Presentation: Delivering Results Across Businesses, Geography: DBS Group Holdings 1Q 2004 Financial

Delivering results across businesses, geography
April 30, 2004

DBS Group Holdings
1Q 2004 Financial Results
Presentation to Media and Analysts
This presentation is available at www.dbs.com/investor
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or
distributed to parties outside the presentation. DBS Bank accepts no liability whatsoever with respect to the use of this document or its contents.

Delivering results across businesses, geography
‰

Achieving top line growth, highest ever quarterly net
profit

‰

Stronger operating profit on better non interest income

‰


Regional investment producing results

‰

Better asset quality, stronger capital adequacy

2

Net profit expands 80.1%
(S$ million)

1Q 2004

1Q 2003

%
change

%

4Q 2003 change

Net interest income

634

599

5.8

628

1.0

Non-interest income

632

448


41.1

425

48.7

1,266

1,047

20.9

1,053

20.2

Staff costs

250


219

14.2

217

15.2

Other operating expenses

253

223

13.5

265

(4.5)


Operating expenses

503

442

13.8

482

4.4

Operating profit (a)

763

605

26.1


571

33.6

Goodwill amortization

110

107

2.8

110

nm

50

118


(57.6)

82

(39.0)

NPAM

488

271

80.1

292

67.1

Cash NPAM (b)


598

378

58.2

402

48.8

Operating income

Provisions

nm : not meaningful
(a) Operating profit before goodwill amortization and provisions
(b) NPAM before goodwill amortization

3


DBS achieves the highest ever quarterly net profit,
and stronger key operating ratios

(S$ million)

488

500

DBS Group Holdings Ltd

1Q
2004

1Q
2003

4Q
2003


Net interest margin

1.79%

1.87%

1.81%

Non-interest inc. / operating inc.

49.9%

42.8%

40.4%

Cost-to-income ratio (a)

39.7%


42.2%

45.8%

Cash ROA (b)

1.42%

0.99%

1.01%

Cash ROE (b)

15.80%

400

300

291

271

292

171

200

100

NPL ratio

0

1Q
2Q
3Q
4Q
1Q
2003 2003 2003 2003 2004

(a)
(b)
(c)

Cash EPS (S$) (c)

Excludes goodwill amortization
Excludes goodwill amortization, annualized
Earnings per share before goodwill amortization, annualized

10.52% 10.91%

4.6%

5.9%

5.2%

1.60

1.02

1.08

4

Delivering results across businesses, geography
‰

Achieving top line growth, highest ever quarterly net
profit

‰

Stronger operating profit on better non interest income

‰

Regional investment producing results

‰

Better asset quality, stronger capital adequacy

5

Net interest income, customer loans grow
QoQ Net interest income (S$ million)

Customer loans (a)

QoQ Net interest margin (%)

YoY growth rate

6.0%
65,344

1.87%
1.68%
599

560

588

628

62,714

634

1Q
2Q
3Q
4Q
1Q
2003 2003 2003 2003 2004
(a)

63,902

1.79%
1.72%
1.81%

64,335

61,640

Mar
2003

Jun
2003

Sep
2003

Dec
2003

Mar
2004

After deducting cumulative provisions
6

Fee income and other income rise
Other income (a)
Fee income

800

(S$ million)
700

632

600

525
500
400
300

448
350
157

381
168

358
157

316
126

425

424

355

266
174

288

210

214

259

251

277

200
100

193

213

201

190

160

1Q
2002

2Q
2002

3Q
2002

4Q
2002

1Q
2003

2Q
2003

3Q
2003

4Q
2003

1Q
2004

33.0

42.8

43.1

47.2

40.4

49.9

0

Non-interest income contribution (%)

As a % of
total income 34.3

36.5

34.8

(a) Other income defined as non interest income less fee and commission income and excluded gains from sale of non-core assets.
Figures have been restated to reflect the changes in accounting policy

7

Fee income grows on sequential rebound in
market-related activities and wealth management
(S$ million)
1Q 2004

