Title
Sound Strategy Backed by
Strong Capitalization
November 5, 2001
THESE PRESS MATERIALS ARE NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES, SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION, AND ANY PUBLIC OFFERING OF
SECURITIES TO BE MADE IN THE UNITED STATES WILL BE MADE BY MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM THE ISSUER AND THAT WILL CONTAIN DETAILED INFORMATION ABOUT THE COMPANY AND MANAGEMENT, AS WELL AS FINANCIAL STATEMENTS. "UNITED STATES" MEANS THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES, AND THE DISTRICT OF COLUMBIA.
2
Top-line growth offset by conservative
provisioning
Strong asset quality and provision coverage
Stabilized interest margin and interest income
Improved efficiency in expense management
Non-interest income continues to shine
3
Net interest income 513 588 14.7 472 24.6
Fees and commissions 131 174 32.7 133 30.8
Dividend & rental 12 15 25.0 28 -46.4
Other income 67 267 300.3 87 206.2
Operating income 723 1,044 44.4 720 45.0
Staff costs 178 244 36.7 177 38.1
Operating expenses 162 226 39.7 189 19.4
Total expenses 340 470 38.1 366 28.5
Operating profit 383 574 49.9 354 62.0
Loan loss provisions 26 246 NM 8 NM
Cash net profit 338 265 -21.6 308 -14.0
Goodwill 0 64 NM 0 NM
Net profit 338 201 -40.5 308 -34.8
Financial Indicators (%)
Net interest margin 2.05 1.78 0 1.71 4.1
Cost-to-income ratio 47.0 45.0 -4.3 50.8 11.4
Net interest income 513 588 14.7 472 24.6 Fees and commissions 131 174 32.7 133 30.8 Dividend & rental 12 15 25.0 28 -46.4
Other income 67 267 300.3 87 206.2
Operating income 723 1,044 44.4 720 45.0
Staff costs 178 244 36.7 177 38.1
Operating expenses 162 226 39.7 189 19.4
Total expenses 340 470 38.1 366 28.5
Operating profit 383 574 49.9 354 62.0
Loan loss provisions 26 246 NM 8 NM
Cash net profit 338 265 -21.6 308 -14.0
Goodwill 0 64 NM 0 NM
Net profit 338 201 -40.5 308 -34.8
Financial Indicators (%)
Net interest margin 2.05 1.78 0 1.71 4.1 Cost-to-income ratio 47.0 45.0 -4.3 50.8 11.4
Operating profit up 49.9% QoQ
(S$ million)
4
Dao Heng disproportionately contributed
to top line growth
(S$ million)
(S$ million) 3Q01DBS 3Q01DHB DBS exclDHB 2Q01DBS Change %
Net interest income 588 150 438 472 -7.1
Fees and commissions 174 51 123 133 -7.6
Dividend & rental 15 1 14 28 -50.0
Other income 267 22 245 87 180.6
Operating income 1,044 224 820 720 13.8
Staff costs 244 56 188 177 6.8
Operating expenses 226 50 176 189 -7.4
Total expenses 470 106 364 366 57.4
Operating profit 574 118 456 354 28.8
Loan loss provisions 246 24 222 8 NM
Cash profits 265 60 205 308 -33.4
Goodwill 64 0 64 0 NM
Net profit 201 60 141 308 -54.2
Net interest income 588 150 438 472 -7.1 Fees and commissions 174 51 123 133 -7.6 Dividend & rental 15 1 14 28 -50.0
Other income 267 22 245 87 180.6
Operating income 1,044 224 820 720 13.8
Staff costs 244 56 188 177 6.8
Operating expenses 226 50 176 189 -7.4
Total expenses 470 106 364 366 57.4
Operating profit 574 118 456 354 28.8
Loan loss provisions 246 24 222 8 NM
Cash profits 265 60 205 308 -33.4
Goodwill 64 0 64 0 NM
5
Original Estimate:
HK$540 million
Revenue :
HK$275 million
Cost:
HK$265 million
New:
HK$750 million
Revenue :
HK$450 million
Cost:
HK$300 million
6
Top-line growth offset by conservative
provisioning
Strong asset quality and provision coverage
Stabilized interest margin and interest income
Non-interest income continues to shine
Improved efficiency in expense management
7
Prudent provisioning
DBS Bank - Loans - Equities - Others
Dao Heng Bank
DBS Kwong On Bank
DBS Thai Danu Bank (DTDB) DBS China Square
Others
Specific provisions General provisions
Total DBSH Group provisions
(S$ million)
(S$ million) 9M00 9M01 Change%
25 20 4 -19 22 16 82 (44) 38
263 132 123 8 24 13 12 16 21 349 (58) 292
8
A significant portion of 3Q provision is driven
by September 11 attacks
Total 3Q provision exercise
- Loan related provision
- Mark-to-market provision for
