DBS Group Holdings Ltd

SGX:D05

I think we can kick off. So hi, everyone. Welcome to the DBS -- Hi, everyone. Welcome to the DBS Fourth Quarter Analyst Briefing. We have some people who are here physically, some people on the line. We'll start with the questions in the room first. [Operator Instructions] So can we have the first question? Aakash?

So once again, Piyush, thank you very much for exceptional leadership. I think I personally have learned a lot, a lot, a lot from you. So thank you very much for that.

First question, I think, will you be involved with DBS in any sort of capacity in the next 12 months?

And sorry to start with this rude question, but I think a lot of investors are wondering, there's so much optimism around DBS. And one of the things that people worry about is what's going to happen to your holdings. Can you comment on that?

My holdings?

Yes, of DBS.

So you've got to be pragmatic. Very -- the large part of my net worth is in one stock, analyst figure, you need to diversify. On the other hand, how many other opportunities you get, which gives you a 6%, 7% dividend yield in an appreciating currency. And with a regular track record, TSR growth of 14% over like 15 years, right? The truth is I can't think of a better investment opportunity, but I mean, I also need to think about diversifying over time. I'm not trying to sell my stock without -- and it's my best performing. Last year, you think about Barbell, right? Everybody, my returns on my portfolio Barbell. DBS gave me 50%. Everything else gave me like 10%, 12%. So I know it tells you, you'd have to be dumb to exit the DBS part of the portfolio.

Except your Bitcoin.

Except -- Bitcoin give me more. Bitcoin give me 300%.

So you won't be selling 100% of your...

No. I'm very bullish on DBS' prospects.

The second question is I just wanted to check again on the net interest margin. So now I think we understand the sensitivity to rate cuts and how NIMs can be more resilient. I think there's also this angle of rising sensitivity through the year, right, as your hedges roll off. So I think some -- you told us in the past that $55 billion of the $180 billion portfolio is going to roll off this year, which means you're sensitive....

We actually did more in the fourth quarter than we're planning to. So originally, we plan to do about $60 billion of the VIP. We bought $68 billion of fixed assets because the rates spiked and the yield curve moved around. So we actually now have a $200 billion fixed rate book this year. We thought we'd wind up there about $190 billion. We're actually about $200 billion of the fixed rate book. But we said we have about $50 billion, $55 billion which will roll off this year. And I think the question Su Shan correctly answered. It's unlikely that we'll put a lot more duration because you're not getting a pickup at this stage. So the stuff which is -- last year, what we rolled off and what we put on, we got a 170 basis points pickup -- and this year, what's rolling off, we put on in the early part of the year, you get a little bit of pickup later part of the year, you get more pickup. So it's marginal.

So will that have an impact on the -- in the -- towards the next ...

It will go down through the year. There are 2, 3 things. At this stage, we have sensitivity $4 million still, right? Our sensitivity will start increasing back from here and it will be driven by 2 things. One, slowly the fixed income, we decide not to pay if the sensitivity goes up. That's correct. And the second, it depends on how much CASA starts flowing back because the second part of the sensitivity is money move to fixed. So fourth quarter CASA came back. And if CASA continues to come back, then obviously, that increases your interest rate sensitivity when you CASA but given the nature of our book, at the peak, we are up $18 million to $20 million sensitivity. In the way the fixed asset rolls out and the CASA comes back, I think we'll probably wind up at $6 million, $7 million by year-end.

Actually go from $4 million, $5 million to $6 million.

Exactly.

Is that included in the guidance that you have in this [indiscernible]...

Yes, it is.

So NII gains slightly up as basically including...

Includes that, includes that.

Which brings me to the second question. So your guidance for NII changed slightly quarter-on-quarter. From last quarter, it was stable; this quarter, it's slightly up, but didn't have any impact on your PBT and net profit guidance. Something in your mind is not very material change.

I think about this thing right -- interest take $4 million per basis point increase, the Fed cut -- I mean, we originally assumed 100 basis points, 25 a quarter. So 50 basis points a year. Now we're assuming that you'll get 25 in September, 25 in November, we look at the delta and the impact on that income, it's like sub-$100 million. It's between $50 million to $100 million.

$50 million to $100 million.

And then you have some trade-off on the other side. You don't know what it does to loan growth and where...

CASA, obviously.

It is somewhere between $50 million, $100 million upside this.

