DBS Group Holdings Ltd
Annual Repo rt 2 0 0 4
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Management Committee
Jackso n Tai– Vice Chairman & Chief Executive O fficerFrank W o ng– Chief O perating O fficer Vice Chairman, DBS Bank
Chairman, DBS Bank (Ho ng Ko ng ) Limited
Jeanette W o ng– Chief Financial O fficer
Eric Ang– Manag ing Directo r & Jo int Head, G lo bal Financial Markets
Steve Ing ram– Manag ing Directo r & Head, Techno lo g y and O peratio ns
G ro up Chief Info rmatio n O fficer
David Lau– Manag ing Directo r & Jo int Head, G lo bal Financial Markets
Rajan Raju– Manag ing Directo r & Head, So uth and So utheast Asia
S Dhanabalan– Adviso r
Susan Ho – Principal Secretary
DBSH Board of Directors
S Dhanabalan– ChairmanJackso n Tai– Vice Chairman & Chief Executive O fficer
Frank W o ng– Chief O perating O fficer
Ang Ko ng Hua Bernard Chen Fo ck Siew W ah G ail D Fo sler G o h G eo k Ling Kwa Cho ng Seng Leung Chun Ying N arayana Murthy Peter O ng Jo hn A Ro ss Thean Lip Ping W o ng N g it Lio ng
Audit Committee
Bernard Chen– ChairmanG o h G eo k Ling Peter O ng
Board Risk Management Committee
Fo ck Siew W ah– ChairmanBernard Chen Kwa Cho ng Seng Peter O ng Jo hn A Ro ss
Compensation Committee
Thean Lip Ping – ChairmanS Dhanabalan Fo ck Siew W ah Leung Chun Ying W o ng N g it Lio ng
Executive Committee
S Dhanabalan– ChairmanJackso n Tai Frank W o ng Bernard Chen Fo ck Siew W ah Kwa Cho ng Seng
Nominating Committee
Bernard Chen– ChairmanS Dhanabalan G ail D Fo sler Leung Chun Ying Thean Lip Ping
Group Secretary
Heng Lee ChengRegistrar
Barbinder & Co . Pte Ltd 8 Cro ss Street # 11 -0 0 PW C Building Sing apo re 0 4 8 4 2 4 Tel: (6 5 ) 6 2 3 6 3 3 3 3 Fax: (6 5 ) 6 2 3 6 4 3 9 9
Auditors
Ernst & Yo ung
Certified Public Acco untants 10 Co llyer Q uay # 21 -0 1 O cean Building
Sing apo re 0 4 9 315
Partner in charg e o f the audit
Fang Ai Lian
Registered Office
6 Shento n W ayDBS Building To wer O ne Sing apo re 0 6 8 8 0 9 Tel: (6 5 ) 6 8 7 8 8 8 8 8 Fax: (6 5 ) 6 4 4 5 12 6 7 Email: dbs@ dbs.co m W ebsite: www.dbs.co m
Performance at a Glance
2
Chairman’s Statement
4
Board of Directors
10
Year in Review
12
CEO’s Report
16
Corporate Governance Report
32
Remuneration Report
46
Awards and Accolades
49
Risk Exposures and Risk Management Approach
52
Management Discussion and Analysis
58
By the Numbers
Co nso lidated Pro fit and Lo ss Acco unt – DBS G ro up Ho lding s 7 1
Co nso lidated Balance Sheet – DBS G ro up Ho lding s 7 2
Co nso lidated Cashflo w Statement – DBS G ro up Ho lding s 7 3
Co nso lidated Statement o f Chang es in Shareho lders’ Equity –
DBS G ro up Ho lding s 7 4
Balance Sheet – DBS G ro up Ho lding s 7 5
N o tes to the Co nso lidated Financial Statements – DBS G ro up Ho lding s 7 6
Pro fit and Lo ss Acco unt – DBS Bank 1 4 3
Balance Sheet – DBS Bank 1 4 4
N o tes to the Supplementary Financial Statements – DBS Bank 1 4 5
Directo rs’ Repo rt – DBS G ro up Ho lding s 1 4 8
Statement by the Directo rs – DBS G ro up Ho lding s 1 5 3
Repo rt o f the Audito rs – DBS G ro up Ho lding s 1 5 4
Ten-Year Summary o f O peratio ns o f DBSH G ro up – DBS G ro up Ho lding s 1 5 5
Further Info rmatio n o n Directo rs – DBS G ro up Ho lding s 1 5 6
Shareho lding Statistics – DBS G ro up Ho lding s 1 6 3
DBS Directory
Internatio nal Banking O ffices 1 6 5
Main Subsidiaries & Asso ciated Co mpanies 1 6 6
Financial Calendar
167
Notice of Annual General Meeting
168
Proxy Form
171
DBS G roup Holdings Ltd Annual Report 2 0 0 4 1
2 DBS G roup Holdings Ltd Annual Report 2 0 0 4
Financial Summary
– DBS G ro up Ho lding s Ltd and its Subsidiary Co mpanies
2004
2 0 0 3 2 0 0 2Profit and Loss ($ millions)
O perating pro fit
2,435
1 ,3 8 6 1 ,4 7 3N et pro fit attributable to members (N PAM)
2,018
1 ,0 2 5 1 ,0 9 7N PAM excluding g o o dwill amo rtisatio n
2,458
1 ,4 5 5 1 ,3 7 5Balance Sheet ($ millions)
To tal assets
175,553
1 5 9 ,5 9 5 1 4 9 ,4 4 5Custo mer lo ans
69,664
6 4 ,3 3 5 6 0 ,7 0 9Custo mer depo sits
113,206
1 0 8 ,0 4 1 1 0 1 ,3 1 5To tal shareho lders’ funds
16,502
1 4 ,8 9 6 1 4 ,2 3 7Per Ordinary Share ($)
Basic earning s
1.34
0 .6 8 0 .7 4Basic earning s excluding g o o dwill amo rtisatio n
1.64
0 .9 8 0 .9 3G ro ss dividend
0.40
0 .3 0 0 .3 0N et assets backing
10.76
9 .7 5 9 .3 0Selected Ratios (%)
Return o n averag e to tal shareho lders’ funds
12.85
7 .0 4 7 .9 4Return o n averag e to tal shareho lders’ funds (excluding g o o dwill amo rtisatio n)
15.66
9 .9 9 9 .9 5O perating expenses as % o f inco me befo re o perating expenses
40.7
4 3 .9 4 4 .6Capital adequacy1
Tier 1
11.3
1 0 .5 1 0 .3To tal
15.8
1 5 .1 1 5 .51 ) Ratio s fo r 2 0 0 4 were co mputed based o n the MAS capital framewo rk issued o n May 2 8 2 0 0 4 . Co mparatives were no t restated and were co mputed using Bank fo r Internatio nal Settlements g uidelines.
DBS G roup Holdings Ltd Annual Report 2 0 0 4 3 Group Net Profit Attributable
to Members
Group Income before Operating Expenses & Ratio of Operating Expenses to Income before Operating Expenses
Total (Tier 1 & 2) 2 0 0 4 : 1 5 .8 % 2 0 0 3 : 1 5 .1 %
Tier 1 2 0 0 4 : 1 1 .3 % 2 0 0 3 : 1 0 .5 % Total Assets
2 0 0 4 : $ 1 7 5 .6 billio n (+1 0 %) 2 0 0 3 : $ 1 5 9 .6 billio n
ROA*
2 0 0 4 : 1 .4 7 % (+0 .5 3 percentag e po ints) 2 0 0 3 : 0 .9 4 %
* Excluding g o o dwill amo rtisatio n Total Shareholders’ Funds
2 0 0 4 : $ 1 6 .5 billio n (+1 1 %) 2 0 0 3 : $ 1 4 .9 billio n
ROE*
2 0 0 4 : 1 5 .6 6 % (+5 .6 7 percentag e po ints) 2 0 0 3 : 9 .9 9 %
* Excluding g o o dwill amo rtisatio n 2 0 0 4 : $ 2 ,0 1 8 millio n (+9 7 %) 2 0 0 3 : $ 1 ,0 2 5 millio n
Income before Operating Expenses 2 0 0 4 : $ 4 ,9 2 8 millio n (+1 7 %) 2 0 0 3 : $ 4 ,1 9 8 millio n
Ratio of Operating Expenses to Income before Operating Expenses*
2 0 0 4 : 4 0 .7 % (-3 .2 percentag e po ints) 2 0 0 3 : 4 3 .9 %
* Excluding g o o dwill amo rtisatio n G ro up net pro fit attributable to
members in 2 0 0 4 included o ne-time g ains o f $ 3 1 0 millio n fro m dispo sal o f a subsidiary co mpany DBS Thai Danu Bank Public Co mpany Limited and $ 1 8 7 millio n fro m sale o f equity investment in W ing Lung Bank. 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 ($ millio ns)
$2,018
2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 ($ millio ns)
Group Total Shareholders’ Funds and Return on Average Total Shareholders’ Funds (ROE)
Group Total Assets and Return on
Average Total Assets (ROA) Capital Adequacy Ratio (CAR)
1
($ billio ns) (%)
9.99% 15.66% $14.2
1 0 .5 11.3 1 4 .4
1 7.4 1 5 .5
12.89% $14.9 $16.5 $10.5 $13.6 12 .2
1 0 .3 18 .9
1 5 .1 1 5 .8
Financial Highlights
44.6% $4,198 $4,928 48.9% $3,532 43.9% 40.7% $2,931 42.5% $4,146 9.99% 9.95%2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4
1 ) Ratio s fo r 2 0 0 4 were co mputed based o n the MAS capital framewo rk issued o n May 2 8 2 0 0 4 . Co mparatives were no t restated and were co mputed using Bank fo r Internatio nal Settlements g uidelines.
