DBS Bank eyes revenue growth from cash-flow advisory service
Lender will help clients to free up capital which is 'trapped' and hard to repatriate or utilise
DBS Bank, the largest lender in Southeast Asia by assets, is expecting robust revenue growth momentum in its global transaction banking business in the coming years on the back of a newly-launched advisory service designed to help corporate clients free up more capital in their cash-flow cycle.
Trapped cash is money that is legitimately earned, but is difficult to repatriate. It occurs as a result of a number of factors, including foreign-exchange controls, capital requirements, restrictions on inter-company lending, and taxation on cross-border flows.
The bank's "Working Capital Advisory Programme", launched in Singapore in March and in Hong Kong last Friday, can help corporate clients increase their cash flows by 20 per cent to 30 per cent, DBS said. It was the first such programme to be launched worldwide, the bank added.
"We are very optimistic based on the results of the pre-launch [of the programme] that we saw," said Sohfern Boey, managing director and head of global transaction services at DBS.
The programme involves benchmarking a client against a database of 65,000 companies to compare working capital ratios and cash conversion cycles.
DBS will then analyse client-specific data and provide insight and advice on best practices where firms could improve operations to release more cash.
The programme will be available to both current and potential clients at no cost, Boey said, adding that she expects this service will be an important bridge to encourage clients to use more of its fee-based services.
"At least for this and next year when we look at our three-year strategy, we will achieve the same growth momentum as [the past few years]," she said.
DBS saw a 5 per cent revenue growth in the global transaction services sector to a total of S$1.48 billion (HK$9.1 billion), according to its annual report. The bank ranked as the third-largest transaction bank in Asia, behind HSBC and Citibank.
Before officially launching the new programme, the lender won 190 deals that brought in more than S$1 million of income in 2012 and 2013, by offering solutions to assist clients to free up more cash flow, its annual report said.
Boey said DBS is hiring more staff for its Hong Kong transaction banking business team in order to facilitate the operation of the programme. The Hong Kong global transaction services team now has 52 people in total.
She added that the bank plans to launch the programme in Taiwan, mainland China, Indonesia and India by the third quarter of this year.
It will be open to all types of firms, from family-owned companies to large multinational corporations, but DBS expects small to medium-sized enterprises with annual revenue above US$20 million to benefit most from it.
