Okay. Hello, everybody. Welcome to the DBS second quarter briefing for analysts and the buy side. This is Michael. I've got Piyush Gupta and the rest of the team with me here. You've heard the presentation this just a while ago, so we can go straight into Q&A. Operator, we can open the lines for questions.
Thank you. We will now begin the question and answer session. For audio participants, if you would like to queue for a question, you may press star followed by one on your telephone keypad now. Our first question, we have Aakash from UBS. Please go ahead.
Hi. Thank you so much for the presentation. I'm entering my questions. I have three questions. The first one is on the loans and the moratorium that you've disclosed in the presentation. It only amounts to, like, 5% or so of the total loans. I just wanna check if that's all, or are there any other loans that are on the moratorium as well? Because this number actually looks quite small to compare to UOB, which just shows around 16% of the loan book on the moratorium. Secondly, whatever this number is, do you think it has plateaued, or how do you see it changing through the rest of the year?
The third related question is, in Q1 you shared some guidance on the stressed loans that you have on the total book, which was around, I think, close to SGD 50 billion, close to 13% of your total loans. So do you have any updates on that number? Has that changed, you know, since Q1? So this is the first category of questions on moratorium and stressed loans. The second one is on the branch strategy. So you did mention earlier that, you know, you've seen digitization in the last 3 months, which would have happened in the next three to five years. Has this also led to some change in your thinking around the branch strategy? Do you see the need for less branches now compared to, you know, in Q1? Thirdly, on the dividend, what's your thinking for dividend for next year?
Okay. The first question was on the moratorium. Now, this is the entire moratorium that we have. It's there is nothing else on moratorium other than that, about SGD 12.5 billion, which is the SME book, and SGD 5.5 billion, which is the consumer book. 17 billion, which is what it is. I think one of the things we've got to reflect is that our large corporate book is much bigger. Our percentage on the SME book is smaller than some of our competitors. Therefore, if you start looking at the percentage, you'll find that our loans under moratorium are somewhat smaller just because our large corporate book is larger, I think. The second question you had was branch strategy. No. SGD 30 billion. The stressed portfolio.
Rakesh, as I said, we've got nothing to tell us right now that there's incremental stress in the portfolio. We're not seeing any increase in delinquencies in the SME book. We're not seeing any increase in delinquencies or performance issues in the large corporate book, which is why it's not showing up in any NPLs. Like I said, even the delinquencies are not going up. We're not seeing any incremental signs of stress at this point in time other than the consumer book. The consumer book where I pointed out before is we saw increase in delinquencies in the unsecured consumer space, not mortgages. Mortgages has been flat. It's only the unsecured consumer book that we saw some pickup in stress. Your second question on branch strategy.
You know, our branch strategy actually has been consistent now for the last three to four years, which is we are trying to automate and digitize our branches quite rapidly, by using things like virtual teller machines and branch teller machines, you know, digital ATMs. We're trying to effectively shrink branch footprint and automate the branch as much as possible. We will continue to do that. Over the next few years, it could wind up that we actually need less physical outlet in Singapore. Though, as you know, we don't think we need less physical outlets in other countries. In places like India, we're actually increasing our outlet because they're too tiny already. In Singapore, yeah, it's possible that we could consider that, but the bulk of the shift is what we're doing, which is converting from manned branches to digital branches.
Your third question was on dividend. You know, we've been guided by the central bank to hold dividends at the 60% level up to the first quarter of next year. That's a given. Beyond that, it depends. If our outlook is correct in terms of what we think happening, then we do think we have the capacity to increase dividend. In fact, as I said originally in the first quarter, that if it weren't for being guided by the regulators, we would have been able to maintain a much higher level of dividend. As long now. Again, tail risk can happen, so I mean, it is obviously possible that things get much worse than we anticipate right now. Of course, we would revisit our dividends thinking at that time.
If things go according to what we're seeing right now, we do have the capacity to start raising dividends after these, the financial year is over.
