DBS Annual Report 2015 2
Who we are
DBS, a Singapore-headquartered commercial bank, provides a full
range of services in consumer banking, wealth management
and institutional banking. As a bank born and bred in Asia, we
understand the intricacies of doing business in the region’s
most dynamic markets.
Total Assets
SGD
458 billion
Income
SGD
10.8 billion
Net Profit
SGD
4.45 billion
Branches
OVER
280
includes sub-branches and centres
Institutional Banking Customers
OVER
200,000
Employees
OVER
22,000
Safest Bank in Asia
by Global Finance 2009 – 2015
Asian Bank of the Year
by IFR Asia 2015
Most Valuable Banking Brand
in ASEAN and Singapore by Brand Finance 2015
Consumer Banking Wealth Management
Customers
OVER
6 million
3 Who we are
Footprint in our six priority markets
† Touchpoints include DBSPOSB branches, self-service banking machines, AXS
terminals and strategic partnerships
Greater China
Singapore
South and Southeast Asia
Rest of the world
Indonesia Singapore
Taiwan China
Hong Kong India
7
of group income
31
of group income
62
of group income
Ho Tian Yee Bart Broadman
Nihal Kaviratne
For profi les of our directors, please refer to page 180. For our corporate
governance report, please refer to page 48.
Board independence
Out of nine directors, seven including the Chairman are
independent directors, one is a non-executive and non-
independent director and one is an executive director CEO.
Deep banking knowledge and
experience
Two-thirds of the Board are seasoned bankers, while the
rest have extensive industry experience ranging from
consumer goods to accounting.
Gender diversity
Two of nine directors are female.
The Board is committed to helping the bank achieve long-
term success. The Board provides direction to management by
setting the Group’s strategy and overseeing its implementation.
It ensures risks and rewards are appropriately balanced.
Board of Directors
DBS Annual Report 2015 4
Ow Foong Pheng
Peter Seah Piyush Gupta
Euleen Goh
Danny Teoh
Andre Sekulic
Board of Directors 5
DBS Annual Report 2015 6
Those marked by are also in the Group Executive Committee.
For more information on the Group Management Committee, please refer
to page 185.
Group Management
Committee
Average years of experience of the Group
Management Committee
The Group Management Committee sets the strategy
and direction of the Group. It drives business performance
and organisational synergies. It is also responsible for
protecting and enhancing our brand and reputation.
13 Sebastian Paredes
Hong Kong
14 Elbert Pattijn
Risk Management
7 Lam Chee Kin
Legal, Compliance Secretariat
8 Lee Yan Hong
Human Resources
2 Jerry Chen
Taiwan
1 Piyush Gupta
Chief Executive Officer
One-third of our Group Management Committee
members are women
Group Management Committee 7
9
Sim S Lim
Singapore
16 Paulus Sutisna
Indonesia
12 Karen Ngui
Strategic Marketing Communications
17 Tan Su Shan
Consumer Banking Wealth Management
18 Jeanette Wong
Institutional Banking
11 Jimmy Ng
Audit
5 Neil Ge
China
10 Andrew Ng
Treasury Markets
6 David Gledhill
Technology Operations
4 Eng-Kwok Seat Moey
Capital Markets
15 Surojit Shome
India
3 Chng Sok Hui
Finance
DBS Annual Report 2015 8
Letter from the Chairman and CEO
“ Given the challenging operating environment, the Board and senior management are very
pleased with how we were able to manage our risks and still grow the business sensibly.”
Chairman Peter Seah
9 Letter from the Chairman and CEO
Global growth slowed in 2015, with the IMF revising GDP forecasts from 3.5 at
the start of the year to 3.1. Even growth in the US economy, thought to be a bright
spot, remained unconvincing, with full-year growth stuck at around 2 per annum.
US GDP decelerated in the fourth quarter, but the job market continued to improve,
showing a mixed picture.
China, the world’s second-largest economy, also slowed in 2015, registering growth of
only 6.9 – its weakest in 25 years. This belies the country’s two-speed economy.
While the services industry is growing quite strongly, China’s manufacturing
and investment sectors are suffering from overcapacity with some sectors in recession.