Group Net Interest Income and Non-Interest Income
Net Interest Income 2 0 0 4 : $ 2 ,5 6 6 millio n (+8 %) 2 0 0 3 : $ 2 ,3 7 5 millio n
Non-Interest Income 2 0 0 4 : $ 2 ,3 6 2 millio n (+3 0 %) 2 0 0 3 : $ 1 ,8 2 3 millio n 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 ($ millio ns)
$892 $2,375 $1,501 $1,823 $2,566 $2,362 $2,257 $1,275 $2,645 $997
($ billio ns)
$159.6 $175.6 $149.4 $151.5 $111.2 0.94% 1.47% 0.86% 1.28% 0.91%
2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 $1,389
$1,097 $1,025
4 DBS G roup Holdings Ltd Annual Report 2 0 0 4
Chairman’s Statement
2 0 0 4 was a g o o d year fo r Asian eco no mies.
Ho ng Ko ng and Sing apo re g rew in excess o f 7 %. G ro wth was
underpinned by stro ng expo rts, lo w inflatio n and an upturn in business
and co nsumer spending . Ag ainst this backdro p, DBS perfo rmed well.
DBS G roup Holdings Ltd Annual Report 2 0 0 4 5 W ith a business diversified in co nsumer, enterprise and
who lesale banking , we were able to capitalise o n the eco no mic rebo und to g ro w o ur custo mer franchise, expand o ur existing o peratio ns, fo rm new ventures and o pen new o verseas o ffices. W e achieved g reater diversificatio n in o ur inco me with stro ng g ro wth acro ss all o ur businesses and acro ss different g eo g raphies.
Financial Review
In 2 0 0 4 , G ro up net pro fits cro ssed the $ 2 billio n mark fo r the first time. Excluding o ne-time g ains o f $ 4 9 7 millio n fro m the dispo sal o f no n-co re investments, G ro up net pro fits was 4 8 % hig her than the year befo re. O perating inco me ro se 1 7 % to $ 4 .9 3 billio n while o perating expenses increased 8 % to $ 2 .4 5 billio n. Ag g reg ate net pro fits fo r o ur co nsumer, SME and co rpo rate secto rs ro se 3 3 % fro m $ 8 8 8 millio n to $1.1 8 billio n. O ur fee inco me g rew 1 5 % and exceeded $1 billio n.
O ur lo an bo o k expanded by 13 % to $ 6 9 .7 billio n during 2 0 0 4 , with new lending to individuals, co rpo rates and SMEs acro ss the reg io n.
O ur asset quality impro ved to pre-Asian crisis levels, helped by mo re favo urable eco no mic co nditio ns. O ur no n-perfo rming lo an ratio sto o d at a lo w 2 .5 %, do wn fro m 5 .2 % the year befo re while o ur pro visio n co verag e ro se to 8 9 % fro m 6 3 % previo usly.
Return o n equity was the hig hest in fo ur years at 1 2 .7 %. O ur capital adequacy ratio ro se to 1 5 .8 %. W ith a healthy balance sheet and ro bust capital ratio s, we believe we are in a stro ng
po sitio n to serve o ur custo mers, to capture business o ppo rtunities and to invest fo r the future.
O verall, it was a g o o d year fo r DBS. W e were able to reap the fruits o f earlier investments in peo ple, pro cesses and systems.
Regional Franchise
During the year, we co ntinued to g ro w o rg anically in China, India, Indo nesia and Malaysia. W e hired mo re staff, intro duced new pro duct lines and expanded to new lo catio ns. O ur effo rts are starting to sho w results in these co untries, as evident fro m the fact that g ro wth in revenues fro m the reg io n o utpaced tho se fro m Sing apo re and Ho ng Ko ng last year.
In Thailand, we merg ed the o peratio ns o f DBS Thai Danu with that o f Thai Military Bank and The Industrial Finance Co rpo ratio n o f Thailand, to fo rm TMB Bank, the co untry’s fifth larg est banking group with combined assets in excess of Bt677 billion ($29 billion). W e believe that TMB Bank’s big g er scale o ffers a mo re effective way fo r us to g ro w in a key market where industry co nso lidatio n is actively enco urag ed by the g o vernment.
Shareholder Returns
The Bo ard declared an interim dividend o f $ 0 .1 8 per share and a final dividend o f $ 0 .2 2 per share. The to tal dividend o f $ 0 .4 0 is a 3 3 % increase o ver the $ 0 .3 0 paid in 2 0 0 3 .
It is the Bo ard’s intentio n to increase the dividend rate in a sustainable manner in line with underlying earning s g ro wth. At the same time, we believe that the reg io n’s eno rmo us g ro wth
Left: DBS in India
O ur Mumbai branch mo ved to big g er premises in 2 0 0 4 and expanded its capabilities to include treasury and markets o peratio ns, institutio nal banking and trade finance.
Rig ht: DBS in China
6 DBS G roup Holdings Ltd Annual Report 2 0 0 4
po tential means that the best lo ng -term return fo r shareho lders will be achieved by using o ur capital to g ro w the business, bo th o rg anically and thro ug h selective ino rg anic o ppo rtunities that create value.
Quality of Earnings
Banking and finance are beco ming increasing ly co mplex and co mpetitive. As DBS seeks to expand its business and balance risk and return, we will co ntinue to invest in peo ple and systems, in areas such as risk manag ement, financial co ntro ls, leg al and reg ulato ry co mpliance, credit assessment and po rtfo lio
manag ement. The imminent implementatio n o f the Basel II capital acco rd adds further urg ency to the steps that we need to take. These investments are abso lutely necessary fo r so und banking and will impro ve the quality o f o ur earning s.
Prospects for 2005
W e remain o ptimistic abo ut eco no mic pro spects in Asia
no twithstanding market expectatio ns o f sho rt-term dislo catio ns in so me eco no mies that have g ro wn at breakneck speed in recent years. The challeng e fo r DBS is to sustain o ur g ro wth mo mentum fro m a hig her revenue base so that we can co ntinue to
streng then o ur fo undatio n as a pro g ressive pan-Asian bank. W ith o ur stro ng er capital reso urces, we are in a better po sitio n to embark o n vario us initiatives that will translate into a hig her level o f service and value fo r o ur custo mers and shareho lders in the co ming years.
Apology
Tho ugh much was achieved in 2 0 0 4 , o ur perfo rmance was marred by the safe depo sit bo x incident in the Mei Fo o branch in Ho ng Ko ng . There is no excuse fo r the series o f erro rs that led to the accidental destructio n o f 8 3 custo mers’ depo sit bo xes. W e apo lo g ise to o ur custo mers fo r the lo ss and stress that we caused them.
Acknowledgements
I wo uld like to thank o ur custo mers, business partners and shareho lders fo r their unstinting suppo rt o f DBS witho ut which we wo uld no t have achieved last year’s reco rd earning s.
I am also indebted to my fello w Bo ard members fo r g enero usly sharing their time and insig hts. Special thanks g o to the fo ur Bo ard members, namely Bernard Chen Tien Lap, Fo ck Siew W ah, G ail D Fo sler and LP Thean, who will be retiring at this year’s Annual G eneral Meeting .
Bernard and Siew W ah, who have been o n the bo ard fo r nine and seven years respectively (including tenure o n the DBS Bank Bo ard), had wanted to retire last year and were persuaded by me to serve ano ther year. I am grateful to them fo r their sterling co ntributio ns o n the Bo ard and in the Audit and Risk Co mmittees.
Siew W ah has very kindly ag reed to serve as an Adviso r to the Chairman o n matters relating to the Bank’s plans and business in China. I will also miss G ail’s challeng ing and incisive questio ns and her perceptive co mments o n eco no mic issues. I am also g rateful to LP Thean who is stepping do wn after serving with
DBS G roup Holdings Ltd Annual Report 2 0 0 4 7 much dedicatio n since 2 0 0 2 . I appreciate his balanced views as
Chairman o f the Co mpensatio n Co mmittee. His leg al experience and fo cus o n custo mer interests were invaluable in helping the Bo ard make so und decisio ns.
I welco me two new Bo ard members, G o h G eo k Ling , Chairman o f Tuas Po wer Ltd, and W o ng N g it Lio ng , Chairman and CEO o f the Venture G ro up, who jo ined us in May last year.
I am also pleased to have Ang Ko ng Hua, Executive Directo r o f N atSteel Ltd, as the latest member o f o ur Bo ard effective March this year.
Last but not least, the management and staff of DBS G roup are to be co mmended fo r their hard wo rk and dedicatio n. Their co ntributio ns helped make DBS a leading financial institution in Asia.
S Dhanabalan
Chairman, DBS G ro up Ho lding s
Left: Trade Finance, Ho ng Ko ng
DBS Ho ng Ko ng maintained its number two po sitio n in trade finance amid a very co mpetitive enviro nment.
Rig ht: DBS Jakarta, Indo nesia
1 0 DBS G roup Holdings Ltd Annual Report 2 0 0 4
S Dhanabalan,
Chairman
Appo inted July 1 19 9 9 , he wo rked in DBS Bank fro m 1 9 6 8 to 1 9 7 8 befo re spending 16 years as a Cabinet Minister in the Sing apo re g o vernment. He is the current Chairman o f Temasek Ho lding s (Pte) Ltd and a Directo r o f the G o vernment o f Sing apo re Investment Co rpo ratio n Pte Ltd. Ag e 6 7 .
