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DBS Group (OTC:) Holdings Ltd. confirmed on Friday that its PayLah! mobile wallet service had returned to normal operations following an interruption earlier in the day. This incident came on the heels of a more substantial outage on October 14, which was caused by a failure at a data center. The disruption affected customers’ ability to use credit cards or conduct online transactions, not only for DBS but also for a local unit of Citigroup Inc (NYSE:).
The Monetary Authority of Singapore (MAS) has ordered an investigation into both DBS Bank and Citibank Singapore, branches of DBS Group Holdings, following these outages. MAS emphasized the banks’ duty to maintain backup facilities and restore critical systems within four hours of an outage, according to a CNA report. This directive indicates potential supervisory actions in the future.
On October 14, a technical issue at Equinix (NASDAQ:)’s data center led to services being down from around 15:00 Singapore time until Sunday morning. Despite activating their backup data centers when the primary ones malfunctioned, the banks failed to comply with MAS’s standard of not exceeding four hours of unscheduled downtime within a year.
The disruptions led to a greater decline in DBS shares (0.9%) compared to the Bloomberg Asia Pacific Banks Index (0.6%). Sarah Jane Mahmud from Bloomberg Intelligence warned of potential impacts on DBS’s ESG performance and criticized the bank for not bolstering systems despite three prior outages incurring SGD 1.6 billion extra-regulatory capital charges.
According to InvestingPro data, DBS Group Holdings has a healthy market cap of $62.16 billion and a P/E ratio of 8.78, indicating a fairly valued stock. The company’s revenue growth has been accelerating, with a quarterly growth of 37.07% as of Q2 2023. Despite the recent outages, it’s worth noting that the company has maintained dividend payments for 24 consecutive years, offering a dividend yield of 4.93% as of 2023. This is a testament to the company’s financial stability and commitment to its shareholders.
InvestingPro Tips suggest that while DBS Group Holdings is trading at a low P/E ratio relative to near-term earnings growth, it suffers from weak gross profit margins. The company’s stock generally trades with low price volatility, providing a relatively stable investment. For more insightful tips, consider subscribing to InvestingPro’s premium services. They offer additional tips and real-time metrics for various companies, including DBS Group Holdings. To learn more, visit InvestingPro Pricing.
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