(Bloomberg) -- DBS Group Holdings Ltd. expects to achieve earnings of more than S$10 billion ($7.4 billion) in the medium term, driven by a strong balance sheet and an ongoing digital transformation.

Return-on-equity is expected to be in a range of 15% to 17%, Southeast Asia’s biggest lender said in an investor day presentation on Monday, referring to a time frame of three to five years. Its profit goal would be more than a 20% increase from last year’s performance, and close to that of Japan’s largest lender Mitsubishi UFJ Financial Group Inc. 

To achieve its goals, the Singapore lender is seeking faster growth in capital-light, high return businesses like wealth management, global transaction services and treasury market sales. Led by Chief Executive Officer Piyush Gupta, DBS also sees room for higher distributions to shareholders through dividends or share buybacks.

The stock was little changed Monday, in line with the Bloomberg Asia-Pacific Banks Index. DBS shares have lost more than 7% this year, compared with a nearly 4% gain in the index. 

Digital Journey

The lender has poured billions of dollars in investments in technology, including digitalization of banking services that has lowered costs for client acquisitions and boosted efficiency. Yearly net income has risen at a compounded average rate of 9% since 2015, after Gupta embarked on transforming the bank via technology that includes cloud and data.

A series of digital banking disruptions over the past few years, which saw customers lose access to banking services via its mobile apps and website, have however hit the bank’s reputation.

The city-state’s financial regulator called the glitches this year “unacceptable” and boosted the bank’s capital requirements for the second time in over a year, with DBS’s required capital rising by S$1.6 billion ($1.2 billion) in total.

The two incidents this year happened in a matter of weeks, though the most recent one early this month was resolved within an hour. In 2021, the bank suffered one of its worst digital disruptions in the past decade.

It takes time to build technology capabilities, DBS said in its presentation, highlighting firms from Alphabet Inc.’s Google to Amazon.com Inc., which have been undertaking this for about 20 years. DBS’s transformation via technology, on the other hand, kickstarted nine years ago.

“Rome was not built in a day,” Jimmy Ng, who heads the bank’s technology and operations, said in the presentation titled “DBS Digital Transformation 2.0.” He compared the digital journey as turning boulders into pebbles. 

India Growth

Going forward, DBS said it sees “high potential opportunities” in its growth markets of India, Indonesia, and Taiwan. The bank is targeting areas like transaction banking, wealth management, lending to small businesses as well as unsecured retail lending in these places. 

In India, where DBS bought Lakshmi Vilas Bank Ltd. in 2020, the firm aims to be among the top 10 private sector banks alongside IDBI Bank Ltd. and Kotak Mahindra Bank Ltd. Its net profit in the country is projected to grow three times by 2026 to around S$375 million. 

--With assistance from Ishika Mookerjee.

(Adds details from presentation throughout, stock move in fourth paragraph.)

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