2000 Interim Results Briefing to Analysts & Investors

(1)

Interim 2000 Results Briefing

Transforming to

World-Class

(2)

2

Transforming to World-Class



Interim results reflect broad-based improvement in operations



Regional asset quality continues to improve

(3)

3



Regional asset quality continues to improve

(4)

4

Broad-based improvement in operations

(S$ million)

Net interest income 1,046 989 5.8 Fee and commission income 260 185 41.1 Dividends and rental income 43 33 28.4 Other income 139 254 (45.2) Income before operating expenses 1,489 1,460 1.9

Excluding SPC profits 1,343 10.8

Operating expenses 594 456 30.3 Operating profit 895 1,004 (10.9)

Excluding SPC profits 887 0.8

Specific provisions 80 333 (75.7) General provisions (17) 3 (674.0)

NPAM 704 655 7.5

Excluding SPC profits 538 30.9

(5)

5

1,046 1,430

1,002

1H99: 989

0 400 800 1200 1600 2000 2400 2800

1997 1998 1999 1H00

Net interest income increased due to higher

margins

Growth : + S$58m (5.8%) (S$ million)

Net interest income

(6)

6

1,046 1,430 1,002 1H99: 989 0 400 800 1200 1600 2000 2400 2800

1997 1998 1999 1H00

Net interest income increased due to higher

margins

(%) 2.07 2.02 1.77 1.73 0.0 0.5 1.0 1.5 2.0 2.5

(1H99 : 2.00) Net interest margin

Net interest income

(7)

7

Fee and commission income rose strongly

Growth : + S$76m (41.1%) (S$ million)

Stock broking 54 47

Investment banking 31 42

Trade related 28 38

Loan related 14 24

Service charges 15 23

Guarantees 13 14

Credit card 11 15

Fund management 7 31

Others 11 26

184 260

(8)

8

Fee and commission income rose strongly

(S$ million) 1998 1999

Stock broking 49 102 54 47 Investment banking 42 85 31 42 Trade related 51 63 28 38 Loan related 29 38 14 24 Service charges 20 32 15 23 Guarantees 27 28 13 14 Credit card 22 25 11 15 Fund management 10 20 7 31 Others 23 29 11 26

274

423 184 260

Fee to Income Ratio (%) 14.6 14.0 13.7 * 17.5

* Income excludes SPC profits.

(9)

9

“Other” income declined due to sale of SPC

shares in 1H99

(S$ million)

FX trading 41 52

Sale of trading securities

& derivatives trading 88 55 Disposal of investment securities:

- Sale of DBS Land shares - 3

- Sale of SPC shares 117 -

- Others - 5

Disposal of fixed assets 2 4

Other 6 20

254

139

1H99 1H00

(10)

1

0

334

529

233

281

87

134

49

64

71

56

18

0 200 400 600 800 1000 1200

1998 1999 1H99 1H00

(S$ million)

456

594 Staff cost

DKOB’s expenses

Operating expenses rose 30% due to

investments in staff and IT

Growth :

+ S$138m (30.3%) IT expenses

Cost to 40.2% 35.1% 31.2% 39.9% Income Ratio

754

(11)

1

894

887

1,964

1,121 972

117

0 400 800 1200 1600 2000

1997 1998 1999 1H99 1H00

(S$ million)

1,004

Operating profit declined 10.9% due to SPC

profits in 1H1999

Growth : - 10.9% (Excl SPC : + 0.8%)

(12)

1

2

Provisions declined substantially

(S$ million)

DTDB 114 11 (103)

5 Regional Countries 54 24 (30)

Singapore 54 (9) (63)

Other Countries 3 11 8

Non-loan provisions (1) 27 28

Specific Provisions 224 64 (160)

General Provisions 3 (17) (20)

Total DBSH Group's share 227 47 (180)

Minority interests' share 109 17 (92)

Total Group Provisions 336 64 (272)

1H99 1H00 (Decrease)

(13)

1

3

704

538 1,072

112

436 117

0 200 400 600 800 1000 1200

1997 1998 1999 1H99 1H00

(S$ million)

655

After-tax profits grew 7.5% to S$704 million

Growth : + 7.5% (Excl SPC : + 30.9%)

(14)

