2000 Interim Results Briefing to Analysts & Investors
Transforming to
World-Class
Interim 2000 Results Briefing
July 2000
Transforming to World-Class
Interim results reflect broad-based improvement in operations
Regional asset quality continues to improve
Well-positioned for expansion and growth
2
Transforming to World-Class
Interim results reflect broad-based improvement in operations
Regional asset quality continues to improve
Well-positioned for expansion and growth
3
Broad-based improvement in operations
(S$ million)
1H00
1H99
Increase/
(Decrease)
Net interest income
Fee and commission income
Dividends and rental income
Other income
1,046
260
43
139
989
185
33
254
5.8
41.1
28.4
(45.2)
Income before operating expenses
Excluding SPC profits
1,489
1,460
1,343
1.9
10.8
Operating expenses
594
456
30.3
Operating profit
Excluding SPC profits
895
1,004
887
(10.9)
0.8
Specific provisions
General provisions
80
(17)
333
3
(75.7)
(674.0)
NPAM
Excluding SPC profits
704
655
538
7.5
30.9
4
Net interest income increased due to higher
margins
(S$ million)
Net interest income
2800
Growth :
+ S$58m (5.8%)
2400
2,035
2000
1600
1200
1,430
1,046
1,002
800
1H99:
989
400
0
1997
1998
1999
1H00
5
Net interest income increased due to higher
margins
(%)
Net interest income
Net interest margin
2800
2400
1.73
1.77
2000
2.02
2.07
(1H99 : 2.00)
2.0
2,035
1.5
1600
1200
2.5
1,430
1,046
1,002
800
1H99:
989
400
1.0
0.5
0
0.0
1997
1998
1999
1H00
6
Fee and commission income rose strongly
(S$ million)
Stock broking
Investment banking
Trade related
Loan related
Service charges
Guarantees
Credit card
Fund management
Others
1H99
54
31
28
14
15
13
11
7
11
184
1H00
47
42
38
24
23
14
15
31
26
260
Growth :
+ S$76m (41.1%)
7
Fee and commission income rose strongly
(S$ million)
Stock broking
Investment banking
Trade related
Loan related
Service charges
Guarantees
Credit card
Fund management
Others
Fee to Income Ratio (%)
1998
1999
1H99
1H00
49
42
51
29
20
27
22
10
23
102
85
63
38
32
28
25
20
29
54
31
28
14
15
13
11
7
11
47
42
38
24
23
14
15
31
26
274
423
184
260
14.6
14.0
13.7 *
17.5
* Income excludes SPC profits.
8
“Other” income declined due to sale of SPC
shares in 1H99
(S$ million)
1H99
1H00
FX trading
41
52
Sale of trading securities
& derivatives trading
88
55
-
3
117
-
-
5
Disposal of fixed assets
2
4
Other
6
20
Disposal of investment securities:
- Sale of DBS Land shares
- Sale of SPC shares
- Others
254
139
Growth :
- S$115m (45.2%)
9
Operating expenses rose 30% due to
investments in staff and IT
DKOB’s expenses
IT expenses
Staff cost
1,064
(S$ million)
1200
71
1000
800
600
400
Growth :
+ S$138m (30.3%)
754
529
334
87
594
456
134
200
18
233
49
56
281
64
0
Cost to
Income Ratio
1998
1999
1H99
1H00
40.2%
35.1%
31.2%
39.9%
1
Operating profit declined 10.9% due to SPC
profits in 1H1999
(S$ million)
Growth : - 10.9%
(Excl SPC : + 0.8%)
1,964
2000
1600
1200
1,121
1,004
117
972
894
800
Singapore
Petroleum
Company
887
400
0
1997
1998
1999
1H99
1H00
1
Provisions declined substantially
Increase/
(Decrease)
1H99
1H00
114
11
(103)
5 Regional Countries
54
24
(30)
Singapore
54
(9)
(63)
3
11
8
(1)
27
28
(S$ million)
DTDB
Other Countries
Non-loan provisions
Specific Provisions
224
64
(160)
General Provisions
3
(17)
(20)
Total DBSH Group's share
227
47
(180)
Minority interests' share
109
17
(92)
Total Group Provisions
336
64
(272)
1
After-tax profits grew 7.5% to S$704 million
(S$ million)
1200
1,072
Growth : + 7.5%
(Excl SPC : + 30.9%)
1000
800
655
600
704
117
436
Singapore
Petroleum
Company
400
538
200
112
0
1997
1998
1999
1H99
1H00
1
ROA recovered to pre-crisis level
(%)
1.4
