Financial Performance 2Q06
DBS Group Holdings Ltd
Incorporated in the Republic of Singapore
Company Registration Number: 199901152M
To: Shareholders
The DBS Group Holdings Ltd (“DBSH” or “the Company”) Board of Directors report unaudited financial
results for the second quarter ended June 30, 2006.
For the second quarter of 2006, the Directors have declared an interim gross dividend of 17 cents (second
quarter 2005: 15 cents) for each DBSH ordinary share; and 13 cents (second quarter 2005: 15 cents) for
each DBSH non-voting convertible preference share (“CPS”) and for each DBSH non-voting redeemable
CPS.
The second quarter 2006 dividends will be paid less 20% Singapore income tax.
The second quarter 2006 dividends will be payable on August 25, 2006. DBS shares will be quoted exdividend on August 10, 2006. Notice is hereby given that the Share Transfer Books and Register of
Members of the Company will be closed on August 15, 2006. Duly completed transfers received by the
Company's Registrar, Tricor Barbinder Share Registration Services of 8 Cross Street #11-00 PWC
Building, Singapore 048424 up to 5.00 p.m. on August 14, 2006 will be registered to determine
shareholders' entitlement to the second quarter 2006 dividends. In respect of ordinary shares in the
securities accounts with The Central Depository (Pte) Limited (“CDP”), the second quarter 2006
dividends will be paid by DBSH to CDP, which will in turn distribute the dividend entitlements to
shareholders.
By order of the Board
Heng Lee Cheng (Ms)
Group Secretary
July 28, 2006
Singapore
More information on the above announcement is available at www.dbs.com/investor
Performance Summary
Unaudited Financial Results
for the Second Quarter ended
June 30, 2006
DBS Group Holdings Ltd
Incorporated in the Republic of Singapore
Company Registration Number: 199901152M
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Contents
Page
Overview
Net Interest Income
Net Fee and Commission Income
Other Non-Interest Income
Operating Expenses
Provision Charges
Performance by Business Unit
Performance by Geography
Customer Loans
Non-Performing Assets and Provision Coverage
Funding Sources
Customer Deposits
Value at Risk and Trading Income
Capital Adequacy
Unrealised Valuation Surplus
Appendix I:
Appendix II:
Appendix III:
Appendix IV:
Appendix V:
2
3
6
6
7
7
8
10
12
13
17
17
18
19
19
Unaudited Consolidated Income Statement
Unaudited Balance Sheet
Unaudited Statements of Changes in Equity
Unaudited Consolidated Statement of Cash Flows
Selected Notes to the Accounts
Issuance of Ordinary Shares
1
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
OVERVIEW
DBS Group Holdings Ltd (“DBSH”) prepares its consolidated DBSH Group (“Group”) financial statements in accordance with
Singapore Financial Reporting Standards (“FRS”), as modified by the requirements of Notice to Banks No. 612 “Credit Files,
Grading and Provisioning” issued by the Monetary Authority of Singapore.
2nd Qtr
2006
2nd Qtr
1/
2005
% chg
1st Qtr
2006
1st Half
2006
1st Half
1/
2005
% chg
897
296
105
12
44
1,354
712
274
94
12
41
1,133
26
8
12
7
20
850
262
108
38
12
1,270
1,747
558
213
50
56
2,624
1,397
503
176
37
58
2,171
25
11
21
35
(3)
21
594
760
484
649
23
17
564
706
1,158
1,466
970
1,201
19
22
62
20
81
17
(23)
18
31
12
93
32
144
26
(35)
23
718
585
23
687
1,405
1,083
30
549
473
16
518
1,067
846
26
54
603
473
NM
27
518
54
1,121
846
NM
33
Selected balance sheet items ($m)
Customer loans
Interbank loans
Total assets
83,410
20,411
189,589
78,712
17,529
183,674
6
16
3
78,818
22,647
183,870
83,410
20,411
189,589
78,712
17,529
183,674
6
16
3
Customer deposits
Total liabilities
Shareholders’ funds
120,875
169,780
17,408
115,933
164,051
17,147
4
3
2
119,067
164,104
17,348
120,875
169,780
17,408
115,933
164,051
17,147
4
3
2
1.84
37.2
42.7
1.03
11.12
67.9
2.2
2.23
33.1
44.4
1.14
12.15
66.2
2.1
2.23
33.4
44.1
1.15
12.55
69.0
1.9
1.83
35.7
44.7
0.94
10.09
67.9
2.2
27
20
18
25
10.6
14.7
10.2
14.1
10.1
14.4
10.6
14.7
1.46
1.50
11.29
1.26
1.26
11.18
1.37
1.37
11.27
1.42
1.45
11.29
1.12
1.12
11.18
1.40
1.44
11.08
1.20
1.20
10.98
1.32
1.32
11.07
1.36
1.40
11.08
1.08
1.08
10.98
Selected profit and loss items ($m)
Net interest income
Net fee and commission income
Net trading income
Net gain from non-trading investments
Other income
Operating income
Less: Operating expenses
Operating profit before provisions
Less: Provisions
Associates
Operating profit before tax
Net profit attributable to shareholders
(“Net profit”)
Add: One-time gain
Net profit
2/
Key financial ratios (%) (excluding one-time gain)
Net interest margin
2.23
Non-interest/total income
33.8
Cost/income ratio
43.9
Return on assets
1.18
12.70
Return on equity 3/
Loan/deposit ratio
69.0
NPL ratio
1.9
Specific provisions (loan)/average loan
16
(bp)
Tier 1 capital adequacy ratio
10.1
Total capital adequacy ratio
14.4
Per share data ($)
Per basic share
– earnings excluding one-time gain
– earnings
– net book value 3/
Per diluted share
– earnings excluding one-time gain
– earnings
3/
– net book value
NM: Not meaningful
Notes:
1/ Figures for 2005 have been restated to make them consistent with the current year’s presentation.
2/ One-time gain of $54 million from the sale of an office building in Hong Kong was recorded in 2nd Quarter 2006.
3/ Minority interests are not included as equity in the computation of net asset value and return on equity.
4/ Return on assets, return on equity, specific provisions (loan)/average loan and per share data for the quarters are computed on an annualised basis.
2
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Net profit before one-time items amounted to $549 million
in second quarter 2006, up 16% from second quarter
2005 and 6% from first quarter 2006.
A one-time gain of $54 million from the sale of an office
building in Hong Kong was recorded during the quarter. If
the item was included, net profit amounted to $603 million
in the second quarter. The commentary that follows
excludes the effects of this non-operating item.
Operating trends underpinning the performance in
first quarter 2006 were sustained in the second
quarter. Operating income increased 20% from a
year ago and 7% from the previous quarter to $1.35
billion.
Interest income and fee income reached a record
during the quarter, reflecting DBS’ customer
franchise and its ability to capture the benefits of
rising interest rates and higher non-interest income
activities as economic conditions strengthened from
a year ago.
Cost pressures continued to be felt during the
quarter. Operating expenses rose 23% from a
year ago and 5% from the previous quarter to
$594 million as a result of higher staff costs and
computerisation expenses. The cost-income
ratio of 44% was slightly higher than the 43% a
year ago but similar to the previous quarter.
Asset quality continued to be healthy. The nonperforming loan ratio improved from 2.2% a year
ago and 2.1% in the previous quarter to 1.9%.
Total provision charges of $62 million were
lower than a year ago, although they were
higher than the previous quarter mainly as a
result of more general provisions being set aside
for this quarter’s loan growth. Specific provisions
for loans fell to 16 basis points this quarter from
27 basis points a year ago and 20 basis points
in the previous quarter.
The Group’s return on assets improved to 1.18%
compared to 1.03% a year ago and 1.14% in the
previous quarter, while return on equity rose to
12.7% compared to 11.1% a year ago and
12.2% in the previous quarter.
Net interest income rose 26% from a year ago and
6% from the previous quarter to $897 million as both
interest spreads and asset volumes improved. Fee
income grew 8% from a year ago and 13% from the
previous quarter to $296 million as contributions from
investment banking and other segments increased.
Net trading income from trading businesses was
higher than a year ago but little changed from the
previous quarter at $112 million.
For first half 2006, net profit rose 26% from a
year ago to $1.07 billion as a result of operating
income growing at a slightly faster pace than
operating costs, and provision charges being
lower. The key drivers of the first half
performance were similar to the second
quarter’s.
NET INTEREST INCOME
Average balance
sheet
2nd Qtr 2006
Average
Average
balance Interest
rate
($m)
($m)
(%)
2nd Qtr 2005
Average
Average
balance Interest
rate
($m)
($m)
(%)
1st Qtr 2006
Average
Average
balance Interest
rate
($m)
($m)
(%)
Interest-bearing
assets
Customer loans
Interbank assets
Securities
Total
80,794
30,966
49,934
161,694
1,134
249
548
1,931
5.63
3.23
4.40
4.79
74,336
30,806
49,479
154,621
724
170
425
1,319
3.91
2.20
3.45
3.42
79,042
27,216
48,604
154,862
1,038
194
503
1,735
5.33
2.89
4.20
4.54
Interest-bearing
liabilities
Customer deposits
Other borrowings
Total
120,945
32,484
153,429
665
369
1,034
2.20
4.56
2.70
116,310
31,998
148,308
335
272
607
1.16
3.41
1.64
117,495
30,142
147,637
568
317
885
1.96
4.27
2.43
897
2.23
712
1.84
850
2.23
Net interest
1/
income/margin
3
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Average balance
sheet
1st Half 2006
Average
Average
balance Interest
rate
($m)
($m)
(%)
1st Half 2005
Average
Average
balance Interest
rate
($m)
($m)
(%)
Interest-bearing
assets
Customer loans
Interbank assets
Securities
Total
80,075
28,992
49,355
158,422
2,172
443
1,051
3,666
5.47
3.09
4.29
4.67
72,828
32,829
48,064
153,721
1,339
350
806
2,495
3.71
2.15
3.38
3.27
Interest-bearing
liabilities
Customer deposits
Other borrowings
Total
119,242
31,502
150,744
1,233
686
1,919
2.08
4.39
2.57
115,589
31,908
147,497
598
500
1,098
1.04
3.16
1.50
1,747
2.23
1,397
1.83
Net interest
1/
income/margin
Note:
1/ Net interest margin is net interest income expressed as a percentage of average interest-earning assets.
Net interest income rose 26% from a year ago from higher
asset volumes, a better asset mix and improved interest
spreads.
Average interest-earning asset volumes rose 5% from a
year ago to $161.7 billion with an improving asset mix.
Most of the increase was due to customer loans.
At the same time, asset yields rose faster than funding
costs across the board from a year ago. In Singapore,
floating-rate corporate and SME loan yields rose in line
with higher interbank rates, while housing loan yields
benefited from higher board rates. Funding costs also
increased but to a lesser extent, reflecting the strength of
DBS’ deposit franchise in Singapore. In Hong Kong, the
spread between prime lending rates and funding costs
continued to widen since bottoming in second quarter
2005.
The improved asset mix and the higher interest spreads
resulted in interest margins rising to 2.23% from 1.84% a
year ago. The rate and volume analysis below indicates
that improving interest spreads played a larger role than
higher asset asset volumes in net interest income growth
from a year ago.
Compared to the previous quarter, net interest income
rose 6%, the result of higher asset volumes and improved
interest spreads, but partially offset by a slightly less
favourable asset mix.
Average interest-earning asset volumes grew 4% from the
previous quarter.
Interest spreads continued to improve from the previous
quarter, but the increase was smaller. In Singapore,
interest spreads improved as asset yields, led by rising
housing loan yields, rose faster than deposit costs.
However, the impact was partially offset by a decline in
spreads between Hong Kong prime lending rates and
funding costs compared to the previous quarter.
The small increase in overall interest spreads was offset
by the effects of the slightly weaker asset mix, resulting in
interest margins remaining at the previous quarter’s level.
The rate and volume analysis below indicates that higher
asset volumes and better interest spreads played an equal
role in growing net interest income from the previous
quarter.
For first half 2006, net interest income grew 25% from a
year ago to $1.75 billion while interest margins improved
from 1.83% to 2.23%.
Net interest costs from a recent US$900 million
subordinated debt issue were reflected for the latter part of
June, while net interest costs from a S$500 million
subordinated debt issue were not included as it was raised
in July. The full-period inclusion of net interest costs from
both issues is expected to have a slight negative impact
on interest margins in the third quarter of around 3 basis
points.
