DBS sees rising demand for yuan settlements from Chinese exporters
SINGAPORE: DBS Group, Southeast Asia's largest lender by assets, is seeing growing interest from Chinese exporters to settle trades in renminbi (RMB), or yuan, particularly with counterparts in Latin America and the Middle East, a senior executive said.
"Right now, you see the Chinese exporters, some are beginning to ask and say, I'm going to sell in RMB, please settle in RMB," said Han Kwee Juan, speaking to Reuters in his first media interview since becoming DBS's group head of institutional banking in January.
"Is that a trend that will continue? I think that it's something that they will continue to ask for as they trade more with the rest of the world, outside of the U.S.," he said.
The shift comes as decades of unwavering faith in the U.S. dollar's dominance in global trade and capital flows faces scrutiny. Major emerging market economies are stepping up efforts to trade in local currencies, underscoring efforts to reduce reliance on the dollar in the global financial system.
However, Han said that most settlements outside of China remain "largely in dollars".
The bank's subsidiary, DBS China, has been a member of China's Cross-Border Interbank Payment System (CIPS) since 2015.
China launched CIPS in 2015 to promote the yuan's usage in international trade. It allows global banks to clear cross-border yuan transactions directly onshore, instead of through clearing banks in offshore yuan hubs.
DBS's settlement flows through the CIPS clearing system grew 30% year-on-year in 2024, Han said, though he maintained that the shift toward more yuan-denominated settlements remains gradual.
In a wide-ranging interview, Han spoke of how businesses are dealing with the uncertainty over Trump's tariffs and outlined DBS's growth strategy in the current economic environment.
"One of the things that we have been growing this year is we have been growing our capability for FI clearing," he said.
"We have been quite purposeful in terms of investment that we have made in the clearing capabilities."
The bank is also looking to capitalise on its institutional banking business to drive its return on equity, which currently stands at 17%, Han said. Last week, DBS posted a quarterly profit that beat estimates, sending its shares to a record high.
"By being able to work with the customers holistically, not just with lending, but also with advisory and as well as cash management, enables us to not only just look at lending or (net interest income) as a source of revenue, but really growing our fee-based revenues," Han said. - Reuters
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