Primed For Growth,
Well-Positioned Against
Downside Risks
FY2000 Results Briefing
2
S. Dhanabalan
Chairman
Philippe Paillart
Chief Executive Officer
Jackson Tai
Chief Operating Officer
Kee Choe Ng
Vice Chairman
Frank Wong
Senior Managing Director
Panelists
Also available for questions
Chong Kie Cheong
Finance Director
Ong Siew Mooi
Head, Group Finance
Lim Lay Hong
Financial Reporting
Tony Raza
Investor Relations
3
Primed for growth, well-positioned
against downside risks
Progress in our financial performance
Significant turnaround in asset quality
Migrating toward optimal capital structure
Maintaining a disciplined expansion plan4
(S$ million) 1999 2000 Change (%)
Net Profits increased by 30%
Net interest income 2,035 2,039 0.2
Fee and commission income 423 508 20.2
Dividends and rental income 62 115 85.3
Other income 509 268 (47.3)
Income before operating expenses 3,029 2,931 (3.2)
Excluding exceptionals 2,854 2,881 0.9
Operating expenses 1,065 1,246 17.0
Operating profit 1,964 1,685 (14.2)
Excluding exceptionals 1,790 1,636 (8.6)
Provisions (1,064) (54) (94.9)
Associated companies 140 43 (69.3)
Taxes (379) (315) (16.9)
Minority interest (410) (29) (92.9)
NPAM 1,072 1,389 29.6
5
Core profits up 51%
Excluding exceptionals,
growth was 50.5%
1,351
897
112 436
175
38
0 200 400 600 800 1,000 1,200 1,400
1997 1998 1999 2000
(S$ million)
1,072
6
Net interest income and margins were maintained
(S$ million)
Excluding the funding costs for BPI, interest margins for 2000 would have been 2.09%Net interest income
1,002
1,430
2,035 2,039
0 500 1000 1500 2000 2500
1997 1998 1999 2000
2.02 2.02
1.77 1.73
1.5 2.0 2.5
(%)
7
Fee income rose 20%
Fee to Income Ratio (%)
14.6
14.0
17.3
Proforma for FY00 the Vickers merger raises DBS’s
fee to income ratio to 21.6%
Investment banking
42
85
98
Stockbroking
48
102
77
Trade-related
51
63
75
Fund management
10
20
62
Deposit-related
20
33
60
Loan-related
29
38
51
Credit card
22
25
33
Guarantees
27
28
26
Others
29
29
26
Total fee income
274
423
508
8
(S$'million) 1999 2000 Change (%)
Net Gains on Trading in
Foreign Exchange 90 119 32.0 Net Gains on Sale of Trading
Securities & Derivatives 186 55 (70.1) Net Gains on Disposal of
Investment Securities:
Sale of SPC shares 117 - (100.0)
Others 26 41 57.7
Net Gains Arising from
Divestment of DBS Tampines 58 - (100.0) Net Gains on Disposal of Fixed
Assets 1 9 726.6
Others 31 44 39.2
Total Other Income 509 268 (47.3)
9
Operating costs increased within budget
Excluding the variance from DKOB, which was consolidated from
May 1999, the expense increase would have been 12%
Staff costs
529.3
613.2
15.9
Occupancy expenses
138.5
147.4
6.3
Technology-related expenses
108.6
132.4
21.9
