* Q4 net profit rose to S$2.39 bln vs S$2.37 bln estimate

* Proposed final dividend 54 cents/share and 1-for-10 bonus issue

* Net interest margin at 2.13% in Q4 versus 2.05% a year earlier

* 2023 ROE climbed to a record high of 18% from 15% a year ago

* Wealth management AUM grew 23% to a new high of S$365 billion

SINGAPORE, Feb 7 (Reuters) - DBS Group cut CEO Piyush Gupta's pay by S$4.1 million ($3.05 million), penalizing him for last year's digital banking disruptions, even as Singapore's largest lender posted a record 2023 profit and its fourth quarter earnings beat expectations.

The pay cut marks a 30% reduction in annual variable compensation for Gupta, DBS said on Wednesday. Gupta was one of the highest paid CEOs in the city-state in 2022 when his total pay amounted to S$15.4 million.

It was also part of a 21% cut in variable pay of members of DBS' group management committee.

"The heavy-punishing move highlights the management’s commitment to minimize future disruptions," Yeap Jun Rong, IG Asia's market analyst, wrote in a note.

"The cuts may also help to offset some of the higher compliance costs, higher operational costs and costs set aside to enhance system resiliency, and limit its overall impact on their earnings."

The pay cuts come as DBS, which is also Southeast Asia's biggest bank by assets, maintained its guidance for net interest income for 2024 at around last year's levels after posting a 2% rise in fourth quarter net profit that beat expectations.

"I think that's a good element of governance," CEO Gupta told reporters in an earnings briefing. "If you can establish accountability and figure you know that people take responsibility for making fixes, that's a good place to start."

DBS shares rose nearly 3% on Wednesday, outperforming the benchmark index's 1% gain.

Commenting on the results, Gupta said return on equity (ROE) is expected to be 15% to 17% for this year and fee income growth in double-digits.

Net interest margin (NIM), a key profitability gauge, for the full year is expected to be slightly below fourth quarter NIM of 2.13%.


Singapore banks' profit growth momentum is poised to slow as central banks pivot toward rate cuts and volatile markets weigh on the wealth business.

DBS, the first Singapore lender to report this earnings season, said October-December net profit grew to S$2.39 billion ($1.78 billion) from S$2.34 billion a year earlier on the back of a 9% increase in total income.

This beat the mean estimate of S$2.37 billion from four analysts, according to LSEG data.

DBS proposed a final dividend of 54 Singapore cents per share and a 1-for-10 bonus issue.

The NIM of 2.13% during the quarter was up from 2.05% a year earlier.

Full-year annual profit jumped 26% to S$10.3 billion. ROE climbed to a record high of 18% from 15% a year ago.

In November, Singapore's central bank barred DBS from acquiring new businesses or making non-essential IT changes for a six-month period to ensure it focuses on shoring up its digital banking services.

Gupta said on Wednesday DBS is making good progress in making its technology more resilient. ($1 = 1.3430 Singapore dollars) (Reporting by Yantoultra Ngui; Additional reporting by Ankur Banerjee in Singapore; Editing by Lisa Shumaker, Sam Holmes and Muralikumar Anantharaman)