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DBS Optimistic of Turnaround in China Business: CEO

The CEO of Southeast Asia's biggest lender, DBS - which missed fourth quarter earnings expectations on Wednesday – told CNBC he expects a turnaround in the bank's China business in 2013.

"By December we began to see tangible signs of confidence and business momentum and the last couple of months, therefore, have been quite promising," Gupta said.

"We are seeing more business activity, we're seeing both on the trade side, but also the non-trade side and our customers are beginning to approach us more to do a bunch of different things," Piyush Gupta said in an interview to CNBC's Adam Bakhtiar.

DBS posted an 11 percent rise in core fourth-quarter net profit at $613.5 million, but missed Reuters' analyst expectations of about $654 million due to weak margins. In Greater China, the bank saw a net loss of $23 million in the fourth quarter, compared to the previous quarter's net profit of $11 million.

(Read more: DBS Fourth Quarter Net Profit Below Expectations)

Gupta said the bank's margins in China came off "quite sharply" in the second half of 2012 when China's central bank, the People's Bank of China (PBOC), liberalized interest rates. Last year, PBOC cut interest rates and the reserve requirement ratio (RRR) for banks twice.

"Our rate finance portfolio has been repricing down. So that's been the biggest source of our margin pressure," Gupta said.

However, a turnaround in China's macro data from September onward, has boded well for the bank, and Gupta is positive that the pick-up the bank has seen late in the fourth quarter will continue this year.

China's economy grew 7.9 percent in the fourth quarter from a year earlier, ending seven straight quarters of slowing growth as pro-growth government policies kicked in.

Catch the full interview on CNBC TV at 5:40 pm (HKT/SGT) on Wednesday and 8:40 am (HKT/SGT) on Thursday.

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