Jackson Tai,
Vice Chairman & Chief Executive Officer
Appo inted May 13 2 0 0 1 , he has been Chief Executive O fficer since June 2 0 0 2 . A United States citizen, he jo ined DBS in 1 9 9 9 as Chief Financial O fficer and was made President and Chief O perating O fficer in January 2 0 0 1 . Prio r to jo ining DBS, Mr Tai served 2 5 years at J.P. Mo rg an & Co as an investment banker. He is also a directo r o f Sing apo re Teleco mmunicatio ns Ltd and CapitaLand Ltd. Ag e 5 4 .Frank Wong Kwong Shing,
Chief Operating Officer
Appo inted September 16 2 0 0 3 , he is Chief O perating O fficer o f DBS G ro up Ho lding s and DBS Bank, Vice Chairman o f DBS Bank and Chairman o f DBS Bank (Ho ng Ko ng ). A British citizen, he bring s o ver 3 0 years o f experience in financial markets, having wo rked fo r Citibank, J.P. Mo rg an and N atW est Markets, and in Ho ng Ko ng , Frankfurt, Lo ndo n and Sing apo re. Mr W o ng is also Directo r o f China Mo bile (HK) Ltd. Ag e 5 7 .Bernard Chen Tien Lap,
Director
Appo inted July 1 19 9 9 , he spent 1 2 years at the Ministries o f Defence and Finance and as Minister o f State fro m 1 9 7 7 to 1 9 8 1 . He then jo ined Fraser & N eave g ro up, where he served the last seven years as G eneral Manag er and Directo r. He was Chief Executive O fficer o f Intraco Ltd fro m 1 9 9 1 to 2 0 0 0 . Mr Chen is no w Chairman o f The Co mmercial & Industrial Security Co rpo ratio n. Ag e 6 2 .
Fock Siew Wah,
Director
Appo inted July 1 19 9 9 , he began his career with DBS and is currently Senio r Adviso r o f Nuri Ho ldings (S) Pte Ltd and Chairman o f Singapo re Airlines Cargo Pte Ltd. He is a Directo r o f Temasek Ho ldings (Pte) Ltd and Singapo re Airlines Ltd, and was previo usly Regio nal Treasurer (Asia-Pacific) fo r J.P. Mo rgan, President and CEO o f O verseas Unio n Bank, Special Adviso r to Singapo re’s Finance Minister and Deputy Chairman o f Fraser & Neave Limited. Age 6 4 .
Gail D Fosler,
Director
Appo inted O cto ber 2 9 1 9 9 9 , she is Executive Vice President and Chief Eco no mist o f The Co nference Bo ard. Befo re jo ining The Co nference Bo ard in 1 9 8 9 , she was Chief Eco no mist and Deputy Staff Directo r o f the US Senate Budget Co mmittee. Ms Fo sler is currently a Directo r o f Unisys Co rpo ratio n, Baxter Internatio nal, Caterpillar Inco rpo rated, The Natio nal Bureau o f Eco no mic Research and The Eco no mic Club o f New Yo rk. She is American. Age 5 7 .
Goh Geok Ling,
Director
Appo inted May 3 2 0 0 4 , he is Chairman o f Tuas Po wer Pte Ltd. Prio r to his retirement in O cto ber 1 9 9 9 , he was in the electro nics industry fo r 2 9 years. He spent 2 8 years with Texas Instruments Singapo re Pte Ltd where he last held the po st o f Managing Directo r. He became Managing Director of Micron Semiconductor Asia Pte Ltd after the acquisitio n o f Texas Instruments. Mr G o h is also a Co uncil Member o f Nanyang Techno lo gical University. Age 6 4 .
DBS G roup Holdings Ltd Annual Report 2 0 0 4 1 1
Kwa Chong Seng,
Director
Appo inted July 2 9 2 0 0 3 , he is Chairman and Manag ing Directo r o f Exxo nMo bil Asia Pacific Pte Ltd and the Lead Co untry Manag er fo r the Exxo nMo bil co mpanies in Sing apo re. He is also Deputy Chairman o f Temasek Ho lding s (Pte) Ltd. Mr Kwa also serves o n the Public Service Co mmissio n and the Leg al Service Co mmissio n in Sing apo re. Ag e 5 8 .
Leung Chun Ying,
Director
Appo inted July 2 2 2 0 0 2 , he is Chairman o f DTZ Debenham Tie Leung G lo bal. A Chinese citizen, he was extensively invo lved in establishing Ho ng Ko ng as a Special Administrative Reg io n, having served as a Vice Chairman o f the Preparato ry Co mmittee and the Pro visio nal Leg islative Co uncil. A member o f the Ho ng Ko ng Executive Co uncil, he was its Co nveno r between 1 9 9 9 and 2 0 0 2 . Ag e 5 0 .
Narayana Murthy,
Director
Appo inted Aug ust 1 9 2 0 0 3 , he is Chairman o f Info sys
Techno lo g ies Ltd, a co mpany he co -fo unded and in which he had served as Chief Executive O fficer fo r 2 0 years. An Indian citizen, he is also a directo r o n the Central Bo ard o f the Reserve Bank o f India, co -chairman o f the Indo -British Partnership and a member o f the Indian Prime Minister’s Co uncil o n Trade and Industry. Ag e 5 8 .
Peter Ong Boon Kwee,
Director
Appo inted March 2 6 2 0 0 3 , he is Permanent Secretary o f the Ministry o f Trade and Industry. Prio r to that, he was Permanent Secretary o f the Ministry o f Transpo rt and seco nd Permanent Secretary (Defence) o f the Ministry o f Defence. Fro m 1 9 9 8 to 2 0 0 0 , he was seco nded to Temasek Ho lding s (Pte) Ltd as an Executive Vice President. He is also the current Chairman o f the Maritime and Po rt Autho rity. Ag e 4 3 .
John A Ross,
Director
Appo inted February 6 2 0 0 3 , he is a retired banker. Prio r to his retirement in 2 0 0 2 , he was Co rpo rate Chief O perating O fficer fo r the Deutsche Bank G ro up. Befo re jo ining Deutsche Bank in 1 9 9 2 , he spent 2 1 years at the Bank o f N ew Yo rk. A US citizen, Mr Ro ss is a Trustee o f the G erman Marshall Fund, the Jewish Museum, the Metro po litan O pera G uild and Ho bart & W illiam Smith Co lleg es. Ag e 6 0 .
Thean Lip Ping,
Director
Appo inted September 9 2 0 0 2 , he is a co nsultant at the leg al firm o f KhattarW o ng . He was a Hig h Co urt Judg e fro m
1 9 8 4 –1 9 9 3 and a Judg e o f Appeal o f the Supreme Co urt fro m 1 9 9 3 –2 0 0 2 . Prio r to that, he was a practising lawyer fo r 2 6 years. Mr Thean is also the Chairman o f the Securities Industry Co uncil o f Sing apo re. Ag e 7 2 .
Wong Ngit Liong,
Director
Appo inted May 3 2 0 0 4 , he has been the Chairman and Chief Executive O fficer o f Venture G ro up since 1 9 8 6 . Prio r to that, he spent mo re than 1 2 years with the Hewlett-Packard Co mpany. Mr W o ng also serves o n the bo ards o f SIA Eng ineering
Co mpany and Internatio nal Enterprise Sing apo re. Ag e 6 4 .
January
DBS Thai Danu Bank and Thai Military Bank sig ned a Memo randum o f Understanding to merg e.DBS and Indo nesia’s Bank Mandiri led a US$ 2 1 5 millio n syndicated lo an to PT Mitra G lo bal Teleko munikasi Indo nesia, the larg est syndicated facility fo r an Indo nesian telco m co mpany since 1 9 9 8 .
February
PO SB and Cho wiz launched an e-Saving s plan fo r scho o ls to enco urag e children to save.March
DBS Thai Danu Bank, Thai Military Bank and The Industrial Finance Co rpo ratio n o f Thailand ag reed to merg e to create the fifth larg est banking g ro up in Thailand by assets.DBS Ho ng Ko ng launched DBS W ealth Acco unt to tap the emerg ing affluent po pulatio n.
April
DBS Shang hai branch was g ranted a Do mestic Enterprise licence.DBS and AirAsia launched the AirAsia Credit Card, o ffering cardmembers the fastest way to redeem free flig hts o n AirAsia.
DBS ag reed to sell its entire 1 0 % stake in Ho ng Ko ng’s W ing Lung Bank Ltd to W u Jieh Yee Co mpany Limited fo r HK$1 .2 billio n.
DBS launched a ho me lo an with the lo west first-year rate and first-year-lo ng payment ho liday; and a car lo an cash rebate that cuts interest by 2 0 %.
May
W o ng N g it Lio ng , Chairman and CEO o f Venture G ro up, and G o h G eo k Ling , Chairman o f Tuas Po wer Limited, jo ined the G ro up’s bo ard o f directo rs.DBS and MasterCard unveiled DBS W o man’s Card, a new credit card which o ffers wo men platinum privileg es with free co ncierg e services.
June
DBS Asia Capital raised HK$ 6 0 9 millio n fo r the IPO o f China’s Li-Ning Co . Ltd.DBS launched the Pan-Asian Bo nd Index to track lo cal so vereign and quasi-so vereign bo nds fro m eight key regio nal markets.
DBS TD W aterho use was renamed DBS Vickers Securities O nline after DBS Vickers raised its stake in the o nline jo int venture.
DBS Ho ng Ko ng partnered Standard & Po o r’s (S&P) to pro vide S&P’s independent and o bjective investment fund analysis to retail investo rs.
Year in Review
July
DBS o pened its G uang zho u branch.DBS Shenzhen branch was g ranted a Do mestic Enterprise licence.
DBS Ho ng Ko ng issued its first millio n credit cards.
Capital O K, a jo int venture between DBS and Shin Co rpo ratio n fro m Thailand, made its first mo ve into Thailand’s co nsumer finance market with the launch o f “ Life’s O K” , an inno vative credit plan fo r co nsumers.
DBS Ho ng Ko ng kicked o ff “ Cares Ho ng Ko ng” , a co mpany-wide co mmunity service pro gramme to pro mo te a caring culture amo ng staff.