Professional & consultancy fees
62.8
72.5
15.5
Others
225.5
280.2
24.2
Total
1,064.7
1,245.7
17.0
Cost-to-income (%)
35.2
42.5
10
1,246 1,065 +12 +16 +18 +26 +10 -10 -76 +57 +67 +61 (S$ million)DBS Bank (+182m)
1999 2000 S ta ff c o st s (+17.0%) C o n su lta n cy C o m p u te ris at io n A d ve rti si n g O th er s D B S S ec u rit ie s D B S C h in a S q u ar e D B S T h ai D a n u O th er s u b si d ia rie s D K O B
At the Bank level, staff costs, technology expenses and advertising expenses accounted for 58% of the increase in operating expenses11
Consultants now limited to implementation of
specific, technical projects
1998 1H99 1999 9M00 2000 1H01 2001 • Phone Banking
• Procurement
• DBS Securities’ Projects • Customer Relationship Mgt • Treasury & Mkts System • E-Commerce
• Risk Mgt System • Datawarehouse
• Call Centre Automation • Business Intelligence • Achieve
Technology Procurement
• Cost & Profitability Mgt System
Measurement
• Institutional Banking Group Reorganisation
Re-engineering Processing & Services
• Process Improvement
• Branch Reconfiguration
Customer Service
• POSBank, DTDB & DKOB
Integration
Strategy Development
• Retail Strategy
12
Provisions declined by S$1 billion
DBS Thai Danu Bank
395.3
12.4
(382.9)
5 regional countries
117.1
49.1
(68.0)
Singapore
131.4
(49.8)
(181.2)
Other countries
60.2
18.0
(42.2)
Non-loan provisions
34.5
51.9
17.4
Specific provisions
738.5
81.6
(656.9)
General provisions
(48.3)
(57.4)
(9.1)
Total DBSH share
690.2
24.2
(666.0)
Minority interests’ share
373.0
29.4
(343.6)
Total group provisions
1,063.2
53.6 (1,009.6)
13
Profitability surpassing pre-crisis levels
ROA has returned to pre-crisis levels
ROE has surpassed pre-crisis levels even though CAR has returned to similar levels.
1.28 1.04
0.14 0.72
1.28
0.0 0.5 1.0 1.5
1996 1997 1998 1999 2000
12.89 10.35
1.29 5.72
10.30
0 2 4 6 8 10 12 14
1996 1997 1998 1999 2000
ROA (%)
14
Assets are mostly from Singapore
Singapore 81% Rest of World
5% Other Asia-Pacific
10%
Other ASEAN 4%
15
Singapore 82% Rest of World
2% Other Asia-Pacific
12%
Other ASEAN 4%
Revenues as of December 1999 were 86% from Singapore, 5% from
Other ASEAN, 8% from Other Asia-Pacific, and 2% from the Rest of
World
16
Balance sheet shrank due to soft loan demand
and shedding of low-yielding assets
Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00 Dec 00
40.1 43.6 73.9 83.1 82.3 80.4 80.7 52.0 52.4 54.4 57.8 56.2 33.6 41.8 0 10 20 30 40 50 60 70 80 90
17
Decline in gross loans tapers off
-4000 -2000 0 2000 4000 6000 8000 10000 12000 14000 16000 -10 -5 0 5 10 15 20 25 30 35
Excluding the S$1.2 billion DTDB NPL sale, the loan contraction
would have only been S$0.8 billion or down -1.5%(HoH) for 2H00.