Got it. Thank you. Just a follow-up on that, Piyush. So, the 5% and the moratorium loans that you have, do you see that number sort of having plateaued, or do you think that could go up a little bit in the rest of the year?
I think it's plateaued. I think what will continue to go up, so in the new loans we gave, these are moratorium loans, right? We've also given new loans under the 90% government guarantee program. At the end of June, about SGD 2.5 billion had been drawn down, whereas we'd approved well over four. I think you'll see another couple of billion draw down in that category, in the guaranteed loans category. In fact, we saw another big draw down in July. That, if you remember, is 90% government guarantee. The risk we take is only 10% on those loans. On the moratorium loans, they've already leveled off. We saw a big increase in the moratorium loans in the early part of the quarter, and by June they had leveled off.
In July, we are hardly seeing any more pick up.
Okay. Thank you very much for that.
Thank you. Our next question, we have Robert from Citi. Over to you.
Hi. Thanks very much for the call. Just a couple of questions, I think. Number one, could you just give more color? I think you mentioned that on the net interest income, because of the interest rate drop, you're in the second quarter, you were down SGD 80 million per month. Going forward, you're probably gonna be down SGD 100 million a month. What does that mean in terms of what your exit NIM was at the end of June and where you think you will exit at the end of the year? I know the 1.6% guidance is obviously an average of the whole year, but we're trying to work out where, you know, the new normal NIM would be. That's the first question.
The second one is, you obviously just said to Aakash that, you know, the loans on the moratorium have plateaued. I just wonder what you're looking at in your assumptions, for a peak NPL ratio, and indeed, whether you actually may come in better than your base case. You know, so your base case is SGD 3 billion provisions. Your worst case is SGD 5 billion. You have an implied peak NPL ratio in there, but with so little under moratorium, will you actually come in better than you expect?
Robert, on the first question, our exit NIM for June was 1.58%. Right? As I took pains to point out in the media briefing that the impact of the surplus of CASA that we have is about 6 basis points. To that extent, I'm not managing to NIM. I'm managing to income and ROE. That SGD 20 billion CASA surplus costs me zero. I put it to MAS at 50 basis points, so it makes me income, and MAS assets are zero risk-weighted. It's good for ROE, it's good for income, but it depresses the NIM. If you add back the 6 basis points, which is discretionary for good business reasons, then I'd say the right number to think about, apples to apples, is about 1.64%, is where we wound up in June.
Now, as we go through the rest of the year, NIM has to come down, partly because we said before our housing loan portfolio reprices gradually. The fixed rate loans and the FHR loans, the impact of that will continue to come through over the next several quarters. Therefore, on a normal basis of 1.58%, we expect to go down to the low 1.50s% at its bottom. The way we've articulated before is that, you know, our interest rate vulnerability is about $8 million per basis point. With the rates coming, having come off roughly about 100-odd basis points, look at SOR, SIBOR, HIBOR. At $8 million, that's about $800 million in the first year.
there is some subsequent impact on that in year two and so on. That's roughly what gives you the $80 million going up to about $100 million a month.
Rates are low in June and July and it's two-tier.
Yeah. Well, we already said that. That if you look at the second quarter with rates, he was saying what is the exit rate. Let's compare it to June exit on this thing. Yeah. Second question on the NPL assumptions. It's very hard to say. The way we've done our estimate is both top-down and bottoms-up. For the large names, the large corporate names, we've gone name by name. That covers like 95% of our portfolio. We've gone by sector, we've gone by name. For every name, we try to figure out what is the cash flow, what is the, you know, vulnerability, et cetera. It's relatively robust. For the SME book, which is where most of the moratoriums are, for some of the names which are larger, we've done name by name.