August
DBS was so le arrang er fo r a US$ 5 0 0 millio n multi-currency debt issuance pro g ramme fo r Pan Asia Paper.September
DBS was cho sen by SPRIN G to manag e Sing apo re’s first lo an securitisatio n pilo t pro g ramme fo r SMEs.DBS launched a new Internet banking platfo rm – iBanking – to serve mo re o nline custo mers at faster speed.
DBS Bank successfully clo sed a US$ 7 5 0 millio n subo rdinated no te issue which qualified as Upper Tier 2 capital fo r the Bank.
October
DBS Ho ng Ko ng apo lo g ised fo r the accidental destructio n o f 8 3 safe depo sit bo xes.November
DBS was g ranted a derivatives licence fo r all DBS branches in China.December
DBS was jo int lead arrang er fo r the Suntec REIT, the larg est IPO in Sing apo re in 2 0 0 4 .DBS o pened a Representative O ffice in Do ngguan, making it the first fo reign bank to establish a presence in the so uthern city o f China.
DBS Ho ng Ko ng launched the W o man’s Card at a g lamo ro us party featuring Ho ng Ko ng
celebrity Daniel W u.
DBS G ro up and its staff do nated $ 6 0 0 ,0 0 0 to victims o f tsunami-affected co untries. The Bank also raised S$ 5 .6 millio n fro m custo mers thro ug h its Internet banking channel and ATMs.
1 4 DBS G roup Holdings Ltd Annual Report 2 0 0 4
DBS Malaysia
DBS was an ag g ressive new challeng er in the o ffsho re syndicated lo ans1 6 DBS G roup Holdings Ltd Annual Report 2 0 0 4
CEO’s Report
At the start o f 2 0 0 4 , Asian eco no mies surg ed ahead
to ward reco very and favo urable market co nditio ns prevailed.
Jackso n Tai
Vice Chairman & Chief Executive O fficer
DBS in Sing apo re
DBS G roup Holdings Ltd Annual Report 2 0 0 4 1 7 As the year pro g ressed, capital-raising activities and investment
sales lang uished in a market rattled by an uncertain o utlo o k fo r US interest rates, co ncerns o ver China’s o verheated eco no my, rising o il prices and a demand slo wdo wn fo r techno lo g y-related pro ducts. Trading vo lumes suffered and co nditio ns became particularly difficult when bo nd yields fell sharply ag ainst widespread expectatio ns.
Ag ainst this uneven 2 0 0 4 o perating enviro nment, DBS chalked up reco rd earning s and delivered the stro ng est bo tto m-line numbers in its 3 6 -year histo ry. O ur net pro fit ro se 9 7 % to $ 2 .0 2 billio n, including $ 4 9 7 millio n in o ne-time g ains fro m sales o f stakes in affiliate banks. Excluding these g ains, net pro fit o f $1.5 2 billio n was up 4 8 % fro m the year befo re and surpassed the reco rd o f $1.3 9 billio n set in 2 0 0 0 .
N et interest inco me g rew 8 % last year to $ 2 .5 7 billio n with net interest marg in arresting previo us year’s decline to stabilise at 1 .7 9 %. N o n interest inco me increased 3 0 % to $ 2 .3 6 billio n but excluding o ne-time g ains, the increase was 2 % to $ 1 .8 7 billio n.
The stro ng er perfo rmance can be traced to o ur do g g ed determinatio n o ver the past three years to g ro wing annuity inco me fro m o ur co re custo mer businesses acro ss seg ments and g eo g raphy.
• Fo r the year, o ur lo an bo o k g rew 1 3 % to $ 6 9 .7 billio n, excluding o ur deco nso lidated Thailand o peratio ns. • But the larg er trend is mo re revealing : o ur lo an bo o k g rew
o ver eig ht co nsecutive quarters. During this perio d, lo an assets increased 2 0 % o r $11.6 billio n.
•O ur success in diversifying o ur inco me streams by g ro wing recurring inco me acro ss all custo mer seg ments sig nificantly reduced o ur past reliance o n market-related inco me.
Altho ugh lo an margins have co ntracted in Asia’s o cean o f excess liquidity, o ur lending o peratio ns generate no t o nly recurring interest inco me, but also the o ppo rtunity fo r us to garner franchise-building fee business. Thus, o ur lo an bo o k’s net interest inco me must be juxtapo sed against o ur fee inco me which has climbed to 2 2 .9 % o f to tal inco me (excluding o ne-time gains). Impo rtantly, fee inco me has gro wn at a co mpo und annual gro wth rate o f 2 4 % o ver six co nsecutive years, fro m $ 2 7 4 millio n in 1 9 9 8 to $1.0 1 3 billio n in 2 0 0 4 .
O ur hig her earning s bo o sted o ur capital reso urces to a 1 5 .8 % g ro up to tal capital adequacy ratio under the MAS capital framewo rk. O ur stro ng pro fitability placed us o n a new level o f o perating streng th and to ug hened o ur reso lve to beco me a leader amo ng Asian financial institutio ns.
Fundamentally, we o we o ur impro ved perfo rmance to a custo mer-centric appro ach that puts custo mers at the co re o f o ur business strateg y.
In this regard, we failed in o ne spectacular instance last year when o peratio nal lapses during the reno vatio n o f o ur Mei Fo o branch in Ho ng Ko ng led to the accidental destructio n o f 8 3 custo mers’ safe depo sit bo xes. W hile o thers might have deftly side-stepped the blame to co ntracto rs, we cho se to pro mptly ackno wledge o ur respo nsibility fo r the incident, and to o k steps to fairly co mpensate o ur custo mers witho ut delay.
6 0 ,0 0 0
5 0 ,0 0 0
4 0 ,0 0 0
3 0 ,0 0 0
2 0 ,0 0 0
1 0 ,0 0 0
1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 3 Q 4 Q 2 0 0 3
4 Q
2 0 0 2 2 0 0 4
1 3 % 7 0 ,0 0 0
6 0 ,0 0 0
5 0 ,0 0 0
4 0 ,0 0 0
3 0 ,0 0 0
2 0 ,0 0 0
1 0 ,0 0 0
1 Q 2 Q 3 Q 4 Q 1 Q 2 Q 2 0 %
3 Q 4 Q 2 0 0 3
4 Q
2 0 0 2 2 0 0 4
1 3 % Eight Consecutive Quarters of Loan Growth
($ millio ns) ($ millio ns)
DBS Thai Danu lo ans Custo mer lo ans
G ro wth rate (ex-DBS Thai Danu)
7 0 0
6 0 0 8 0 0 9 0 0 1 0 0 0
5 0 0
4 0 0
3 0 0
2 0 0
1 0 0
2 0 0 4 1 ,0 1 3
2 0 0 3 8 8 4
2 0 0 2 7 9 7
2 0 0 1 6 2 6
2 0 0 0 5 0 8
1 9 9 9 4 2 3
1 9 9 8 2 7 4
G ro up’s distributio n mix: $ millio ns
Consumer Banking 1 ,5 6 6 Enterprise Banking 7 3 5 Investment Banking 7 0 3 T&M Funding Portfolio 3 4 6 Treasury & M arkets 3 9 4 Central O perations 6 8 7
To tal G ro up’s revenue
(excludes o ne-time gains) 4 ,4 3 1
1 8 DBS G roup Holdings Ltd Annual Report 2 0 0 4
To date we have settled in full with all but seven custo mers. The incident had no material financial impact o n o ur Ho ng Ko ng o peratio ns, but no netheless set back o ur effo rts to establish o ur brand in o ur seco nd biggest market in Asia. We deeply regret this incident, have since taken remedial actio n to ensure that such lapses do no t recur, and pledge to regain the trust o f o ur custo mers.
The unfo rtunate incident was a reminder o f the co ntinuo us need to impro ve the quality o f o ur business as we expand in scale and sco pe. Business achievements are o f no co nsequence if we let o ur custo mers do wn. Arising fro m the incident, all DBS emplo yees were reminded that pro ducing stro ng financial results alo ne do es no t make DBS a well-managed bank. Since then, we have taken steps to reinfo rce a co mpany culture that places custo mers first and upho lds the highest business standards and practices.
2004 Highlights
W e co mpleted in 2 0 0 4 a rang e o f no table achievements, a reflectio n o f DBS’ g ro wing diversity and depth o f talent.
•W e wo n stando ut investment banking mandates, including lead manager fo r the biggest IPO in Singapo re, the $ 8 3 0 .3 millio n Suntec REIT; the first glo bal bo nd in Asia after the 1 9 9 7 Asian financial crisis, a US$ 2 7 0 millio n bo nd financing fo r Indo nesia’s PT MG TI; and a HK$ 6 0 9 millio n IPO fo r Li-Ning Co . Ltd, the co nsumer go o ds co mpany fo unded by the namesake O lympic gymnast and three-time go ld medalist.
•W e embarked o n a pro g ramme o f o rg anic g ro wth to underpin o ur co ntinued search fo r appro priate merg ers and acquisitio ns o ppo rtunities. W e o pened new branches and o ffices in China,
Indo nesia and India, and saw do uble-dig it g ro wth in assets and revenues in these co untries.
•W e co mpleted the merg er o f DBS Thai Danu, Thai Military Bank and The Industrial Finance Co rpo ratio n o f Thailand in September. The new entity no w o perates under the Thai Military Bank name and is the fifth larg est bank in Thailand with co mbined assets in excess o f Bt6 7 7 billio n ($ 2 9 billio n). DBS’ 1 6 .1 % o wnership is seco nd o nly to the 3 1 .2 % stake o f the Thai Ministry o f Finance.
