DBS Group CEO Tan Su Shan said China’s fast push into deep tech and AI is producing “pockets of exciting growth” even as the property sector remains sluggish and bank lending stays cautious. The bank is expanding on-shore wealth and corporate services in China to capture tech and industrial flows rather than property-related lending. Tan framed the strategy as deliberate diversification to reduce exposure to credit-heavy segments while leaning into areas aligned with Beijing’s industrial priorities. The comments come as many foreign banks scale back China operations, making DBS’s selective expansion notable for regional banking watchers.

Underpinning DBS’s pivot is a belief that Chinese tech ecosystems — from AI startups to industrial automation firms will generate higher-quality fee and advisory business than cyclical property finance. The bank has opened new wealth management hubs in Shanghai to serve affluent clients linked to tech and new industries. DBS executives say converting this opportunity into stable revenues requires local teams, regulatory finesse and bespoke products tailored to Chinese clients’ needs. Analysts caution execution risk remains significant given regulatory unpredictability and competition from local banks.

For investors, DBS’s stance signals a broader regional banking trend: diversify revenue streams toward fee-based and tech-linked activities to offset weak loan demand. That strategy can boost returns if China’s tech policy continues to favour commercialization and industrial adoption. But it also raises governance and reputational questions about operating inside a market with tighter oversight and geopolitical friction. DBS will be watched as a test case of whether selective exposure can outperform wholesale retreat.

The move also has implications for Singapore’s financial hub status: success would strengthen the city-state’s role as a conduit for capital and services into China’s next-generation industries. Conversely, failure or regulatory pushback could force rapid reassessment. For corporate strategists and fund managers, the key takeaway is to balance selective on-shore opportunity against policy, compliance and concentration risk.

Source: Reuters.