Jun 98
Dec 98
Jun 99
Dec 99
Jun 00
Dec 00
(S$ million)
10.4%
3.4%
-4.8%
-3.8%
-3.7%
30.7%
4,290
13,959
2,041
18
Decline in deposits offset by other products
(S$ million)
Change in balance (Half on Half)
-2000 -1500 -1000 -500 0 500 1000
(847)
314
(1,866)
526
320
347
Dec 99
Jun 00
Dec 00
Other products include the Horizon, Eight, and Up programs
Deposits
19
Primed for growth, well-positioned
against downside risks
Progress in our financial performance
Significant turnaround in asset quality
Migrating toward optimal capital structure
Maintaining a disciplined expansion plan20
Significant decline in NPLs in second half 2000
2,705 2,824 2,425 2,452
1,735
772
1,239 1,408 1,365 1,144
1,735 2,874 3,018 3,207 3,000 1,238 1,249 649 358 433 435 328 267 151 97 366 667 412 637 717 543 0 2,000 4,000 6,000 8,000 10,000
Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00 Dec 00
7.6% 12.7% 8.5% 13.0% 13.1% 11.8% 2.7%
21
Most NPLs are classified substandard; some
are still current
NPLs (2000)
3,508 358 546 250 295
956 2,552 325
32
0 500 1,000
1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000
DTDB
3,172
4,411 80%
80%
1,238
77% Total
(ex-DTDB)
Total
(Incl-DTDB) 8% 12%
20%
(S$ million) 3%
Substandard Doubtful Loss
Approx. S$0.7 bn current, or 20%
22
Provision coverage at 52% of NPLs or 61% on
SEC basis
179 948 801 946 1,115 1,294 1,191 1,174 1,049 1,237 3,095 2,032 2,804 2,558 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00 Dec 00
164.6%
119.6% 102.7% 110.6%
118.4% 114.8% 130.2%
51.8% 51.9% 52.6% 47.4% 44.4% 48.5% 88.1%
55.3% 63.0% 60.8% 61.4%
General Provisions (GP) Specific Provisions (SP)
SP+GP/NPLs (SEC) (%) SP+GP/Unsec NPLs (%)
23
NPLs much lower under SEC reporting and
after adjusting for restructured loans
Under SEC
reporting NPL
rate drops from
7.5% to 6.8%.
Assuming
restructured
loans are
upgraded, NPLs
under SEC
reporting falls
to 3.7%
1999 2000
Singapore
Non accrual loans 1859 1403
Non-restructured 1471 897
Restructured 388 506
Regional countries
Non accrual loans 4,173 1,784
Non-restructured 3,666 698
Restructured 507 1,087
Other countries
Non accrual loans 770 537
Non-restructured 695 417
Restructured 74 120
Total non accrual loans 6,801 3,724
Total restructured loans 969 1,712
Restructured / non accrual 14.3% 46.0%
NPL under SEC reporting 11.6% 6.8%
24
Overseas NPLs fell by S$3 billion or 53%
Malaysia
412
62.2
304
47.1
Indonesia
566
97.9
176
58.5
Thailand excluding DTDB
234
49.3
49
16.2
Korea
76
17.4
51
13.2
The Philippines
77
20.1
87
17.0
DTDB
3,207
70.4
1,238
42.7
Total regional NPLs
4,571
65.3
1,905
38.9
Hong Kong
852
15.5
541
8.7
China
124
12.3
153
15.9
Total
5,547
41.1
2,599
21.5
(S$ million)
NPLs
NPL (%)
NPLs
NPL (%)
25
Progress in our financial performance
Significant turnaround in asset quality
Migrating toward optimal capital structure
Maintaining a disciplined expansion plan
Protected on the downside, ready for a breakout26
Strong capital continues to provide a cushion
against possible global economic slowdown
(S$ million)
1998
1999
2000
Tier 1
9,621
10,463
10,200
Tier 2
793
2,379
3,211
Total Capital
10,414
12,842
13,411
Risk Weighted Assets
65,989
66,790
70,963
Capital Adequacy Ratio (%)
Tier 1
14.6
15.7
14.4
Total (Tier 1 + Tier 2)
15.8
19.2
18.9
27
Capital further supported by valuation surplus
1,916
807
692
589
498
1,204
1,164
729
827
677
0
500
1,000
1,500
2,000
2,500
3,000
3,500
1996
1997
1998
1999
2000
(S$ million)
3,210
1,971
1,421
1,416
1,175
Properties
Quoted investments
28
Pro-active management of capital base
Raised US$1.25 billion of Tier II Capital
Divested non-core assets, generated S$1.3 billion in proceeds Redeemed S$600 million NVPS
S$5.0 billion excess capital for growth, and contingencies Expecting to raise S$1.4 billion through a issue of Hybrid Tier I Migrating toward optimal capital structure
13.6 14.6 15.7 14.4 3.5 4.5 1.2
2.0
(%)
0 5 10 15 20 25
Dec-97 Dec-98 Dec-99 Dec-00
(*) Not to scale
Optimal Structure* Tier 2
Hybrid Tier 1 Tier 1
15.6 15.8
19.2 18.9
29
Increasing the returns on capital
0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0
1994 1995 1996 1997 1998 1999 2000 0 5 10 15 20 25 CAR
ROE
The improvement in ROE isnot a gimmick of equity reductions as the CAR is back to pre-crisis levels.