1Q 2003

%
change

4Q 2003

%
change

Stockbroking

69

18

283.3

60

15.0

Investment banking

26

7

271.4

24

8.3

Trade and remittances

30

27

11.1

29

3.4

Loan related

52

36

44.4

43

20.9

Deposit related

25

26

(3.8)

26

(3.8)

Credit card

22

20

10.0

24

(8.3)

Fund management

11

7

57.1

9

22.2

Wealth management (a)

34

13

161.5

23

47.8

8

6

33.3

13

(38.5)

Total

277

160

73.1

251

10.4

Fee-to-income (%) (b)

21.9

15.3

Others

(a) Unit trust distribution and bancassurance
(b) Fee and commission income as a % of total operating income

23.8

8

Retail wealth management sales rises every quarter
Sales Volume of Investment Products (a)
9000

8,806

(S$ million)

Hong Kong

8000

Singapore
7000

4,824

6000
5000

4,434

4000

1,396

3000

2,005
2000

453

1000

65
65

379

880

3,039

3,982

1998

1999

2000

2,481

1,004

1,370

1,403

1,518

775

1,061

1,068

1,078

1,224

1Q
2003

2Q
2003

3Q
2003

4Q
2003

1Q
2004

1,822
1,047

1,552

0

2001

2002

2003

2,742

2,438

2,065

(a) Includes unit trusts (such as Horizon, Ei8ht, Up! and other DBSAM programmes) and treasury investment products (such
as Growth, Surf, medium-term equity linked notes and structured notes)

9

Revenue-related costs up, but cost to income down
(S$ million)

1Q 2004

1Q 2003

%
change

4Q 2003

%
change

Group operating expenses
Staff costs

250

219

14.2

217

15.2

Occupancy expenses

46

48

(4.2)

54

(14.8)

Technology-related

77

71

8.5

74

4.1

Revenue-related

54

33

63.6

53

1.9

Others

76

71

7.0

84

(9.5)

503

442

13.8

482

4.4

1,266

1,047

20.9

1,053

20.2

39.7

42.2

Total operating expenses
Operating income
Cost-to-income ratio (a) (%)
(a) Excludes goodwill amortization

45.8

10

Delivering results across businesses, geography
‰

Achieving top line growth, highest ever quarterly net
profit

‰

Stronger operating profit on better non interest income

‰

Regional investment producing results

‰

Better asset quality, stronger capital adequacy

11

DBS Hong Kong shows results again,
net profit up 52%
1Q 2004

1Q 2003

%
change

4Q 2003

Net interest income

213

190

12.1

208

2.4

Non-interest income

107

80

33.8

104

2.9

Operating income

320

270

18.5

312

2.6

Operating expenses

122

109

11.9

121

0.8

-

1

nm

-

-

198

160

23.8

191

3.7

24

41

(41.5)

25

(4.0)

149

98

52.0

144

3.5

(S$ million) (a)

Impairment of fixed assets
Operating profit (b)
Provisions
Net profit after tax

nm : not meaningful
(a) Assumes exchange rate of HK$1 to S$0.2154. Based on Hong Kong GAAP
(b) Operating profit before provisions

%
change

12

DBS Hong Kong key ratios continue to support
Group results
DBS Bank (Hong Kong) Limited

1Q 2004

1Q 2003

4Q 2003

Net interest margin

2.49%

2.35%

2.45%

Cost-to-income ratio (a)

38.1%

40.4%

38.8%

Non-interest inc. / operating inc.

33.4%

29.6%

33.3%

Loan-to-deposit ratio

77.1%

75.7%

76.0%

NPL ratio

2.2%

2.6%

2.4%

CAR ratio

18.7%

21.6%

19.0%

ROE

16.7%

10.1%

16.4%

ROA

1.65%

1.15%

1.59%

(a) Excludes impairment loss on properties

13

Delivering results across businesses, geography
‰

Achieving top line growth, highest ever quarterly net
profit

‰

Stronger operating profit on better non interest income

‰

Regional investment producing results

‰

Better asset quality, stronger capital adequacy

14

NPL rate trending down, the lowest since post
1997 Asian financial crisis
Substandard
Doubtful
Loss
NBk NPLs / NBk Loans (%)