The manufacturing slowdown contributed to a collapse in commodity prices across the
board. The impact on the oil and gas sector was exacerbated by a supply glut, which
took crude prices to an 11-year low.
China’s fi nancial sector reforms further unsettled markets. Faster-than-expected
market liberalisation created volatility across several asset classes, and this was
amplifi ed by policy actions that sometimes contradicted each other.
A strong, resilient franchise
Given the challenging operating environment, the Board and senior management are very
pleased with how we were able to manage our risks and still grow the business sensibly.
For full-year 2015, income and earnings both rose 12. Despite the headwinds,
return on equity improved from 10.9 to 11.2. Our commitment to customers,
the strength of the DBS brand, and a capability and product set that increasingly
rival the best in Asia and the world, have built resilience into the franchise. Strong
governance and risk management processes also undergird our business.
The diversity of our franchise was best exemplifi ed by our loan book. We were
able to compensate for a decline in China trade loans by growing other forms of
lending. We grew Singapore housing loans by gaining share in a competitive market.
We also extended credit for regional clients’ investments and corporate restructuring.
With net interest margin at its highest since 2012, net interest income rose to a record.
Non-interest income benefi tted from strong growth in wealth management,
cash management and credit cards. Our bancassurance fees also grew strongly
and we will continue to bolster this through a new 15-year, four-market
partnership with Manulife Financial Asia.
2015 was a year of two halves. Policy actions by
various central banks bolstered markets and
sentiment in the fi rst half. However, investor and
business confi dence faltered in the second half on the
back of growing uncertainty about the strength of the
world economy.
Our core Singapore franchise had a stellar year, turning in record income and earnings.
We gained market share in consumer and SME banking, and remained a leader in
savings and current deposits, large corporate banking and capital markets.
Asset quality remained resilient. While non-performing loans and specifi c
allowances inched up, these were in line with our expectations. We reviewed several
portfolios, including China, commodities, oil and gas, and residential exposures. We are
satisfi ed that potential losses, even under stressed conditions, are manageable.
We are pleased that we continue to receive recognition from the street: Asian Bank of
the Year from IFR, Best Asia Commercial Bank, Best Asia Investment Bank, and Best
Asian Private Bank from FinanceAsia to name a few of our accolades. We have also
been named Safest Bank in Asia by Global Finance, a New York-based publication,
for seven consecutive years.
Building a sustainable organisation
Customer experience
Since unveiling our strategy six years ago, we have been delivering consistently
strong fi nancial performance. The texture of our franchise has changed considerably.
Wealth Management and SME Banking contribute 27 of Group income from 22
in 2010. Income from transaction services has doubled, while customer activities
contributed half of Treasury income from 36 in 2010.
We have entrenched our position in Singapore, where in addition to market
share gains, we are today widely acknowledged for our customer service
and innovation.
We have repositioned our Hong Kong franchise for profi table growth. Income
and earnings reached a record in 2015. We have expanded our franchises in China,
Taiwan, India and Indonesia to improve our geographical mix and our ability to
intermediate regional trade and capital fl ows. Income from these growth markets
has risen 95 since 2009.
We have also strengthened the internal plumbing of the bank. Our risk architecture
is more robust, the resiliency of our technology platforms has been strengthened
and our systems are designed to “plug and play” new business applications. Our
management information systems can measure profi tability at granular levels.
A dedicated corporate treasury now stewards our capital and liquidity.
Higher return on equity
Despite headwinds, ROE improved, a testament to our commitment
to customers, as well as strong brand and resilient franchise.
Record income
Our total income crossed SGD 10 billion for the fi rst time.
Higher dividends
We proposed full-year dividends of 60 cents per share, up from
58 cents per share in 2014.
11.2
60
cents SGD
10.8
bn
DBS Annual Report 2015 10
Singapore’s Deputy Prime Minister Tharman Shanmugaratnam, our guest of honour, at the opening of the new DBS Academy in December 2015
“ We capture our vision for our relationship with customers, employees and society at large under
a simple agenda – ‘Making Banking Joyful’.”