marketable securities
(S$ million)
(S$ million)
246
146
100
Out of the S$100 million mark-to-market provision expense,
S$48 million was written-back after market recovery in
9
2,705 2,824 2,425 2,452
1,735 1,610 1,486
642 607
772
1,239
1,408 1,365
1,144
624 606
1,735
2,874
3,018 3,207
3,000
1,238
1,143
1,101
1,249 649
770 1070
1152 871
267
151 97
366
667
777 815
2.7%
11.8%
13.1% 13.0%
8.5%
12.7%
7.6%
6.2%
6.0%
NPLs fell to 6.0%
Dao Heng Bank
DBS Thai Danu Bank 5 Regional Countries Others
Singapore NBk NPL/NBk Loans (%)
(S$ million)
1,112
3,907
7,085
8,121 8,149
7,666
4,411 4,834 4,577
Dec 97
Jun 98
Dec 98
Jun 99
Dec 99
Jun 00
Dec 00
10
71% of NPLs are graded “Substandard”
Total
DTDB
Dao Heng
DKOB
Others
5RC
S'pore
1,2075
2751,486
421
83
85 589
273
10
58340
158 103
7 268
290221266 777
903 191 1,101
7
3,251 445 881 4,577
Substandard Doubtful Loss 81%
71%
82% 1% 17%
71% 10% 19%
Of which 9% have never been
11
801 1,115 1,294 1,191 1,174 1,532 1,463 948 179 1,237 3,095 2,032 2,804 2,558 1,155 946 1,180 1,049General Provisions (GP) Specific Provisions (SP)
SP+GP/NPLs (SEC) (%) SP+GP/Unsec NPLs (%)
SP+GP/NPLS (%) 980 1,894 3,147 3,852 4,286 3,978 2,286 (S$ million) 2,643 2,687
Provision coverage improved from 55% to 59%
Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00 Dec 00
Jun 01 Sep 01
146.5% 164.6% 119.6% 102.7% 110.6% 118.4% 114.8% 129.9% 54.7% 51.8% 51.9% 52.6% 47.4% 44.4% 48.5% 88.1% 59.9% 55.3% 63.0% 60.8% 61.4%
143.8%
62.9%
12
25.2%
67.3%
16.3%
38.5%
5.6%
3.8% 16.9%
59.1%
22.1%
37.7%
6.3%
5.4%
Singapore
Restructured / non-accrual
Regional countries
Restructured / non-accrual
Other countries
Restructured / non-accrual
Total
Restructured / non accrual
NPLs under SEC reporting
Non-restructured NPLs / total loans
41% of NPLs restructured
Sep 00 Jun 01
32.5%
66.0%
18.2%
41.2%
5.5%
3.4%
13
Top-line growth offset by conservative
provisioning
Strong asset quality and provision coverage
Stabilized interest margin and interest income
Improved efficiency in expense management
Non-interest income continues to shine
14
Margins stabilized at 1.78% in 3Q01
(S$ million)
Net interest income
Net interest margin (gross basis)
2.00% 2.04%
989 1,046 1,046
2.07%
1.97%
993
1H99 2H99 1H00 2H00 1H01
962
1.78%
1,176*
3Q01
1.78%
15
Top-line growth offset by conservative
provisioning
Strong asset quality and provision coverage
Stabilized interest margin and interest income
Improved efficiency in expense management
Non-interest income continues to shine
16
9M00 9M01 Change%On track with target growth rate of YoY
17% expense growth
DBSH Group (excluding DHG)
Staff costs
Occupancy expenses
Technology-related expenses
Professional and consultancy fees Others
Non Dao Heng restructuring costs Total (excluding Dao Heng)
Dao Heng Total
Cost-to-income ratio (%)
(S$ million)
(S$ million)
460 110 99 54 211 934 -934 -934
42.2
567 120 121 44 250 1,102 11 1,113 106 1,219
47.4
17
Set to achieve 17% expense growth target
by end-2001
106
364*
366 382
0 100 200 300 400 500
1Q2001 2Q2001 3Q2001
17 19
26
0 10 20 30
1H2001 3Q2001 FY2001Target 470
(S$ million) (%)
Cost containment program is producing results - Operating expenses (excluding Dao Heng)
have been declining steadily quarter-on-quarter
Year-on-year expense growth expected to meet management
target
18
88.3 87.4
85.5
86.5 87.6 89.6
14.4 17.1 86.0 0 25 50 75 100 Jan-01 Feb-01 Mar-01 Apr-01 May-01 Jun-01 Jul-01 Aug-01 Sep-01
% of txns processed ‘Straight Through
Implementation of CRM & Interactive Voice
Recognition will bring Contact Centre STP rates close to Global bench marks
IDEAL & BBS-2000 Enhancements, will drive the
Remittance Operations STP rates up to approximately 45-50%
Cheque Truncation Scheme implementation in 2Q-02
along with other initiatives will move the Clearing Operations STP rates closer to the 100% Mark
STP rates leap from 14% to 89%
5.5 25.3 40.0 16.1 0 25 50 75 100
Benchmark: Operations Council