4
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
2nd Qtr 2006 versus 2nd Qtr 2005
Volume and rate analysis ($m)
Increase/(decrease) due to change in
2nd Qtr 2006 versus 1st Qtr 2006
Volume
Rate
Net
change
Volume
Rate
Net
change
Customer loans
Interbank assets
Securities
Total
63
1
4
68
347
79
118
544
410
80
122
612
23
27
13
63
60
26
25
111
83
53
38
174
Interest expense
Customer deposits
Other borrowings
Total
13
4
17
317
93
410
330
97
427
17
27
44
72
21
93
89
48
137
Net impact on interest income
51
134
185
19
18
37
Interest income
Due to change in number of days
Net interest income
-
10
185
47
1st Half 2006 versus 1st Half 2005
Volume and rate analysis ($m)
Increase/(decrease) due to change in
Volume
Rate
Net
change
133
(41)
22
114
700
134
223
1,057
833
93
245
1,171
19
(6)
13
616
192
808
635
186
821
101
249
350
Interest income
Customer loans
Interbank assets
Securities
Total
Interest expense
Customer deposits
Other borrowings
Total
Net impact on interest income
Due to change in number of days
Net interest income
350
5
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
NET FEE AND COMMISSION INCOME
($m)
Stockbroking
Investment banking
Trade and remittances
Loan related
Guarantees
Deposit related
Credit card
Fund management
Wealth management
Others
Total
2nd Qtr
2006
2nd Qtr
2005
% chg
1st Qtr
2006
1st Half
2006
1st Half
2005
% chg
33
44
47
50
7
21
28
15
38
13
296
19
37
46
55
6
19
25
19
38
10
274
74
19
2
(9)
17
11
12
(21)
30
8
37
19
44
34
8
19
24
22
42
13
262
70
63
91
84
15
40
52
37
80
26
558
44
59
85
100
14
38
42
29
73
19
503
59
7
7
(16)
7
5
24
28
10
37
11
Net fee and commission income rose 8% from a year
ago and 13% from the previous quarter as contributions
from a wide range of activities grew.
Active equity markets resulted in stockbroking
commissions making the biggest contribution from a
year ago. However, they were less buoyant in the
second quarter compared to the previous quarter as
more cautious market sentiment affected retail activity, a
mainstay of DBS Vickers’ business.
Investment banking fees were higher compared to a
year ago and the previous quarter. Deal activities during
the quarter included IPOs for Banyan Tree, Allco REIT
and Pacific Shipping Trust. Greater loan syndication in
the region boosted fees compared to the previous
quarter.
Fees from credit cards, trade and remittances, and
deposit-related activities were also higher compared to a
year ago and the previous quarter.
For first half 2006, net fee and commission income rose
11% from a year ago to reach $558 million. The growth
was led by stockbroking commissions, fund management
fees and credit card fees, reflecting higher equity market
activity and greater retail spending as economic
conditions strengthened.
OTHER NON-INTEREST INCOME
($m)
2nd Qtr
2006
2nd Qtr
2005
% chg
1st Qtr
2006
1st Half
2006
1st Half
2005
% chg
Net trading income
From trading businesses
From other businesses
Net gain on non-trading investments
Net gain on fixed assets 1/
105
112
(7)
12
2
94
52
42
12
1
12
>100
NM
100
108
113
(5)
38
-
213
225
(12)
50
2
176
125
51
37
4
21
80
NM
35
(50)
Others (include dividend and rental
income)
42
40
5
12
54
54
-
161
147
10
158
319
271
18
Total
Note:
1/ Exclude one-time gain of $54 million from the sale of an office building in Hong Kong in 2nd Quarter 2006.
Net trading income from trading businesses amounted to
$112 million compared to $52 million a year ago and was
little changed from the previous quarter. During the
quarter, there was demand from corporate customers for
foreign exchange and interest rate products, while trading
gains were made in interest and credit spreads as well as
regional currencies.
Net trading income from trading businesses was better for
the first six months this year, rising 80% from a year ago.
Higher dividend income accounted for most of the $30
million increase in Other income from the previous quarter.
Other income, which amounted to $42 million, was little
changed from a year ago.
6
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
OPERATING EXPENSES
($m)
Staff
Occupancy
Computerisation
Revenue-related
Others
Total
Staff headcount at period-end
2nd Qtr
2006
2nd Qtr
2005
% chg
1st Qtr
2006
1st Half
2006
1st Half
2005
% chg
321
45
97
26
105
594
12,453
253
44
70
28
89
484
12,090
27
2
39
(7)
18
23
3
300
46
92
23
103
564
12,673
621
91
189
49
208
1,158
12,453
518
86
145
50
171
970
12,090
20
6
30
(2)
22
19
3
Operating expenses increased 23% from a year ago to
$594 million from higher staff, computerisation and other
costs.
Staff costs rose 27% from a year ago. With headcount
increasing by 3%, a large part of the increase was
attributable to a higher salary base due to a tight labour
market and to higher bonus accruals in line with the
Group’s better financial performance.
Computerisation expenses were higher than a year ago
due to IT depreciation as well as expenses for ongoing
major projects. Other expenses were higher mainly
because of professional fees.
Compared to the previous quarter, operating expenses
rose 5% with higher base salaries and bonus accruals
accounting for most of the increase.
For first half 2006, operating expenses increased 19%
from a year ago to $1.16 billion. As the rise was slightly
below the increase in operating income, the cost-income
ratio improved marginally from 45% a year ago to 44% for
the first six months.
PROVISION CHARGES
($m)
2nd Qtr
2006
2nd Qtr
2005
% chg
1st Qtr
2006
1st Half
2006
1st Half
2005
% chg
General provisions
34
21
62
14
48
36
33
Specific provisions for loans
Singapore
Hong Kong
Other countries
33
23
19
(9)
51
26
10
15
(35)
(12)
90
NM
40
13
18
9
73
36
37
-
95
48
22
25
(23)
(25)
68
(100)
Specific provisions for securities,
properties and other assets
(5)
9
NM
(23)
(28)
13
NM
Total
62
81
(23)
31
93
144
(35)
Total provision charges for second quarter 2006
decreased 23% to $62 million from a year ago. Specific
provisions for loans decreased 35% to $33 million as
charges for new and exisiting NPLs fell.
a higher charge of $34 million was set aside for general
provisions this quarter for loan growth and higher loan
commitments compared with $14 million in the previous
quarter.
Compared to first quarter 2006, total provisions were
higher as there had been a significant write-back of a
corporate debt security in the previous quarter. In addition,
For first half 2006, total provision charges fell 35% from a
year ago to $93 million as a result of lower specific
provisions and a net write-back for securities.
7
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
PERFORMANCE BY BUSINESS UNIT
($m)
CBG
EB
CIB
GFM
CTU
Central
Ops
Total
Selected profit and loss items
2nd Qtr 2006 1/
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
436
130
244
11
311
176
75
86
16
149
142
161
94
44
165
152
95
111
0
137
81
(28)
9
0
44
(90)
24
50
(9)
(88)
897
457
594
62
718
1st Qtr 2006
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
421
121
232
7
303
172
84
81
25
150
132
113
88
(12)
169
145
68
96
1
118
68
11
9
(1)
71
(88)
23
58
11
(124)
850
420
564
31
687
2nd Qtr 2005
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
308
129
220
20
197
134
59
70
40
83
117
140
76
51
130
97
47
81
(3)
66
103
(47)
8
8
40
(47)
93
29
(35)
69
712
421
484
81
585
1st Half 2006
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
857
251
476
18
614
348
159
167
41
299
274
274
182
32
334
297
163
207
1
255
149
(17)
18
(1)
115
(178)
47
108
2
(212)
1,747
877
1,158
93
1,405
1st Half 2005
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
618
243
440
40
381
267
116
137
64
182
219
231
148
87
215
190
124
169
(5)
151
174
(76)
15
8
75
(71)
136
61
(50)
79
1,397
774
970
144
1,083
Selected balance sheet and other
items
Jun 30, 2006
Total assets before goodwill
Total liabilities
Capital expenditure for 2nd Qtr 2006
Depreciation for 2nd Qtr 2006
28,985
71,977
12
6
18,988
17,660
5
4
38,164
16,707
1
1
67,242
42,402
5
3
28,482
1,240
2
2
1,895
19,794
27
14
183,756
169,780
52
30
Mar 31, 2006
Total assets before goodwill
Total liabilities
Capital expenditure for 1st Qtr 2006
Depreciation for 1st Qtr 2006
29,397
70,922
3
6
18,782
18,192
2
3
32,673
17,816
2
1
70,794
35,929
6
5
24,068
1,749
1
2
2,322
19,496
25
16
178,036
164,104
39
33
1/
8
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
($m)
CBG
EB
CIB
GFM
CTU
Central
Ops
Total
Total assets before goodwill
Total liabilities
Capital expenditure for 4th Qtr 2005
Depreciation for 4th Qtr 2005
29,518
68,415
22
7
18,396
17,862
12
3
32,824
17,953
3
1
68,758
32,980
11
5
24,047
1,417
6
1
858
22,387
75
18
174,401
161,014
129
35
Jun 30, 2005
Total assets before goodwill
Total liabilities
Capital expenditure for 2nd Qtr 2005
Depreciation for 2nd Qtr 2005
30,068
66,995
3
7
18,303
16,888
3
4
32,881
16,480
2
1
68,758
45,686
6
5
23,225
2,122
2
2
3,508
15,880
10
20
176,743
164,051
26
39
Dec 31, 2005
Note:
1/ 2nd Quarter 2006 income and profits exclude one-time gain.
Consumer Banking’s (CBG) net interest income rose 4%
from the previous quarter as a result of higher housing
loan yields in Singapore and higher deposit volumes in
Hong Kong. It was 42% higher than a year ago due to
better interest spreads and higher deposit volumes in both
locations. Non-interest income was stable compared to a
year ago and the previous quarter. Operating expenses
rose from both comparative periods due to higher staff
costs as well as investments in branch upgrading in
Singapore. Provisions in Singapore fell from a year ago.
Enterprise Banking’s (EB) net interest income rose slightly
from the previous quarter as volume growth was partially
offset by lower margins. Higher volumes and margins
contributed to the 31% increase in net interest income
from a year ago. Non-interest income was 27% better than
a year ago from higher sales of treasury-related products
in Hong Kong, but declined 11% from the previous quarter,
which had benefited from corporate demand for foreign
exchange hedging products in Hong Kong. The higher
operating expenses against both comparative periods
were due mainly to salary increase and bonus accruals,
while there was a decline in provision charges in
Singapore.
Corporate and Investment Banking’s (CIB) net interest
income rose 8% from the previous quarter and 21% from a
year ago as a result of loan and deposit growth. Noninterest income was 42% higher than the previous quarter
from a wide range of investment banking activities, as well
as higher dividend income. The 24% increase in operating
expenses from a year ago was due to higher wages and
support costs. Provision charges were higher than the
previous quarter as a result of general provisions being set
aside for loan growth, while they were lower than a year
ago because of a net write-back of specific provisions
during the current quarter.
Global Financial Markets (GFM) earned higher net interest
income from bonds in Singapore compared to a year ago.
Non-interest income rose 40% from the previous quarter
due to higher trading gains in credit and other markets.
Compared to a year ago, non-interest income was also
boosted by higher stockbroking commissions. Higher
wage costs accounted for the rise in operating expenses.
Central Treasury’s (CTU) net interest income rose 19%
from the previous quarter as lower-yielding assets
matured and new positions were taken. Net interest
income fell 21% from a year ago due to lower gapping
opportunities.
Central Operations encompasses a range of activities
from corporate decisions and income and expenses not
attributed to other business segments. Asset management
and private banking activities are also included in this
segment.
9
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
PERFORMANCE BY GEOGRAPHY
($m)
S’pore
Hong
Kong
Rest of
Greater
China
South
and
Southeast Asia
Rest of
world
Total
2nd Qtr 2006 1/
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
563
299
375
48
444
286
87
164
25
184
10
30
20
(1)
21
24
26
20
(5)
50
14
15
15
(5)
19
897
457
594
62
718
1st Qtr 2006
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
526
290
355
(3)
461
278
90
162
19
187
9
19
14
4
10
22
14
22
(1)
30
15
7
11
12
(1)
850
420
564
31
687
2nd Qtr 2005
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
447
300
290
46
412
220
80
156
4
140
7
16
12
9
2
22
15
14
(3)
42
16
10
12
25
(11)
712
421
484
81
585
1st Half 2006 1/
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
1,089
589
730
45
905
564
177
326
44
371
19
49
34
3
31
46
40
42
(6)
80
29
22
26
7
18
1,747
877
1,158
93
1,405
1st Half 2005
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
884
517
592
75
736
425
178
308
12
283
15
27
20
20
2
41
30
26
69
32
22
24
37
(7)
1,397
774
970
144
1,083
124,078
116,690
116,087
117,839
38,820
42,831
41,393
42,187
7,258
5,806
5,861
4,791
4,487
4,383
3,781
3,456
9,113
8,326
7,279
8,470
183,756
178,036
174,401
176,743
Selected profit and loss items
Total assets before goodwill
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
Note:
1/ 2nd Quarter 2006 income and profits exclude one-time gain .