For a lot of that, you actually just have to do portfolio estimates. That's why it's hard to predict what the actual NPL and the provisioning number on that could be. We are reassured by the fact that that book is pretty much all secured. It's around 90%-ish secured. And the security mostly is property, and the property collateral values are quite conservative. LGDs bind us south of 70%. To me, that tail event, which you've not catered for, is what happens if property prices across Asia collapse to 50% of levels, then you might wind up with unexpected risk beyond our, you know, SGD 3 billion-SGD 5 billion range. But at this point in time, we think we have sufficient, you know, collateral cover on that portfolio. At the same time, we do the modeling.
We actually have to model a whole bunch of, you know, regulations and what happens, estimate on how the moratorium loans. I prefer to think of it in, you know, SP terms and what I think the losses might get up to. I don't think we'll. It's unlikely we'll be south of three. It's possible, but it won't be because I think credit migration will require us to build up ECL. So that's, I think, a given. So it'd be hard for me to see that. When I did the, you know, probability, just thinking in my own mind, I'd say there's a roughly half and half chance at the low end of the range than the top end of the range, right? It'll be somewhere in between there.
Thank you.
Thanks.
Thank you. Our next question, we have Harsh Modi from JP Morgan. Please go ahead.
Hi, Piyush. One question on NIM. When you think about, let's say, your rate outlook for next 18-24 months, how are you thinking about positioning for that? As in trying to say, all right, let's lock in rates right now for next 3 years and then try to increase the duration if the customers can, even if it means 20 bps lower yield, let's just lock it in. Is that the view? Or are you trying to kind of push back that repricing to the max? That's one. Second, the 160 bps of NIM guidance, does it include some sort of reversal of accrued interest in second half of the year? Thanks.
Well, you know, I think the problem is the yield curve is so flat right now, and the rates are so low that pushing duration is not very helpful at this point in time. I mean, you don't get a lot of pickup, and you locked yourself in. Though, to be fair, we are doing that in the mortgage book because the floating rate in the market is so low, we are doing five-year mortgages today at 1.50%. In fact, 80% of our new mortgage bookings are all coming in the five-year category at 1.50%. That's less to do with the view on rates, it's to do with the fact that the floating rate at the short end is just uncompetitively priced.
For anything else to build duration at these levels is not very sensible. Frankly, if you did what we had done, as if you remember, I've been saying for some time that we've been building, putting on duration in the last 2-3 years with a view that rates might collapse. That's been helping us a lot. We've actually got this $35 billion-$40 billion portfolio we built up in our corporate management overlays because of that. That's helpful. That was built at a time when you could get duration pickup and get yield pickup, right? It's much harder to do that today. What we are doing is tactical, that if the rates turn up, the yield curve pops up, and we think there's an opportunity to build some duration, we do that.
We spend a lot of time actively managing our balance sheet. Through this quarter, as you can see, for example, in the liability side, because we got some close to SGD 40 billion of CASA, we had to let SGD 30-35 billion of fixed deposits run off, and we've been very nimble at being able to do that. Similarly, on the asset side, when rates move up and down, when we find the opportunities either through cross-currency arbitrage or just in the cash market, we go and selectively try to add positions and duration, but it's not easy to find those opportunities. Your second question on the 160. No, we've got no interest accrual reversal built into the 160.
Okay. The second one, Piyush, is again a bit weird question. Some of the fee income this quarter was lower activity, that's fine. The flip side of digitization is a lot of the competitors, the tech guys, have started to come up with their own distribution, product distribution and what have you. Very small, nothing to impact you right now. In terms of pricing, either on insurance or wealth management distribution, again, at mid to low end, is that something you get worried about? And how are you kind of offsetting that, if at all?
I'm not worried about it right now. If it is going to make an impact, it'll be over several years. I think the best analogy to look at is Europe. Europe's had this negative interest rate environment now for the last two to three years. Every bank in Europe has increased fee income by rethinking its fee architecture schedules. Notwithstanding Monzo is there and Starling and all these guys are there, all the high street banks in the U.K. and in Europe and in Switzerland, everybody's been able to hold and grow fee income now for the last three to five years. I don't think it's going to be material in the short term.
Got it. Thank you.
Thank you. Our next question, we have Nicholas from Credit Suisse. Over to you.