Understood. Second question is just on the NPLs. So you did take higher SPs this quarter. And I think if you look at the NPL...

We didn't take higher SPs this quarter. That what I think Sok Hui pointed out. SPs have been fairly consistent. We had lower recoveries this quarter. So the net SP looks higher and that's because we've been continuing to get very steady recoveries. So we have some recovery -- strong recovery in the pipeline. They just didn't drop into this quarter and spilling over into...

Into Q1.

Into Q1.

But I think from an NPL mix perspective as well, there was some increase in the Hong Kong book.

Hong Kong book NPL increase is partly exchange rate. If you look at this thing. But partly certainly, the 2 places where you can see we took increased cost of credit concerns around. And I gave you this thing in the third quarter. It shows up in the performance summary in the half and half, but they were both third quarter events. So in the third quarter, we had idiosyncratic issue in the auto distributor dealership in China. And I point out this I thought misstatement of financial statement, but it was a one-off, but we wrote it off. So it shows up in SP charge, but doesn't show up in NPL in China because we wrote it off right away.

And then the second thing in the third quarter, I indicated is that the real estate portfolio in Hong Kong is deteriorating. So our watch list has increased, and we took one of those into NPL in the third quarter as well. But the good news is that in the last quarter, I'm actually encouraged. We've done now 2.5 transactions, half because we closed in January, and we did 2. And in all of those, we've been able to exit and recover our loans. So our loan to values are quite good. The market -- our valuations are quite up to date, but we've been able to clear both those at a market clearing price of about 30% below what it was. So if you drop price, you can sell the property. And so in all 3 cases, we've recovered that which is why -- so the NPA has gone up for Hong Kong, but we have to take a lot of SPs fairly well secured.

And then what's your sense of rates continue to remain higher for longer if outlook partnerships to like 1 rate cut this year or something like that. And do you see incremental stress in the Hong Kong book or but new world is making [indiscernible]

Yes, Hong Kong SME will have some stress. And we've been reducing -- we've been deliberately reducing our asset exposure and Hong Kong SME as a result of that. But there was one idiosyncratic sort of related loan that hit us last year and I don't see that repeating itself this year. So rates have gone down 4 times last year. So therefore, [indiscernible] basis points. So that will give some relief to the Hong Kong SMEs. And we need to remain cautious. So in short, yes, I mean, higher rates, higher-for-longer rates will create some stress open the consumer and the smaller SME book. But I think there has been some relief, some cash flow relief now for them.

The thing is with the high interest, I mean, surprising to me, we haven't seen more. We expect this thing to see more defaults. In the course of last year, if you look at this thing, our delinquencies in both consumer unsecured and SME going up every quarter. But they've still been lower than the highs of the past. And so there is still some -- either the residual benefit of the government support programs [indiscernible] still not hit. I look at the NPL rates nowhere near even like first COVID hit, it went up much higher. I look back at '09, it went up much higher. I look at SARS, it went up much higher. So it's been lower than those.

If rates go up, could it go up in this thing? Yes, it could. I mean I've seen it at least 3 times in my own cycle that it can get up slightly higher. The good thing, though, which is why I keep saying we've been so prudent with our GP. We've hung on to our $2.4 billion GP overlay through COVID, the 2 years after COVID, when most banks were reversing GPs, we didn't touch it because I'm still not sure when some of this might come to bite. And we don't have any big stress. I don't have any large this I'm worried about. But at the low end, our books are not very big. We have $15 billion in consumer unsecured and we have $13 billion, $14 billion in SME. It's not a big book. It's 10% of our total bank. But still, if it goes up, we have enough provisions.

But as I said, we're comfortable, we're not complacent. And the work that we've done certainly around risk management, coming up with credit scoring that's preemptive and predictive and strengthening our collections process and the way we operate, I think will be helpful and has been helpful.

Fantastic. A couple more questions. So just one on Wealth Management. And I think I heard what you said 5 years up 40% year-on-year weakness on quarter-on-quarter basis.

37% if you exclude Citi but it's still there, [indiscernible] 40%.

I think based on the net new money trends that you talked about, so $21 billion for the year, probably means like a $5 billion sort of number for Q3, if I'm correct?

$6 billion.

$6 billion.

$6 billion. So it's pretty strong, right, compared to the run rate for this year?

And Jan is also based on.