10
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Singapore
Operating profit before tax grew 8% from a year ago as a
result of a 26% increase in net interest income partially
offset by higher operating expenses. It was 4% lower
than the previous quarter as first quarter 2006 had the
benefit of a net provision write-back.
Net interest income increased 30% from a year ago due
to higher interest spreads and an increase in loan and
deposit volumes. It grew 3% from the previous quarter
as the impact of loan and deposit growth was offset by
lower interest spreads.
Net interest income continued to improve from both
comparative periods as a result of higher interest
spreads and higher asset volumes. Non-interest income
was steady against both comparative periods.
Non-interest income rose 9% from a year ago from
higher sales of wealth management and foreign
exchange products, and was little changed from the
previous quarter.
Operating expenses were higher as a result of higher
staff and computerisation expenses. Provision charges
were similar to a year ago as a decline in specific
provisions was offset by higher general provisions for
new loans.
Operating expenses were higher than both comparative
periods due mainly to higher wage costs. Provision
charges were substantially higher than a year ago as
there had been a general provision write-back in second
quarter 2005. Specific provision charges were also
higher in the current quarter than a year ago.
Hong Kong
Other regions
The current quarter’s results incorporate an appreciation
of the Singapore dollar against the Hong Kong dollar of
2% from first quarter 2006 and 6% from second quarter
2005.
Operating profit before tax was 31% higher than a year
ago as a result of improved net interest income partially
offset by higher provision charges. It was similar to the
previous quarter.
DBS’ operations outside Singapore and Hong Kong are
in their build-up phase and do not yet have a significant
impact on the Group. The largest earnings contributions
are currently from Indonesia (through a 99%-owned
subsidiary) and the Philippines (through a 20% associate
stake in Bank of Philippines Islands).
11
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
CUSTOMER LOANS
($m)
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
84,835
80,267
80,949
80,172
574
851
83,410
611
838
78,818
636
851
79,462
576
884
78,712
By business unit
Consumer Banking
Enterprise Banking
Corporate and Investment Banking
Others
Total (Gross)
28,509
19,488
30,937
5,901
84,835
28,914
19,123
26,542
5,688
80,267
29,686
19,234
26,478
5,551
80,949
29,871
18,397
25,831
6,073
80,172
By geography
Singapore
Hong Kong
Rest of Greater China
South and South-east Asia
Rest of the world
Total (Gross)
47,267
26,505
4,086
2,662
4,315
84,835
44,381
26,198
3,120
2,492
4,076
80,267
45,280
26,669
2,953
2,287
3,760
80,949
46,657
25,720
2,524
1,938
3,333
80,172
10,506
10,500
23,994
8,835
7,560
10,112
9,010
9,772
24,388
8,343
6,717
9,734
8,536
8,958
25,005
8,639
6,884
9,785
8,275
9,009
25,291
8,383
6,636
9,226
Gross
Less:
Specific provisions (“SP”)
General provisions (“GP”)
Net total
By industry
Manufacturing
Building and construction
Housing loans
General commerce
Transportation, storage & communications
Financial institutions, investment & holding
companies
Professionals & private individuals (except housing
loans)
Others
Total (Gross)
7,502
7,340
7,204
7,090
5,826
84,835
4,963
80,267
5,938
80,949
6,262
80,172
By currency
Singapore dollar
Hong Kong dollar
US dollar
Others
Total (Gross)
34,694
24,213
15,737
10,191
84,835
33,395
24,187
14,714
7,971
80,267
33,571
24,721
16,214
6,443
80,949
35,981
24,103
14,999
5,089
80,172
Customer loans rose 6% from the previous quarter. Most
of the growth was from corporate loans in Singapore and
Greater China, which included a few large loan
drawdowns. SME loans increased marginally as growth in
Hong Kong was narrowed by exchange translation effects.
Consumer loans fell slightly, with most of the decline
accounted for in Hong Kong.
In Singapore, both Singapore-dollar and foreign-currency
borrowing contributed to the growth in corporate loans
during the quarter. Housing loans were little changed
compared to a decline in the previous quarter. Mortgage
applications and loan drawdowns improved from the
previous quarter, while the volume of early repayments
eased.
In Hong Kong, loans rose 3% in local currency terms
during the quarter, with all of the growth accounted for by
corporates and SMEs. Housing loans fell 2% in Hong
Kong dollar terms during the quarter.
12
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
NON-PERFORMING ASSETS AND PROVISION COVERAGE
By business unit
NPA
($m)
SP
($m)
GP
($m)
NPL
(% of loans)
(GP+SP)/NPA
(%)
(GP+SP)/
unsecured
NPA
(%)
Consumer Banking
331
110
284
1.2
119
320
Enterprise Banking
721
300
192
3.7
68
144
Corporate and Investment
Banking
438
189
308
1.4
113
228
98
28
108
1.7
141
443
1,588
627
892
1.9
96
213
37
21
15
9
75
107
-
243
552
611
1,104
1,646
651
1,074
-
105
234
339
740
110
294
288
189
1.2
3.9
117
65
322
144
509
235
263
1.9
98
184
80
32
140
1.4
214
521
1,668
671
880
2.1
93
204
Debt securities
37
18
71
-
239
490
Contingent liabilities
45
15
94
-
244
714
1,750
704
1,045
-
100
218
344
691
111
283
296
190
1.2
3.6
118
68
326
144
573
267
262
2.2
92
155
83
32
132
1.5
196
480
1,691
693
880
2.1
93
190
130
44
57
19
71
80
-
99
227
209
451
1,865
769
1,031
-
97
198
Jun 30, 2006
Others
Total non-performing loans
(“NPL”)
Debt securities
Contingent liabilities
Total non-performing
assets (“NPA”)
Mar 31, 2006
Consumer Banking
Enterprise Banking
Corporate and Investment
Banking
Others
Total non-performing loans
Total non-performing
assets
Dec 31, 2005
Consumer Banking
Enterprise Banking
Corporate and Investment
Banking
Others
Total non-performing loans
Debt securities
Contingent liabilities
Total non-performing
assets
13
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
By business unit
NPA
($m)
SP
($m)
GP
($m)
NPL
(% of loans)
(GP+SP)/NPA
(%)
(GP+SP)/
unsecured
NPA
(%)
336
637
108
232
298
182
1.1
3.5
121
65
327
150
631
255
256
2.4
81
144
Jun 30, 2005
Consumer Banking
Enterprise Banking
Corporate and Investment
Banking
Others
Total non-performing loans
Debt securities
Contingent liabilities
Total non-performing
assets
131
52
173
2.2
172
417
1,735
647
909
2.2
90
192
127
34
51
18
73
86
-
97
311
243
405
1,896
716
1,068
-
94
201
14
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
By geography
Jun 30, 2006
Singapore
Hong Kong
Rest of Greater China
South and South-east
Asia
Rest of the World
Total non-performing
loans
NPA
($m)
SP
($m)
GP
($m)
NPL
(% of loans)
(GP+SP)/NPA
(%)
(GP+SP)/
unsecured
NPA
(%)
851
394
87
341
144
36
442
281
44
1.9
1.5
2.1
92
108
93
218
243
230
125
68
69
2.8
110
183
131
38
56
2.5
71
135
1,588
627
892
1.9
96
213
37
21
15
9
75
107
-
243
552
611
1,104
1,646
651
1,074
-
105
234
903
396
89
375
139
38
440
278
35
2.2
1.5
2.9
90
105
82
201
258
191
123
68
61
3.1
104
178
157
51
66
3.2
75
140
1,668
671
880
2.1
93
204
Debt securities
37
18
71
-
239
490
Contingent liabilities
Total non-performing
assets
45
15
94
-
244
714
1,750
704
1,045
-
100
218
883
395
91
382
139
36
449
291
23
2.1
1.5
3.2
94
109
65
203
263
88
131
68
60
3.7
98
166
191
68
57
3.7
65
92
1,691
693
880
2.1
93
190
Debt securities
Contingent liabilities
Total non-performing
assets
Mar 31, 2006
Singapore
Hong Kong
Rest of Greater China
South and South-east
Asia
Rest of the World
Total non-performing
loans
Dec 31, 2005
Singapore
Hong Kong
Rest of Greater China
South and South-east
Asia
Rest of the World
Total non-performing
loans
Debt securities
Contingent liabilities
Total non-performing
assets
Jun 30, 2005
Singapore
Hong Kong
Rest of Greater China
South and South-east
Asia
Rest of the World
Total non-performing
loans
Debt securities
Contingent liabilities
Total non-performing
assets
130
57
71
-
99
209
44
19
80
-
227
451
1,865
769
1,031
-
97
198
909
466
61
341
143
36
429
283
24
2.1
1.8
2.8
85
91
98
196
239
111
157
82
50
4.6
84
128
142
45
123
2.7
118
207
1,735
647
909
2.2
90
192
127
34
51
18
73
86
-
97
311
243
405
1,896
716
1,068
-
94
201
15
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
By industry
($m)
Jun 30,2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
NPA
SP
NPA
SP
NPA
SP
NPA
SP
Manufacturing
Building and construction
Housing loans
349
119
246
178
39
68
358
125
257
186
42
68
434
103
256
225
37
66
449
161
248
190
38
65
General commerce
Transportation, storage &
communications
339
31
133
14
405
31
165
14
367
30
150
13
245
33
110
11
Financial institutions, investment
& holding companies
189
47
176
46
164
47
189
53
Professionals & private
individuals (except housing
loans)
Others
Total non-peforming loans
181
75
193
81
204
84
237
111
134
1,588
73
627
123
1,668
69
671
133
1,691
71
693
173
1,735
69
647
37
21
15
9
37
45
18
15
130
44
57
19
127
34
51
18
1,646
651
1,750
704
1,865
769
1,896
716
Debt securities
Contingent liabilities
Total non-performing assets
By loan classification
($m)
Non-performing assets
Substandard
Doubtful
Loss
Total
Restructured assets
Substandard
Doubtful
Loss
Total
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
NPA
SP
NPA
SP
NPA
SP
NPA
SP
1,053
224
369
1,646
82
200
369
651
1,109
249
392
1,750
94
223
387
704
1,220
276
369
1,865
156
244
369
769
1,337
216
343
1,896
197
176
343
716
318
48
39
405
41
34
39
114
345
79
44
468
45
50
44
139
429
26
41
496
85
27
41
153
503
19
45
567
96
19
45
160
By collateral type
($m)
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
NPA
NPA
NPA
NPA
Unsecured non-performing assets
738
803
911
886
Secured non-performing assets by collateral type
Properties
Shares and debentures
Fixed deposits
Others
666
35
38
169
683
51
33
180
675
68
36
175
817
55
10
128
1,646
1,750
1,865
1,896
Total
16
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
By period overdue
($m)
Not overdue
180 days overdue
Total
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
NPA
NPA
NPA
NPA
447
381
138
680
1,646
The Group’s NPLs fell 5% from March 2006 and 8% from
a year ago to $1,588 million. As a percentage of loans, the
NPL rate improved to 1.9% from 2.1% in the previous
quarter and 2.2% a year ago.
NPL rates for most customer and geographical segments
fell during the quarter. The exceptions were NPL rates for
consumer loans and Hong Kong loans, which were
unchanged from the previous quarter.
519
377
205
649
1,750
697
353
157
658
1,865
675
411
169
641
1,896
Including debt securities and contingent liabilities, the
amount of NPAs fell 6% from March 2006 and 13% from
a year ago to $1,646 million. The proportion of NPAs in
the substandard category was at 64% compared to 63%
in the previous quarter and 71% a year ago. Most of the
loan recoveries over the past year were in the
substandard category.
Provision coverage improved to 105% of NPAs from
100% in the previous quarter and 94% at a year ago.
FUNDING SOURCES
($m)
Customer deposits
Interbank liabilities
Other borrowings and liabilities
Shareholders’ funds
Total
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
120,875
11,769
39,537
17,408
189,589
119,067
10,674
36,781
17,348
183,870
116,884
8,959
37,637
16,724
180,204
115,933
12,053
38,541
17,147
183,674
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
66,055
22,436
21,203
11,181
120,875
65,400
21,838
20,521
11,308
119,067
64,112
22,676
19,736
10,360
116,884
62,916
23,527
18,540
10,950
115,933
44,991
13,127
60,403
2,354
120,875
45,402
13,945
57,145
2,575
119,067
45,409
14,004
54,585
2,886
116,884
46,817
12,470
50,640
6,006
115,933
CUSTOMER DEPOSITS
($m)
By currency
Singapore dollar
US dollar
Hong Kong dollar
Others
Total
By product
Savings accounts
Current accounts
Fixed deposits
Other deposits
Total
The Group’s total funding rose 3% from March 2006 and a
year ago to $189.6 billion, contributed by higher customer
deposits and a US$900 million subordinated debt issued in
June 2006. Compared to March 2006, interbank liabilities
were also higher.
deposits increased 1% from March 2006 and 5% from a
year ago, while Hong Kong-dollar deposits rose 3% from
March 2006 and 14% from a year ago. The proportion of
fixed deposits continued to increase as customers
sought higher yields in a rising interest rate
environment.