1.31
1.28
1.13
1.2
1.04
1.0
0.8
0.72
0.6
0.4
0.14
0.2
0.0
1996
1997
1998
1999
1H99
1H00
1
ROE on track toward 15%+ target
(%)
15
13.13
11.80
10.35
10.30
10
5.72
5
1.29
0
1996
1997
1998
1999
1H99
1H00
1
Balance sheet shrank due to soft loan demand
and shedding of low-yielding assets
(S$ billion)
Total Assets
140
120
Customer
Loans
Customer
Deposits
107.6
111.4 (-3.4%)
80.4
83.1 (-3.3%)
100
80
57.8
60
52.4
(-9.2%)
40
20
0
Jun 99 Jun 00
Jun 99 Jun 00
Jun 99 Jun 00
1
Dividend rate increased
Targeting to align payout ratio more with international banks
Total
1998
Ordinary dividend rate
Amount (S$ million)
Payout rate
Total
1999
Interim
1999
Interim
2000
18%
25%
9%
14%
140.8
241.9
80.6
139.2
128.9%
22.3%
19.8%
1
Transforming to World-Class
Interim results reflect broad-based improvement in operations
Regional asset quality continues to improve
Well-positioned for expansion and growth
1
NPLs have peaked
(S$ million)
DTDB
8,121
DKOB
Others
8,149
7,666
7,086
Singapore
NBk NPL/NBk Loans (%)
13.1
11.8
NBk NPL/NBk Loans
(ex-DTDB) (%)
13.0
12.7
3,207
3,018
3,000
2,874
543
8.5
9.0
7.7
3,907
2.7
1,112
463
649
Dec 97
@
2,172
8.2
1,800
@
4.9
923
637
8.4
1,736
1,506
1,735
717
@
4,211
4,560
2,705
4,029
4,225
@
@
1,577
2,824
2,425
2,452
Dec 99
Jun 00
1,249
Jun 98
Dec 98
Jun 99
@ Group NPLs excluding DTDB and DKOB.
1
Note: Loans and NPLs include POSBank’s loans since Nov 98 and DKOB’s
loans since May 99.
Most NPLs are classified substandard; some
are still current
NPLs (30 Jun 00)
Substandard
Doubtful
Total
(ex-DTDB)
Loss
483 475 4,666
3,708
79%
96
DTDB
1,235
41%
Total
(Incl-DTDB)
4,943
2,000
3%
579
64%
0
1,669
4,000
56%
2,144
8%
3,000
7,666
28%
6,000
8,000
(S$ million)
2
DBS NPL classification more conservative
than SEC Reporting
NPLs (30 Jun 00)
(S$ million)
MAS 612
Standard
SEC
Reporting
Singapore
2,452
1,888
5 Regional Countries
4,144
3,953
Other Countries
1,071
702
Total Group
7,666
6,543
Non bank NPLs / Non bank loans
12.7%
11.1%
Provisions / NPLs
51.9%
60.8%
Difference :
S$ 1.12 bn
(14.8%)
2
Most NPLs are classified substandard; some
are still current
NPLs (30 Jun 00)
Substandard
Doubtful
Total
(ex-DTDB)
Loss
483 475 4,666
3,708
79%
96
Approx. S$1.1 bn
current, or 22.7%
of Substandard
DTDB
Total
(Incl-DTDB)
1,235
41%
4,943
2,000
3%
579
64%
0
1,669
4,000
56%
2,144
8%
3,000
7,666
28%
6,000
8,000
(S$ million)
2
Provision coverage at 52% of NPLs or 61% on
SEC basis
(S$ million)
General Provisions (GP)
4,286
Specific Provisions (SP)
SP+GP/NPLs (%)
1,191
SP+GP/NPLs (SEC) (%)
SP+GP/Unsec NPLs (%)
164.6
3,147
1,174
1,294
1,115
1,894
102.7
119.6
110.6
118.4
3,095
88.1
2,558
946
2,032
980
801
3,978
3,852
48.5
948
55.3
44.4
47.4
Dec 98
Jun 99
114.8
2,804
63.0
60.8
52.6
51.9
179
Dec 97
Jun 98
Dec 99
Jun 00
2
DBS Thai Danu Bank : Crossed over to
operating breakeven
by
Sep 99
Dec 99
Mar 2000
IT systems upgraded
Rigorous Credit & Risk Management in place
Specialized NPL units
Regional Integration Center in Bangkok
Scrubbed loan book
Reclassified NPLs
60% reserves in DBS’ books
Branch network cut by 1/3, headcount by 40%
Restructured more than 1/2 of NPLs
Raised Bt 13.5 bn through rights issue
Jun 2000
CAR
increased to 26.1%
Flexibility
to sell or write off NPLs
Sell and/or write down NPLs
2
Raised Bt 13.5 billion through rights / private
placement
(48.3%) minority &
outside investor
subscription
(51.7%) DBS
subscription
Bt 2.5 bn private placement
Bt 0.94 bn
Bt 0.96 bn
Bt 11.0 bn rights offering
Bt 1.96 bn
Bt 2.14 bn
Convertible preference shares
(MCAPs)
Total
Bt 2.9 bn
(43%)
Bt 7.5 bn
Bt 10.6 bn
(57%)
DBS’ ownership is 51.8%, or 73.4% on fully-diluted basis.