And markets are also very buoyant in Q4. So there was elections and volatility. So in that sort of context, a 15% drop Q-on-Q in Wealth Management is what surprised some investors. I think people were expecting that wealth management has been doing so well, Q4 might actually be slightly better than that. So I'm just wondering, is that something that surprised you as well, like 15% drop Q-on-Q in Q4? Or was it in line with expectation?

[indiscernible]

Wealth Management, I think it's seasonal. You always see fourth quarter drop. So we don't think it's actually unusual. We think it's actually a pretty strong quarter.

That is obviously seasonality which is 15%, 20%, but I was saying that because last quarter was so exceptional, you probably would have seen like a 5% drop, 15%.

Last quarter, we had a half impact from [indiscernible]

Citi Taiwan as well.

Apart from Citi.

In the base.

Yes. That's right.

Fourth...

Q-on-Q, Q-on-Q.

There's nothing that we saw . So people are still -- money still coming to us, people would be investing and activity has been quite strong. It is the fourth quarter, which just looked at 2 businesses where either we will go off on holiday in the 15th of December, trading always suffers because the traders turn, they work 11 months a year. By December, they shut their books. And I think that also psychology applies to all of us, individuals, right? So most people tune off by mid-December, then they come and rebalance their books in January.

And it could be also waiting for Trump to come in and see how it pans out. Yes.

And then I think last question, Su Shan. So you talked about transformative technologies, GenAI. Just wondering as like given DeepSeek is so relevant right now, has that changed anything in terms of your projections, thinking materially for DBS?

We're seeing pressure on cost saves from my tech colleagues.

Have you changed your targets? Have you changed your assumptions?

No, we're doing a lot of work there. We're doing a lot of work to see how we can optimize our technology. We've done a lot of work in building resiliency in the last 18 months or so, and that's bearing fruit. And the way we've organized our tech now is really a lot more resilient and a lot more forward-looking, right? And so -- and also quite agile. And so with that in mind, I have challenged all our different teams to come up with both vertical and horizontal use cases that they can harness with generative AI and what kind of efficiencies, capacity release and better top line growth we can harness from these new ways of doing business, new ways of organizing new ways of touching the clients, et cetera. So that's all work in progress right now.

Short answer, I don't think DeepSeek itself is in the December quarter. What it tells you is democratization of AI will happen. Within a week after DeepSeek, ChatGPT came up with the next version, everybody. So the fact that it can be done more cheaply and be done faster is just going to democratize GenAI even more than we anticipated. But we've already -- we spent a lot of time building -- I think I'm convinced that what we're doing is right. So like you got to build your underbedding. So you've got to make sure, otherwise, you can run massive risk. So we spent a lot of time in the last 12, 15 months building model, how do you make sure the appropriate, how do you make sure the checks and balances, how do you make sure again hallucination, what is okay. We have a very robust way of now taking GenAI applying it towards [indiscernible] got a very ambitious program for how we rethink many of our operating models...

Nick?

And again, just echo what everybody else has said -- thank you very much for all your systems over the last few years. It's been really appreciated. I have 2 questions actually. The first is just following up on Hong Kong. Can you talk a little bit about loan growth? I mean you've contracted much more in the system. The system was down about 2.8%, you were down about 6%. So I just wonder if you can talk about whether that's a new risk which you are taking there or why [indiscernible]

And then if you could talk a little bit about -- I'm just interested, you said you sold properties. I'm just interested what sort of buyers you've got for these properties at the moment how you're able to sell these distressed funds of just normal people? And then just if you could give us a little bit more color on sort of how we should think about wealth management this year. So there's a lot of volatility, a lot of uncertainty, maybe rates are coming down as quickly as we previously thought. So what does that mean in terms of your thoughts, I guess, relative to where you would have been in terms of net new money flows this year and also the pace at which you can switch...

Okay. So for Hong Kong, you're right, we have been reducing our overall exposures. We've been circumspect on the Hong Kong commercial real estate for a while now. And so taken in collectively, both Hong Kong and China, we have been, as you know, pretty risk aware. So where we've been pivoting is really the outbound. If you grow your loan book, it's really more on the outbound where you can make some -- where there's more structural growth, if you will. And the Hong Kong strategy has been actually to pivot more to wealth management. So that's where there has been growth as opposed to the more IBG type trade.

