's DBS Bank has launched operations in Australia, thereby expanding its presence to 18 markets around the world. DBS CEO Piyushi Gupta says that "with our growing footprint in Greater China, Southeast Asia and South Asia, we are better able to connect clients in Sydney with Asia and vice versa".