•During the year, we to o k advantag e o f favo urable market co nditio ns to raise US$ 7 5 0 millio n o f Upper Tier 2 capital fo r DBS Bank thro ug h a 1 5 -year, 5 % subo rdinated no tes issue. The financing supplements maturing subo rdinated no tes, was in line with o ur po licy o f pro actively manag ing o ur capital base, and po sitio ns DBS to pursue business and strateg ic initiatives as suitable o ppo rtunities arise.
•W e maintained o ur wealth manag ement sales despite intense co mpetitio n and in the face o f slug g ish market co nditio ns in the seco nd half o f the year. To tal sales o f investment pro ducts in Sing apo re and Ho ng Ko ng amo unted to $ 8 .8 1 2 billio n.
•W e divested o ur lo ng-held 1 0 % stake in Ho ng Ko ng’s W ing Lung Bank Ltd in April to W ing Lung Bank’s co ntro lling W u family. W e also to o k initial steps in No vember to divest o ur 1 2 .7 % stake in Banco D’O ro to the co ntro lling Sy family o f the Philippines, which was co mpleted in January this year. Altho ugh neither stake fits into o ur pro gram fo r highly integrated banking o peratio ns in the regio n, we value the relatio nship and trust with the lead shareho lders o f these institutio ns and lo o k fo rward to co ntinued business co llabo ratio n.
To achieve scale, w e embrace a multi-pronged approach
of pursuing organic growth, acquisitions, and hybrid strategies
of joint-ventures and alliances.
DBS Revenues by Business Segments in 2004
3 5 %
1 7 %
1 6 %
8 %
9 %
DBS G roup Holdings Ltd Annual Report 2 0 0 4 1 9
Embracing our Roots as we Build Diversity and Depth
DBS is an Asian bank o f the 2 1 st century. W e live, breathe and wo rk in the mo st exciting and fastest-g ro wing reg io n o f the wo rld. O ur pro spects are inextricably tied to the fo rtunes o f Asia; fo r us, there is no running away when sto rm clo uds g ather o ver the ho rizo n and returning when blue skies
reappear. W e are firmly ro o ted here to serve o ur Asian clients, in g o o d times and bad.
O ur Asian o rig in and o rientatio n have endo wed us with the advantag e o f lo cal kno wledg e and insig ht while o ur
co mmitment to internatio nal best practices have helped us build pro fitable o perating mo dels and leadership in pro duct and service quality. W e embrace g o o d g o vernance, transparency, as well as timely and full disclo sure.
O ur strateg y has been the same reg ardless o f market cycles. W e strive to build scale, diversity and depth as we expand further into the reg io n to serve o ur custo mers.
• W e must g ro w the scale o f o ur o peratio ns to harness lo wer per unit co st fo r o ur custo mers, and to remain relevant to o ur custo mers and shareho lders.
• W e seek diversity in business mix and pro duct o ffering s to address o ur custo mers’ g ro wth acro ss Asia, as well as to achieve better balance in shareho lder returns.
• W e are increasing o ur business depth to ancho r o ur market penetratio n and do minance, and to capture hig her returns fro m o ur mo re develo ped pro ducts and services.
W e ado pt this strateg y o n to p o f an unwavering co mmitment to so und risk and credit manag ement, as well as a culture o f stro ng internal co ntro ls, co mpliance and transparency.
To achieve scale, we embrace a multi-pro ng ed appro ach o f pursuing o rg anic g ro wth, acquisitio ns, and hybrid strateg ies o f jo int-ventures and alliances. W hat fo rm we ado pt, and ho w fast, depends very much o n business o ppo rtunities at hand as well as chang ing lo cal reg ulato ry po licies and fo rbearance.
O utside o f o ur twin hubs o f Sing apo re and Ho ng Ko ng , o rg anic g ro wth has driven to p-line numbers in co untries like China, Indo nesia, India and Malaysia. In the co ming years, we will be channelling mo re reso urces to sig nificantly reinfo rce o ur presence in these co untries. Asset g ro wth in these co untries swelled mo re than 1 4 % last year.
W e will pursue acquisitio ns o nly when the rig ht o ppo rtunities arise, and o nly if they extend o ur reg io nal reach and add sig nificant value to o ur existing businesses.
Thus far, o ur reg io nalisatio n effo rts have helped us achieve a mo re balanced g eo g raphical distributio n o f o ur inco me and assets in 2 0 0 4 . In 1 9 9 8 , o nly 1 7 % o f o ur assets were so urced o utside Sing apo re. Last year, that share was 3 2 %. O peratio ns o utside o f Sing apo re co ntributed 3 7 % in revenues last year, co mpared to 1 5 % six years ag o when we started to map o ut o ur pan-Asian ambitio ns.
6 % 6 %
8 5 % 3 %
Rest of the world
O ther Asia-Pacific
(incl. HK, China, India, Japan, Korea)
O ther ASEAN
(incl. Indonesia, Philippines, Thailand)
Singapore Rest of the world
O ther Asia-Pacific
(incl. HK, China, India, Japan, Korea)
O ther ASEAN
(incl. Indonesia, Philippines, Thailand)
Singapore
3 0 % 4 %
6 3 % 3 %
Rest of the w orld
Regional countries
(incl. M alaysia, Indonesia, Thailand, Korea, Philippines)
Hong Kong
Singapore Rest of the w orld
Regional countries
(incl. M alaysia, Indonesia, Thailand, Korea, Philippines) Hong Kong Singapore 7 % 6 %
8 3 % 4 %
2 4 % 3 %
6 8 % 5 %
Operating Income Total Assets
1 9 9 8 : $ 1 .8 7 6 millio n 2 0 0 4 : $ 4 .4 3 1 millio na 1 9 9 8 : $ 1 0 0 billio n 2 0 0 4 : $ 1 7 6 billio nb
a) Excludes S$ 4 9 7 millio n o ne-time g ains
2 0 DBS G roup Holdings Ltd Annual Report 2 0 0 4
W e w ill take full advantage of our on-site presence, local insight,
and Asian commitment to build an enduring mid-cap franchise,
one that w eathers cycles and is not affected by competing demands
from other parts of the w orld.
Replicating Singapore Strengths in the Region
As we expand o ur o peratio ns, we seek to replicate the capabilities we have built up o ver three decades in Sing apo re, and mo re recently in Ho ng Ko ng , in the rest o f Asia.N o twithstanding reg ulato ry co nstraints that so metimes slo w o ur ag enda, we made headway last year in markets beyo nd Sing apo re and Ho ng Ko ng .
Mo mentum is building in o ur o peratio ns in China, Indo nesia, India, Malaysia, and So uth Ko rea. G ro wth in revenues fro m the regio n and the rest o f the wo rld o utside Singapo re and Ho ng Ko ng o utpaced that o f the twin hubs last year, increasing 1 4 % against 1 0 % and 2 % fo r Singapo re and Ho ng Ko ng respectively.
As we g ro w in these co untries, we will be using Sing apo re and Ho ng Ko ng as spring bo ards, expo rting fro m these two markets successful business mo dels, expertise and pro cesses, and extending a co mmo n techno lo g y and o peratio ns infrastructure acro ss the reg io n.
Mo st o f the business gro wth o utside o ur two key markets has thus far been in who lesale banking since lo cal regulatio ns co ntinue to impo se varying degrees o f restrictio ns o n fo reign banks’ presence in the retail market. W e have, fo r example, been a new and aggressive challenger in the syndicated lo ans markets in India, Malaysia and So uth Ko rea. In Malaysia, where we have an o ffsho re branch in Labuan and a marketing o ffice in Kuala Lumpur, we were lead arranger o f numero us high pro file syndicated lo ans. They included a US$ 2 5 0 millio n term lo an fo r YTL Po wer Internatio nal Bhd, a US$ 3 0 0 millio n term lo an fo r Astro , a US$ 7 0 0 millio n flo ating rate facility fo r Titan Capital (L) Ltd, and a US$ 4 0 0 millio n revo lving credit facility fo r Star Cruises.
In India, we emerg ed as the number two bo o krunner fo r syndicated lending as ranked by the Tho mso n Financial Leag ue Tables 2 0 0 4 , capturing 9 .7 % share fro m 1 3 issues to talling US$ 4 4 4 .4 millio n.
Lo o king fo rward, we are fo cused o n o ppo rtunities to accelerate client co verag e acro ss g eo g raphies, and to o ffer the same full suite o f services we already have in o ur twin hubs o f Sing apo re and Ho ng Ko ng . These include capital markets and adviso ry, treasury and markets, structured finance, private banking , sto ckbro king , asset manag ement and transactio n services. There is no reaso n, fo r example, fo r us no t to replicate abro ad o ur asset securitisatio n capabilities which have seen us pio neer and do minate the Real Estate Investment Trusts (REIT) business in Sing apo re.
W e also lo o k fo r an enhanced presence in the reg io nal derivatives market, particularly in China where we were awarded a licence to co nduct derivatives business last year. This appro val will help us expand the mo dest scale o f wealth manag ement business we have already develo ped thro ug h o ur “ white labelling ” co llabo ratio n with Chinese banks.
In mo st o f the markets in g reater China and So uth and So utheast Asia, we aim to capitalise o n o ur track reco rd in co rpo rate and SME banking to targ et mid-cap custo mers. W e will take full advantag e o f o ur o n-site presence, lo cal insig ht, and Asian co mmitment to build an enduring mid-cap franchise, o ne that weathers cycles and is no t affected by co mpeting demands fro m o ther parts o f the wo rld. W e must do so befo re g lo bal bank co mpetito rs finally demo nstrate a lo ng -term willing ness to invest in Asian mid-cap custo mers. W e must also
Regional Revenues Grow at a Faster Pace
Amo unt ($ m) Yo Y 2 0 0 3 2 0 0 4 change (%)
Revenues
Regio n and rest o f wo rlda 1 9 9 2 2 7 1 4
Ho ng Ko ngb 1 ,3 3 7 1 ,3 6 1 2
Sing apo rec 2 ,5 2 0 2 ,7 7 3 1 0
To tal 4 ,0 5 6 4 ,3 6 1 8
DBS G roup Holdings Ltd Annual Report 2 0 0 4 2 1 differentiate o urselves fro m so me g lo bal banks who still find it
mo re co mpelling at their remo te headquarters to bo o k tro phy transactio ns with larg e hig h-pro file custo mers in their episo dic view o f Asia.