(S$ million)

11.8%

13.0%

8,149
7500

7.6%

7,086
3,799
(54%)

5,121

4,411 4,512 4,224
951
(13%)

2,336
(33%)

452

3,607 3,411 3,114

(5%)

(82%)

(76%)

258

282

(74%)

3,780

5.7% 5.2%
4.6%

4,133 4,163 4,143
3,780
3,077

3,017 2,936 2,777

(74%)

(73%)

(71%)

(73%)

240

295

(6%)

204
(5%)
799

(7%)

316

(6%)

816

851

2,777

2,576

(6%)

(32%)

546

819

(12%)

(18%)

(20%)

(22%)

(20%)

(20%)

Dec
2000

Dec
2001

Dec
2002

Dec
2003

Mar
2003

Jun
2003

0

Dec
1998

5.9% 5.9%

(63%)

5000

2500

5.7% 6.1% 5.2%

Dec
1999

(6%)

252
858

(8%)

891

3,359

(73%) 2,523
(75%)

204

213

799

623

(5%)

(21%) (22%)

Sep
2003

37.2% are
restructured
loans

Dec
2003

(6%)
(19%)

Mar
2004
15

Provision coverage levels improve to 67.6%
5000

General Provisions (GP)
Specific Provisions (SP)

4,286

(S$ million)
4000

1,191
2,719

3000
2,286

1,061

2,500 2,387

2,477 2,496

2,605 2,387
2,271

1,064

1,003 1,017 1,061 1,064

1,323

1,474 1,479 1,544 1,323 1,199

Dec Dec Dec Dec Dec
1999 2000 2001 2002 2003

Mar Jun Sep Dec Mar
2003 2003 2003 2003 2004

2000
3,095

1,049

1000
1,237

989

1,658 1,511

1,072

0

Coverage ratios (%)
SP+GP / Unsec NPLs 118.4 129.9 142.5 120.7 124.0
SP+GP / NPLs

52.6

51.8

60.3

59.2

63.2

120.9 118.8 121.7 124.0 132.4
59.9

60.0 62.9 63.2 67.6
16

Specific provision charges significantly down
(S$ million)

1Q 2004

1Q 2003

%
Change

4Q 2003

%
Change

29

79

(63.3)

78

(62.8)

Singapore

17

18

(5.6)

53

(67.9)

Hong Kong

17

45

(62.2)

24

(29.2)

Others

(5)

16

nm

1

nm

1

24

(95.8)

(7)

nm

Specific provision

30

103

(70.9)

71

(57.7)

General provision

20

15

33.3

11

81.8

Total

50

118

(57.6)

82

(39.0)

SP + GP (loans) /
average loans (bps)

25

56

Loans

Securities, properties
and other assets

nm: not meaningful

52

17

Continued strong capital position
BIS capital adequacy ratio

24
20
16

Tier 2 capital ratio (%)
Tier 1 capital ratio (%)
17.4
15.5
5.2
5.2

12
8

15.1

12.2

14.5

15.2

15.1

15.2

4.7

4.6

4.5

14.2

4.6

4.7

4.5

10.3

10.5

9.8

9.7

10.5

10.5

10.7

Dec
2002

Dec
2003

Mar
2003

Jun
2003

Sep
2003

Dec
2003

Mar
2004

9,624

8,891

9,068

9,463

9,624 10,235

(a)

4
Dec
2001

Group Capital (in S$ million)
Tier-1 Capital 10,474
RWA
(a)

8,393

85,892 81,239 92,067

90,836 93,865 90,542 92,067 95,490

Compared to end December 2001, the reduction in the Tier 1 CAR ratio was primarily due to the reduction of
additional goodwill with DBS’ purchase of the DBS Diamond Holdings Limited minority interest

18

Delivering results across businesses, geography
‰

Achieving top line growth, highest ever quarterly net
profit

‰

Stronger operating profit on better non interest income

‰

Regional investment producing results

‰

Better asset quality, stronger capital adequacy

19

Delivering results across businesses, geography
‰

Supplemental information
Page
‰

Interest margins and Other income

21 - 22

‰

Regional operations

23 - 24

‰

Treasury & Markets

25 - 26

‰

Asset quality and Capital

27 - 31

20

Continuing compression in the mortgage business,
favorable shift in the business mix affect 1Q 2004
margin
1Q 2004

(S$ million)

4Q 2003

Average
Bal.

