FEE AND COMMISSION INCOME DIVIDEND INCOME STAFF COSTS, EQUITY COMPENSATION AND SHARE OPTION PLANS

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2.13 OFFSETTING FINANCIAL INSTRUMENTS

Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

2.14 INTEREST INCOME

Interest income is recognised on an accrual basis. Interest earned but not received on non-performing loans is not recognised as income in the profit and loss account until receipt. All interest accrued previously and recognised in the profit and loss account is reversed from interest income once a loan is classified as non-performing. Amortisation of premiums and discounts are recognised as interest expense or interest income on a straight-line basis over the life of the asset or liability.

2.15 FEE AND COMMISSION INCOME

Fee and commissions are recognised in the profit and loss account as and when the service is performed and when considered recoverable. Fee income relating to loans and guarantees is recognised over the period during which the related service is provided or credit risk is undertaken. Where a fee is charged in lieu of interest, such fee is amortised over the same period as the related income is recognised.

2.16 DIVIDEND INCOME

Dividends from equities are recognised when declared payable.

2.17 STAFF COSTS, EQUITY COMPENSATION AND SHARE OPTION PLANS

DBS Bank has adopted a total compensation package that consists of base pay, cash bonuses, other staff-related allowances and long-term incentive plans. These long-term incentives are the DBSH Share Ownership Scheme, the DBSH Share Option Plan, the DBSH Performance Share Plan and the DBSH Employee Share Plan. The details of these share schemesplans are described in the Directors’ Report and Note 13. Remuneration expenses on base pay, cash bonuses, contributions to defined contribution plans, e.g., the Central Provident Fund, other staff-related allowances and contributions to the DBSH Share Ownership Scheme are recognised in the profit and loss account once incurred. For defined contribution plans, contributions are made to publicly or privately administered funds on a mandatory, contractual or voluntary basis. Once the contributions have been paid, DBS Bank has no further payment obligations. For the DBSH Performance Share Plan and the DBSH Employee Share Plan, a trust has been set up for each share plan. The shares purchased are recorded as “Other assets” in the balance sheet at cost less provision for diminution in value. When the shares are awarded, remuneration 12 expenses are computed using the average purchase price adjusted for provision for diminution in value and recognised in the profit and loss account on a straight-line basis over the relevant performance period. Options granted under the DBSH Share Option Plan are not recognised as remuneration expenses. When the options are exercised, the proceeds received net of any transaction costs are credited to DBSH’s share capital par value and share premium accounts. Employee entitlement to annual leave is recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.

2.18 OPERATING LEASES