CEO Piyush Gupta
But taking DBS to the next level requires more than incremental steps in the same
direction. Our industry, like several others, is being profoundly impacted by new
technologies and changing customer expectations. Fintech start-ups are beginning
to attack various parts of the financial services value chain. In such an environment,
our future success depends on our ability to harness the digital revolution and completely
re-imagine the banking experience. While this is a challenge, we believe it is also
an opportunity to distinguish ourselves. By thinking deeply about customers’ true
needs and their real-jobs-to-be-done, we can make their banking truly simple and
relevant, taking effort and anxiety out of their banking engagements.
Being socially and environmentally responsible
In addition to the customer experience, we have to be relentlessly focused on
earning the trust and goodwill of society at large. This can only come from playing a
relevant role in people’s real needs – helping companies grow, helping individuals prosper.
One of the bank’s organisational values is being purpose-driven. Since the time of their
establishment, DBS and POSB have had a strong social mandate. DBS was formed
to finance Singapore’s industrialisation, while POSB as the “People’s Bank” had a
mission of promoting the savings habit and facilitating home ownership. Today, DBS and
POSB continue to uphold our responsibility to the communities we operate in, whether
through the provision of inclusive and subsidised banking, the support of SMEs
or our corporate philanthropy initiatives. DBS is also committed to responsible
financing. When making loans to companies, we conduct assessments
on how they address environmental, social and other material risks.
Building a future-ready workforce
In an industry where people are the most important asset, equipping our 22,000
people to execute on strategy is key to success. We believe that we must have
a work environment that is fun and empowering. At the same time, we need
to be relentless about upskilling our people.
In 2015, we established DBS Academy learning centres in Singapore, Indonesia
and Taiwan to build a strong talent pool able to shape the future of banking.
Employees are encouraged to embrace a digital mindset through experiential
learning and experimentation.
DBS was the first bank to incorporate hackathons into our talent development
Letter from the Chairman and CEO 11
Experiments and prototypes
To inculcate a digital mindset and spur innovation, the bank is
running over 1,000 experiments.
Leading bank in Asia
DBS has been named Best Asia Commercial Bank, Asian Bank of
the Year and Safest Bank in Asia, among our many accolades.
Peter Seah Lim Huat
Chairman DBS Group Holdings
Piyush Gupta
CEO DBS Group Holdings
programme. At these hackathons, employees work with start-ups to create
prototype mobile apps to address business problems. This enables them to gain
exposure to the fintech culture, agile methodology and other digital working
concepts. In all, the bank is running over 1,000 experiments, giving our people the
exposure they need so we can innovate as a bank.
Making Banking Joyful
We capture our vision for our relationship with customers, employees and society at
large under a simple agenda – “Making Banking Joyful”. We recognise that Joyful
Banking would traditionally be seen as a contradiction in terms, but we are convinced
that the holistic embrace of this mission can produce path-breaking results.
Commemorating Singapore’s Jubilee
2015 was a significant year for Singapore, being its 50th year of independence. As
Singapore’s largest bank, DBS and POSB spared no effort in giving back. After
all, DBS’ story has mirrored Singapore’s, and we have played a key role in the
nation’s growth from early on, financing first the development of key industries
post-independence, and later on, the regionalisation of Singapore Inc.
We established the SGD 50 million DBS Foundation in conjunction with the nation’s
Jubilee. The foundation actively nurtures and develops the social enterprise sector in
a multitude of ways, including through the provision of loans, grants and mentoring.
Singapore also has a rich heritage in the arts, and to make this more accessible
to the public, we gifted SGD 25 million to the National Gallery Singapore.
Fifty years ago, Singapore differentiated itself by creating a first-world infrastructure
both hard and soft in a third-world region. It can again set itself apart in the next 50
years by being the world’s first truly digital city. DBS is well-placed to promote and
facilitate Singapore’s development into a Smart Nation, and the bank is committed
to doing so.
Dividends
The Board has proposed a final dividend of 30 cents per share for approval at the
forthcoming annual general meeting. This will bring the full-year dividend to 60 cents
per share compared to 58 cents per share a year ago.