Interest

Average
rate %

Average
Bal.

Interest

Average
rate %

Interest bearing assets
Customer loans and advances
Interbank items
Securities (a)
Total interest bearing assets

65,631
33,821
42,744
142,196

560
90
302
952

3.43
1.07
2.84
2.69

63,965
34,542
38,876
137,383

575
88
262
925

3.57
1.01
2.67
2.67

Total interest bearing
liabilities

134,388

318

0.95

129,029

297

0.91

634

1.79

628

1.81

Net interest income/margin

(a)

Refers to Singapore Government securities and treasury bills, trading and investment debt securities

21

Other income shows a robust growth, up 24.4%
(S$ million)
Net gain on treasury
activities (a)

1Q 2004 1Q 2003

%
%
4Q 2003
change
change

252

155

62.6

120

110.0

Net gain on investment
securities

86

119

(27.7)

28

207.1

Net gain on fixed assets

2

(1)

nm

3

(33.3)

Others

2

2

nm

2

nm

342

275

24.4

153

123.5

Total

nm : not meaningful
(a) Includes structured investment products

22

DBS Thai Danu’s net profit returned to a positive
territory, net profit up 271%
(S$ million) (a)

1Q 2004 1Q 2003

%
4Q 2003
change

%
change

Net interest income (b)

25

26

(1.0)

29

(10.9)

Non-interest income

12

12

(5.6)

14

(19.1)

Operating income

37

38

(2.5)

43

(13.7)

Operating expenses

22

25

(11.9)

24

(11.8)

Operating profit (c)

16

14

14.6

19

(16.2)

-

9

(100.0)

5

(100.0)

16

4

271.0

13

15.7

Provisions
Net profit / (loss)
after tax

(a)
(b)
(c)

Assumes exchange rate of THB1=S$0.0425
Includes dividend income
Operating profit before provisions

23

Group net profit balanced
1Q 2003 Net Profit
S$378 million (a)
(S$ million)

Singapore
253
(67%)

(S$ million)
Regional countries
15
(4%)

Hong Kong
100
(26%)

Rest of the world
10
(3%)

(a)

Excludes goodwill amortization

1Q 2004 Net Profit
S$598 million (a)

Singapore
407
(68%)

Regional countries
25
(4%)

Hong Kong
152
(26%)

Rest of the world
14
(2%)

24

DBS’ earnings diversified
1Q 2003 Revenues
S$1,047 million (a)

1Q 2004 Revenues
S$1,266 million (a)
(S$ million)

(S$ million)

Consumer
Banking
340
(32%)

Enterprise
Banking
149
(14%)

T&M
Funding Portfolio
102
(10%)

Consumer
Banking
384
(30%)

Treasury & Markets
203
(19%)

Investment
Banking
142
(14%)
(a)

Central Operations
111
(11%)

Totals may not sum exactly due to rounding

Enterprise
Banking
182
(14%)

T&M
Funding Portfolio
131
(10%)
Treasury & Markets
202
(16%)

Investment
Banking
176
(14%)

Central Operations
191
(15%)

25

Daily earnings at risk and trading income
DEaR for Trading Book
(April 1, 2003 to March 31, 2004)
At 31
(a)
(a)
Mar Average High Low

24.3
Interest rate
9.4
FX
4.1
Equity
Diversification (12.8)
effect
Total

25.0

24.5
6.9
3.8
(12.9)

33.7
18.2
7.3
-

19.6
2.3
1.3
-

70
60
50

No. of D ay s

(S$ million)

DBSH Group DEaR for Trading Book

40
30
20
10
0

DEaR ($ million)

22.3

32.0

16.5

DBSH Group Daily Distribution of Trading Income

60

50

No. of Days

40

30

20

10

>24-26

>22-24

>20-22

>18-20

>16-18

>14-16

>12-14

>10-12

>6-8

>8-10

>4-6

>2-4

>0-2

>(2)-0

>(4)-(2)

>(6)-(4)

>(8)-(6)

>(10)-(8)

>(12)-(10)

>(14)-(12)

>(16)-(14)

>(18)-(16)

0

Trading income ($ millions)

(a)

The high (and low) DEaR figures reported for each risk class did not necessarily occur on the same day as the high
(and low) reported for total. A corresponding diversification effect cannot be calculated and is therefore omitted from
the table.