Customer deposits rose 2% from March 2006 and 4%
from a year ago to $120.9 billion. Singapore-dollar
17
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
VALUE AT RISK AND TRADING INCOME
The Group uses a Value at Risk (“VaR”) measure as one mechanism for controlling trading risk. The VaR is calculated
using a one-day time horizon and a 99% confidence interval. The following table shows the period-end, average, high
and low VaR for the trading risk exposure of the DBSH Group for the period from July 1, 2005 to June 30, 2006.
($m)
July 1, 2005 to June 30 2006
Average
High 1/
Low 1/
As at June 30, 2006
Interest rate
FX
Equity
Diversification effect
17.3
8.6
2.6
(11.8)
21.4
6.8
4.8
(12.6)
26.7
11.1
7.6
17.3
3.7
2.6
16.7
20.4
27.5
16.1
Note:
1/ The high (& low) VaR figures reported for each risk class did not necessarily occur on the same day as the high (& low) reported for total. A corresponding diversification effect cannot
be calculated and is therefore omitted from the table.
The charts below provide the range of VaR and the daily distribution of trading income in the trading portfolio for the
period from July 1, 2005 to June 30, 2006.
DBSH Group VaR for Trading Book
45
40
No. of Days
35
30
25
20
15
10
5
>39-40
>38-39
>37-38
>36-37
>35-36
>34-35
>33-34
>32-33
>31-32
>30-31
>29-30
>28-29
>27-28
>26-27
>25-26
>24-25
>23-24
>22-23
>21-22
>20-21
>19-20
>18-19
>17-18
>16-17
>15-16
0
VaR (S$ million)
Daily Distribution of Group Trading Income
(1 July 2005 to 30 June 2006)
70
60
40
30
20
10
Trading income (S$ million)
18
>16-18
>14-16
>12-14
>10-12
>8-10
>6-8
>4-6
>2-4
>0-2
>(2)-0
>(4)-(2)
>(6)-(4)
>(8)-(6)
>(10)-(8)
0
>(12)-(10)
No. of Days
50
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
CAPITAL ADEQUACY
($m)
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
1,571
18,081
(5,833)
13,819
1,567
17,728
(5,834)
13,461
1,564
17,377
(5,823)
13,118
1,561
17,563
(6,931)
12,193
1,001
4,893
19
5,913
976
4,034
84
5,094
963
4,222
13
5,198
1,002
4,343
(624)
4,721
19,732
137,375
18,555
131,810
18,316
123,847
16,914
114,845
10.1
4.3
14.4
10.2
3.9
14.1
10.6
4.2
14.8
10.6
4.1
14.7
Tier 1
Paid-up ordinary and preference shares
Disclosed reserves and others
Less: Goodwill
Total
Tier 2
Cumulative general provisions
Subordinated debts
Others
Total
Total capital
Risk-weighted assets
Capital adequacy ratio (%)
Tier I ratio
Tier II ratio
Total (Tier I & II) ratio
Based on regulatory guidelines, the Group’s total capital
adequacy ratio increased from 14.1% in March 2006 to
14.4% in June 2006. The increase was due to the
inclusion of a US$900 million tier-2 subordinated debt
Jun 30, 2005
issued in June 2006, offset by higher risk-weighted
assets and the amortisation of US$270 million of existing
tier-2 subordinated debts during the quarter.
UNREALISED VALUATION SURPLUS
($m)
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
415
16
431
425
15
440
416
25
441
751
40
791
Properties
Non-trading investments
Total
The amount of unrealised valuation surpluses fell
slightly from $440 million in March 2006 to $431 million
as the sale of an office building in Hong Kong during the
quarter was offset by an increase in the valuation surplus
from other properties.
19
Appendix I
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Unaudited Consolidated Income Statement
2nd Qtr
2006
2nd Qtr
2005
+/(-)
%
1st Qtr
2006
1st Half
2006
1st Half
2005
+/(-)
%
Operating income
Interest income
Interest expense
Net interest income
Net fee and commission income
Net trading income
Net gain from non-trading investments
Other income
1,931
1,034
897
296
105
12
98
1,318
606
712
274
94
12
41
47
71
26
8
12
>100
1,735
885
850
262
108
38
12
3,666
1,919
1,747
558
213
50
110
2,495
1,098
1,397
503
176
37
58
47
75
25
11
21
35
90
Total operating income
1,408
1,133
24
1,270
2,678
2,171
23
Operating expenses
Personnel expenses
General and administrative expenses
Depreciation of properties and other fixed assets
Provisions for credit and other losses
321
243
30
62
253
192
39
81
27
27
(23)
(23)
300
231
33
31
621
474
63
93
518
375
77
144
20
26
(18)
(35)
Total operating expenses
656
565
16
595
1,251
1,114
12
Operating profit
Share of profits of associates
Operating profit before tax
752
20
772
568
17
585
32
18
32
675
12
687
1,427
32
1,459
1,057
26
1,083
35
23
35
Income tax expense
Net profit
131
641
74
511
77
25
133
554
264
1,195
162
921
63
30
603
38
641
473
38
511
27
25
518
36
554
1,121
74
1,195
846
75
921
33
(1)
30
In $ millions
Attributable to:
Shareholders
Minority interests
NM: Not meaningful
1
Appendix II
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Unaudited Balance Sheet as at
COMPANY
Mar 31
Dec 31
2006
2005 1/
Jun 30
2005
-
-
3
6,822
6,822
6,790
6,780
6,822
6,822
6,790
6,783
6
5
6
6
164,051
6
5
6
6
19,190
19,623
6,816
6,817
6,784
6,777
8,165
(117)
2,615
6,685
8,132
(117)
2,542
6,167
8,088
(117)
2,568
6,608
3,942
51
2,823
3,894
50
2,873
3,861
49
2,874
3,817
41
2,919
17,408
17,348
16,724
17,147
6,816
6,817
6,784
6,777
Minority interests
2,401
2,418
2,466
2,476
-
-
-
-
TOTAL EQUITY
19,809
19,766
19,190
19,623
6,816
6,817
6,784
6,777
11,124
77,982
1,403,137
10,002
76,401
1,444,019
8,769
75,804
1,359,935
8,552
67,455
1,588,306
4.49
4.50
4.48
4.49
4.34
4.35
4.34
4.34
In $ millions
Jun 30
2006
GROUP
Mar 31
Dec 31
2006
2005 1/
Jun 30
2005
8,103
14,416
20,411
9,210
10,999
22,647
4,986
9,846
23,816
10,080
11,527
17,529
15,172
9,955
83,410
22,258
3,125
551
5,833
1,556
56
4,743
15,574
9,608
78,818
22,452
2,548
550
5,834
1,638
38
3,954
14,989
8,792
79,462
23,102
2,380
585
5,803
1,662
51
4,730
14,999
9,618
78,712
22,484
4,775
520
6,931
1,786
70
4,643
-
189,589
183,870
180,204
183,674
11,769
9,703
120,875
373
660
51
12,131
7,812
2,584
5,228
10,674
9,570
119,067
362
589
81
10,728
7,956
2,756
5,200
8,959
8,537
116,884
378
557
58
12,274
8,002
2,664
5,338
12,053
9,308
115,933
491
641
56
12,424
7,555
2,985
4,570
6,406
5,077
5,365
5,590
169,780
164,104
161,014
19,809
19,766
8,213
(111)
2,434
6,872
Jun 30
2006
ASSETS
Cash and balances with central banks
Singapore Government securities and treasury bills
Due from banks
Other financial securities at fair value through profit or
loss
Positive replacement values
Loans and advances to customers
Non-trading investments
Securities pledged
Subsidiaries
Investments in associates
Goodwill on consolidation
Properties and other fixed assets
Deferred tax assets
Other assets
TOTAL ASSETS
LIABILITIES
Due to banks
Negative replacement values
Due to non-bank customers
Bills payable
Current tax liabilities
Deferred tax liabilities
Other liabilities
Other debt securities in issue 2/
- due within one year
- due after one year
Subordinated term debts
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Treasury shares
Other reserves
Revenue reserve
SHAREHOLDERS’ FUNDS
OFF BALANCE SHEET ITEMS
Contingent liabilities
Commitments
Financial derivatives
OTHER INFORMATION
Net asset value per ordinary share ($)
(i) Based on existing ordinary share capital
(ii) Assuming conversion of outstanding preference
shares to ordinary shares
Notes:
1/
Audited
2/
Includes secured amount of $2,384 million as at June 30, 2006 (March 31, 2006: $2,204 million; December 31, 2005: $2,018 million; June 30, 2005: $1,927 million). These are
mainly secured by properties and securities.
2
Appendix III
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Unaudited Statement of Changes in Equity
GROUP
In $ millions
Balance at January 1, 2006
Exercise of share options
Attributable to Shareholders
Share
capital 1/
8,132
Treasury
shares
Other
reserves
Revenue
reserve
Minority
interests
Total
equity
(117)
2,542
6,167
2,466
19,190
(60)
(84)
81
81
Net exchange translation adjustments
(24)
Share of associates’ capital reserves
(5)
(5)
Cost of share-based payments
15
15
(6)
-
Draw-down of reserves upon vesting of performance
shares
6
Available-for-sale investments/Cash flow hedge:
- Net valuation taken to equity
(66)
(66)
- Transferred to income statement on sale
(25)
(25)
- Tax on items taken directly to or transferred from equity
3
3
Net profit for the period
1,121
Final dividends paid for previous year
(212)
Interim dividends paid for current year
(204)
Dividends paid to minority interests
Change in minority interests
74
1,195
(212)
(204)
(74)
(74)
(5)
(5)
Balance at June 30, 2006
8,213
(111)
2,434
6,872
2,401
19,809
Balance at January 1, 2005
8,066
(126)
2,328
6,176
2,431
18,875
292
(9)
On adoption of FRS 39 at January 1, 2005
Exercise of share options
283
20
20
42
45
Net exchange translation adjustments
3
Share of associates’ capital reserves
2
2
21
21
Cost of share-based payments
Draw-down of reserves upon vesting of performance
shares
Reclassification of reserves upon exercise of share options
9
2
(9)
-
(2)
-
Available-for-sale investments/Cash flow hedge:
- Net valuation taken to equity
- Transferred to income statement on sale
- Tax on items taken directly to or transferred from equity
51
51
(110)
(110)
(8)
(8)
846
Net profit for the period
Final dividends paid for previous year
(268)
Interim dividends paid for current year
(137)
Dividends paid to minority interests
Change in minority interests
Balance at June 30, 2005
8,088
(117)
2,568
6,608
75
921
(268)
(137)
(76)
(76)
4
4
2,476
19,623
3
Appendix III
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Unaudited Statement of Changes in Equity
COMPANY
Share capital
In $ millions
Balance at January 1, 2006
Exercise of share options
1/
3,861
Other
reserves
Revenue
reserve
Total equity
49
2,874
6,784
81
Cost of share-based payments
Net profit for the period
81
365
2
365
Final dividends paid for previous year
(212)
(212)
Interim dividends paid for current year
Balance at June 30, 2006
3,942
51
(204)
2,823
(204)
6,816
Balance at January 1, 2005
3,795
35
3,000
6,830
Exercise of share options
2
20
Reclassification of reserves upon exercise of share options
Net loss for the period
20
8
Cost of share-based payments
2
8
(2)
324
324
Final dividends paid for previous year
(268)
(268)
Interim dividends paid for current year
Balance at June 30, 2005
(137)
2,919
(137)
6,777
3,817
41
Note:
1/
Share capital included Capital redemption reserves and Share premium of DBS Bank prior to restructuring of DBS Bank under a financial services holding company,
DBSH, pursuant to a scheme of arrangement under Section 210 of Singapore Companies Act on 26 June 1999 (previously disclosed under Non-distributable reserves).
4
Appendix IV
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Unaudited Consolidated Statement of Cash Flows
1st Half
2006
1st Half
2005
Cash flows from operating activities
Operating profit before tax
1,459
1,083
Adjustments for n
Incorporated in the Republic of Singapore
Company Registration Number: 199901152M
To: Shareholders
The DBS Group Holdings Ltd (“DBSH” or “the Company”) Board of Directors report unaudited financial
results for the second quarter ended June 30, 2006.