An Integrated Approach to Serving our Customers
As we extend o ur g eo g raphical reach and pro duct o ffering s, we will make evo lutio nary o rg anisatio nal adjustments that will allo w us to o ffer o ur custo mers a seamless experience o f hig h level o f service and quality o f pro ducts acro ss the reg io n. Early in 2 0 0 5 , we placed all o f o ur client-facing businesses under Frank W o ng , who was appo inted Chief O perating O fficer in reco g nitio n o f his success in fo rg ing the ag endas and prio rities o f different businesses. He will help ensure that we harness DBS’ reso urces acro ss functio ns and g eo g raphies to serve o ur custo mers with integ rated, inno vative and timely so lutio ns.Ano ther evo lutio nary o rg anisatio n chang e to o k place two years ag o and is no w beg inning to take ho ld. W e g ro uped six businesses – Investment Banking , Treasury & Markets, DBS Vickers Securities, Private Banking , Asset Manag ement as well as so me o f the functio ns within Central Treasury Unit – into a new integ rated W ho lesale Banking team. By hard-wiring pro duct manufacturers, relatio nship manag ers and distributio n specialists who serve co rpo rates and institutio ns clo ser to g ether, we were able to leverag e pro duct capabilities and secto r expertise acro ss the DBS G ro up, facilitating clo ser teamwo rk and mo re efficient cro ss-selling o f pro ducts and services.
In o ur SMEs business, we have set up a Reg io nal Enterprise Banking Manag ement Team co mprising senio r manag ers fro m Sing apo re and Ho ng Ko ng , to co nso lidate and drive reg io nal
plans and ensure alig nment o f po licies and practices in credit, pro cesses and systems.
Expanding Distribution to Serve Retail Customers
O ur co nsumer banking franchise in Sing apo re and Ho ng Ko ng reg istered a 3 7 % increase in earning s in 2 0 0 4 to beco me the larg est net pro fit co ntributo r within the G ro up. But beyo nd the bo o kkeeping o f pro fit, o ur reg io nal co nsumer banking franchise is addressing the challeng e that banking is increasing ly abo ut access to custo mers and distributio n.DBS retained its do minant po sitio n as the larg est distributo r o f investment and insurance pro ducts to the mass market, with the bulk o f the treasury pro ducts eng ineered in-ho use and insurance pro ducts so urced fro m Aviva, o ur strateg ic bancassurance partner.
Sharing a co mmo n wealth manag ement business mo del with Sing apo re, Ho ng Ko ng repo rted yet ano ther year o f ro bust sales in investment and bancassurance pro ducts, particularly in unit trusts where it no w co mmands at least a 5 % market share. Fees fro m sale o f bancassurance and unit trust pro ducts ro se 4 7 % despite uncertainties in the financial markets.
DBS’ retail distributio n netwo rk is the largest in Singapo re, with 8 6 branches and 7 6 8 ATMs lo cated co nveniently at co nsumer ho tspo ts acro ss the island. W e o pened a new branch fo r PO SB in Juro ng East in July. In 2 0 0 4 , o ur ATMs in Singapo re pro cessed an average o f 1 7 millio n transactio ns a mo nth fro m a to tal o f abo ut 3 .7 millio n ATM cards in circulatio n.
Retail Wealth Management Sales
($ millio ns)
Ho ng Ko ng Sing apo re
Excludes bancassurance
1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 8,812 453 1,396 4,824 5,337 379 1,552 3,039 3,982 3,475 880 65 2,005 4,434 8,806
Regional Customer Franchise Underpin
Record 2004 Results
2 0 0 3 2 0 0 4a
$ millio ns N PAMb Pro po rtio n N PAMb Pro po rtio n %g ro wth
Co nsumer Banking 3 3 7 2 3 % 4 6 2 2 4 % +3 7 %
Enterprise Banking 2 3 1 1 6 % 3 0 3 1 5 % +3 1 %
Investment Banking 3 2 0 2 2 % 4 1 5 2 1 % +3 0 %
Treasury & Markets
+ Funding Po rtfo lio 5 0 6 3 5 % 4 3 6 2 2 % -1 4 %
Central O peratio ns 6 1 4 % 3 4 5 1 8 % nm
To tal 1 ,4 5 5 1 0 0 % 1 ,9 6 1 1 8 % +3 5 %
2 2 DBS G roup Holdings Ltd Annual Report 2 0 0 4
DBS Woman’s Card
In May 2 0 0 4 , DBS Bank, in partnership with MasterCard Internatio nal,2 4 DBS G roup Holdings Ltd Annual Report 2 0 0 4
In 2 0 0 4 , our Enterprise Banking business in the region registered
record earnings with double digit growth in loans to customers
in Hong Kong, China and Singapore.
In additio n to being able to access o ur co mbined netwo rk o f 1 5 1 branches and 8 4 8 ATMs in Sing apo re and Ho ng Ko ng , DBS custo mers are also able to use their ATM cards at o ver 5 0 0 ,0 0 0 ATMs in 1 2 0 co untries that are part o f the PLUS/ Cirrus netwo rk. Fro m last year, they co uld also carry o ut transactio ns at the cash machines o f fo ur partner banks in the reg io n fo llo wing the sig ning o f ATM alliances with the HDFC Bank in India, Bank Internasio nal Indo nesia and Bank Danamo n in Indo nesia and BPI in The Philippines.
The number o f credit cards issued by DBS in Ho ng Ko ng cro ssed the o ne millio n mark in July, making the bank the fo urth larg est credit card issuer in the Chinese Special Administrative Reg io n. The success o f the W o man’s Card in Sing apo re, which debuted in May, led to a similar launch in Ho ng Ko ng seven mo nths later. W e are no w the seco nd larg est issuer o f credit cards in Sing apo re, with mo re than 7 5 0 ,0 0 0 cards in circulatio n, including the successful Black Card and the W o man’s Card.
In Sing apo re, we defended o ur traditio nal stro ng ho lds in ho using lo ans which g rew 1 3 % year-o n-year, making headway in the public ho using market with an inno vative HDB Lo yalty Pro g ramme. W e started rebuilding o ur auto lo ans po rtfo lio to wards the end o f 2 0 0 3 and have been fast g aining market share with packag es desig ned to pro vide attractive pricing , co nvenience and simplicity to o ur custo mers. Co mpared to 2 0 0 3 , auto lo ans in Sing apo re g rew even stro ng er at 9 0 % to $1.12 billio n.
Bo tto m-line gro wth in Ho ng Ko ng co nsumer banking was impressive. Co ncerted effo rts to build relatio nships with Treasures
Prio rity Banking custo mers, and to target the emerging affluent with a new DBS W ealth Acco unt, were well received, resulting in higher custo mer acquisitio n and retentio n, and higher pro fitability. During the year, six branches with full Treasures Prio rity Banking services were reno vated and expanded, while a new branch was o pened in the new Tseung Kwan O residential district.
During the year, we also launched a new Internet banking platfo rm to deliver o nline pro ducts and services faster, to mo re users, and acro ss the reg io n in a seamless manner.
Helping SMEs Flourish in Asia
W ith o ur o rig ins in develo pment financing o f heavy industries, it is no surprise that DBS was a relative late-co mer to serving SMEs. To make up fo r lo st time, we stepped up investments in peo ple and infrastructure o ver the last two years as we set o ur sig hts o n building an enduring SME franchise in this hig her risk-adjusted return business.
These investments are beg inning to pay o ff. In 2 0 0 4 , o ur Enterprise Banking business in the reg io n reg istered reco rd earning s with do uble dig it g ro wth in lo ans to custo mers in Ho ng Ko ng , China and Sing apo re. O verall, Enterprise Banking’s earning s ro se 3 1 % in 2 0 0 4 . Increasing ly, DBS’ pro ducts and services, including capital markets, trade finance, and stro ng lo cal credit kno wledg e, make us an attractive financing partner fo r g ro wth-bo und SMEs.
In Ho ng Ko ng , where o ur mo re mature SME business co mmands a 1 2 % market share, we co ntinued to o utperfo rm the industry in lo an g ro wth, reg istering a 1 7 % increase co mpared to the
DBS’ Distribution Network in the Region
Sing apo re Ho ng Ko ng
Branches 8 6 6 5
Treasures Prio rity Co unters 1 8 2 2
ATMs 7 6 8 8 0
Cash Depo sit & Passbo o k Updating Machines 2 2 8 5 3
Internet Banking Users 6 0 0 ,0 0 0 7 0 ,0 0 0
DBS Indo nesia
W ith the fo rming o f ATM alliances, DBS custo mers can no w carry o ut transactio ns at the cash machines o f fo ur partner banks in the reg io n, namely Bank Internasio nal Indo nesia and Bank Danamo n in Indo nesia, HDFC Bank in India, and BPI in The Philippines.
DBS G roup Holdings Ltd Annual Report 2 0 0 4 2 5 DBS Dealing Ro o m
O ne o f DBS’ co re strengths is o ur ability to manage risk arising fro m vo latility in financial markets fo r o ur clients.
industry averag e o f 1 %. O ur SME po rtfo lio in Ho ng Ko ng expanded fo r eig ht straig ht quarters, with no table g ro wth in facto ring and equipment finance. W e also maintained a number two po sitio n in trade finance in a very co mpetitive enviro nment. The Ho ng Ko ng team extended their co verag e in so uthern China last year with a flurry o f activity, including the award o f a Do mestic Enterprise Licence to the Shang hai Branch in April and the Shenzhen Branch in July, the co mmencement o f business in G uang zho u Branch in July and the o pening o f the Do ng g uan Representative O ffice in N o vember.
