5
NOTES TO THE FINANCIAL STATEMENTS
These notes form an integral part of and should be read in conjunction with the accompanying financial statements.
1 GENERAL
The financial statements of DBS Bank Ltd formerly known as The Development Bank of Singapore Ltd “DBS Bank” for the year ended December 31, 2003 were approved and
authorised for issue by the Board of Directors on February 19, 2004.
The financial statements are expressed in Singapore dollars. DBS Bank is principally engaged in the business of banking including the operations of an Asian Currency Unit under terms and
conditions specified by the Monetary Authority of Singapore. The principal activities of the subsidiary companies of DBS Bank are disclosed in Note 28.2.
DBS Bank is a wholly owned subsidiary of DBS Group Holdings Ltd “DBSH”. The registered office of DBS Bank is located at 6 Shenton Way, DBS Building Tower One,
Singapore 068809.
Pursuant to Section 2013BA of the Singapore Companies Act, DBS Bank is not required to prepare consolidated financial statements. The results of DBS Bank’s subsidiary companies,
and newly acquired and incorporated subsidiary companies have been included in the consolidated financial statements of DBSH Group from the date they became subsidiary
companies.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of the significant accounting policies applied by DBS Bank and, except where noted, are consistent with those applied in the previous financial year. The
principal accounting policies adopted in the preparation of these financial statements are set out below:
2.1 BASIS OF PRESENTATION
2.1.1 These financial statements of DBS Bank are prepared in accordance with the historical
cost convention, modified by the revaluation of certain treasury instruments to market value. The financial statements comply with Singapore Financial Reporting Standards “FRS”
including related Interpretations promulgated by the Council on Corporate Disclosure and Governance “CCDG”. The financial statements were previously prepared in accordance with
the Singapore Statements of Accounting Standard “SAS”. The transition from SAS to FRS has no material impact on the financial statements of DBS Bank.
2.1.2 FRS 39, “Financial Instruments: Recognition and Measurement” has been adopted by
the CCDG during the financial year but the Standard will be effective from January 1, 2005. The implementation of FRS 39 is expected to have a significant impact on certain financial
assets and liabilities. An opening adjustment to reserve will also be required, representing
6 unrealised gains or losses on financial assets recorded as available for sale, and derivatives
designated as cash flow hedges.
2.2 CHANGE IN SIGNIFICANT ACCOUNTING POLICY
The Monetary Authority of Singapore revised MAS Notice 605 during the third quarter of 2003, allowing for the measurement of trading book positions at fair value. Following the revision,
DBS Bank revised its classification guidelines and measurement of its trading and investment securities.
Prior to the revision, Singapore Government securities and other trading securities were separately stated at cost adjusted for amortisation of premium or discount less provision.
Provision was made based on the shortfall between cost and market value determined on an aggregate portfolio basis and recognised as a charge to the profit and loss account as they arise.
With the revision, a security is classified as held for trading if it is acquired or incurred principally for the purpose of generating a profit from short-term fluctuations in price or dealer’s
margin. A security is also classified as held for trading if it is part of a portfolio for which there is evidence of a recent actual pattern of short-term profit-taking, regardless of why it was
acquired. These securities are recorded at fair value on the balance sheet, with changes in fair value recorded in “Other income” in the profit and loss account.
Securities that are not classified as held for trading are classified as investment securities. These securities are stated at cost less provision. Specific provision is made for an individual
investment when there has been a diminution in value, except where such diminution is temporary, and is charged to the profit and loss account as they arise. In addition, for corporate
debt securities, a general provision charge in line with the DBS Bank’s existing provisioning policies is also recorded in the profit and loss account.
The accounting policy change has been applied retroactively, and the comparable financial results for DBS Bank have been restated to conform to the new accounting policy.
As a result of the change, the net profit after taxation “NPAT” of DBS Bank for 2003 was S7 million higher than it would have been had the change not been made. Accordingly, the
previously reported NPAT for 2002 increased by S56 million and the beginning revenue reserves at January 1, 2002 decreased by S9 million.
2.3 SUBSIDIARY COMPANIES