1

4

(%)

ROA recovered to pre-crisis level

1.04

0.14 0.72

1.28

1.13

1.31

0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4

(15)

1

5

10.35

1.29 5.72

10.30

11.80

13.13

0 5 10 15

1996 1997 1998 1999 1H99 1H00

(%)

(16)

1

6

Balance sheet shrank due to soft loan demand

and shedding of low-yielding assets

83.1

57.8 111.4

80.4

52.4 107.6

0 20 40 60 80 100 120 140

(-3.4%)

(-9.2%)

(-3.3%)

Total Assets Customer Customer Loans Deposits

(S$ billion)

(17)

1

7

Ordinary dividend rate 9% 14%

Amount (S$ million) 80.6 139.2

Payout rate 19.8%

Interim

1999 Interim2000

25%

241.9

22.3% Total 1999

18%

140.8

128.9% Total 1998

Dividend rate increased

(18)

1

8



Regional asset quality continues to improve

(19)

1

9

649 2,425 2,452 1,249 2,705 2,824 1,577 1,800 463 923 1,506 1,736 543 717 ₆₃₇ 1,735 2,874 3,018 3,207 3,000 1,112 3,907 7,086

@ Group NPLs excluding DTDB and DKOB.

Note: Loans and NPLs include POSBank’s loans since Nov 98 and DKOB’s loans since May 99.

8,121

Others Singapore DTDB

DKOB 8,149

NBk NPL/NBk Loans (%) NBk NPL/NBk Loans (ex-DTDB) (%)

Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00 7,666 8.2 4.9 8.4 9.0 7.7 2,172 4,211 4,560 4,225 @ @ @ @ @ 4,029

NPLs have peaked

(20)

2

0

4,943 579 2,144

1,669 475

1,235

3,708 483

96

0 2,000 4,000 6,000 8,000

DTDB

4,666

7,666 79%

64%

3,000

41% Total

(ex-DTDB)

Total (Incl-DTDB)

8% 28%

56%

(S$ million) 3%

Most NPLs are classified substandard; some

are still current

NPLs (30 Jun 00)

(21)

2

1

DBS NPL classification more conservative

than SEC Reporting

NPLs (30 Jun 00)

MAS 612 Standard

Singapore 2,452 1,888

5 Regional Countries 4,144 3,953

Other Countries 1,071 702

Total Group 7,666 6,543

Non bank NPLs / Non bank loans 12.7% 11.1%

Provisions / NPLs 51.9% 60.8%

(S$ million)

SEC Reporting

Difference : S$ 1.12 bn

(22)

2

4,943 579 2,144

1,669 475

1,235

3,708 483

96

0 2,000 4,000 6,000 8,000

DTDB 4,666 7,666 79% 64% 3,000 41% Total (ex-DTDB) Total (Incl-DTDB)

8% 28%

56%

(S$ million) 3%

Most NPLs are classified substandard; some

are still current

NPLs (30 Jun 00)

Substandard Doubtful Loss

Approx. S$1.1 bn current, or 22.7%

(23)

2

3

801 1,191 1,174 2,558 948 2,032 3,095 2,804 179 946 1,115 1,294 980 3,852 3,147 1,894 4,286

Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00 3,978 SP+GP/NPLs (%) 51.9 52.6 47.4 44.4 48.5 88.1

SP+GP/Unsec NPLs (%)

164.6

114.8 102.7 110.6

119.6 118.4

Provision coverage at 52% of NPLs or 61% on

SEC basis

(S$ million)

General Provisions (GP) Specific Provisions (SP)

60.8 63.0

55.3

(24)

2

4

Sep 99

Jun 2000

IT systems upgraded

Rigorous Credit & Risk Management in place

Specialized NPL units

Dec 99

Regional Integration Center in Bangkok

Scrubbed loan book

Reclassified NPLs

Mar 2000

60% reserves in DBS’ books

Branch network cut by 1/3, headcount by 40%

Restructured more than 1/2 of NPLs

Raised Bt 13.5 bn through rights issue

_{CAR increased to 26.1%}

_{Flexibility to sell or write off NPLs}

Sell and/or write down NPLs by

(25)

2

5

Raised Bt 13.5 billion through rights / private

placement

(48.3%) minority &

outside investor

subscription

(51.7%) DBS

subscription

Bt 2.5 bn private placement

Bt 11.0 bn rights offering

Convertible preference shares

(MCAPs)

Total

Bt 0.94 bn

Bt 1.96 bn

-Bt 2.9 bn

Bt 0.96 bn

Bt 2.14 bn

Bt 7.5 bn

Bt 10.6 bn

DBS’ ownership is 51.8%, or 73.4% on fully-diluted basis.