Remittance Operations % T ra n sa c ti o n s p ro ce ss ed S tr a ig h t T h ro u g h
Bench Mark Dec 00 Mar 01 Sep 01
91.4 96.0 98.0 93.5 0 25 50 75 100 Clearing Operations
Bench Mark Dec 00 Mar 01 Sep 01 23.2 75.0 8.8 0 25 50 75 100
Benchmark: Operations Council
Assumes full service IVR capability
Contact Centre % C al ls h an d le d b y IV R
Bench Mark Dec 00 Mar 01 Sep 01
% T ra n s ac ti o n s p ro ce ss ed S tr ai g h t T h ro u g h Bench mark: Int. research
19
0.97 1.00
0.00 0.40 0.80 1.20
1.02 1.00
0.00 0.40 0.80 1.20
0.88 1.00
0.00 0.40 0.80 1.20
0.78 1.00
0.00 0.40 0.80 1.20
Clearing Operations - Inward Cheques Remittance Operations-Outward TTs
Trade Operations - Collections Remittance Operations - Cashiers Orders
Budget YTD (Avg) Budget
(Avg)
YTD (Avg)
YTD (Avg) Budget
(Avg)
YTD (Avg) Budget
(Avg)
(Index) (Index)
(Index) (Index)
20
181 100 199 0 70 140 2102000 Mar 01 Sep 01
Clearing operations : 5.25 Sigma
Account services : 5.00 Sigma
Remittance operations : 4.25 Sigma
Clearing & Remittance Operations
ISO-9000 Certified
Large Productivity Gains from
Centralisation & Re-engineering Remittance Operations
T ra n s ac ti o n s / F T E ( In d ex ) Clearing Operations Contact Centre T ra n s ac ti o n s / F T E ( In d ex ) Process Quality Tr a n s a c ti o n / F T E ( In d e x )
Processing & Servicing rolled-up
163 100 133 0 60 120 180 240
Dec 00 Mar 01 Sep 01
131 100 96 0 60 120 180 240
Dec 00 Mar 01 Sep 01
T ra n sa ct io n s / F T E ( In d ex ) 163 100 127 0 60 120 180 240
Dec 00 Mar 01 Sep 01
21
Top-line growth offset by conservative
provisioning
Strong asset quality and provision coverage
Stabilized interest margin and interest income
Improved efficiency in expense management
Non-interest income continues to shine
22
Loan-related
Deposit-related
Trade-related
Investment Banking
Credit Card
Fund Management
Stockbroking
Others
Total
Fee-to-income ratio (%)
Strong fee income despite stockbroking
liberalization and weak markets
(S$ million)
(S$ million) 9M00 9M01 Change%
37
42
55
77
25
52
65
39
392
17.7
56
72
71
54
51
50
31
40
425
16.5
52.5
70.6
30.3
(29.7)
102.8
(3.9)
(52.3)
1.3
23
Other income: FX & securities trading
doubled
Net gains on treasury activities - foreign exchange
- trading securities and derivatives
Net gains on sale of government securities and equities
Net gains on disposal of investment securities
Net gains on disposal of fixed assets
Others
Total
Non-interest income to operating income ratio (%)
(S$ million)
(S$ million) 9M00 9M01 Change%
86 39
25
27
4
25
206
29.5
141 158
58
135
24
26
542
39.7
64.1 306.1
130.5
401.3
533.5
4.4
24
Singapore T&M DEaR
-25 -20 -15 -10 -5 0 2 /J a n/ 0 1 2 5 /J a n/ 0 1 2 0 /F e b/ 0 1 1 6 /M a r/ 0 1 1 3 /A pr /0 1 9 /M a y/ 0 1 1 1 /J un /0 1 3 /J ul /0 1 2 7 /J ul /0 1 2 2 /A ug /0 1 2 1 /S e p/ 0 1 S $m -5 -4 -3 -2 -1 0 2 /J a n/ 0 1 24 /J an /0 1 16 /F eb /0 1 14 /M ar /0 1 6/ A pr /0 1 4 /M ay /0 1 1 /J un /0 1 27 /J un /0 1 27 /J ul /0 1 28 /A ug /0 1 2 4/ S e p/ 01 S $M
Singapore Treasury and Markets
have expanded earnings while maintaining DEaR levels
Hong Kong DEaR
Hong Kong has benefited from a
25
Top-line growth offset by conservative
provisioning
Strong asset quality and provision coverage
Stabilized interest margin and interest income
Improved efficiency in expense management
Non-interest income continues to shine
Title
Sound Strategy Backed by
Strong Capitalization
Presentation to Media and Analysts
November 5, 2001
THESE MATERIALS ARE NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES, SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION, AND ANY PUBLIC OFFERING OF SECURITIES TO BE MADE IN THE UNITED STATES WILL BE MADE BY MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM THE ISSUER AND THAT WILL CONTAIN DETAILED INFORMATION ABOUT THE COMPANY AND MANAGEMENT, AS WELL AS FINANCIAL STATEMENTS. "UNITED STATES" MEANS THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES, AND THE DISTRICT OF COLUMBIA.