Absolute capital has been increasing substantially as well. 2,000 4,000 6,000 8,000 10,000 12,0001994 1995 1996 1997 1998 1999 2000
2.00 4.00 6.00 8.00 10.00 12.00 14.00 Capital ROE 0 0
30
Dividend rate hiked 80%
25 30 15 18 18 16 16 16 16 16 5 128% 31% 22% 23% 13% 14% 15% 22% 18% 0 10 20 30 40 50
1992 1993 1994 1995 1996 1997 1998 1999 2000
31
Progress in our financial performance
Significant turnaround in asset quality
Migrating toward optimal capital structure
Maintaining a disciplined expansion plan
Protected on the downside, ready for a breakout32
DBS’s expansion strategy remains unchanged
DBS has a disciplined expansion strategy
Acquisition plans are not as haphazard as reported
Management moves are being carefully planned
Recent Reports about DBS:
DBS increasing its stake in BPI to 40%
DBS to purchase a stake in PCI Equitable (Philippines)
DBS acquires a 20% investment in Far Eastern Bank (Taiwan)
DBS looking to purchase Korean credit card business for US$1.6bn
Standard Chartered Bank and DBS to merge
DBS to issue more Tier II capital33
Building Asia’s best bank
Japan and Korea
Focus on ASEAN and Hong Kong
We have the capital resources and
commitment to achieve this goal
Greater ChinaAustralia and India
Southeast Asia and Hong
34
Progress in Hong Kong
Integrated DBS IT systems, treasury operations and product platforms
35 Customer Contact Points: Closed unprofitable branches and opened two new branches in Central, (one of which was best performer for 2000)
Pre-provision profits up 10% to HK$450m: achieved significant deposit (15.2%) and loan (17.5%) growth
NPLs fell by 57%, to 5.6% rate (under HKMA standards)
Refining skills to eventually take on a larger market share35
DBS Vickers extends our cross-selling to clients
— DBS Vickers Branding — Products &
Services
Fulfillment
Regional IT/OP Platform
Treasury & Markets- FX
- Derivative
DBS Bank
- Asset Management - Financial Planning - On-line services
Research
Origination
- Leading IPO, Debt market share
- Securitisation capability
Distribution
- 368 remisers & dealers
- 11% market share
36
Progress in our financial performance
Significant turnaround in asset quality
Migrating toward optimal capital structure
Maintaining a disciplined expansion plan
Protected on the downside, ready for a breakout37
A stronger bank, better protected against
downside risks
Enhanced, regionally integrated credit and risk management systems
Sharp improvement in asset quality, and ability to resolve problem loans
Much stronger management depth, implementing best global practices
Continue to offer high CAR support even as we optimise capital, improve our returns on capital
Enhancing MIS, Costing systems to provide better analysis of businesses, exposures
No longer paralyzed overseas, cleaned up problems in Thailand38
Positioned for a breakout
Consumer Banking
Ideally positioned in mass affluent wealth management with dynamic
asset management programs (Horizon, Eight, Up, Moneyplus).
Regionally integrating product and channel strategies; launching new
products; credit cards and mortgage applications up
Treasury and Markets
Largest Singapore Dollar treasury player
FX and derivatives growing rapidly, based increasingly on sustainable
customer related transactions
Investment Banking
Leadership in equity capital markets will be enhanced by Vickers’
distribution and research
39
Progress in our financial performance
Significant turnaround in asset quality
Migrating toward optimal capital structure
Maintaining a disciplined expansion plan
Protected on the downside, ready for a breakoutPrimed For Growth,
Well-Positioned Against
Downside Risks