In Sing apo re, o ur Enterprise Banking asset base g rew 2 8 % in a market facing marg inal g ro wth and narro wing lending spreads. A structured finance team was set up to pro vide custo mers with a co mprehensive suite o f pro ducts and services rang ing fro m term lo ans to risk manag ement and cash manag ement pro ducts. W e also upg raded the credit turnaro und and selectio n pro cess, and intro duced mo re rig o ro us risk assessment and mo nito ring .
O ur capabilities were reco g nised in September when DBS was selected by the Sing apo re G o vernment to pio neer the natio n’s first lo an securitisatio n pro g ramme fo r SMEs, scheduled fo r launch this year. This pro g ramme is intended to help SMEs tap funding thro ug h the capital markets.
Providing Financial Solutions to Leading
Asian Corporates
DBS aims to be the to p financial so lutio ns partner o f leading co rpo rate and institutio nal clients in Asia. To wards this end, we are accelerating the expansio n o f o ur reg io nal client co verag e and the ro ll o ut o f pro duct o rig inatio n capabilities. W e will
co ntinue to leverag e o ur unique institutio nal and retail investo r distributio n capabilities as well as o ur do minant po sitio n in lo cal currency capital market financing s. As Asia g ro ws and beco mes the centre o f capital fo rmatio n, DBS is well-po sitio ned to intermediate reg io nal capital flo ws.
Co rpo rate and investment banking co ntributed $ 4 1 5 millio n in net pro fit, up 3 0 % o ver 2 0 0 3 . The sterling perfo rmance was due to hig her fee inco me principally fro m capital market activities, and stro ng g ro wth in lo an-related fees fro m hig her vo lume o f lo an syndicatio n transactio ns.
W e were invo lved in many o f the year’s majo r transactio ns in Asia, demo nstrating o ur distinctive capabilities acro ss debt and equity capital markets. W e ag ain led in the value o f Initial Public O ffering s in Sing apo re, acco unting fo r 2 0 % o f the to tal $ 3 .4 billio n raised in 2 0 0 4 . In N o vember, we assisted Ascendas-MG M Funds Manag ement Limited o ffer 3 7 .5 millio n units o f their Ascendas Real Estate Investment Trust (“ A-REIT” ). The retail investo r po rtio n o f that A-REIT was so ld o ut at o ur ATMs within 2 5 minutes o f launch. W e were also underwriter fo r Meg hmani O rg anics, the first Indian co mpany to seek a listing o n the Sing apo re Exchang e.
2 6 DBS G roup Holdings Ltd Annual Report 2 0 0 4
Treasury & M arkets’ grow th reflects our commitment to building
a treasury centre of excellence in Singapore that w ill supply
a grow ing pipeline of interest rate, currency and equity products
to the rest of the region.
In Ho ng Ko ng, DBS Asia Capital kept its fo cus o n the mid-cap segment and clinched two significant transactio ns during the year – the IPO fo r Li-Ning Co . Ltd, which was mo re than 11 times subscribed, and fo r China Fo rce, an edible o il manufacturer which so ld HK$ 2 9 5 millio n wo rth o f shares to the public.
In syndicated finance, DBS was sole arranger for a US$ 21 5 million syndicated term lo an facility fo r Hebei Pan Asia Lo ng-teng Paper Co Ltd, as well as a HK$ 7 billio n syndicated credit facility fo r Kerry Pro perties.
In additio n, we raised o ur pro file in So uth Ko rea’s lo an syndicatio n market by co mpleting the US$ 2 3 0 millio n syndicated lo an facility fo r Ko o kmin Bank, a US$ 2 0 0 millio n flo ating rate no tes issue fo r Hyundai Mo to r Finance Co mpany and a JPY1 0 billio n flo ating rate no tes issue fo r Samsung Co rning.
O ur debt capital markets team was selected by Pan Asia Paper Co Ltd as the so le arrang er fo r its US$ 5 0 0 millio n multi-currency debt issuance pro g ramme and so le lead manag er fo r its inaug ural debt issues. O ther deals included being mandated lead manag er fo r Yello w Pag es (Sing apo re) Pte Ltd’s $13 0 millio n bo nd issue.
In merg ers & acquisitio ns, we successfully advised Titan (Ho lding s) Ltd, a Ho ng Ko ng -listed o il g ro up, o n its
US$10 3 millio n acquisitio n o f N eptune Asso ciated Shipping Pte Ltd and two o ther o il tankers in Sing apo re. W e were also financial adviser to China Merchant Ho lding s (Pacific) Limited, a co mpany listed o n the Sing apo re Exchang e, o n its
HK$ 2 .8 billio n acquisitio n o f five to ll ro ads in China. Suppo rting o ur investment banking team, o ur award-winning custo dy and trust services expanded its pro duct o ffering s and g eo g raphical co verag e during the year. In the ADR (American Depo sito ry Receipt) custo dy business, we were awarded several mandates fo r the ADR pro g rammes o f majo r Chinese co mpanies and appo inted administratio n ag ent fo r a majo r debt restructuring .
Managing Risks amid Volatility
O ne o f DBS’ co re streng ths is o ur ability to manag e risks arising fro m vo latility in financial markets. The co mpo unded annual g ro wth rate o f revenue fro m o ur treasury and markets o peratio ns since 1 9 9 9 has exceeded 3 0 %. This g ro wth reflects o ur co mmitment to building a treasury centre o f excellence in Sing apo re that will supply a g ro wing pipeline o f interest rate, currency and equity pro ducts to the rest o f the reg io n. W e aim to extend o ur do minance in Sing apo re do llar instruments to o ther Asian currencies, and to expand o ur sales capabilities in derivatives acro ss multiple asset classes.
A majo r synthetic co llateralised debt o bligatio n transactio n during the year invo lved the US$1.6 5 billio n securitisatio n o f DBS Bank’s Asian lo an po rtfo lio , o ne o f the largest securitisatio n deals in Asia o utside Japan.
Making Headway in Managing Wealth
In ano ther intensely co mpetitive segment, DBS Asset Management retained its lead po sitio n as the largest retail fund manager in Singapo re and in Malaysia thro ugh Hwang-DBS during 2 0 0 4 .
DBS Ho ng Ko ng
DBS G roup Holdings Ltd Annual Report 2 0 0 4 2 7 O ur flagship Shento n Inco me Fund was awarded best G lo bal
Bo nd Fund o ver three and five years by Standard & Po o r’s and Lipper. O ur Malaysian jo int venture, Hwang-DBS Securities, saw stro ng gro wth in 2 0 0 4 with eleven distributo rs selling o ur retail funds there, making us the fastest gro wing fund management co mpany in Malaysia in terms o f to tal assets under management.
Full-service bro kerag e DBS Vickers Securities benefited fro m a buo yant sto ck market in the first half o f the year but saw vo lumes decline in the seco nd half because o f mo re slug g ish co nditio ns. It repo rted 11 % increase in fees and co mmissio n to $ 2 4 0 .6 millio n, ano ther reco rd co ntributio n to the G ro up. DBS Vickers remains o ne o f the to p three bro kers in Sing apo re by market share and amo ng the leading players in Ho ng Ko ng and Thailand.
O ur private banking business in Sing apo re and Ho ng Ko ng co ntinues to wo rk clo sely with o ther who lesale banking units within the G ro up to o ffer clients tailo red so lutio ns fo r their financial needs. Jo ining fo rces with DBS Asset Manag ement and o ne o f the wo rld’s larg est fund manag ers, the private banking team launched the first Sing apo re do llar leverag ed fund o f hedg ed funds, the Sentinel II Enhanced O ppo rtunity Fund.
Strong Asset Quality Allows DBS to Grow with our Customers
In the aftermath o f the 19 9 7 Asian financial crisis, o urno n-perfo rming lo ans reached an embarrassing 13.1 % in 19 9 9 , as a result o f o ur limited credit risk manag ement and a lending discipline that did no t match o ur reg io nal ambitio ns at the time.
O ur reso lve to put right o ur asset quality never wavered o ver the past five years, despite setbacks and disruptio n fro m eco no mic recessio n, asset deflatio n, terro rism and the SARS episo de. O ur year-end 2 .5 % no n-perfo rming lo an rate is no w amo ng the best o f Asian banks and reflects o ur willingness to disclo se o ur mistakes thro ugh early classificatio n o f pro blem lo ans, the readiness to take precautio nary and sizeable pro visio ns despite the pro fit and lo ss co nsequences, and the co urage to write o ff o r sell no n-perfo rming lo ans no twithstanding the impact o n o ur regulato ry capital.
To day, o ur pro visio n co verag e o f no n-perfo rming lo ans stands at 8 9 %, up sig nificantly fro m the 4 4 % in 1 9 9 8 . W e no w have sufficient pro visio n cushio n to weather eco no mic sho cks to o ur lo an bo o k. Mo re impo rtantly, o ur asset quality and pro visio n cushio n g ive us the leeway and co nfidence to g ro w with o ur custo mers as they expand their o peratio ns thro ug ho ut Asia.