Actually, the big difference between us and the system, Nick, is only mortgages. So we are not in the mortgage market, and Sebastian took us out of the market business a decade ago. And whatever loan growth system, loan growth you're seeing is mostly the mortgage. And since we're not in the mortgage market, our loan growth looks disproportion.

So who's buying the real estate? I mean these are not big ticket items, but we are hearing there's some interest about funds, distressed funds.

We sold one. The first one was actually a quasi refi, but into one of the big banks, they put in and co-invest in it. The second was a property fund, private equity fund. And the third one that we are investing is a strategic, somebody wants to build. The Chinese are willing to buy at the right price. So if you look at some of the discussions that are happening with the large case -- a couple of Chinese SOEs have put in bids, but they're putting bids at their prices. If the family agrees and those deals can go through and those prices are actually went over.

And from what I'm hearing also there's some money also sitting behind funds that are slipping around. Your third question was around the net new money...

Wealth management outlook.

Okay. So as I said, right, I think the team has done a great job in being really disciplined and focused on net new money. And it's a process, right? You've got new RMs, you've got new clients, you've got net new money. And as they get bedded down, then that net new money can be brought into stickier structures, be it trust, estate planning, insurance, et cetera, and the rest can be invested according to risk profile of the clients. So from the very high end to the lower end, we've built a wealth continuum where we just chug along with this very disciplined process. But our central kitchen, if you will, is the same central kitchen. That's why compared to most banks, we're not siloed in our segments. We're able to harness cost efficiencies, both physically and digitally.

And the growth area is also in the internationalization of the middle bid. So the international treasures, which is the priority bank wealth management bid is to us quite exciting. That's growing, and we need to harness that growth by doing better onboarding, better cross-border, et cetera. So there's some growth potential there. The ultra-high family offices as well, there's some growth potential there. We started doing things like DCC structures, better trust, advisory estate planning. There is a lot of wealth transfer happening now even in Asia between the first and the next generation. And that in itself creates an opportunity because as the wealth transfers next generation, next generation might want a new bank hopefully.

The next generation might want to link it more with their businesses or more private equity, for example. And that's where the one bank can come in because unlike most pure private banks, for example, DBS has a strong business bank, commercial bank and corporate bank. And so if we're able to harness or combine wealth creation with the wealth management and being risk aware on both sides. I think that also makes for a good sticky longer-term relationship.

We're -- it's the hardest number to budget for this year. We budgeted a mid-teens growth in the wealth business. And could it be -- could we hit the ball out of the park [indiscernible] any you could. But it's very uncertain because to me, one of the biggest risks we have is the uncertainty that creates. And our business, as you know, a lot of it is sentimental. So if the market sell off, if Trump creates anxiety, people stop putting money to work, you could also suddenly -- I've seen before in the last -- you suddenly hit a wall and people stop putting money to work. So it can happen. So the high beta business, even though you think it's a steady, stable business, high beta based on sentiment. And our annuity business is about 15%. The other 85% is a sentiment business, right? So people putting money to work, are they trading? Are they doing commission. So if things continue and the animal spirits stay unleashed like they are right now, we could do a lot. On the other hand, if there's a market correction, there's a selloff of 20%, the big 7, we could also get. So it's sort of tied to be in between.

We'll try to get more of the annuity business. So you have hopefully less volatility. That's a conversation. It's a long-term structural conversation you have with these families -- put some into the strategic asset allocation and you keep some for the tactical debt, right, your structured products and what have you. So it's really a balance between having that slow, steady recurring income, which we're having those conversations and it's gradually moving and then that tactical trade in the market as volatilities go up or go down trades as well.

Jayden, Macquarie.

Yes. So just a couple of follow-up questions. Firstly, more mechanical, just on the NIM, MAS eased on the slide, which should be positive for SORA. So just wondering if that's structured into your guidance? And any thoughts around the impact?

And the second thing is more strategic. I think Su Shan, you said no comment to Malaysia earlier. But just wondering what would having an onshore bank bring you? What would it allow you to offer your clients versus what you could do in the default state as an offshore bank? Like how much additional upside could there be to having that versus the status quo?

And secondly, how would that fit with the capital management? Because I think you very clearly sort of enumerated that the $8 billion has been sort of thought about. So any thoughts around allocation towards that sort of thing versus just returning to shareholders?

