RISING private consumption and stronger trade ties in Asia have helped Singapore-based DBS Bank flourish in the regional market of its roots, according to Piyush Gupta, chief executive officer and director of the DBS Group.

DBS earned Global Finance's "Safest Bank in Asia" accolade for five consecutive years since Gupta took over as CEO in 2009. Last year, the banking group reported record net profit of S$3.8 billion (US$3 billion).

Before he joined DBS, Gupta was the CEO of Citigroup for Southeast Asia, Australia and New Zealand. He started his career with Citibank in India in 1982 and held various senior management roles across Citi's corporate and consumer banking businesses.

Gupta has a bachelor's degree in economics from St. Stephen's College of Delhi University and an MBA from the Indian Institute of Management Ahmedabad.

During a visit to Shanghai last month, he sat down with Shanghai Daily to discuss his latest strategies for expanding DBS into an Asian hub bank.

Q1

Why is Asia in the spotlight?

A: We believe by 2020, Asia's economy will be 17 percent larger than that of the United States. That's a tremendously large market. It's not only large, but it's also growing faster than any other part of the world.

There are four big trends that illustrate the Asia GDP phenomena.

One is increasing consumption. It is happening in China as the government plans to rebalance the economy to become more consumer-driven. But that's also happening in other part of Asia - India, Indonesia, Philippine, Vietnam and Thailand. For these Asian countries, there's a shift from being the factory of the world to being the marketplace of the world.

The second trend is urbanization. Again, as you can see in China, more and more people are living in cities other than in rural areas.

That has very important implications for the investment needs in Asia, including energy, transport and infrastructure. We expect almost US$8 trillion of investment in this region in this decade.

The third factor is increasing intra-Asian trade. In this decade for the first time, trade within Asia is growing much faster than trade between Asia and other parts of the world. Whether it's China or the Association of Southeast Asian Nations, the growth is very fast.

That speeds the integration in Asia for trade flows and also for capital flows, which leads to the formation of multinational companies and smaller enterprises willing to cross borders.

The last trend, of course, is technology. Lots of young people in Asia are growing up knowing only a world of social media, the mobile and the internet. That creates the opportunity for the banks to find new business models.

Q2

How does DBS plan to seize those opportunities?

A: Our strategy stems from one singular reality: Asia is coming into its own era. Against that backdrop, we look at the competitive landscape in Asia and see two basic competitors.

First are the local banks, which tend to be strong in some ways.

They have deep customer bases and are firmly rooted in local economies. They are very customer-oriented, but their weakness is limited regional connectivity. They often lack US dollar funding capability, and they have inadequate sales levels.

The other competitive force is the large western global banks, which tend to have strong product offerings but very narrow customer bases. They do not have the appetite to use balance sheets. Their capital weaknesses inhibit their lending.

As a regional bank, we can operate in the space between the two. We believe we can bring the best of both worlds to our clients. Then we want to become what we call "the Asian bank of choice for the new Asia."

We say "Asian" because we think this is where the future is in the medium term. We say "bank of choice" because we think we will have to compete to make people to choose us proactively. And we say "new Asia" because we want to be more relevant for the new generation coming up.

We came up with a very simple strategy to realize this ambition, which is to focus on being an Asia-centric commercial bank. Within our existing 15 countries, we set our focus on building presence in six important markets: Singapore, Hong Kong, Chinese mainland, Taiwan, India and Indonesia. Our principle lines of business are large corporate banking, small and medium enterprises business on a regional platform, and a regional wealth management business.

We also decided to differentiate ourself from global Western competitors by using a very Asian style of banking. That is to focus on building Asian relationships of trust, based on deep inside knowledge of Asian ways and Asian products and services.

Q3

DBS sold its first yuan-denominated bond in Singapore earlier this month. What's the significance for DBS in this issuance?

A: We are a big believer in the internationalization of the yuan and the offshore yuan market.

We have a strong view that in the next five years the Chinese yuan will become a global currency - a reasonable alternative to other global currencies today.

DBS took a leadership position in the offshore yuan market in Hong Kong. We have almost 10 percent market share across all the yuan products in Hong Kong. We have a complete suite from yuan deposits, loans, trade financing, structured product, foreign exchange, and Dim Sum bonds.

We think it's important for us to continue to demonstrate the leadership in the Singapore market as well. We've been active in building the base of yuan deposits and trade finance in Singapore.

But we also wanted to issue yuan bonds to underline our leadership in yuan capital markets.

We believe that we will serve as a good example for other issuers who will use our services to tap offshore yuan capital markets.

Q4

Your net income from China, excluding Hong Kong, was less than half of the net income in Hong Kong last year. Do you see a robust growth on the mainland in the next few years?

A: In Hong Kong, we acquired Dao Heng Bank about 13 years ago, which made us the fifth-largest bank in Hong Kong.

In the mainland, that kind of organic growth strategy is not viable because of regulations. So the strategy has to be organic growth by building the business systematically over time.

The good news is China's growth rates are so strong. So if you are confident the business will grow and you project out for the next five to 10 years, you'll actually build a large and meaningful business.

We are here for the long term, so we are not looking for short-term results. As long as we are executing our strategies well, we will see the results over time.

Our mainland business has been growing by 25 percent. Our Hong Kong and Singapore business grows about 10 percent. So we can see the trajectory of the mainland business is much stronger.

One of our strengths is our Asian connectivity. We are quite comfortable with the business we built from our Chinese customers, whether it is on the mainland or offshore.

If we bank Chinese customers in the offshore markets, that is part of the China franchise, even it doesn't show up in our mainland numbers.

If you look at the turnaround of our Hong Kong unit in the first quarter this year, it gave us a return that is higher than the cost of capital for the first time since our acquisition.

That turnaround was achieved principally because of our abilities to bank Chinese customers in Hong Kong.