Hi, thanks for taking my question. Just a couple questions from me. Firstly, on the investment security gains, just wanted to get a sense of how much unrealized mark-to-market gains you're sitting on at the moment. How do we think about, you know, how much you're willing to recognize or realize in the near term and perhaps in 2021 as well? The other question was just in terms of the loans under moratorium, do you have a rough estimate of how much, I guess, you would expect for these to become NPLs? Even if they do, given that they're quite highly secured, how low would you expect the loss given defaults to be?
On the first question, we're currently about $1.5 billion in mark-to-market gains in the book. The question of when we realize it is, I guess, a little tricky because every time we realize it, that means it puts further pressure on our NIM going forward because these are really good yielding assets because we got into these assets at a good time. We will trade off whether you want to front end some of the gains or whether you want to let them trickle through. Part of that goes back to Piyush's question, what is the outlook on rates? If you're saying that there's a good opportunity to recognize the gains, then you do. Otherwise, it's okay. It's only a timing question. When does the value trickle in through the book?
On the moratorium loans, it's very hard to say. I've answered that question twice. I mean, it's your guess is as good as mine about, you know, how many of them will turn NPL and, you know, what's going to happen to that book. You know, the reality because of thousands of customers is very hard. It's a small ticket portfolio, very hard to go back and try and figure how many of them are going to recover and survive after COVID, how many are not going to survive after COVID. Like I said, the fact that we have, you know, security collateral and property, that's helpful. But that notwithstanding, we're just being prudential. We're just trying to build up provisions ahead of time.
The biggest provisions and general allowances that we're building up, I think will relate to that SME book, and to some extent, the unsecured consumer book. That's where I think the biggest challenges will be. Since we can't actually predict what that number is going to be, we're just being prudential ahead of time.
Okay. Thanks a lot.
Because they're all secured, you can assume that the LGD, which you were asking, is relatively low.
Thank you.
Thank you. Just a gentle reminder. Our audience, if you have any follow-up questions, you may press zero one on your telephone keypad. Our next question, we have Nick from Morgan Stanley. Please go ahead.
Hi. Thanks very much for the meeting. Just a couple of questions surrounding loans really for me. First of all, just as a matter of detail, Chng Sok Hui, I think you said in your presentation that wealth management loans fell in the second quarter. I'd just be interested as to what was the driver of that. Then just more generally, I mean, if we think, you know, over the next two or three years, I mean, you know, you obviously set out a strategy two or three years ago where we lifted returns to a reasonable level. You'd built up capital to where you needed it to be. The demand for credit or capital-intensive growth was quite low. And so the net outcome of that was obviously a pretty attractive dividend policy.
I guess as we go forward over the next two or three years, your return outlook may be lower, given where rates have gone. I'd be interested to know what your thoughts are on the capital consumption of growth going forward. Are we in an era where there is more demand for credit? You spoke about digital transformation and therefore can we get back to that sort of high payout or where will the balance be, do you think, going forward in terms of funding growth and funding payout from the capital you generate?
On the wealth management loans, actually it's quite the same. A lot of people because of the big challenges in March, people had to pay down margins. So a lot of the wealth management loans come from margin financing. You have to deal with margin calls, so people sold assets and paid off their margin loans. That's basically what accounted for the drop. Most of the drop was in that March-April period. It's actually stabilized after that. On your second question on the dividend policy. Our dividend policy is constructed around being able to support growth in the core business. Our typical, you know, RWA growth has been like 4%-5% over the last two to three years. Our capital policy can support that and continue to pay out in a reasonable way over time.
As we go forward, if it turns out that credit demand is even weaker, and so you don't need the capital, we're not going to continue to create capital, right? I said earlier that left to ourselves, it's not clear to me that we would have cut dividend at this point in time. Certainly when the central bank restrictions are over, we definitely have the capacity to pay a lot more dividend than we are being held at right now. We would take up our dividend levels. How much we would actually take them up to or what we pay out would be dependent on the market outlook at that point in time.