So I think we've assumed that 65% pass-through from Fed into Sing dollar. And we haven't calibrated that for MAS policy because it goes up and down sometimes. Sometimes pass-through goes through higher, sometimes it's slower, but we generally tend to assume through cycle, we'll get 65% pass-through. That's what we calibrated into our guidance on that. If it turns out that SORA is higher than that, then there could be some upside. But you've got to start assuming that the 1% cut 65% flows through into SORA. And then if you have a couple of percentage points cuts later that it will also 65%...

Yes. But you'll be in this kind of nice environment with the Feds on hold, and obviously, the Sing dollar rate should be rising because the cuts you're assuming will be very late in the year from there?

Sing dollar rates is also a function of a lot of other things. And so I've tried to model it, it's not easy. And so I just figured that if you look through cycle and the noise, you get about 65%. And you're right, you could be at a point in time where rates could move up. But you take HIBOR, and then -- so you assume HIBOR should be typically 80, 90 basis points of the U.S. Fed -- so this time Fed fund rate. You look at the last few months, year-end, the HIBOR went up -- climbed massively, then they collapsed massively. So the swings are quite volatile and then the Malaysia thing.

Right from my -- beginning of my tenure, I've sort of talked about 3.5 countries that interest me -- China, India, Indonesia and then half is Malaysia. Malaysia because it's not big enough to matter a few months some weeks. But because they are contributing to Singapore and what we can do record this thing, it's always been interesting. Because of the G2G environment, we've never been able to get a look into the country. And -- but we've always had to just to be able to go in. With the Johor special economic zone, it actually makes it even more interesting. I do think there's a real opportunity for companies to leverage Johor for the supply chains. And we're seeing that from our clients. We're seeing our data center clients, our tech clients, even Singapore-based clients are actually say, okay, could we use Johor for something or other.

Now what we can't do today is renminbi lending -- ringgit lending, right? So we can do the dollar lending and the dollar lending, the nature of the business is we do the top clients. So we can do the [ YPS ] and those articles of the world, they do a lot of dollar financing. But we can't participate in local currency deposit taking or lending. And that's something that you would have an upside where you could actually do that. And if there is a lot more local currency activity on the back of Johor, you could participate in that. Both from capital and P&L in the short term, it's not that material, right? I mean it doesn't take a large amount of capital and it doesn't -- actually, if you look at the P&L prediction, [indiscernible] cut in half -- lucky to add another $70 million, $80 million, $100 million to your P&L if you did something.

So interesting, not imperative is how I like to define it if you could get something that. Now in terms of capital allocation, we said we have $8 billion surplus. We've already factored in a couple of billion that we're keeping aside to do M&A transactions. We don't do the big M&A. If you have to do big M&A, then that's different. But most of our M&As are in the hundreds of millions. We have enough firepower to do that outside of [indiscernible]

Harsh?

JPMorgan.

Two, 3 questions. First, Piyush, thanks again, 15 years phenomenal earnings and all the best for your next one. One on the PV profitability, you have had growing your own timber all of that low cost. But at some point in time, now you have become so big in kind of AUM, other people will put your people. So at some point in time, that cost advantage probably goes away, right? So how do you think about...

Turnover -- employee turnover was for last year in [indiscernible] So there is.

Again, do you have to pay up or I just trying to understand is the cost income ratio? Is it bottomed? Is it stabilized? Like how do we think about that? Because top line because this is one part which is growing so well and continues to grow.

I'm very confident that we can hold the 50% cost income. That's what -- and by the way, 50%, we are across all 3 segments. The PB segment, the private client segment and the affluent segment, all are 50%. The nature of the cost. In the PB segment, we pay up obviously more for the big bankers [indiscernible] In the bottom end, we don't have to pay so much for the bankers, but the return on AUM is better on the one hand. And we spend more on digital, on technology and branches. But when you balance it out, you have 50% on all 3 segments. We've been able to retain that now through the last whatever, a decade. We'll continue to do that.