(26)

2

6

Selling DTDB NPLs



DTDB to sell Bt 30.6 billion (or 77%) of total NPLs, including most

difficult NPLs



Aggregate sale price is 28.8%, resulting in total proceeds to DTDB

of Bt 8.4 billion



Approximately 86% of the Bt 13.5 billion recapitalization will be

applied against the expected loss from the DTDB NPL sale



Closing expected by summer for the corporate and non-legal retail

tranches. 3-4 months’ time period required for the legal retail

(27)

2

7

Sale of NPLs will reduce DTDB NPLs to 14%

30 Jun 00

NPLs

Loan Loss Reserve

CAR - Tier I

DTDB Books

Bt 39.8 bn

Bt 15.0 bn

21.8%

26.1%

BOT Standards

CAR - Total

(41.5%)

(37.6%)

Pro Forma

on Sale of NPLs

Bt 9.2 bn

Bt 3.8 bn

11.0%

16.0%

(14.1%)

(41.3%)

Bt 37.5 bn

Bt 18.8 bn

(54.6%)

(50.1%)

NPLs

Loan Loss Reserve

Bt 68.1 bn

Bt 41.6 bn

MAS Standards

(28)

2

8

DBS’ group NPLs will decline to 10.6%

30 Jun 00

DBSH Group Books

NPLs

Loan Loss Reserve

S$ 7.7 bn

S$ 4.0 bn

(12.7%)

(51.9%)

Pro Forma

on Sale of NPLs

S$ 6.3 bn

S$ 3.0 bn

(10.6%)

(29)

2

9

649 2,425 2,452 1,249 2,705 2,824 1,577 1,800 463 923 1,506 1,736 543 ₇₁₇ 637 1,735 2,874 3,018 3,207 3,000 1,112 3,907 7,086

@ Group NPLs excluding DTDB and DKOB.

Note: Loans and NPLs include POSBank’s loans since Nov 98 and DKOB’s loans since May 99.

8,121 Others Singapore DTDB DKOB 8,149 NBk NPL/ NBk Loans (%) NBk NPL/NBk Loans (ex-DTDB) (%)

Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00 7,666 12.7 13.0 13.1 11.8 8.5 2.7 2,172 4,211 4,560 4,225 @ @ @ @ @ 4,029

DBS’ group NPLs will decline to 10.6%

(S$ million) DBS NPLs headed down with DTDB resolution DBS NPLs headed down with DTDB resolution 10.6

Pro forma DTDB NPL sale

8.2 4.9

8.4 9.0

(30)

3

0

DBS Thai Danu Bank well-positioned to

compete

Rebuild Revenues



Focus on developing treasury, institutional banking and retail banking capabilities



Grow fee-based income through retail banking initiatives



Target large Thai corporates



Leverage DBS customer relationships, expertise



Regional Integration Center in Bangkok to accelerate integration of regional operations, including DBS Kwong On Bank and DTDB



IT platform to reach 70% of DBS’ standards by year end



Migrating DBS products and capabilities into Thailand

Continued Integration

Efforts

(31)

3

1



Regional asset quality continues to improve

(32)

3

2

Right-sizing branch network

Singapore

Number of

branches

Post POSBank merger (Nov 1998)

173

31 Dec 1999

155

30 Jun 2000

120

(33)

3

Pre-Branch Improvement

Program

Post-Branch Improvement

Program (by October 2000)

New branch design will focus on sales

Sales 14%

Service 86%



Moving from a ratio of 1 sales staff : 6 service staff

to 1 sales staff : 2 service staff



Convert deposit collection branch to point of sales



Sales in 3 pilot branches increased by up to 700%

Sales 33%

(34)