26

DBS Hong Kong Consumer Banking asset quality
Credit card delinquency rates

Credit card charge-off rates

15.00%
12.9%

12.4%

12.00%

12.0% 11.8% 11.8%

90 days
past due

11.0%
10.8%

1Q03

2Q03 3Q03

4Q03

1.5%

1.5%

1Q04

10.0%

DBS (HK) (a) 1.1%

9.00%

0.6% Industry (c) 1.3%1.3%

3.00%

1.2%

0.9%

n.a.

6.0%

6.00%

1.8%

?

0.00%

3M
2003

6M
2003

DBS HK (b)

9M
2003

12M
2003

3M
2004

Industry (c)

n.a : not available
(a)
(b)
(c)

Delinquency rates as at period end
YTD, annualized Credit card charge off rates using HKMA basis
Source: Hong Kong Monetary Authority

27

DBS Singapore Consumer Banking asset quality
Credit Card Delinquency Rates (a)

Credit card charge-off rates
3.00%

6.00%

4.5%

4.6%

4.5%

2.2%

4.1%

4.0%

2.2%
2.0%

2.00%

1.8%

1.8%

3.00%

1.00%

0.00%

0.00%

3M
2003

(a)

6M
2003

9M
2003

12M
2003

3M
2004

90 days past due delinquency rates as at period end

1Q
2003

2Q
2003

3Q
2003

4Q
2003

1Q
2004

28

Residential mortgage delinquency rates (a)
DBS Bank (Hong Kong) Ltd.

DBS Singapore Consumer Banking

2.00%

2.00%

1.50%

1.30%

1.27%
1.04%

1.00%

1.00%

0.82%
0.63%

0.70%

0.69%

Mar
2003

Jun
2003

0.81%

0.69%

0.62%

0.50%

0.00%

0.00%

Mar
2003

(a)

Jun
2003

Sep
2003

Dec
2003

Mar
2004

Sep
2003

Dec
2003

Mar
2004

Residential mortgage 90 days past due delinquency rates
29

Total capital versus RWA
(S$ billion)

Risk Weighted Assets

Total Capital
+1.8 -0.4 -0.2 +0.2 14.5

15

+6.3 +0.6 -2.0 -0.2 95.5

13.1

10

Others (b)
Capital (a)
Instruments

90.8
Others (c)
Financial
Derivatives

Dividend
Cash
Earnings

75

Inter-Bank
Placements
& Bank Bonds

5

50

Loans &
Bonds

25

0

0
Mar
2003

(a)
(b)
(c)

100

Mar
2004

Mar
2003

USD-denominated capital instruments decreased as USD weakened against SGD
Includes asset revaluation reserves for equities and general provisions
Decrease mainly due to drop in financial guarantees, offset by increase in accounts receivables and trade receivables
from DBSV

Mar
2004

30

Total capital versus RWA
(S$ billion)

15

Risk Weighted Assets

Total Capital
13.9

+0.6

14.5
92.1

+3.3

+0.3

95.5

100

Others (a)

Cash
Earnings

10

-0.2

Financial
Derivatives

75

Loans &
Bonds

50

5
25
0

0
Dec
2003

(a)

Includes accounts receivables and other assets

Mar
2004

Dec
2003

Mar
2004

31

Delivering results across businesses, geography
April 30, 2004

DBS Group Holdings
1Q 2004 Financial Results
Presentation to Media and Analysts
This presentation is available at www.dbs.com/investor
Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or
distributed to parties outside the presentation. DBS Bank accepts no liability whatsoever with respect to the use of this document or its contents.