This led its Hong Kong operations to record a 15% q-o-q decline in earnings to $334 million from $385 million.
“There has been a lot of concern and disquiet about Hong Kong,” he says in a results briefing on Monday.
“The net profit is down, but that’s only because we took a specific allowance in Hong Kong and we did that just to be prudent. But given the environment, we don’t know what is coming down the pipe, we said we put some money aside just in case,” he adds.
Chng Sok Hui, DBS chief financial officer, notes that the bank’s allowances are considered “generous” compared to the “conservative” provision levels of its Hong Kong peers.
See also: Hong Kong’s stock market booms with Wall Street in turmoil
But, if and when the political situation improves in Hong Kong, DBS has the ability to reverse these provisions, she adds.
Gupta says it’s hard to tell if the slowdown in Hong Kong trade is due to domestic unrest or the trade tensions between China and the US.
But he reckons that Hong Kong will continue to be an important market to DBS as the territory’s economy and financial market will continue to benefit from China’s capital market and economic activity.
See also: Hong Kong mulls lowering threshold to buy most expensive stocks
For instance, he points out that Alibaba Group Holding is reportedly resuming with its listing plans in Hong Kong.
“So the capital market in HK is continuing to be quite active,” he says.
Moreover, as Hong Kong continues to leverage and integrate into the Greater Bay area, this will be a positive for the bank, he adds.
See also: DBS 3Q earnings up 15% to $1.63 bil on strong operating performance, broad-based growth
