DBS finance chief Sok Hui Chng is one of the driving forces behind South-East Asia’s biggest lender.
Sok Hui Chng has impeccable timing. The 50-something career banker stepped into her role as finance chief at Singapore-based bank DBS in 2008, smack in the middle of a global financial system meltdown, which coincided with an unprecedented boom in Asia. It was an exceptional moment in history.
The global financial crisis was relatively kind to DBS – thanks in part to Chng’s prescience – and subsequently the bank has been busy growing its Asian footprint. The bank now operates in 16 markets and is on track to be one of the few pan-Asian financial institutions able to ride the growing tide of capital that is flowing into Asia.
Chng is recognised as a CFO who knows her stuff. She has energy, drive and has forged strong partnerships with the frontline businesses. She also has a reputation for being friendly and approachable, and is a big believer in using soft measures alongside the traditional metrics of revenues and earnings.
"Connecting with people, building capabilities, seeing what is not there, helping my younger colleagues find opportunities across the organisation and encouraging their commitment – these are soft factors, and I think they’re really important,” she says.
Ask Chng about her career highlight and she doesn’t hesitate: “The progressive realisation over the last four years that our strategic focus is giving DBS tremendous traction.”
DBS has a nimble, dynamic, less bureaucratic culture and is expected to have the strongest earnings growth over the next three years.
While DBS is seen as being more dynamic than some of its local rivals, more internationally focused and more inclined to push for high growth in certain businesses, the bank is being challenged on many fronts.
Its regionalisation strategy is not yet fully appreciated by investors, according to Bernstein’s banking analyst Kevin Kwek. And while its top management team has undoubtedly proven itself, he says some misgivings remain in the market, related to DBS’s acquisition history, for instance.
But that has been changing – DBS has an improving track record and was the clear outperformer in 2013. Its returns (at more than 19 per cent for 2013) were nearly twice that of its nearest competitor, UOB (around 11 per cent).
For Kwek, DBS is the bank to watch, and any negative perceptions lag behind what is real.
“What’s real,” he says, “is that DBS has a nimble, dynamic, less bureaucratic culture and is expected to have the strongest earnings growth over the next three years.”
Part of Chng’s task is to help revamp the bank’s market standing, and how the stock market values the organisation has to be a huge part of that. Revitalising the bank’s image is particularly crucial now, as DBS works to expand its reach across Asia. Chng is positioning the bank for high growth amid strong regional competition. Dealing with new capital management and liquidity regulation is just part of that.
Resourcefulness has always been second nature to Chng. She didn’t come from a wealthy family and she learned to make the most of opportunities from a very young age.
“My parents were immigrants from China. My father passed away when I was 12, and my mum had to single-handedly raise five kids. I had to make sure my grades were good enough to win scholarships; give tuition to supplement scholarship funds; and look after my younger siblings,” she recalls.
She signed on with DBS – her first and only employer – with a scholarship awarded by the bank. It meant she had to commit to DBS for the first six years following her 1983 graduation from the National University of Singapore, but that was no hardship. Her sharp mind, combined with her clear, concise style, made banking the right choice.
Unusually perhaps, she’s had no specific goals in her 30-year career and she is planning to keep it that way.
“In life, the dots connect only in hindsight,” Chng says.
“I didn’t have a grand career plan when I started in banking. It’s always been a case of doing the best job you can wherever you find yourself. Along the way, you get thrown more and larger challenges, build up teams, help shape strategy and hopefully you pick up enough wisdom doing all of that to handle the next wave of change.”
In a sense, her career has evolved along with DBS.
“I honestly can’t think of a time in the last 15 years or so when there wasn’t far more to do than we had resources, time and focus to deal with,” she says candidly.
“I was just so busy making change happen. You can’t possibly feel unfulfilled seeing such a big impact from the work that you do.”
"I don't think having a strategy just focused on wholesale banking will lead to growth opportunities. It is really the customer connectivity, the intermediation of trade and investment flow."
Sometimes the opportunities were formidable. In her time at DBS, she has held more than 10 senior roles – often establishing new functions from scratch. Along the way, Chng has ticked many varied boxes, including corporate planning, market risk management and credit risk management.