And I do think that apart from the continuum that we have, the continuum not only helps us on the client side, it helps us on the RM side. So we do groom a large part of our people. We groom people. The second thing is we are not -- we don't pay over the top, and we make no secrets of that. Even when we go, we don't -- we're not hiring people over the top. But when you ask, why do you prefer staying on with -- you could make more money if you went to join [indiscernible] I think our platform makes it easier for them to function. So they change it off in their mind. They might get a higher commission rate. But at DBS, it's easier to function. The franchise comes together. They can get the investment bank to participate in the deal. They can get the consumer bank to do their credit card and the mortgage that they need when they do the stuff. We can put leverage. We're not capital constrained. So they, in their own mind say, you know what, I might get a higher rate somewhere else, but I can do 30% more when I'm on the DBS platform. So net-net, I probably make more money with DBS than I'm [indiscernible]

Longer term. The key is to create stickiness in the relationship, right? Institutionalize the client, create long-term stickiness, right, be it whether you're there in the corporate bank, so you've got funding in the corporate bank and you see the cash flows, the dividend flows, then you go in, in the private bank or even a priority bank. You know the cash flows, you know how to make it sticky. You know the fund transfer, you know the next generation, you know what's needed, even in insurance, life insurance, whatever. So once you create these sticky products that are very long term, you institutionalize the client. And if the RM is a good RM and we've got good advisers around it, good structures around it. It's just nice steady annuity income.

Over the next 3 years, let's say, yes, the beta side aside, we should assume flattish cost-income ratio at 50-odd percent for overall.

Our wealth business, it's an ROE of 60% business. And it's an unbelievable business. And you look at the trajectory, the massive growth in wealth in the region. So I think you'll get double-digit growth just from only market share. And for us, we've got this thing to -- last year, we had 100 RMs. And so when you talk about -- we hadn't talked about that thing. We talked about what could happen in wealth, RMs are hit the peak production in year 3. So year 1, they're still settling in, then they start talking to the clients saying, I want to move you -- year 2, you get a substantial risk. So first year, RM will make less than $1 million. Second, you get to closer to $1 million -- by the third year, you start contributing the $3.5 million, $4 million an RM can make. So we did a big scale up last year. We consolidate. So we could do more. So I think double-digit growth you get in market and then you can outperform that if you're doing better than the market.

And then you add generative AI and some AI modeling to the mix, whether it's [indiscernible] you get more profit that the RM or the investor can know -- investment council can now manage more clients because they've got tools to help them to scale.

Yes, not general stuff that we had.

Right.

Okay. Second bit on asset quality. Could you quantify how much of Hong Kong export you have sold, offloaded and which are...

I mean not that easy -- in this market, everybody is in the same boat -- people are lining up. And then to sell, you've got to drop pricing. And most of the developers are not that willing to drop price unless the back us to the wall. So the ones that we've been able to do is because they've hit the back to the wall situation and then you push and work with them. Proactively, a few people are willing to sell everybody is holding out. I think you'll see it change this year because rates went up. I think most people are holding out and rates will come down, then that gives them an extended period of life. But I think you'll start seeing more sales and more this thing happening this year.

And the final one is on the $0.15. You say it's a capital return dividend. But if I think about $3 per year, that's after buyback of 2.8 billion shares. That's $8.5 billion, 4%, 5% loan growth consumes about another 2. You are still retaining capital even after paying $0.75. So how do I square that capital return dividend?

Because you're a greedy, Laura, I can say.

$3 billion share buyback last quarter. $5 billion more we are going to give back this year. You should be happy $8 billion of capital giving us [indiscernible] why can't you do more.

I'm absolutely happy. What I'm trying to understand is that after this, you are not using $11 billion and change, you're using sub $11 billion. using your capital consumption as a less capital...

Yes, nil profit. [indiscernible] Profit -- this $0.06 step up, starts heading to close to 70%, 65%-70%. So you take 30 -- 1/3 of the $11 billion-ish right? So you have about $3 billion of net capital accretion every year after the payout of this thing. The $8 billion -- so when you go back to say, do I have some cushion for -- I can do another M&A, I can support my loan growth goes more than 3%, 4%, if I get -- I have some cushion for that. And we'll see at the end of 3 years, it turns out that we've got more capital be accreted or the capital requirements drop, then take another look.

Absolutely. So what I'm trying to get to is the $3 billion buyback that you have started, what is the pace, we should expect? Is it $3 billion...

Because in October -- in November, December, we had to buy back some employees shares, right? So we bought 4 million, 5 million shares but also the employees didn't cancel. Then we run into this blackout window. So start now. After this, we can start the buyback? We'll do it consistently.

So what I'm getting to is that is there a possibility? So basically, it's more about the pace of buyback. Is it more $1 billion per year? Or is it more closer to $2 billion to $3 billion per year?

We calibrate it against our model. So if prices are high, we do less. Prices for whatever reason...