Is your view that the demand for capital going forward will be lower, not higher? You don't expect RWA growth to be as high, so let's say over the next five years as it has been over the last five?
It's hard to say. I think that the impact of COVID is quite unclear. Some of the big mega trends, both the trends around geopolitics and social politics and, you know, supply chain shifts and so on, are also relatively unclear. It is something to be watched, you know, what happens. The fact is that there is a huge amount of incremental debt built in the system, but most of that is sovereign and government and fiscal debt, et cetera. How much that crowds out private sector borrowing over the next two, three years is also not entirely clear. How much default and bankruptcy there is in the SME sector and how long it takes for creative, you know, reconstruction to happen is also not entirely clear in my mind.
I think over the next two to three years, I would be surprised if we see a massive credit creation. Our current projection is back end of this year, we go back to our normal, you know, rate of credit growth. Like I said, we have to watch and see exactly how things unfold by year-end.
Okay. Thanks very much. Thank you.
Thank you. Our next question, we have Melissa from Goldman Sachs. Please go ahead.
Hi there. Just two questions. Firstly, maybe just on India. Can you give us some color on how the book has developed in India, loans under moratorium? Is there anything we should be worried about? Secondly, in terms of, let's say we look at 2022, when your credit costs can come back to a more normal level, but rates are still low, what are you looking in terms of your target ROEs then? Thank you.
India's been a bright light for us, frankly, and it's only because we went through so much pain. As you know, between 2013 and 2017-2018, it took us four to five years to clean up our book. We have a very robust book at this point in time. In fact, of all our countries, India is having the most spectacular year this year. We've got no stress in the system, our portfolio is holding up well, and we are gaining market share in sensible kind of businesses. Frankly, nothing in moratorium in India. As you know, we don't have an SME book in India, and our large corporate book has really gone very upmarket. It's quite robust.
On the projection ROE, the question is really with the collapse in margins, there's going to be some headwind on ROE. The two or three drivers we have on ROE, one is going to be how can we increase non-interest income into the future? That's something that's actively occupying us. Like I said, the new world I think will create some opportunities for some new income stream, which are fee generating. We've had some success, but we're going to have to double down on that a lot. Again, it's constructive to see that some of the European banks, not all, have been able to achieve that over the last three, four years. It's something that we can take some guidance from. The second is our cost structures.
We continue to, you know, look at our cost structures. In the short term, we are being very thoughtful, and I think it's, you know, for a company like us, there's enough pain in the system for us not to be creating more pain by beginning to start retrenching people and laying people off right now. Again, there's no question that if you think over the next couple of years, we're going to have to think very sensibly about re-architecting our cost structures. We think we have the capacity to do some of that, as we go forward. Then, finally goes back to, you know, what level of credit costs we have.
I think with the NIM collapse, our 13% ROE, which back from that and gain back another thing over the next year or two, remains to be seen.
All right. Thank you.
Thank you. Our next question, we have Jayden from Macquarie. Please go ahead.
Hi. Thanks a lot for the presentation and taking my question. I just have a couple of questions. The first is on the fee side. And just looking at you mentioned during the presentation some falls in the wealth fees and then a recovery. I'm just thinking conceptually, how much of those fees are kind of recurring or sort of trailing fees, kind of like the service charges you make? How much of it would be there even if there were no sales? Would you just like to have some color on that? It seems like the AUM is holding up very nicely and you're seeing flows. And my second question is just on costs. Obviously there was good cost control. Was there any benefit from the Singapore government Jobs Support Scheme?
You know, is that a factor or is that something that's not relevant for looking at the cost side? Thanks very much.
On the wealth management, as you know, nature of wealth management in Asia is quite consistent. Most of the income comes from activity. The commission as opposed to trailer fees or the same. If I don't know the number off the top of my head, but last I reckon our trailer fee number is only about 10%-12%. It's not much higher than that. You really have to have clients doing activity to generate that income. Which is why that explains why this is a fee line which is linked to confidence. The confidence levels are high, there's a lot of activity. If confidence levels are low and people don't do anything, then that shows up in the fee income line. It's by the way, it's improving, but it's slow.