In 1995 Chng broke ground by launching a group risk management function before that function became common in the banking industry. Today risk management is highly sophisticated, not least because of the regulatory changes that came with Basel II and III.
When the time came to select a new finance chief, Chng’s understanding of the play-off between profitability and risk clearly impressed the DBS board. She has made an equally positive impression on colleagues and analysts.
Rahul Gupta, deputy group CEO of Ambit Group (and formerly the CFO of Shinsei Bank, Japan), knew Chng when he was group financial controller at DBS, and speaks of her “tremendous intellect”.
“What is most striking is the way she can toggle between granular operational detail and strategic thinking with complete ease,” he says.
“Her long experience in the bank’s transformation over the last 13 years and having been a part of the key balance sheet and treasury management is a very optimal combination for a banking CFO to have.”
Chng was aware she had a unique perspective when she was appointed CFO after six years as DBS’s managing director of risk.
Her first priority was to create a non-profit driven corporate treasury. Rather than have the corporate treasury racking up profits for the bank’s own account (through proprietary trading), she insisted that it play a stewardship role, safeguarding the bank’s balance sheet.
A non-profit model allowed her to tweak internal transfer prices to optimise the whole balance sheet, and decide what sorts of assets, costs and liabilities the bank wanted.
She has also made a big difference to the way the bank’s business performance is measured.
“You can only drive performance management throughout the organisation – and by that I mean risk-adjusted measures for businesses – if you’re in the unique role of being able to take on both risk and P&L dimensions and put in place the infrastructure for businesses, so that all our business people know their risk adjusted profitability at the customer level. We can now have very meaningful conversations about the customer rate of return.”
DBS posted a net profit of S$3.8 billion in 2012, up 11 per cent over the previous year, and connectivity with Asia is key to DBS’s future.
Says Chng: “I don’t think having a strategy that is just focused on wholesale banking will lead to growth opportunities. It is really the customer connectivity, the intermediation of trade and investment flow, that makes a difference, as customers in big markets like China, India and Indonesia create opportunities with their counterparts within our network of countries. Trade opportunities, cross-sell opportunities in treasury business or cash management – these are the areas we can leverage with our network.”
However, not everything has gone the bank’s way. Last year’s decision for DBS to walk away from its plan to buy Indonesia’s Bank Danamon for US$7.2 billion was a crushing disappointment for Chng. What would have been South-East Asia’s largest banking takeover ever was quashed in July 2013 after Indonesia curbed foreign ownership in local banks to 40 per cent.
Although Chng talks brightly about expanding the bank’s local Indonesian subsidiary to tap into the potential of Asia’s most lucrative lending market, the deal’s collapse was a game changer. DBS badly needs to gain a foothold in Indonesia and Danamon’s 3000-branch network, serving more than six million customers, fitted the bill nicely.
For DBS, buying growth is seen as a much easier option than building it. Chief executive of DBS, Piyush Gupta, was reported as saying he will need five years to replicate what Danamon would have given him immediately. While some commentators wondered if the decision to bail was short-sighted, most think the asking price for a minority stake was too high, and that DBS did the prudent thing.
What I've Learned
Have one clear vision to drive organisational change and alignment.
In 2009, DBS underwent a major transformation. We translated our vision to be “The Asian Bank of Choice for the New Asia” into reality through clearly articulated and well executed strategic priorities.
We created reinforcing mechanisms (policy, process, people, communications) and embedded them in a scorecard to drive alignment deep into the organisation.
Banks need to strategically manage the 3Ls – leverage, liquidity and local application of global rules. This requires understanding the interaction of regulations, risk appetite, markets and accounting with the fundamental economics and dynamics of each business line and customer segment.
We established corporate treasury as a strategic stewardship function in 2009, and it has delivered incredible value in navigating the new landscape of the 3Ls.
I am a big believer in job rotation and putting people in stretch assignments, having done more than 10 different roles myself.
DBS runs an international talent management program. When one of our senior managers resigned in 2012, we orchestrated a role change for six of our lead talents across geographies and functions.