Going forward
2016 will not be easy. Global growth is likely to be slower, and we will have to stay
focused and nimble. Nevertheless, we have demonstrated time and again an ability to
navigate an uncertain environment. In all things, we are guided by our belief that we
can create an impact beyond banking and change lives for the better. In particular, as
a bank operating in an industry at the cusp
DBS and Manulife officially launching a 15-year, four-market partnership covering Singapore, Hong Kong, China and Indonesia
of massive change, DBS will push forward to make banking simpler and more seamlessly
integrated into customers’ lives, so that they can “Live more, Bank less”.
1,000
DBS Annual Report 2015 12
CEO reflections
Piyush Gupta shares his thoughts on some
pertinent matters.
On business model and strategy
Our strategy of building a regional commercial bank with deep customer
reach and broad product diversity has been delivering good results, with progress
in areas such as wealth management, transaction services, debt capital markets
and Singapore retail banking. Our basis of competitive differentiation Banking
the Asian Way, governance principles, management model and risk management
architecture have proven to be robust. You can read about our existing business model
in detail on page 14.
While our strategy is sound, we periodically review where we are at, taking into account
emerging mega-trends, our operating environment, and what our stakeholders
are telling us. These are material matters that can impact our ability to create value
and you can read more about them on page 19.
One area where we would have liked to do more is our growth in the big geographies –
China, India and Indonesia. Our large corporate franchise has done well; however,
the SME and consumer businesses have been challenged by distribution limitations
due to regulations, thereby resulting in longer payback periods.
Another area where we have done well when compared with our traditional
competitors but perhaps not when compared to our new competitive
landscape is the embrace of innovation and the digitalisation of our business.
Fintechs are beginning to unravel the financial services value chain, and we
need to be able to respond.
The good news is that harnessing the digital opportunity can not only help us protect our
position in our core markets of Singapore and Hong Kong, it can also be a game
changer to help extend our reach into the larger geographies. By harnessing the power
of technology and the prevalence of smart mobile devices, we can reach customers
anywhere and anytime. They can open accounts and conduct banking transactions
without ever having to make a branch visit. This means we can reach out to a broader
customer base in our growth markets without the need for an extensive physical
branch network.
However, this is a lot more than adding a few digital apps in front of our clients.
It requires a deep rethink about our basic value proposition, a shift in our culture and
a comprehensive re-architecture of our technology. It is the challenge of culture
and legacy technology that prevents most incumbents from true transformation.
We have spent the past three years deeply immersed in this agenda. On the technology
front, we have made efforts to completely digitise the bank – such as using SOA
Service-Oriented Architecture and an API Application Programme Interface
framework to eliminate paper and provide instant fulfilment. We are already beginning
to see income and expense benefits from this. On the culture front, we are making
good headway in creating a “fintech-like” workforce that is consumed with re-
imagining the customer experience – one that is simple, seamless and complete.
This is instrumental to our goal of making banking joyful for our customers.
On China
China’s achievements over the past three decades have been unrivalled in history –
a USD 11 trillion economy, lifting 500 million people out of poverty. The model
of centrally-planned growth with twin engines of exports and investments has
served it well. However, more recently, the
“ The good news is that harnessing the digital opportunity can not only help us protect our
position in our core markets of Singapore and Hong Kong, it can also be a game changer to help
extend our reach into the larger geographies.”
CEO reflections 13
planned model resulted in a significant misallocation of resources with substantial
overcapacity in the manufacturing sector. This was compounded by a credit binge in
the aftermath of the Global Financial Crisis. Going forward, China has three imperatives:
overcapacity in the short term and efficiency in the state-owned enterprise
resource allocation to prevent future
occurrence of inefficiency.
with a strong currency to be able to
intended to achieve these outcomes and,
if successful, will have enormous benefits for China and the world.
The socio-political dimensions aside, at a macroeconomic level, China has the
without an implosion. However, there are
to subdue the volatility, the Chinese have relied on policy measures that are
sometimes misguided and often unclear.
therefore quite easy to be caught on the wrong side of economic turbulence.
reform will result in heightened levels of
deal with.
managing our business appropriately.
the biggest opportunities in financial services
internationalisation paths may be choppy,
but building out suitable positions in these areas will have long term payoffs.