For the second quarter of 2006, the Directors have declared an interim gross dividend of 17 cents (second
quarter 2005: 15 cents) for each DBSH ordinary share; and 13 cents (second quarter 2005: 15 cents) for
each DBSH non-voting convertible preference share (“CPS”) and for each DBSH non-voting redeemable
CPS.
The second quarter 2006 dividends will be paid less 20% Singapore income tax.
The second quarter 2006 dividends will be payable on August 25, 2006. DBS shares will be quoted exdividend on August 10, 2006. Notice is hereby given that the Share Transfer Books and Register of
Members of the Company will be closed on August 15, 2006. Duly completed transfers received by the
Company's Registrar, Tricor Barbinder Share Registration Services of 8 Cross Street #11-00 PWC
Building, Singapore 048424 up to 5.00 p.m. on August 14, 2006 will be registered to determine
shareholders' entitlement to the second quarter 2006 dividends. In respect of ordinary shares in the
securities accounts with The Central Depository (Pte) Limited (“CDP”), the second quarter 2006
dividends will be paid by DBSH to CDP, which will in turn distribute the dividend entitlements to
shareholders.
By order of the Board
Heng Lee Cheng (Ms)
Group Secretary
July 28, 2006
Singapore
More information on the above announcement is available at www.dbs.com/investor
Performance Summary
Unaudited Financial Results
for the Second Quarter ended
June 30, 2006
DBS Group Holdings Ltd
Incorporated in the Republic of Singapore
Company Registration Number: 199901152M
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Contents
Page
Overview
Net Interest Income
Net Fee and Commission Income
Other Non-Interest Income
Operating Expenses
Provision Charges
Performance by Business Unit
Performance by Geography
Customer Loans
Non-Performing Assets and Provision Coverage
Funding Sources
Customer Deposits
Value at Risk and Trading Income
Capital Adequacy
Unrealised Valuation Surplus
Appendix I:
Appendix II:
Appendix III:
Appendix IV:
Appendix V:
2
3
6
6
7
7
8
10
12
13
17
17
18
19
19
Unaudited Consolidated Income Statement
Unaudited Balance Sheet
Unaudited Statements of Changes in Equity
Unaudited Consolidated Statement of Cash Flows
Selected Notes to the Accounts
Issuance of Ordinary Shares
1
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
OVERVIEW
DBS Group Holdings Ltd (“DBSH”) prepares its consolidated DBSH Group (“Group”) financial statements in accordance with
Singapore Financial Reporting Standards (“FRS”), as modified by the requirements of Notice to Banks No. 612 “Credit Files,
Grading and Provisioning” issued by the Monetary Authority of Singapore.
2nd Qtr
2006
2nd Qtr
1/
2005
% chg
1st Qtr
2006
1st Half
2006
1st Half
1/
2005
% chg
897
296
105
12
44
1,354
712
274
94
12
41
1,133
26
8
12
7
20
850
262
108
38
12
1,270
1,747
558
213
50
56
2,624
1,397
503
176
37
58
2,171
25
11
21
35
(3)
21
594
760
484
649
23
17
564
706
1,158
1,466
970
1,201
19
22
62
20
81
17
(23)
18
31
12
93
32
144
26
(35)
23
718
585
23
687
1,405
1,083
30
549
473
16
518
1,067
846
26
54
603
473
NM
27
518
54
1,121
846
NM
33
Selected balance sheet items ($m)
Customer loans
Interbank loans
Total assets
83,410
20,411
189,589
78,712
17,529
183,674
6
16
3
78,818
22,647
183,870
83,410
20,411
189,589
78,712
17,529
183,674
6
16
3
Customer deposits
Total liabilities
Shareholders’ funds
120,875
169,780
17,408
115,933
164,051
17,147
4
3
2
119,067
164,104
17,348
120,875
169,780
17,408
115,933
164,051
17,147
4
3
2
1.84
37.2
42.7
1.03
11.12
67.9
2.2
2.23
33.1
44.4
1.14
12.15
66.2
2.1
2.23
33.4
44.1
1.15
12.55
69.0
1.9
1.83
35.7
44.7
0.94
10.09
67.9
2.2
27
20
18
25
10.6
14.7
10.2
14.1
10.1
14.4
10.6
14.7
1.46
1.50
11.29
1.26
1.26
11.18
1.37
1.37
11.27
1.42
1.45
11.29
1.12
1.12
11.18
1.40
1.44
11.08
1.20
1.20
10.98
1.32
1.32
11.07
1.36
1.40
11.08
1.08
1.08
10.98
Selected profit and loss items ($m)
Net interest income
Net fee and commission income
Net trading income
Net gain from non-trading investments
Other income
Operating income
Less: Operating expenses
Operating profit before provisions
Less: Provisions
Associates
Operating profit before tax
Net profit attributable to shareholders
(“Net profit”)
Add: One-time gain
Net profit
2/
Key financial ratios (%) (excluding one-time gain)
Net interest margin
2.23
Non-interest/total income
33.8
Cost/income ratio
43.9
Return on assets
1.18
12.70
Return on equity 3/
Loan/deposit ratio
69.0
NPL ratio
1.9
Specific provisions (loan)/average loan
16
(bp)
Tier 1 capital adequacy ratio
10.1
Total capital adequacy ratio
14.4
Per share data ($)
Per basic share
– earnings excluding one-time gain
– earnings
– net book value 3/
Per diluted share
– earnings excluding one-time gain
– earnings
3/
– net book value
NM: Not meaningful
Notes:
1/ Figures for 2005 have been restated to make them consistent with the current year’s presentation.
2/ One-time gain of $54 million from the sale of an office building in Hong Kong was recorded in 2nd Quarter 2006.
3/ Minority interests are not included as equity in the computation of net asset value and return on equity.
4/ Return on assets, return on equity, specific provisions (loan)/average loan and per share data for the quarters are computed on an annualised basis.
2
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Net profit before one-time items amounted to $549 million
in second quarter 2006, up 16% from second quarter
2005 and 6% from first quarter 2006.
A one-time gain of $54 million from the sale of an office
building in Hong Kong was recorded during the quarter. If
the item was included, net profit amounted to $603 million
in the second quarter. The commentary that follows
excludes the effects of this non-operating item.
Operating trends underpinning the performance in
first quarter 2006 were sustained in the second
quarter. Operating income increased 20% from a
year ago and 7% from the previous quarter to $1.35
billion.
Interest income and fee income reached a record
during the quarter, reflecting DBS’ customer
franchise and its ability to capture the benefits of
rising interest rates and higher non-interest income
activities as economic conditions strengthened from
a year ago.
Cost pressures continued to be felt during the
quarter. Operating expenses rose 23% from a
year ago and 5% from the previous quarter to
$594 million as a result of higher staff costs and
computerisation expenses. The cost-income
ratio of 44% was slightly higher than the 43% a
year ago but similar to the previous quarter.
Asset quality continued to be healthy. The nonperforming loan ratio improved from 2.2% a year
ago and 2.1% in the previous quarter to 1.9%.
Total provision charges of $62 million were
lower than a year ago, although they were
higher than the previous quarter mainly as a
result of more general provisions being set aside
for this quarter’s loan growth. Specific provisions
for loans fell to 16 basis points this quarter from
27 basis points a year ago and 20 basis points
in the previous quarter.
The Group’s return on assets improved to 1.18%
compared to 1.03% a year ago and 1.14% in the
previous quarter, while return on equity rose to
12.7% compared to 11.1% a year ago and
12.2% in the previous quarter.
Net interest income rose 26% from a year ago and
6% from the previous quarter to $897 million as both
interest spreads and asset volumes improved. Fee
income grew 8% from a year ago and 13% from the
previous quarter to $296 million as contributions from
investment banking and other segments increased.
Net trading income from trading businesses was
higher than a year ago but little changed from the
previous quarter at $112 million.
For first half 2006, net profit rose 26% from a
year ago to $1.07 billion as a result of operating
income growing at a slightly faster pace than
operating costs, and provision charges being
lower. The key drivers of the first half
performance were similar to the second
quarter’s.
NET INTEREST INCOME
Average balance
sheet
2nd Qtr 2006
Average
Average
balance Interest
rate
($m)
($m)
(%)
2nd Qtr 2005
Average
Average
balance Interest
rate
($m)
($m)
(%)
1st Qtr 2006
Average
Average
balance Interest
rate
($m)
($m)
(%)
Interest-bearing
assets
Customer loans
Interbank assets
Securities
Total
80,794
30,966
49,934
161,694
1,134
249
548
1,931
5.63
3.23
4.40
4.79
74,336
30,806
49,479
154,621
724
170
425
1,319
3.91
2.20
3.45
3.42
79,042
27,216
48,604
154,862
1,038
194
503
1,735
5.33
2.89
4.20
4.54
Interest-bearing
liabilities
Customer deposits
Other borrowings
Total
120,945
32,484
153,429
665
369
1,034
2.20
4.56
2.70
116,310
31,998
148,308
335
272
607
1.16
3.41
1.64
117,495
30,142
147,637
568
317
885
1.96
4.27
2.43
897
2.23
712
1.84
850
2.23
Net interest
1/
income/margin
3
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Average balance
sheet
1st Half 2006
Average
Average
balance Interest
rate
($m)
($m)
(%)
1st Half 2005
Average
Average
balance Interest
rate
($m)
($m)
(%)
Interest-bearing
assets
Customer loans
Interbank assets
Securities
Total
80,075
28,992
49,355
158,422
2,172
443
1,051
3,666
5.47
3.09
4.29
4.67
72,828
32,829
48,064
153,721
1,339
350
806
2,495
3.71
2.15
3.38
3.27
Interest-bearing
liabilities
Customer deposits
Other borrowings
Total
119,242
31,502
150,744
1,233
686
1,919
2.08
4.39
2.57
115,589
31,908
147,497
598
500
1,098
1.04
3.16
1.50
1,747
2.23
1,397
1.83
Net interest
1/
income/margin
Note:
1/ Net interest margin is net interest income expressed as a percentage of average interest-earning assets.
Net interest income rose 26% from a year ago from higher
asset volumes, a better asset mix and improved interest
spreads.
Average interest-earning asset volumes rose 5% from a
year ago to $161.7 billion with an improving asset mix.
Most of the increase was due to customer loans.
At the same time, asset yields rose faster than funding
costs across the board from a year ago. In Singapore,
floating-rate corporate and SME loan yields rose in line
with higher interbank rates, while housing loan yields
benefited from higher board rates. Funding costs also
increased but to a lesser extent, reflecting the strength of
DBS’ deposit franchise in Singapore. In Hong Kong, the
spread between prime lending rates and funding costs
continued to widen since bottoming in second quarter
2005.
The improved asset mix and the higher interest spreads
resulted in interest margins rising to 2.23% from 1.84% a
year ago. The rate and volume analysis below indicates
that improving interest spreads played a larger role than
higher asset asset volumes in net interest income growth
from a year ago.
Compared to the previous quarter, net interest income
rose 6%, the result of higher asset volumes and improved
interest spreads, but partially offset by a slightly less
favourable asset mix.
Average interest-earning asset volumes grew 4% from the
previous quarter.
Interest spreads continued to improve from the previous
quarter, but the increase was smaller. In Singapore,
interest spreads improved as asset yields, led by rising
housing loan yields, rose faster than deposit costs.
However, the impact was partially offset by a decline in
spreads between Hong Kong prime lending rates and
funding costs compared to the previous quarter.
The small increase in overall interest spreads was offset
by the effects of the slightly weaker asset mix, resulting in
interest margins remaining at the previous quarter’s level.
The rate and volume analysis below indicates that higher
asset volumes and better interest spreads played an equal
role in growing net interest income from the previous
quarter.
For first half 2006, net interest income grew 25% from a
year ago to $1.75 billion while interest margins improved
from 1.83% to 2.23%.
Net interest costs from a recent US$900 million
subordinated debt issue were reflected for the latter part of
June, while net interest costs from a S$500 million
subordinated debt issue were not included as it was raised
in July. The full-period inclusion of net interest costs from
both issues is expected to have a slight negative impact
on interest margins in the third quarter of around 3 basis
points.