It used to be, you know, 5%, now it's north of 10. It's gone into double digits. We're still the minority of our total income streams. On the second question, which was the Jobs Support Scheme, Sok Hui, you want to take that?
Job support program for the first half, net of additional accruals because more people are not taking their leave, is only about 1% of the overall sort of impact in the first half.
Okay. Thank you very much.
Thank you. Our next question, we have Krishna Guha from Jefferies. Please go ahead.
Yeah. Hi. Thank you, Piyush and Sok Hui for the presentation and taking the call. A few questions from my side. Just on this, sustainability and ESG initiatives, maybe you can share some stats. Of the SGD 20 billion loan growth that you had for first half, how much was it linked to those initiatives? Because the illustrated peer seems to be producing quite a bit of green loans. That's the first question.
Sorry, I didn't follow the question. What initiatives are you talking about?
The ESG and sustainability initiatives. Maybe if you can share that out of the SGD 20 billion loan growth that you had in first half for corporate, for the wholesale segment, how much of it is ESG or sort of green loans? That's the first question. The second question is, you know, in your media presentation, you did say about few broad changes. I think on those, you alluded to taxes and taxation changes. I think banks have generally benefited from government support. Do you see any sort of change going forward, either on taxation for your side or on the wealth management segment, any introduction of estate taxes, et cetera, and how you are guiding your wealth management customers? That's the second question. The third question is on your Hong Kong exposure.
I think geopolitics you mentioned about one trend. Your, you know, the structural exposure that you have to Hong Kong dollar, does that need sort of a careful management? What's your thoughts on that? The last bit is on what you said about the various industries that will change. You know, on the ground, when we speak to those industry segments like hospitality, it seems banks are still lending. I mean, will that change? Do you see deals coming through? What's your take on that?
Okay, the first question on sustainability-linked loans. Does somebody have the number on what we did? We did about SGD 5 billion last year, and I'm aware of some anecdotally that we have done this year. I don't have a specific number for you. Somebody's going to have to get back on that. But the reality we're very active in the space, you know, in both green financing and sustainability-linked loans. As you know they're somewhat different. Sustainability-linked loans basically is you agree with the customer on a target set of ESG metrics that they have to hit, and if they hit those metrics, you give them a discount on rate. That really depends on the future performance of the customer.
The green loans depend principally on what the underlying asset is today. So they're different loans, but we'll get back to you on the specific number. On the tax changes, I think it's going to happen directionally. I have not heard of anybody talking about it today. But it's just my general view, frankly. It's been for some time that over the next decade we're going to see an environment like the 1970s, where the idea of taxing the rich and taxing corporations and so on, increased tax rates and greater income redistribution, has to happen just because of the social issues that we are facing. So my guidance, for example, on the wealth side to our clients has been right from January that, you know, if you haven't done it, better think estate planning.
Better think about, you know, how you manage and, you know, succession and so on. It's a worthwhile thing to do. On the rest of the corporate side, unfortunately, there's a lot more focus on tax avoidance, tax evasion, BEPS, and so on. I think companies just have to be reconciled to be seen to be doing the right thing. I don't think there are any ways out of that. On Hong Kong, you know, we've been conscious about the Hong Kong challenges for a little while. Even in the last few years, we've been reshaping our Hong Kong portfolio. You know, for example, I tell you 5 years ago, our Hong Kong portfolio on the corporate side used to be 1/3 SME. Today it's only 15% SME.
That's been deliberate because of the last 2-3 years with all of the challenges. We've been taking our portfolio more to a higher quality level. By the way, that explains why our moratorium loans et cetera are SME loans. Our SME business, we shifted a lot more into a liability and transactional business as opposed to a lending business. It's something we've been thoughtful about. You said, you know, concerned on the Hong Kong dollar itself. I'm not sure if you're alluding to the peg. I don't really think the peg is going to go. I think between Hong Kong and the Chinese, they have enough firepower to hold the peg as long as they wish. If the peg goes, I think it'll be driven not by outsider, but by the Chinese.