You find high prices.

So we do standard deviations and models that run so that we do not buy at the peak $40 billion, right?

Because the question ultimately is that, yes, you are doing a lot and thanks for that. This is phenomenal. Very, very few banks globally have done what you have done. So awesome. But if you are still accreting capital, depending on what is the pace of buyback, I mean it's $500 million to $1 billion, then it's one thing; if it is $2 billion to $3 billion, that's completely different. So that's -- so that is something which will be determined at next quarter after...

Melissa, Goldman.

Thank you, Piyush, for all that you have done.

Thank you.

Not only as an analyst, but also as a citizen of Singapore. Thank you so much for all that you have done. Thank you so much.

You wanted to hold shares, right? You guys are trying to hold shares.

[indiscernible] still part of the pension somewhere there.

In the last couple of months, ministers have come and told me that they're going to retire because of DBS stuff.

I just had a few follow-up questions. Firstly, on the capital. So in terms of the $0.24 step-up, so are we still going to do that until it hit 70%. So is that...

No, I didn't give a 70% guidance. I'd say it starts getting up. Because you remember when we said -- when we started doing that, we said we can afford to do this in the medium term, and we've done a couple of years. So I do think that we have the capacity to keep increasing $0.06 for the next couple of years, but then I'll leave it to the team to figure how much more they can do beyond that.

Okay. And then we still have the lockup right with MAS in terms of [indiscernible] So does that give you a bit more firepower to consider more capital returns? Or is that -- for inorganic growth? What is that used for? Then maybe moving on to ROEs, 15% to 17% was your long-term targets. Now it's high for longer and 18% ROE and with you paying out that's change are we going to the 17% or maybe push up and a bit higher or...

We look at.

Where we could be. And then last just housekeeping on the NIM. What was the exit NIM? And the SORA pass-through was quite high versus the 65%. So has it been done? What was the hedging policy on the Sing dollar book? So will we feel it in the first quarter? Did I get it right? You said NIMs will be expected to be down.

I think Su Shan give 2.9 -- 2.10.

Yes. And just sneaking in one last question. You mentioned management changes that will happen. Just checking in, [indiscernible] still be here as she promised to continue on...

We're locking her up. We could lock up here, so we'll lock up that we [indiscernible] On the ROE question, I think you have to be realistic that the 18%, you have to factor in the tax, right, effective this year, that's $400 million. That is going to be the big driver of how we sort of just calibrated a bit lower. You can factor that data.

I said the only thing, right.

Just the tax and then the long-term sustainable ROE of 15% to 17%, are we now very comfortably at the higher end and maybe push a little bit as you carry out.

It depends on the continued growth of wealth management. So there you have the sort of the market swings. But as I said, right, the key is you get your constant net new money, you get your good RMs to stay, you just snowball that. So -- and as I said, it's across the segments, it's not just PB, it's also the middle, it's also the lower end. So our view is get the high ROE business and get that churning well and you get an increasing sticky base. Come what may, whether it's -- that will have -- you get the icing from a nice market. When the markets are not good, you hopefully have it -- you have some cash CASA. And then you also have discretionary, we're trying to move some more into sort of more recurring fee, then you build a buffer for that for well, right? So that's higher ROE business.

The 15% to 17% is based on assumption of a long-term neutral rate of about 3%. So if rates stay north of 3%, that tends to lift it closer to the 17%; if rates head to 3%, then gets to [indiscernible] The single biggest variable, what do you model the interest rate outlook -- and when we get 15% to 17%, the assumption that rates will go back to 3% normalized rate. If it doesn't, then inflation is high and sticky, rates stay at 4%, there's upside. So it will be closer to the 17% and 15%.

Then the 3 other questions.

The lockup.

So we've got a few other things in our pocket. The MAS capital is about $1.5 billion, which we haven't factored into our -- at some stage, they will release us from it. So that would be also an additional [indiscernible].

Then the NIM, the exit NIM.

I take the NIM is not good. There's also still some way. The rates I carefully said, our Jan NIM is closer to 12%. I think that's what your outlook should be your starting position for the year [indiscernible] up and down last year, even they saw some [indiscernible]

So the hedging is both on the U.S. book and...

Hedging on.

Yong Hong, Citi.

Just following up on that question. I think the 15% to 17% ROE target that you gave up 2 years ago, does that include whatever capital that you have today just factoring what you have done on the capital return of $1.7 billion this year, there's already 50 basis point lift to your ROE. Just curious if whatever you've done...