4
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
2nd Qtr 2006 versus 2nd Qtr 2005
Volume and rate analysis ($m)
Increase/(decrease) due to change in
2nd Qtr 2006 versus 1st Qtr 2006
Volume
Rate
Net
change
Volume
Rate
Net
change
Customer loans
Interbank assets
Securities
Total
63
1
4
68
347
79
118
544
410
80
122
612
23
27
13
63
60
26
25
111
83
53
38
174
Interest expense
Customer deposits
Other borrowings
Total
13
4
17
317
93
410
330
97
427
17
27
44
72
21
93
89
48
137
Net impact on interest income
51
134
185
19
18
37
Interest income
Due to change in number of days
Net interest income
-
10
185
47
1st Half 2006 versus 1st Half 2005
Volume and rate analysis ($m)
Increase/(decrease) due to change in
Volume
Rate
Net
change
133
(41)
22
114
700
134
223
1,057
833
93
245
1,171
19
(6)
13
616
192
808
635
186
821
101
249
350
Interest income
Customer loans
Interbank assets
Securities
Total
Interest expense
Customer deposits
Other borrowings
Total
Net impact on interest income
Due to change in number of days
Net interest income
350
5
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
NET FEE AND COMMISSION INCOME
($m)
Stockbroking
Investment banking
Trade and remittances
Loan related
Guarantees
Deposit related
Credit card
Fund management
Wealth management
Others
Total
2nd Qtr
2006
2nd Qtr
2005
% chg
1st Qtr
2006
1st Half
2006
1st Half
2005
% chg
33
44
47
50
7
21
28
15
38
13
296
19
37
46
55
6
19
25
19
38
10
274
74
19
2
(9)
17
11
12
(21)
30
8
37
19
44
34
8
19
24
22
42
13
262
70
63
91
84
15
40
52
37
80
26
558
44
59
85
100
14
38
42
29
73
19
503
59
7
7
(16)
7
5
24
28
10
37
11
Net fee and commission income rose 8% from a year
ago and 13% from the previous quarter as contributions
from a wide range of activities grew.
Active equity markets resulted in stockbroking
commissions making the biggest contribution from a
year ago. However, they were less buoyant in the
second quarter compared to the previous quarter as
more cautious market sentiment affected retail activity, a
mainstay of DBS Vickers’ business.
Investment banking fees were higher compared to a
year ago and the previous quarter. Deal activities during
the quarter included IPOs for Banyan Tree, Allco REIT
and Pacific Shipping Trust. Greater loan syndication in
the region boosted fees compared to the previous
quarter.
Fees from credit cards, trade and remittances, and
deposit-related activities were also higher compared to a
year ago and the previous quarter.
For first half 2006, net fee and commission income rose
11% from a year ago to reach $558 million. The growth
was led by stockbroking commissions, fund management
fees and credit card fees, reflecting higher equity market
activity and greater retail spending as economic
conditions strengthened.
OTHER NON-INTEREST INCOME
($m)
2nd Qtr
2006
2nd Qtr
2005
% chg
1st Qtr
2006
1st Half
2006
1st Half
2005
% chg
Net trading income
From trading businesses
From other businesses
Net gain on non-trading investments
Net gain on fixed assets 1/
105
112
(7)
12
2
94
52
42
12
1
12
>100
NM
100
108
113
(5)
38
-
213
225
(12)
50
2
176
125
51
37
4
21
80
NM
35
(50)
Others (include dividend and rental
income)
42
40
5
12
54
54
-
161
147
10
158
319
271
18
Total
Note:
1/ Exclude one-time gain of $54 million from the sale of an office building in Hong Kong in 2nd Quarter 2006.
Net trading income from trading businesses amounted to
$112 million compared to $52 million a year ago and was
little changed from the previous quarter. During the
quarter, there was demand from corporate customers for
foreign exchange and interest rate products, while trading
gains were made in interest and credit spreads as well as
regional currencies.
Net trading income from trading businesses was better for
the first six months this year, rising 80% from a year ago.
Higher dividend income accounted for most of the $30
million increase in Other income from the previous quarter.
Other income, which amounted to $42 million, was little
changed from a year ago.
6
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
OPERATING EXPENSES
($m)
Staff
Occupancy
Computerisation
Revenue-related
Others
Total
Staff headcount at period-end
2nd Qtr
2006
2nd Qtr
2005
% chg
1st Qtr
2006
1st Half
2006
1st Half
2005
% chg
321
45
97
26
105
594
12,453
253
44
70
28
89
484
12,090
27
2
39
(7)
18
23
3
300
46
92
23
103
564
12,673
621
91
189
49
208
1,158
12,453
518
86
145
50
171
970
12,090
20
6
30
(2)
22
19
3
Operating expenses increased 23% from a year ago to
$594 million from higher staff, computerisation and other
costs.
Staff costs rose 27% from a year ago. With headcount
increasing by 3%, a large part of the increase was
attributable to a higher salary base due to a tight labour
market and to higher bonus accruals in line with the
Group’s better financial performance.
Computerisation expenses were higher than a year ago
due to IT depreciation as well as expenses for ongoing
major projects. Other expenses were higher mainly
because of professional fees.
Compared to the previous quarter, operating expenses
rose 5% with higher base salaries and bonus accruals
accounting for most of the increase.
For first half 2006, operating expenses increased 19%
from a year ago to $1.16 billion. As the rise was slightly
below the increase in operating income, the cost-income
ratio improved marginally from 45% a year ago to 44% for
the first six months.
PROVISION CHARGES
($m)
2nd Qtr
2006
2nd Qtr
2005
% chg
1st Qtr
2006
1st Half
2006
1st Half
2005
% chg
General provisions
34
21
62
14
48
36
33
Specific provisions for loans
Singapore
Hong Kong
Other countries
33
23
19
(9)
51
26
10
15
(35)
(12)
90
NM
40
13
18
9
73
36
37
-
95
48
22
25
(23)
(25)
68
(100)
Specific provisions for securities,
properties and other assets
(5)
9
NM
(23)
(28)
13
NM
Total
62
81
(23)
31
93
144
(35)
Total provision charges for second quarter 2006
decreased 23% to $62 million from a year ago. Specific
provisions for loans decreased 35% to $33 million as
charges for new and exisiting NPLs fell.
a higher charge of $34 million was set aside for general
provisions this quarter for loan growth and higher loan
commitments compared with $14 million in the previous
quarter.
Compared to first quarter 2006, total provisions were
higher as there had been a significant write-back of a
corporate debt security in the previous quarter. In addition,
For first half 2006, total provision charges fell 35% from a
year ago to $93 million as a result of lower specific
provisions and a net write-back for securities.
7
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
PERFORMANCE BY BUSINESS UNIT
($m)
CBG
EB
CIB
GFM
CTU
Central
Ops
Total
Selected profit and loss items
2nd Qtr 2006 1/
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
436
130
244
11
311
176
75
86
16
149
142
161
94
44
165
152
95
111
0
137
81
(28)
9
0
44
(90)
24
50
(9)
(88)
897
457
594
62
718
1st Qtr 2006
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
421
121
232
7
303
172
84
81
25
150
132
113
88
(12)
169
145
68
96
1
118
68
11
9
(1)
71
(88)
23
58
11
(124)
850
420
564
31
687
2nd Qtr 2005
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
308
129
220
20
197
134
59
70
40
83
117
140
76
51
130
97
47
81
(3)
66
103
(47)
8
8
40
(47)
93
29
(35)
69
712
421
484
81
585
1st Half 2006
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
857
251
476
18
614
348
159
167
41
299
274
274
182
32
334
297
163
207
1
255
149
(17)
18
(1)
115
(178)
47
108
2
(212)
1,747
877
1,158
93
1,405
1st Half 2005
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
618
243
440
40
381
267
116
137
64
182
219
231
148
87
215
190
124
169
(5)
151
174
(76)
15
8
75
(71)
136
61
(50)
79
1,397
774
970
144
1,083
Selected balance sheet and other
items
Jun 30, 2006
Total assets before goodwill
Total liabilities
Capital expenditure for 2nd Qtr 2006
Depreciation for 2nd Qtr 2006
28,985
71,977
12
6
18,988
17,660
5
4
38,164
16,707
1
1
67,242
42,402
5
3
28,482
1,240
2
2
1,895
19,794
27
14
183,756
169,780
52
30
Mar 31, 2006
Total assets before goodwill
Total liabilities
Capital expenditure for 1st Qtr 2006
Depreciation for 1st Qtr 2006
29,397
70,922
3
6
18,782
18,192
2
3
32,673
17,816
2
1
70,794
35,929
6
5
24,068
1,749
1
2
2,322
19,496
25
16
178,036
164,104
39
33
1/
8
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
($m)
CBG
EB
CIB
GFM
CTU
Central
Ops
Total
Total assets before goodwill
Total liabilities
Capital expenditure for 4th Qtr 2005
Depreciation for 4th Qtr 2005
29,518
68,415
22
7
18,396
17,862
12
3
32,824
17,953
3
1
68,758
32,980
11
5
24,047
1,417
6
1
858
22,387
75
18
174,401
161,014
129
35
Jun 30, 2005
Total assets before goodwill
Total liabilities
Capital expenditure for 2nd Qtr 2005
Depreciation for 2nd Qtr 2005
30,068
66,995
3
7
18,303
16,888
3
4
32,881
16,480
2
1
68,758
45,686
6
5
23,225
2,122
2
2
3,508
15,880
10
20
176,743
164,051
26
39
Dec 31, 2005
Note:
1/ 2nd Quarter 2006 income and profits exclude one-time gain.
Consumer Banking’s (CBG) net interest income rose 4%
from the previous quarter as a result of higher housing
loan yields in Singapore and higher deposit volumes in
Hong Kong. It was 42% higher than a year ago due to
better interest spreads and higher deposit volumes in both
locations. Non-interest income was stable compared to a
year ago and the previous quarter. Operating expenses
rose from both comparative periods due to higher staff
costs as well as investments in branch upgrading in
Singapore. Provisions in Singapore fell from a year ago.
Enterprise Banking’s (EB) net interest income rose slightly
from the previous quarter as volume growth was partially
offset by lower margins. Higher volumes and margins
contributed to the 31% increase in net interest income
from a year ago. Non-interest income was 27% better than
a year ago from higher sales of treasury-related products
in Hong Kong, but declined 11% from the previous quarter,
which had benefited from corporate demand for foreign
exchange hedging products in Hong Kong. The higher
operating expenses against both comparative periods
were due mainly to salary increase and bonus accruals,
while there was a decline in provision charges in
Singapore.
Corporate and Investment Banking’s (CIB) net interest
income rose 8% from the previous quarter and 21% from a
year ago as a result of loan and deposit growth. Noninterest income was 42% higher than the previous quarter
from a wide range of investment banking activities, as well
as higher dividend income. The 24% increase in operating
expenses from a year ago was due to higher wages and
support costs. Provision charges were higher than the
previous quarter as a result of general provisions being set
aside for loan growth, while they were lower than a year
ago because of a net write-back of specific provisions
during the current quarter.
Global Financial Markets (GFM) earned higher net interest
income from bonds in Singapore compared to a year ago.
Non-interest income rose 40% from the previous quarter
due to higher trading gains in credit and other markets.
Compared to a year ago, non-interest income was also
boosted by higher stockbroking commissions. Higher
wage costs accounted for the rise in operating expenses.
Central Treasury’s (CTU) net interest income rose 19%
from the previous quarter as lower-yielding assets
matured and new positions were taken. Net interest
income fell 21% from a year ago due to lower gapping
opportunities.
Central Operations encompasses a range of activities
from corporate decisions and income and expenses not
attributed to other business segments. Asset management
and private banking activities are also included in this
segment.
9
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
PERFORMANCE BY GEOGRAPHY
($m)
S’pore
Hong
Kong
Rest of
Greater
China
South
and
Southeast Asia
Rest of
world
Total
2nd Qtr 2006 1/
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
563
299
375
48
444
286
87
164
25
184
10
30
20
(1)
21
24
26
20
(5)
50
14
15
15
(5)
19
897
457
594
62
718
1st Qtr 2006
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
526
290
355
(3)
461
278
90
162
19
187
9
19
14
4
10
22
14
22
(1)
30
15
7
11
12
(1)
850
420
564
31
687
2nd Qtr 2005
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
447
300
290
46
412
220
80
156
4
140
7
16
12
9
2
22
15
14
(3)
42
16
10
12
25
(11)
712
421
484
81
585
1st Half 2006 1/
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
1,089
589
730
45
905
564
177
326
44
371
19
49
34
3
31
46
40
42
(6)
80
29
22
26
7
18
1,747
877
1,158
93
1,405
1st Half 2005
Net interest income
Non-interest income
Operating expenses
Provisions
Operating profit before tax
884
517
592
75
736
425
178
308
12
283
15
27
20
20
2
41
30
26
69
32
22
24
37
(7)
1,397
774
970
144
1,083
124,078
116,690
116,087
117,839
38,820
42,831
41,393
42,187
7,258
5,806
5,861
4,791
4,487
4,383
3,781
3,456
9,113
8,326
7,279
8,470
183,756
178,036
174,401
176,743
Selected profit and loss items
Total assets before goodwill
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
Note:
1/ 2nd Quarter 2006 income and profits exclude one-time gain .