If at some stage they decide to switch the peg from the, you know, US dollar to a basket or the renminbi, that's when it'll actually go. That notwithstanding, we obviously do all of our stress tests on what happens if the peg goes, what's our level of exposure? How do we deal with that? You know, a large chunk of our capital, we have about $10 billion of capital in Hong Kong. About $4 billion-$5 billion of that supports a Hong Kong dollar book. That will be neutralized. If, you know, the value of Hong Kong dollar changes, the RWA and the capital will all change proportionately. So I don't think we have a issue. The rest of it we really use to hedge our US dollar books. So we're looking at ways in which we can actually modify those positions.
Finally, in terms of industries, if you look at hospitality, you said everybody's willing to lend. We're also not that concerned. I think that's to do with the underlying nature of the sponsors. You know, the hotels in the region, the Kuoks own the Shangri-La, for example, and some of the other things. I mean, you're banking on large corporate balance sheet. If in the long term, it turns out that hotel occupancies are, you know, down by 30%-40% on a long-term basis, even the sponsors are going to rethink the business and the business model. Of course, the banks are going to have to rethink their whole financing agenda. You take airlines and, you know, yeah, we were part of the Singdollar, I mean, the Singapore Airlines bailout. We've been there.
We're there principally because we're even with 95% traffic gone, the governments are standing behind the airlines. At some stage, the governments are going to rethink their strategy, and at that stage we will also have to be thoughtful about what we want to do. Oh, okay.
Okay.
Michael pulled out our total numbers already. Our total ESG-linked loans in the first half of the year were about SGD 4 billion. On top of that, we also ran bonds. We did another SGD 4.5 billion of green and social bonds. Our total sustainability-linked transactions in the first half of the year are SGD 8.5 billion. Of the SGD 20 billion loan book that you talked about, it's about SGD 4 billion.
Okay. That's very helpful. Thank you, Piyush.
Thank you. Our last question, we have Anand from Bank of America. Please go ahead.
Thank you. Hi, Piyush. Sorry. Just a couple of questions from me. Firstly, Piyush, what are your thoughts on the new transition to the new benchmark away from IBOR? How should we think about it? What time frame and what could be the net impact on them? Secondly, a follow-up question on Hong Kong. We hear a lot of news around flows from Hong Kong to Singapore in terms of wealth, et cetera. Any trends that you are seeing, any color you can give us would be good. Thank you.
Sok Hui, you want to take the SORA question?
I think like all other sort of jurisdictions, we are also preparing for the transition from SOR to SORA. The MAS has been actively sort of engaged, and I think they just came out with an announcement on how they will sort of administer and sort of be also supporting the growth of SORA, sort of quoted loans and bonds. In Singapore it's very nascent, but we have done bonds, we have done loans, we have done some of these derivatives. I think it's making an effort to have the price discovery. And I think we also have been posting, I think the SORA sort of benchmarks. We are moving at a pace that is as quick as any other jurisdictions preparing for it.
I think just a quick question. The way you should think about it is collectively as the regulator in the industry, the intent is to make sure that customers' credit spreads are stable, so they don't wind up having to increase credit spreads or reduce them. Therefore, if you think about it from a banking standpoint, it should not have material impact on our earnings. It'll just change the reference rates, if you will. The Hong Kong question, no, we haven't seen any massive outflow from Hong Kong. In fact, we saw more of it last year when the original social unrest was happening. We haven't seen too much of that in recent times.
Thank you.
All right. Thanks very much everybody for joining us. That will be the last question. We'll see you next quarter.
All right. Thanks, everybody. Thanks all.
Thank you. Ladies and gentlemen, this concludes today's conference call. You may disconnect. Thank you.