Tan Su Shan: «Client Are Now Looking at Reconfiguration»
DBS clients are looking at repositioning themselves due to the ongoing escalation of the trade war, according to Tan Su Shan. Depending on the impact, client activities may slow in the second half for the Singapore lender.
Given the shift in the macroeconomic environment due to the so-called «Liberation Day» on April 2 and the barrage of tariffs imposed by US President Donald Trump as well as retaliatory response, most notably by China, uncertainty has been on the rise. At DBS, adjustments have been made including a S$205 million ($158 million) increase in general provisions in the first quarter of 2025.
«We all know this is the potential end of a rules-based world order and multilateralism as we used to know it,» remarked Tan Su Shan, who took over from Piyush Gupta as DBS CEO on March 28, during a media briefing on the bank's earnings. «So we need to learn to shift to work in a multipolar world.»
First and Second Order Risks
According to Tan, DBS stressed tested scenarios based on what she called first and second order risks. First order involves risks at the country and sector level while second order involves macroeconomic risk parameters such as trade disruption and growth slowdown that could lead to credit stress or a drop in consumer confidence.
«Whilst it's still too early to see impact […] the first order impact is not too big. Second order impact, we are stress tested. We are ready for it,» Tan said.
Business Outlook
In the first three months of 2025, DBS delivered a record pre-tax profit of S$3.4 billion and the bank said that April has also seen resilient momentum.
«Having said that, because of the uncertainty that we saw after April 2, there has been a pause in some of the longer term investments until there's clarity and clients are now looking at the reconfiguration of both the trade flows and their payments and technology stack,» Tan added.
«So second quarter will be okay. It's the second half [where] if this trade war continues and we get to a pretty bad scenario, then don't be surprised that non-trade loans and the deals that people want will be paused. It’s natural.»
In addition to trade war-related risks, the bank also flagged that the newly implemented global minimum tax of 15 percent is expected to lead to lower profit compared to levels in 2024.