3

4

Centralizing processing and servicing

functions



Formed Processing and Servicing division last year transform back

office into efficient, cost-accountable business



Centralizing processing capabilities and platforms across the firm:



Eliminating duplication



Aggregating for scale economies and quality control



Accelerating push for straight-through processing

(35)

3

5

Leveraging IT, improving efficiency

IT supports cross selling, targeted marketing and multi-channel

delivery

IT:

Ensuring a robust, integrated

IT platform

Robust CRM system

to be developed over

18-24 month period

Activity Based Costing:

Will enable measurement of profitability & hit rates

by product, channel & customer

Data warehousing & mining:

Developing capabilities since 1997 to track cross

(36)

3

6

E-business

Bricks &

Mortar

Direct Marketing

(Call Center)

Linking Bricks and Mortar, Call Centers and

E-business

DBS’ integrated delivery model

Brand

Products &

Services

ATM

Phone Banking Mobile Banking Internet Banking

(37)

3

7

DBS website leads Asian banks

Commonwealth Bank of Australia

ANZ Bank Australia

DBS

National Australia Bank Citibank Hong Kong

Emirates Bank International, UAE Overseas Union Bank Singapore

Westpac Australia

St George Bank Australia ANZ Bank New Zealand

1 2 2 2 5 5 7 7 7 10 Top Internet Banking Websites

(Asian/Middle East)

Source: Lafferty Internet Ratings



Internet user base more than tripled in the last year to 130,000



Only Asian Bank with top-rated internet banking web-site



Scored a perfect 10 out of 10 for quality web-site design

Rank Website

Average Time Spent Per

Access (minutes)

1 MSN 42:08

2 AsiaOne 42:00

3 Yahoo! 38:45

4 eCircle 25:24

5 DBS 24:35

6 Go Network 24:35

7 IRAS 20:07

8 Pacific Internet 19:48

9 Catcha 18:07

10 SingTel 16:40

(38)

3

8

Early mover in building leading E-business

capabilities

B2C



Integrating web-based initiatives with advanced ATMs, mobile phone / hand-held device technology, call centers



Actively exploring WAP technology applications throughout emerging Asia



Phone banking



24-hour Autophone service



State-of-the-art call center



Mobile phone banking



Internet banking



Pioneer since 1997



On-line securities trading will enhance customer stickiness



ATM



Pioneered use of ATM for IPOs and Unit Trust applications



Linking almost 2,000 DBS, BPI ATMs in the region

(39)

3

9

B2B

Using IT, e-business to expand our channels

DBS c2Pay



Enhancing web-based cash management services platform to deliver treasury, other services through the Internet and mobile phones



Developing partnerships, alliances, with DBS serving as payment gateway



DBS C2Pay - Online payment solution to handle

corporates' credit, debit card transactions



IDEAL - Integrated web-based cash management

gateway: services include account information, online payments, trade finance, securities settlement/portfolio management



IBEX - Global business exchange that allows

corporates to source, market, place sales orders, fulfil orders, invoice and make payment

(40)

4

0

Japan and Korea

We aspire to be a top-five Asian bank

Target markets

We have the capital resources and

commitment to achieve this goal

Greater China

Australia and India

(41)

4

1

Capital Adequacy Ratio

Strong capital position for strategic growth,

M&A

15.7 _15.5

14.6 13.6

2.0

4.6 3.5

1.2

0 5 10 15 20 25 30

Dec 97 Dec 98 Dec 99 Jun 00

Tier 1 _{US$500M Tier II}Raised

capital through subordinated note issue in

April 2000 Tier 2

19.2 20.1

(%)

(42)

4

2

Managing our capital base



Optimizing the mix of capital, e.g., raised US$500 million Tier 2 capital

in April 2000



Flexibility to dispose remaining non-core assets



Utilizing excess capital for organic growth and acquisitions

(43)

4

3

Transforming DBS into a world-class competitor



New Corporate Office leadership since 1998



New hires : 2 SMDs, 23 MDs and 65 VPs since 1999



About half of all MDs and VPs have international working experience



Average 23 years’ working experience for MDs and 17 for VPs



29% of MDs and 15% of VPs are non-Singaporean

(44)

4



Regional asset quality continues to improve

(45)

Interim 2000 Results Briefing

Transforming to

World-Class