10
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Singapore
Operating profit before tax grew 8% from a year ago as a
result of a 26% increase in net interest income partially
offset by higher operating expenses. It was 4% lower
than the previous quarter as first quarter 2006 had the
benefit of a net provision write-back.
Net interest income increased 30% from a year ago due
to higher interest spreads and an increase in loan and
deposit volumes. It grew 3% from the previous quarter
as the impact of loan and deposit growth was offset by
lower interest spreads.
Net interest income continued to improve from both
comparative periods as a result of higher interest
spreads and higher asset volumes. Non-interest income
was steady against both comparative periods.
Non-interest income rose 9% from a year ago from
higher sales of wealth management and foreign
exchange products, and was little changed from the
previous quarter.
Operating expenses were higher as a result of higher
staff and computerisation expenses. Provision charges
were similar to a year ago as a decline in specific
provisions was offset by higher general provisions for
new loans.
Operating expenses were higher than both comparative
periods due mainly to higher wage costs. Provision
charges were substantially higher than a year ago as
there had been a general provision write-back in second
quarter 2005. Specific provision charges were also
higher in the current quarter than a year ago.
Hong Kong
Other regions
The current quarter’s results incorporate an appreciation
of the Singapore dollar against the Hong Kong dollar of
2% from first quarter 2006 and 6% from second quarter
2005.
Operating profit before tax was 31% higher than a year
ago as a result of improved net interest income partially
offset by higher provision charges. It was similar to the
previous quarter.
DBS’ operations outside Singapore and Hong Kong are
in their build-up phase and do not yet have a significant
impact on the Group. The largest earnings contributions
are currently from Indonesia (through a 99%-owned
subsidiary) and the Philippines (through a 20% associate
stake in Bank of Philippines Islands).
11
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
CUSTOMER LOANS
($m)
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
84,835
80,267
80,949
80,172
574
851
83,410
611
838
78,818
636
851
79,462
576
884
78,712
By business unit
Consumer Banking
Enterprise Banking
Corporate and Investment Banking
Others
Total (Gross)
28,509
19,488
30,937
5,901
84,835
28,914
19,123
26,542
5,688
80,267
29,686
19,234
26,478
5,551
80,949
29,871
18,397
25,831
6,073
80,172
By geography
Singapore
Hong Kong
Rest of Greater China
South and South-east Asia
Rest of the world
Total (Gross)
47,267
26,505
4,086
2,662
4,315
84,835
44,381
26,198
3,120
2,492
4,076
80,267
45,280
26,669
2,953
2,287
3,760
80,949
46,657
25,720
2,524
1,938
3,333
80,172
10,506
10,500
23,994
8,835
7,560
10,112
9,010
9,772
24,388
8,343
6,717
9,734
8,536
8,958
25,005
8,639
6,884
9,785
8,275
9,009
25,291
8,383
6,636
9,226
Gross
Less:
Specific provisions (“SP”)
General provisions (“GP”)
Net total
By industry
Manufacturing
Building and construction
Housing loans
General commerce
Transportation, storage & communications
Financial institutions, investment & holding
companies
Professionals & private individuals (except housing
loans)
Others
Total (Gross)
7,502
7,340
7,204
7,090
5,826
84,835
4,963
80,267
5,938
80,949
6,262
80,172
By currency
Singapore dollar
Hong Kong dollar
US dollar
Others
Total (Gross)
34,694
24,213
15,737
10,191
84,835
33,395
24,187
14,714
7,971
80,267
33,571
24,721
16,214
6,443
80,949
35,981
24,103
14,999
5,089
80,172
Customer loans rose 6% from the previous quarter. Most
of the growth was from corporate loans in Singapore and
Greater China, which included a few large loan
drawdowns. SME loans increased marginally as growth in
Hong Kong was narrowed by exchange translation effects.
Consumer loans fell slightly, with most of the decline
accounted for in Hong Kong.
In Singapore, both Singapore-dollar and foreign-currency
borrowing contributed to the growth in corporate loans
during the quarter. Housing loans were little changed
compared to a decline in the previous quarter. Mortgage
applications and loan drawdowns improved from the
previous quarter, while the volume of early repayments
eased.
In Hong Kong, loans rose 3% in local currency terms
during the quarter, with all of the growth accounted for by
corporates and SMEs. Housing loans fell 2% in Hong
Kong dollar terms during the quarter.
12
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
NON-PERFORMING ASSETS AND PROVISION COVERAGE
By business unit
NPA
($m)
SP
($m)
GP
($m)
NPL
(% of loans)
(GP+SP)/NPA
(%)
(GP+SP)/
unsecured
NPA
(%)
Consumer Banking
331
110
284
1.2
119
320
Enterprise Banking
721
300
192
3.7
68
144
Corporate and Investment
Banking
438
189
308
1.4
113
228
98
28
108
1.7
141
443
1,588
627
892
1.9
96
213
37
21
15
9
75
107
-
243
552
611
1,104
1,646
651
1,074
-
105
234
339
740
110
294
288
189
1.2
3.9
117
65
322
144
509
235
263
1.9
98
184
80
32
140
1.4
214
521
1,668
671
880
2.1
93
204
Debt securities
37
18
71
-
239
490
Contingent liabilities
45
15
94
-
244
714
1,750
704
1,045
-
100
218
344
691
111
283
296
190
1.2
3.6
118
68
326
144
573
267
262
2.2
92
155
83
32
132
1.5
196
480
1,691
693
880
2.1
93
190
130
44
57
19
71
80
-
99
227
209
451
1,865
769
1,031
-
97
198
Jun 30, 2006
Others
Total non-performing loans
(“NPL”)
Debt securities
Contingent liabilities
Total non-performing
assets (“NPA”)
Mar 31, 2006
Consumer Banking
Enterprise Banking
Corporate and Investment
Banking
Others
Total non-performing loans
Total non-performing
assets
Dec 31, 2005
Consumer Banking
Enterprise Banking
Corporate and Investment
Banking
Others
Total non-performing loans
Debt securities
Contingent liabilities
Total non-performing
assets
13
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
By business unit
NPA
($m)
SP
($m)
GP
($m)
NPL
(% of loans)
(GP+SP)/NPA
(%)
(GP+SP)/
unsecured
NPA
(%)
336
637
108
232
298
182
1.1
3.5
121
65
327
150
631
255
256
2.4
81
144
Jun 30, 2005
Consumer Banking
Enterprise Banking
Corporate and Investment
Banking
Others
Total non-performing loans
Debt securities
Contingent liabilities
Total non-performing
assets
131
52
173
2.2
172
417
1,735
647
909
2.2
90
192
127
34
51
18
73
86
-
97
311
243
405
1,896
716
1,068
-
94
201
14
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
By geography
Jun 30, 2006
Singapore
Hong Kong
Rest of Greater China
South and South-east
Asia
Rest of the World
Total non-performing
loans
NPA
($m)
SP
($m)
GP
($m)
NPL
(% of loans)
(GP+SP)/NPA
(%)
(GP+SP)/
unsecured
NPA
(%)
851
394
87
341
144
36
442
281
44
1.9
1.5
2.1
92
108
93
218
243
230
125
68
69
2.8
110
183
131
38
56
2.5
71
135
1,588
627
892
1.9
96
213
37
21
15
9
75
107
-
243
552
611
1,104
1,646
651
1,074
-
105
234
903
396
89
375
139
38
440
278
35
2.2
1.5
2.9
90
105
82
201
258
191
123
68
61
3.1
104
178
157
51
66
3.2
75
140
1,668
671
880
2.1
93
204
Debt securities
37
18
71
-
239
490
Contingent liabilities
Total non-performing
assets
45
15
94
-
244
714
1,750
704
1,045
-
100
218
883
395
91
382
139
36
449
291
23
2.1
1.5
3.2
94
109
65
203
263
88
131
68
60
3.7
98
166
191
68
57
3.7
65
92
1,691
693
880
2.1
93
190
Debt securities
Contingent liabilities
Total non-performing
assets
Mar 31, 2006
Singapore
Hong Kong
Rest of Greater China
South and South-east
Asia
Rest of the World
Total non-performing
loans
Dec 31, 2005
Singapore
Hong Kong
Rest of Greater China
South and South-east
Asia
Rest of the World
Total non-performing
loans
Debt securities
Contingent liabilities
Total non-performing
assets
Jun 30, 2005
Singapore
Hong Kong
Rest of Greater China
South and South-east
Asia
Rest of the World
Total non-performing
loans
Debt securities
Contingent liabilities
Total non-performing
assets
130
57
71
-
99
209
44
19
80
-
227
451
1,865
769
1,031
-
97
198
909
466
61
341
143
36
429
283
24
2.1
1.8
2.8
85
91
98
196
239
111
157
82
50
4.6
84
128
142
45
123
2.7
118
207
1,735
647
909
2.2
90
192
127
34
51
18
73
86
-
97
311
243
405
1,896
716
1,068
-
94
201
15
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
By industry
($m)
Jun 30,2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
NPA
SP
NPA
SP
NPA
SP
NPA
SP
Manufacturing
Building and construction
Housing loans
349
119
246
178
39
68
358
125
257
186
42
68
434
103
256
225
37
66
449
161
248
190
38
65
General commerce
Transportation, storage &
communications
339
31
133
14
405
31
165
14
367
30
150
13
245
33
110
11
Financial institutions, investment
& holding companies
189
47
176
46
164
47
189
53
Professionals & private
individuals (except housing
loans)
Others
Total non-peforming loans
181
75
193
81
204
84
237
111
134
1,588
73
627
123
1,668
69
671
133
1,691
71
693
173
1,735
69
647
37
21
15
9
37
45
18
15
130
44
57
19
127
34
51
18
1,646
651
1,750
704
1,865
769
1,896
716
Debt securities
Contingent liabilities
Total non-performing assets
By loan classification
($m)
Non-performing assets
Substandard
Doubtful
Loss
Total
Restructured assets
Substandard
Doubtful
Loss
Total
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
NPA
SP
NPA
SP
NPA
SP
NPA
SP
1,053
224
369
1,646
82
200
369
651
1,109
249
392
1,750
94
223
387
704
1,220
276
369
1,865
156
244
369
769
1,337
216
343
1,896
197
176
343
716
318
48
39
405
41
34
39
114
345
79
44
468
45
50
44
139
429
26
41
496
85
27
41
153
503
19
45
567
96
19
45
160
By collateral type
($m)
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
NPA
NPA
NPA
NPA
Unsecured non-performing assets
738
803
911
886
Secured non-performing assets by collateral type
Properties
Shares and debentures
Fixed deposits
Others
666
35
38
169
683
51
33
180
675
68
36
175
817
55
10
128
1,646
1,750
1,865
1,896
Total
16
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
By period overdue
($m)
Not overdue
180 days overdue
Total
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
NPA
NPA
NPA
NPA
447
381
138
680
1,646
The Group’s NPLs fell 5% from March 2006 and 8% from
a year ago to $1,588 million. As a percentage of loans, the
NPL rate improved to 1.9% from 2.1% in the previous
quarter and 2.2% a year ago.
NPL rates for most customer and geographical segments
fell during the quarter. The exceptions were NPL rates for
consumer loans and Hong Kong loans, which were
unchanged from the previous quarter.
519
377
205
649
1,750
697
353
157
658
1,865
675
411
169
641
1,896
Including debt securities and contingent liabilities, the
amount of NPAs fell 6% from March 2006 and 13% from
a year ago to $1,646 million. The proportion of NPAs in
the substandard category was at 64% compared to 63%
in the previous quarter and 71% a year ago. Most of the
loan recoveries over the past year were in the
substandard category.
Provision coverage improved to 105% of NPAs from
100% in the previous quarter and 94% at a year ago.
FUNDING SOURCES
($m)
Customer deposits
Interbank liabilities
Other borrowings and liabilities
Shareholders’ funds
Total
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
120,875
11,769
39,537
17,408
189,589
119,067
10,674
36,781
17,348
183,870
116,884
8,959
37,637
16,724
180,204
115,933
12,053
38,541
17,147
183,674
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
66,055
22,436
21,203
11,181
120,875
65,400
21,838
20,521
11,308
119,067
64,112
22,676
19,736
10,360
116,884
62,916
23,527
18,540
10,950
115,933
44,991
13,127
60,403
2,354
120,875
45,402
13,945
57,145
2,575
119,067
45,409
14,004
54,585
2,886
116,884
46,817
12,470
50,640
6,006
115,933
CUSTOMER DEPOSITS
($m)
By currency
Singapore dollar
US dollar
Hong Kong dollar
Others
Total
By product
Savings accounts
Current accounts
Fixed deposits
Other deposits
Total
The Group’s total funding rose 3% from March 2006 and a
year ago to $189.6 billion, contributed by higher customer
deposits and a US$900 million subordinated debt issued in
June 2006. Compared to March 2006, interbank liabilities
were also higher.
deposits increased 1% from March 2006 and 5% from a
year ago, while Hong Kong-dollar deposits rose 3% from
March 2006 and 14% from a year ago. The proportion of
fixed deposits continued to increase as customers
sought higher yields in a rising interest rate
environment.
