DBS China has received a licence to underwrite debt financing instruments for non-financial enterprises, including foreign issuers, in China’s interbank bond market.
The lender said it is the first South-east Asia headquartered bank to secure such a licence, which was awarded by China’s National Association of Financial Market Institutional Investors.
It will enable non-financial enterprises outside of China to tap the world’s second-largest bond market, by leveraging DBS’ “track record in helping foreign governments and agencies, supranational organisations, and financial institutions”, said the group on Wednesday (Feb 14).
Noting that foreign issuers are increasingly turning to China’s bond markets for financing, the group also highlighted DBS China as “the most active foreign bank for panda bonds in the China Interbank Bond Market” since 2021.
Panda bonds refer to yuan-denominated debt issued in China’s onshore market by non-Chinese companies, governments and organisations.
DBS China’s chief executive Ginger Cheng said: “The growth of panda bond issuances highlights the domestic bond market’s depth and rising international standing, driven in part by the government’s initiatives to internationalise its financial markets.
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“As one of the first foreign banks to participate in the China Interbank Bond Market, our new underwriting licence expands DBS’ existing capabilities and networks in helping both foreign and local issuers access this attractive market.”
In 2023, DBS China was the joint lead underwriter for 16.5 billion yuan (S$3.1 billion) of panda bonds issued in the China Interbank Bond Market, accounting for more than 10 per cent of the record 140 billion yuan market that year.
Overall, DBS China participated in 248.7 billion yuan of bond issuances last year. It underwrote the first green financial bond issued by a foreign bank.
In December 2023, DBS said it obtained the requisite regulatory approvals to increase its stake in Shenzhen Rural Commercial Bank Corporation (SRCB) to 16.69 per cent from 13 per cent.
Then, the bank said it would acquire Shenzhen Huaqiang Asset Management’s stake of 383.6 million SRCB shares for 5.25 yuan per share.
As for its financial results, DBS posted a record full-year net profit of S$10.06 billion, up 23 per cent on the year.
Full-year total income grew 22 per cent to S$20.18 billion, also an all-time high, driven by a higher net interest margin, increased fee income and record treasury customer sales.
This brings the bank’s full-year return on equity to a record 18 per cent.
During a media briefing for its fourth quarter results, DBS chief Piyush Gupta expects the bank can sustain its underlying profits in a S$10 billion range in 2024, notwithstanding headwinds from interest rate changes.
The macroeconomic outlook around the world is looking brighter than it did during the bank’s last briefing in November for its third-quarter results, he said.
Speaking on his outlook for China, Gupta expects it will remain a challenge as growth stays slow.
While he does not expect a systemic financial risk nor a major issue with its portfolio, he said the bank will still be careful and not be very aggressive in the market for now.
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