Singapore's biggest bank cuts CEO's pay by millions on digital banking outage

DBS Group Holdings Ltd. slashed Chief Executive Officer Piyush Gupta’s compensation by S$4.1 million ($3 million) after the lender suffered a series of digital banking outages last year and was reprimanded by the central bank.

The pay cut, announced on Wednesday alongside DBS earnings, represents a 30% reduction in variable pay for Gupta, one of the highest paid executives in the country who earned S$15.4 million in total in 2022. Last year’s outages that saw payment and ATM transactions stalled across the city-state also resulted in the variable compensation for the group management committee collectively cut by 21% from a year earlier.

“We’ve taken accountability,” Gupta said at an earnings briefing. “I think that’s a good element of governance.”

The pay fallout came even though DBS’ full-year results hit a record. The bank’s net profit for 2023 exceeded S$10 billion, a target it had set for itself for the medium term. It posted return on equity of 18%. The lender also proposed a bonus share issue and raised its final dividend, and said it saw opportunities to return more to shareholders this year.

DBS shares rose as much as 2.8%, the most in six weeks, out-pacing the city-state benchmark stock index.

“The heavy punishing move highlights the management’s commitment to minimise future disruptions,” Yeap Jun Rong, a market analyst at IG, wrote in a note about the pay cuts. Yeap also noted that DBS’ level of dividend yield towers above its peers, setting up expectations for others to follow.

Meanwhile, net profit, excluding one-time items, rose 2% to S$2.39 billion ($1.78 billion) in the three months ended Dec. 31, Singapore’s biggest lender said in a statement Wednesday. This compares to the S$2.44 billion average estimate by analysts surveyed by Bloomberg News.

DBS is the first of major Singapore banks reporting results, showing how its robust performance that has been propelled by elevated interest rates may have peaked as rates are expected to decline this year.

Rivals United Overseas Bank Ltd. and Oversea-Chinese Banking Corp will report results later this month.

In November, the Monetary Authority of Singapore had banned DBS from acquiring new business ventures and reducing local branch and ATM networks for six months after a spate of digital banking service outages.

The actions followed repeated and prolonged disruptions of DBS’ online banking services last year, prompting Gupta to apologize to customers and assure them the bank is addressing the issues “with utmost priority.” DBS said on Wednesday customers can expect greater service reliability, as well as alternative channels for payments and enquiries should issues happen.


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