Remember when we did the Investor Day, we said that we're going to achieve this on the back of what Piyush mentioned, rates of at least 3%, and we showed you that we will have to do capital returns. Otherwise, it will continue to be a drag on ROE. So we have factored that.

Maybe just some clarity on your net interest margins in this quarter was helped by easing treasury markets book. Is this negative part and positive because I think...

In the past, treasury always used to make money on the interest income. It's only in the last 2 years, they've been funding higher than and then they're giving it up on the swap. But if you look at the negative drag from treasury by the fourth quarter, it has reduced a lot. And if you look at this thing, it's coming down quite. So it's not impossible that [indiscernible].

A large part of that is actually funding equity structures, right? So if you buy equity, you don't get returns, but you have a cost of funding. So the equity product that you sell to your PB customers, et cetera, they all appear under the other income line. So you only have the net interest expense. That's always a trend.

Finally, I think you guided about $400 million in your bps. I think because obviously, Singapore book is moving up. Just want to -- just curious what is your tax rate that you have to calculate that $400 million impact from your...

This year, this is about 12.5%. So you take the delta, 2.5% you have to pay that $400 million.

Group basis, you are...

You look at Singapore...

Other places, we are over 15%. It's only the Singapore land group this thing that we are under 15% on top of.

So Singapore -- you have moved 15% so whatever concessionary tax that will be gone.

It's all gone. It's all gone [indiscernible] sold properties are sold because they all come under the new regime where you actually have to get tax even though under the old regime, capital gains had shrunk.

There are no questions online. So last question from...

The duration, I think you said that you prefer to extend because the -- since you're looking at rate cuts, I was wondering whether it still makes sense to extend given that you are...

We got this opportunity. So the rates move around. So if we get an opportunity, we will. And then there are some asset classes where you can extend and you also get some credit pickup. So if you went and bought Ginnie Mae today in the dollar book, you can still get a pickup. So it's not that we won't do anything, but it won't be a systematic program that we've had so far. We look at the opportunities to extend where it makes sense.

Okay. And on OpEx, I think your OpEx on the full year was a bit missed versus higher than consensus estimate. So I was just wondering like what growth amount you are budgeting for this year? And then like what programs or what investments you are looking at for this year?

Yes, budging mid-single.

And this is higher only because last year, I target cost-income ratio. So cost income ratio is 39.9%. And so we had the opportunity to take in some more expenses like paying the staff special bonus and doing some fixed asset impairment in the sense. You give Su Shan a clean cheat to work from.

Just one last question I have on Malaysia. Just wondering like what is the -- if you're looking at it, like which would be the best format for you to go in? Like could you not expand like organically? Or do you definitely take a minority?

We're not -- there's nothing which is cast in stone, right? As a general rule, going in and taking a new license is very hard. If you want to start de novo in a country and be the bank in the country where we are -- we tried that you would do that, but then you'd be very, very focused. They asked us as part of the Johor economic zone, could you do something only in Johor, we could give you this thing. So it depends on what the regulations are and what they ship. they tell us, okay, we'll give you a license only for Johor to do something, we will still look at that.

Last follow-up from Harsh.

This is on the Temasek stake. Let's say, if we do buyback and it starts sitting at close to 30%. Technically, what are the various options available -- that is the hard number, that's 30 and that's when you stop [indiscernible] Technically, what are the various options?

Right now, we announced $3 billion. We still have headroom of another $3 billion. We could do without hitting the 30% on top of this first 3. So we have some cushion. Second, technical option is that Temasek can go apply for a whitewash, so to the SEC and the stock exchange so that they're not forced to do a general offer at 30%. I think they would be very careful about going and looking for special deals. But technically, you could do that. The third is, obviously, they can keep trimming down their stake and creating more headroom.

And the fact is that when the stock price is at 45, they're also somewhat tempted to create -- monetize and create liquidity, right? So all of these depends on what their outlook is and what their portfolio is and do they need more.

So on your calculations, this $3 billion, another $3 billion, and that is still okay without hitting the 30%.

Yes. Without Temasek taking action except what they...

Actually we could another...

We can do a perpetual part of buyback.

Sorry, what is that?

Meaning if they trim at the edge, you can always do more buybacks.

All right. Thank you all. Thank you again to the media.