China has powered growth in Asia for the past decade and will continue to
play a crucial role in the future growth of the region. Given this, it is important
“ Over the past five years, we have positioned ourselves well to benefit from China’s trade
account opening. Going forward, we are focused on seizing opportunities that emerge from China’s
liberalisation of its capital account.”
“ What makes us different is our fundamental belief that at the heart of it all, we must do real
things for real people, while ensuring that DBS is a joy to deal with.”
capitalising on opportunities arising from
positioned ourselves well to benefit from
forward, we are focused on seizing
liberalisation of its capital account.
On our role in society
to our industry was not through the erosion of capital or liquidity, but the erosion of a
resource that is infinitely more dear – trust.
suspicion and our role in society and the macroeconomy questioned.
legitimate part of the macroeconomy,
revalidate our role in the larger society. We will have to recognise that not all returns
can be found in financial statements and our responsibility to shareholders must be
balanced by responsibility to society at large.
licence to operate comes from civil society,
depend on the currency of that licence.
belief that at the heart of it all, we must
do real things for real people, while
entrepreneurship path – our corporate social responsibility platform. Find out more
about our approach to creating social value on page 44.
We are also a firm believer that to uphold
to embed a culture of doing the right thing within the organisation. Tied to this is a
mindset of not simply following rules or the letter of the law, but embracing the
principles behind them. This belief underpins our commitment to enhancing the
transparency of our corporate disclosures
steps to present a more comprehensive and transparent view of how our business
model and strategies inform the way we do business. Find out more about our approach
DBS Annual Report 2015 14
Business model –
how we create value
In Institutional Banking, we serve large corporates, SMEs and
institutional investors, from helping them finance their business activities
to managing their financial risks.
We offer a full range of credit facilities from short-term working
capital financing to specialised lending. We also provide transaction
services such as cash management and trade finance, treasury
and markets products, capital markets and advisory solutions.
Read more about our Institutional Banking business on page 30.
In Consumer Banking, we serve individuals, from mass market to
affluent, at every stage of their lives: from saving at a young age
to buying a home as they start their own families, to investing
for retirement. We offer a diverse range of banking products and
services, including deposits, loans, cards, payments, investment and
insurance products.
Read more about our Consumer Banking business on page 33.
In Treasury and Markets, we structure products for customers
and are market makers for foreign exchange, interest rate,
debt, credit, equity and other structured derivatives.
Our business model seeks to create value for stakeholders
in a sustainable way.
Our strategy is predicated on Asia’s megatrends, including the rising
middle class, growing intra-regional trade, urbanisation, and the rapid
adoption of technology that is fuelling new innovations.
We seek to intermediate trade and investment flows as well as support
wealth creation to capitalise on Asia’s long-term ascendancy. We are a regional
bank with sufficiently-deep roots in key markets, making us a compelling
Asian bank of choice. The strategy is encapsulated in the following
four points:
seeking to make banking joyful for our customers
flows across Greater China, South Asia and Southeast Asia
serving all customer segments
focused on affluent individuals,
large corporates, small and medium enterprises SMEs and institutional
investors. Going forward, we will leverage digital technologies to
extend our reach to individuals Our strategy is clear and simple. It defines
the businesses that we will do and will not do. We have clarity around our sources of
competitive advantage given our resources. We have put in place a governance
framework to ensure effective execution and risk management. Further, we have
a balanced scorecard to measure our performance and align compensation
to desired behaviours.
Read more about “How we use our resources” on page 16.
Our businesses
Our strategy
15
Differentiating ourselves
Governing ourselves
Measuring our performance
Business model – how we create value
Competent leadership Competent leadership starts at the top.
We have a strong nine-member board, two-thirds of whom are former bankers
and the remainder industry leaders. The Board is well-informed and fully engaged,
and provides direction to management by reviewing and overseeing the
implementation of the Group’s strategy. Senior management is responsible for
setting strategy, and driving business performance and organisational
synergies. A matrix reporting structure with joint ownership between regional
businesssupport unit heads and local country heads ensures that the decision-
making process leverages our group-wide strengths and takes into account local
market conditions.