Integrating Technology and Operations for Productivity
W e integ rated o ur techno lo g y and o peratio ns teams nearly two years ag o and are building o n the fo undatio n laid in 2 0 0 3 . Unit co sts declined by 7 %, pro ductivity increased by 11 %, while quality, measured in bo th custo mer satisfactio n and six sig ma terms, co ntinued to impro ve.O ur IT o utso urcing pro g ram is no w two years into its planned ten-year cycle and we are reaping the benefits o f increased fo cus o n adding business value, and access to the g lo bal co mpetencies o f o ur partner, IBM. As the relatio nship pro gresses, we are mo ving away fro m capital investments in techno lo gy to wards a pay-as-yo u-use mo del o f o peratio n. W e are also
1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 7 ,0 8 6
1 1 .8 % 1 3 .0 %
7 .6 %
5 .7 % 6 .1 % 5 .2 %
2 .5 % 8 ,1 4 9
4 ,4 1 1 4 ,5 1 2 4 ,2 2 4
3,7 8 0
1,9 1 9
4 4 %
Pro visio n co verage ratio :
5 3 % 5 2 % 6 0 % 5 9 % 6 3 % 8 9 % Non-Performing Loan Rate at 2.5%
Among Best of Asian Banks ($ millio ns)
2 8 DBS G roup Holdings Ltd Annual Report 2 0 0 4
Suntec REIT
2 0 0 4 was a banner year fo r DBS’ investment banking team. Amo ng the marquee deals was the $ 8 3 0 .3 millio n Suntec REIT, the big g est IPO in Sing apo re. beginning to deplo y o ther advanced techno lo gies fro m IBM as
part o f o ur jo int techno lo gy planning pro cess.
W ith o ur strateg ic partners, we achieved a number o f
sig nificant milesto nes in 2 0 0 4 . W e relo cated, co nso lidated and upg raded o ur co re data centres in Sing apo re and Ho ng Ko ng , implemented new Internet Banking systems fo r bo th o ur retail and co rpo rate custo mers and co mpleted the standardisatio n o f o ur unsecured lending platfo rm.
Recruiting and Retaining Talent as Economy Recovers
Even as we invest millio ns in hardware and so ftware we never lo se sight o f the fact that o ur peo ple are o ur mo st impo rtant asset.The talent o f o ur peo ple – their drive, intellig ence and curio sity – differentiate DBS in a cro wded market o f financial service pro viders. In o ur recruitment and retentio n po licies, we search fo r the best and brig htest and reward them o n a merito cratic basis that directly links reward with perfo rmance.
As eco no mies in Asia reco ver and co mpetitio n intensifies in the banking industry, attracting, retaining and mo tivating talent acro ss the regio n is a clear and present challenge fo r DBS, as it is fo r o ther Asian banks. To address this challenge, we are undertaking different initiatives in the area o f career develo pment and pro gressio n, talent management, leadership develo pment and remuneratio n review.
W e co ntinue to embrace family-friendly po licies that help emplo yees strike a better wo rk-life balance. Last year, DBS
became the first majo r co rpo ratio n in Sing apo re to g rant all emplo yees two days paid family/ childcare leave, exceeding the statuto ry requirement which co nfines the benefit to
emplo yees with children less than seven years o f ag e. W e also extended maternity fo r any childbirth, ag ain g o ing beyo nd the new leg islated benefit fo r the fo urth childbirth.
During the year, we wo n the Family Friendly Emplo yer Award g iven by a tripartite bo dy co mprising g o vernment, unio n and emplo yers fo r o ur effo rts in building harmo nio us industrial relatio ns. Fo r o ur co mmitment to staff welfare and training and develo pment, we received the N TUC Plaque o f Co mmendatio n in Sing apo re.
Giving Back to the Communities
Beyo nd pro viding financial pro ducts and services, creating wealth, g enerating jo bs and paying taxes, DBS reco g nises o ur larg er civic and so cial respo nsibilities to the co mmunities in which we o perate. W e co ntinue to champio n tho ug htful philanthro pic and vo lunteer wo rk.
DBS G roup Holdings Ltd Annual Report 2 0 0 4 2 9 Share A Ho pe
DBS champio ns philanthro pic and vo lunteer wo rks, raising funds fo r charities, including the Co mmunity Chest’s “ G ive a Hand, Share a Ho pe” campaign.
DBS raised almost $ 5 .6 million through our internet banking
and ATM channels for the Singapore Red Cross Tidal W aves
Asia Fund in slightly under a month.
business partners in Sing apo re and Ho ng Ko ng . Impo rtantly, DBS raised almo st $ 5 .6 millio n thro ug h o ur internet banking and ATM channels fo r the Sing apo re Red Cro ss Tidal W aves Asia Fund in slig htly under a mo nth, a testament to the po wer o f o ur retail distributio n channels.
After the lull fo llo wing the 2 0 0 3 SARS o utbreak, o ur staff stepped up their vo lunteerism wo rk fo r vario us causes in Sing apo re and Ho ng Ko ng . During the year, they esco rted underprivileg ed children to the theatre, co nducted a museum to ur fo r the physically handicapped, co o ked fo r lo w inco me families, built ho mes fo r the po o r o n Batam island, and celebrated the mo o ncake festival with residents o f an o ld fo lks ho me. DBS suppo rts its staff in their co mmunity wo rk by g iving every emplo yee two days o f paid vo luntary leave each year.
DBS was o nce again co nferred the “ Distinguished Patro n o f the Arts” award by the Ministry o f Info rmatio n, Co mmunicatio ns & the Arts in Singapo re fo r its co ntributio ns to vario us arts causes.
We Share Asia’s Future and Confidence
DBS is an Asian bank fo cused o n Asia.W e have emerg ed fro m the Asian crisis stro ng er, to ug her, mo re ag ile, and mo re determined to be a leader amo ng Asian banks. O ur po rtfo lio o f businesses is mo re diversified and g eo g raphically balanced, and will be further calibrated to impro ve shareho lders’ returns. O ur capital and asset quality are amo ng the stro ng est o f o ur peers, and we are exceptio nally well-placed to g ro w with o ur custo mers as they expand
thro ug ho ut Asia. O ur co mmitment to g o o d co rpo rate
g o vernance, transparency and timely disclo sure – to g ether with o ur investments in peo ple, pro ducts and systems – differentiate us as Asia surg es ahead.
W e are pro ud o f o ur reco rd achievements fo r 2 0 0 4 and are quietly co nfident o f DBS’ future. Fo r this, I o ffer my perso nal and heart-felt thanks to o ur shareho lders, custo mers, business partners and emplo yees fo r their suppo rt.
Jackson Tai
3 0 DBS G roup Holdings Ltd Annual Report 2 0 0 4
DBS Singapore
DBS has the biggest distributio n netwo rk in Singapo re with 8 6 branches,3 2 DBS G roup Holdings Ltd Annual Report 2 0 0 4
Corporate Governance Report
Introduction
At DBS, we see g o o d co rpo rate g o vernance as the co rnersto ne o f any effective, well-run o rg anisatio n. Integ rity, ho nesty and transparency in dealing s are crucial to retaining investo r co nfidence and in ensuring a firm’s reputatio n. N o t o nly do we benchmark o urselves ag ainst the Sing apo re Co de o f Co rpo rate G o vernance, we also ado pt, where appro priate, internatio nal best practice co rpo rate g o vernance standards.
This repo rt describes DBS’ co rpo rate g o vernance pro cesses with specific reference to the g uidelines in the Co de, and also includes info rmatio n required to be disclo sed under the Best Practices G uide and the Interested Perso n Transactio ns Po licy in the SG X Listing Manual.
Board Matters
Board’s Conduct of its Affairs
Principle 1: Every company should be headed by an
effective Board to lead and control the company.
Role of the Board
DBS G ro up Ho lding s (“ DBSH” ) Bo ard, which has o verall respo nsibility fo r manag ing the affairs o f DBS G ro up, including reviewing its financial perfo rmance, setting its strateg ic directio n and perfo rmance o bjectives and reviewing majo r co rpo rate initiatives, co mprises 1 4 members, excluding Ang Ko ng Hua who jo ined the Bo ard in March 2 0 0 5 .
O f these, two are executive directo rs, three are directo rs asso ciated with Temasek Ho lding s Pte Ltd (“ THL” ), DBSH’s
substantial shareho lder, and nine are independent directo rs. The three directo rs asso ciated with THL were no t appo inted at the request o f THL and do no t repo rt to THL o r take directio ns fro m THL. Six o f the 1 4 -member Bo ard are no n-Sing apo reans.
Certain matters specifically require Bo ard appro val, including :
(a) the co nso lidated financial statements and directo rs’ repo rt o f the DBS G ro up;
(b) any strateg ic plan fo r the DBS G ro up and ho w actual results co mpare with the plan;
(c) the annual budg et fo r the DBS G ro up;
(d) all strateg ic acquisitio ns and divestments by the DBS G ro up;
(e) all majo r fund-raising exercises o f the DBS G ro up; and
(f) all decisio ns that will have a majo r impact o n the reputatio n o r standing o f the DBS G ro up.
Board Meetings
The Bo ard co nducts five scheduled Bo ard meetings a year with at least o ne meeting held o ver two days. The agenda includes review o f financial perfo rmance and discussio ns o n co rpo rate strategy, business plans, majo r co rpo rate initiatives and review o f po tential strategic acquisitio ns o r alliances.
DBS G roup Holdings Ltd Annual Report 2 0 0 4 3 3
Training
N ew and existing directo rs underg o co mprehensive o rientatio n and training pro g rammes. N ew directo rs are pro vided with relevant materials o n directo rs’ ro les and respo nsibilities. They are also briefed by the co mpany secretary o n their fiduciary respo nsibilities, and by the CEO and key business and functio nal heads o n the G ro up’s businesses and o peratio ns.
Bo ard and Bo ard co mmittee members are also updated regularly o n key acco unting and regulato ry changes. In 2 0 0 4 , the Audit Co mmittee received co mprehensive briefings o n fraud risk management, tax risk management and anti-mo ney laundering, as well as changes to key acco unting standards, such as Financial Repo rting Standar