Customer deposits rose 2% from March 2006 and 4%
from a year ago to $120.9 billion. Singapore-dollar
17
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
VALUE AT RISK AND TRADING INCOME
The Group uses a Value at Risk (“VaR”) measure as one mechanism for controlling trading risk. The VaR is calculated
using a one-day time horizon and a 99% confidence interval. The following table shows the period-end, average, high
and low VaR for the trading risk exposure of the DBSH Group for the period from July 1, 2005 to June 30, 2006.
($m)
July 1, 2005 to June 30 2006
Average
High 1/
Low 1/
As at June 30, 2006
Interest rate
FX
Equity
Diversification effect
17.3
8.6
2.6
(11.8)
21.4
6.8
4.8
(12.6)
26.7
11.1
7.6
17.3
3.7
2.6
16.7
20.4
27.5
16.1
Note:
1/ The high (& low) VaR figures reported for each risk class did not necessarily occur on the same day as the high (& low) reported for total. A corresponding diversification effect cannot
be calculated and is therefore omitted from the table.
The charts below provide the range of VaR and the daily distribution of trading income in the trading portfolio for the
period from July 1, 2005 to June 30, 2006.
DBSH Group VaR for Trading Book
45
40
No. of Days
35
30
25
20
15
10
5
>39-40
>38-39
>37-38
>36-37
>35-36
>34-35
>33-34
>32-33
>31-32
>30-31
>29-30
>28-29
>27-28
>26-27
>25-26
>24-25
>23-24
>22-23
>21-22
>20-21
>19-20
>18-19
>17-18
>16-17
>15-16
0
VaR (S$ million)
Daily Distribution of Group Trading Income
(1 July 2005 to 30 June 2006)
70
60
40
30
20
10
Trading income (S$ million)
18
>16-18
>14-16
>12-14
>10-12
>8-10
>6-8
>4-6
>2-4
>0-2
>(2)-0
>(4)-(2)
>(6)-(4)
>(8)-(6)
>(10)-(8)
0
>(12)-(10)
No. of Days
50
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
CAPITAL ADEQUACY
($m)
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
1,571
18,081
(5,833)
13,819
1,567
17,728
(5,834)
13,461
1,564
17,377
(5,823)
13,118
1,561
17,563
(6,931)
12,193
1,001
4,893
19
5,913
976
4,034
84
5,094
963
4,222
13
5,198
1,002
4,343
(624)
4,721
19,732
137,375
18,555
131,810
18,316
123,847
16,914
114,845
10.1
4.3
14.4
10.2
3.9
14.1
10.6
4.2
14.8
10.6
4.1
14.7
Tier 1
Paid-up ordinary and preference shares
Disclosed reserves and others
Less: Goodwill
Total
Tier 2
Cumulative general provisions
Subordinated debts
Others
Total
Total capital
Risk-weighted assets
Capital adequacy ratio (%)
Tier I ratio
Tier II ratio
Total (Tier I & II) ratio
Based on regulatory guidelines, the Group’s total capital
adequacy ratio increased from 14.1% in March 2006 to
14.4% in June 2006. The increase was due to the
inclusion of a US$900 million tier-2 subordinated debt
Jun 30, 2005
issued in June 2006, offset by higher risk-weighted
assets and the amortisation of US$270 million of existing
tier-2 subordinated debts during the quarter.
UNREALISED VALUATION SURPLUS
($m)
Jun 30, 2006
Mar 31, 2006
Dec 31, 2005
Jun 30, 2005
415
16
431
425
15
440
416
25
441
751
40
791
Properties
Non-trading investments
Total
The amount of unrealised valuation surpluses fell
slightly from $440 million in March 2006 to $431 million
as the sale of an office building in Hong Kong during the
quarter was offset by an increase in the valuation surplus
from other properties.
19
Appendix I
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Unaudited Consolidated Income Statement
2nd Qtr
2006
2nd Qtr
2005
+/(-)
%
1st Qtr
2006
1st Half
2006
1st Half
2005
+/(-)
%
Operating income
Interest income
Interest expense
Net interest income
Net fee and commission income
Net trading income
Net gain from non-trading investments
Other income
1,931
1,034
897
296
105
12
98
1,318
606
712
274
94
12
41
47
71
26
8
12
>100
1,735
885
850
262
108
38
12
3,666
1,919
1,747
558
213
50
110
2,495
1,098
1,397
503
176
37
58
47
75
25
11
21
35
90
Total operating income
1,408
1,133
24
1,270
2,678
2,171
23
Operating expenses
Personnel expenses
General and administrative expenses
Depreciation of properties and other fixed assets
Provisions for credit and other losses
321
243
30
62
253
192
39
81
27
27
(23)
(23)
300
231
33
31
621
474
63
93
518
375
77
144
20
26
(18)
(35)
Total operating expenses
656
565
16
595
1,251
1,114
12
Operating profit
Share of profits of associates
Operating profit before tax
752
20
772
568
17
585
32
18
32
675
12
687
1,427
32
1,459
1,057
26
1,083
35
23
35
Income tax expense
Net profit
131
641
74
511
77
25
133
554
264
1,195
162
921
63
30
603
38
641
473
38
511
27
25
518
36
554
1,121
74
1,195
846
75
921
33
(1)
30
In $ millions
Attributable to:
Shareholders
Minority interests
NM: Not meaningful
1
Appendix II
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Unaudited Balance Sheet as at
COMPANY
Mar 31
Dec 31
2006
2005 1/
Jun 30
2005
-
-
3
6,822
6,822
6,790
6,780
6,822
6,822
6,790
6,783
6
5
6
6
164,051
6
5
6
6
19,190
19,623
6,816
6,817
6,784
6,777
8,165
(117)
2,615
6,685
8,132
(117)
2,542
6,167
8,088
(117)
2,568
6,608
3,942
51
2,823
3,894
50
2,873
3,861
49
2,874
3,817
41
2,919
17,408
17,348
16,724
17,147
6,816
6,817
6,784
6,777
Minority interests
2,401
2,418
2,466
2,476
-
-
-
-
TOTAL EQUITY
19,809
19,766
19,190
19,623
6,816
6,817
6,784
6,777
11,124
77,982
1,403,137
10,002
76,401
1,444,019
8,769
75,804
1,359,935
8,552
67,455
1,588,306
4.49
4.50
4.48
4.49
4.34
4.35
4.34
4.34
In $ millions
Jun 30
2006
GROUP
Mar 31
Dec 31
2006
2005 1/
Jun 30
2005
8,103
14,416
20,411
9,210
10,999
22,647
4,986
9,846
23,816
10,080
11,527
17,529
15,172
9,955
83,410
22,258
3,125
551
5,833
1,556
56
4,743
15,574
9,608
78,818
22,452
2,548
550
5,834
1,638
38
3,954
14,989
8,792
79,462
23,102
2,380
585
5,803
1,662
51
4,730
14,999
9,618
78,712
22,484
4,775
520
6,931
1,786
70
4,643
-
189,589
183,870
180,204
183,674
11,769
9,703
120,875
373
660
51
12,131
7,812
2,584
5,228
10,674
9,570
119,067
362
589
81
10,728
7,956
2,756
5,200
8,959
8,537
116,884
378
557
58
12,274
8,002
2,664
5,338
12,053
9,308
115,933
491
641
56
12,424
7,555
2,985
4,570
6,406
5,077
5,365
5,590
169,780
164,104
161,014
19,809
19,766
8,213
(111)
2,434
6,872
Jun 30
2006
ASSETS
Cash and balances with central banks
Singapore Government securities and treasury bills
Due from banks
Other financial securities at fair value through profit or
loss
Positive replacement values
Loans and advances to customers
Non-trading investments
Securities pledged
Subsidiaries
Investments in associates
Goodwill on consolidation
Properties and other fixed assets
Deferred tax assets
Other assets
TOTAL ASSETS
LIABILITIES
Due to banks
Negative replacement values
Due to non-bank customers
Bills payable
Current tax liabilities
Deferred tax liabilities
Other liabilities
Other debt securities in issue 2/
- due within one year
- due after one year
Subordinated term debts
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Treasury shares
Other reserves
Revenue reserve
SHAREHOLDERS’ FUNDS
OFF BALANCE SHEET ITEMS
Contingent liabilities
Commitments
Financial derivatives
OTHER INFORMATION
Net asset value per ordinary share ($)
(i) Based on existing ordinary share capital
(ii) Assuming conversion of outstanding preference
shares to ordinary shares
Notes:
1/
Audited
2/
Includes secured amount of $2,384 million as at June 30, 2006 (March 31, 2006: $2,204 million; December 31, 2005: $2,018 million; June 30, 2005: $1,927 million). These are
mainly secured by properties and securities.
2
Appendix III
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Unaudited Statement of Changes in Equity
GROUP
In $ millions
Balance at January 1, 2006
Exercise of share options
Attributable to Shareholders
Share
capital 1/
8,132
Treasury
shares
Other
reserves
Revenue
reserve
Minority
interests
Total
equity
(117)
2,542
6,167
2,466
19,190
(60)
(84)
81
81
Net exchange translation adjustments
(24)
Share of associates’ capital reserves
(5)
(5)
Cost of share-based payments
15
15
(6)
-
Draw-down of reserves upon vesting of performance
shares
6
Available-for-sale investments/Cash flow hedge:
- Net valuation taken to equity
(66)
(66)
- Transferred to income statement on sale
(25)
(25)
- Tax on items taken directly to or transferred from equity
3
3
Net profit for the period
1,121
Final dividends paid for previous year
(212)
Interim dividends paid for current year
(204)
Dividends paid to minority interests
Change in minority interests
74
1,195
(212)
(204)
(74)
(74)
(5)
(5)
Balance at June 30, 2006
8,213
(111)
2,434
6,872
2,401
19,809
Balance at January 1, 2005
8,066
(126)
2,328
6,176
2,431
18,875
292
(9)
On adoption of FRS 39 at January 1, 2005
Exercise of share options
283
20
20
42
45
Net exchange translation adjustments
3
Share of associates’ capital reserves
2
2
21
21
Cost of share-based payments
Draw-down of reserves upon vesting of performance
shares
Reclassification of reserves upon exercise of share options
9
2
(9)
-
(2)
-
Available-for-sale investments/Cash flow hedge:
- Net valuation taken to equity
- Transferred to income statement on sale
- Tax on items taken directly to or transferred from equity
51
51
(110)
(110)
(8)
(8)
846
Net profit for the period
Final dividends paid for previous year
(268)
Interim dividends paid for current year
(137)
Dividends paid to minority interests
Change in minority interests
Balance at June 30, 2005
8,088
(117)
2,568
6,608
75
921
(268)
(137)
(76)
(76)
4
4
2,476
19,623
3
Appendix III
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Unaudited Statement of Changes in Equity
COMPANY
Share capital
In $ millions
Balance at January 1, 2006
Exercise of share options
1/
3,861
Other
reserves
Revenue
reserve
Total equity
49
2,874
6,784
81
Cost of share-based payments
Net profit for the period
81
365
2
365
Final dividends paid for previous year
(212)
(212)
Interim dividends paid for current year
Balance at June 30, 2006
3,942
51
(204)
2,823
(204)
6,816
Balance at January 1, 2005
3,795
35
3,000
6,830
Exercise of share options
2
20
Reclassification of reserves upon exercise of share options
Net loss for the period
20
8
Cost of share-based payments
2
8
(2)
324
324
Final dividends paid for previous year
(268)
(268)
Interim dividends paid for current year
Balance at June 30, 2005
(137)
2,919
(137)
6,777
3,817
41
Note:
1/
Share capital included Capital redemption reserves and Share premium of DBS Bank prior to restructuring of DBS Bank under a financial services holding company,
DBSH, pursuant to a scheme of arrangement under Section 210 of Singapore Companies Act on 26 June 1999 (previously disclosed under Non-distributable reserves).
4
Appendix IV
DBS GROUP HOLDINGS LTD AND ITS SUBSIDIARIES
Unaudited Consolidated Statement of Cash Flows
1st Half
2006
1st Half
2005
Cash flows from operating activities
Operating profit before tax
1,459
1,083
Adjustments for n