Read about our leaders from pages 4 to 7.
Effective internal controls Our framework for internal controls spans
finance, operations, compliance and information technology, and is built on
three lines of defence. The first comprises the identification and management of
risks by businesses, support units and countries. The second is the corporate
oversight exercised by control functions such as Risk Management, Finance and
Compliance. The third is in the form of regular internal audits, which provide an
independent assessment of the adequacy and effectiveness of our internal controls.
Read about internal controls on page 63.
Values-led culture Our organisational values, PRIDE, shape
the way we do business and work with each other.
P urpose-driven
We strive to be a long-term Asian partner, committed to making banking joyful and
trustworthy, and transforming Asia for the better.
R elationship-led
We build long-lasting relationships and strong teams, and work together to find
better solutions.
I nnovative
We embrace change and are not afraid to do things differently.
D ecisive
Our people are given the freedom to decide, take ownership and make
things happen.
E – Everything Fun
We have fun and celebrate together
Our balanced scorecard We use a balanced
scorecard approach to measure how successfully
we are serving multiple stakeholders and driving
the execution of our long-term strategy. Our
scorecard is based on our strategy and is used to set
objectives, drive behaviours, measure performance
and determine the remuneration of
our people.
The scorecard is divided into two parts of equal
weighting and is balanced in the following ways:
and non-financial
performance indicators; almost one-third of the
total weighting is focused on control and
compliance metrics
stakeholders
targets and long-term strategic outcomes
The scorecard is updated yearly and approved by
the Board before being cascaded throughout the
organisation, ensuring that the goals of every business,
country and support function are aligned
to those of the Group. Performance is assessed
against the balanced scorecard to determine
remuneration.
Read about our balanced scorecard on page 27.
Read about our remuneration policy
on pages 68 to 73.
Banking the Asian Way We marry the professionalism expected of
a best-in-class bank with an understanding of Asia’s cultural nuances.
Asian relationships: We strive to embody
the elements of what relationships are about in Asia. We recognise that
relationships have swings and roundabouts, and look at relationships holistically,
recognising that not every transaction needs to be profitable in its own right.
We stay by our clients through down cycles.
Asian service: Our service ethos is built
on the RED motto: being Respectful, Easy to deal with and Dependable, with
the humility to serve and the confidence to lead.
Asian insights: We know Asia better; we
provide unique Asian insights and create bespoke Asian products. Our customer
conversations are underpinned by award- winning research that offers insights into
markets and industries in Asia.
Asian innovation: We constantly innovate
new ways of banking that are appropriate to our markets as we strive to make
banking faster, more intuitive and more interactive.
Asian connectivity: We work in a
collaborative manner across geographies, supporting our customers as they expand
across Asia.
Technology and infrastructure We invest heavily in technology, a crucial
business differentiator, which allows us to be nimble, resilient and innovative.
Our systems now operate on a common platform which allows us to scale up
our business with lower marginal costs. This enables us to be nimble with faster
speed-to-market. Our investments have strengthened the resilience of our network
and fortified our defences against cyber intrusions. Our open platform enables
us to integrate and leverage best in- breed technologies, allowing us to work
seamlessly with technology partners such as research agencies and cloud-service
providers to develop innovative solutions for our stakeholders.
Nimbleness and agility We are of a “goldilocks” size, big enough
to have meaningful scale and yet nimble enough to quickly identify and act on
opportunities. We have a flat organisation structure and all our key leaders work
cohesively as one team. Further, we are building a culture of innovation and
experimentation.
DBS Annual Report 2015 16
How we use our
resources
We have various resources
1
available that we can use to create value for stakeholders. We seek to strike a balance between using them in the current period on the one
hand, and enhancing and retaining them for future periods on the other. We recognise the difficulty in measuring the exact value of many of these resources.
Hence, we provide proxies of the values at discrete points and explain the initiatives undertaken during the year that enhanced or made use of the resources.
A sustainable business model requires us to manage our
resources in a way that maximises value creation
in the long term.
Resources 2014
2
How we manage our resources 2015
2
Brand
Our well-recognised name that embodies
our values and differentiates us
Brand value
3
USD 4.2 bn