2
Selling DTDB NPLs
DTDB to sell Bt 30.6 billion (or 77%) of total NPLs, including most
difficult NPLs
Aggregate sale price is 28.8%, resulting in total proceeds to DTDB
of Bt 8.4 billion
Approximately 86% of the Bt 13.5 billion recapitalization will be
applied against the expected loss from the DTDB NPL sale
Closing expected by summer for the corporate and non-legal retail
tranches. 3-4 months’ time period required for the legal retail
tranche, due to the need for DTDB to establish an AMC
2
Sale of NPLs will reduce DTDB NPLs to 14%
DTDB Books
30 Jun 00
Pro Forma
on Sale of NPLs
BOT Standards
NPLs
Loan Loss Reserve
CAR - Tier I
CAR - Total
Bt 39.8 bn (41.5%)
Bt 15.0 bn (37.6%)
21.8%
26.1%
Bt 9.2 bn (14.1%)
Bt 3.8 bn (41.3%)
11.0%
16.0%
MAS Standards
NPLs
Bt 68.1 bn (68.6%)
Bt 37.5 bn (54.6%)
Loan Loss Reserve
Bt 41.6 bn (61.1%)
Bt 18.8 bn (50.1%)
2
DBS’ group NPLs will decline to 10.6%
DBSH Group Books
30 Jun 00
Pro Forma
on Sale of NPLs
NPLs
S$ 7.7 bn (12.7%)
S$ 6.3 bn (10.6%)
Loan Loss Reserve
S$ 4.0 bn (51.9%)
S$ 3.0 bn (47.1%)
2
DBS’ group NPLs will decline to 10.6%
(S$ million)
DTDB
8,121
DKOB
Others
7,666
7,086
Singapore
NBk NPL/
NBk Loans (%)
11.8
Pro forma DTDB NPL sale
NBk NPL/NBk Loans
(ex-DTDB) (%)
13.1
3,018
463
649
3,000
10.6
717
9.0
7.7
1,506
637
8.4
1,736
8.2
1,800
@
4.9
1,112
12.7
3,207
543
1,735
923
13.0
2,874
8.5
3,907
2.7
8,149
@
4,211
2,705
4,560
4,029
4,225
@
@
1,577
DBS
DBSNPLs
NPLs
headed
headeddown
down
with
DTDB
with DTDB
resolution
resolution
2,824
@
2,425
2,452
Dec 99
Jun 00
2,172 1,249
Dec 97
Jun 98
Dec 98
Jun 99
@ Group NPLs excluding DTDB and DKOB.
2
Note: Loans and NPLs include POSBank’s loans since Nov 98 and DKOB’s
loans since May 99.
DBS Thai Danu Bank well-positioned to
compete
Other Thai banks paralyzed: NPLs, capital-starved, legacy IT
Focus on developing treasury, institutional banking
Rebuild
Revenues
and retail banking capabilities
Grow fee-based income through retail banking
initiatives
Target large Thai corporates
Leverage DBS customer relationships, expertise
Regional Integration Center in Bangkok to accelerate
Continued
Integration
Efforts
integration of regional operations, including DBS
Kwong On Bank and DTDB
IT platform to reach 70% of DBS’ standards by year
end
Migrating DBS products and capabilities into Thailand
3
Transforming to World-Class
Interim results reflect broad-based improvement in operations
Regional asset quality continues to improve
Well-positioned for expansion and growth
3
Right-sizing branch network
Singapore
Number of
branches
Post POSBank merger (Nov 1998)
173
31 Dec 1999
155
30 Jun 2000
120
Estimated 31 Dec 2000
Approx. 100
3
New branch design will focus on sales
Pre-Branch Improvement
Program
Post-Branch Improvement
Program (by October 2000)
Sales
14%
Service
86%
Sales
33%
Service
67%
Moving from a ratio of 1 sales staff : 6 service staff
to 1 sales staff : 2 service staff
Convert deposit collection branch to point of sales
Sales in 3 pilot branches increased by up to 700%
3
Centralizing processing and servicing
functions
Formed Processing and Servicing division last year transform back
office into efficient, cost-accountable business
Centralizing processing capabilities and platforms across the firm:
Eliminating duplication
Aggregating for scale economies and quality control
Accelerating push for straight-through processing
Exploring opportunities for outsourcing and strategic procurement
3
Leveraging IT, improving efficiency
IT supports cross selling, targeted marketing and multi-channel
delivery
IT:
Ensuring a
robust, integrated
IT platform
Activity Based
Costing:
Will enable measurement
of profitability & hit rates
by product, channel
& customer
Data warehousing
& mining:
Developing capabilities
since 1997 to track cross
selling effectiveness
Robust CRM system
to be developed over
18-24 month period
3
Linking Bricks and Mortar, Call Centers and Ebusiness
DBS’ integrated delivery model
E-business
ATM
Phone Banking
Mobile Banking
Internet Banking
Brand
Products &
Services
Bricks &
Mortar
Fulfilment
Direct Marketing
(Call Center)
3
DBS website leads Asian banks
Internet user base more than tripled in the last year to 130,000
Only Asian Bank with top-rated internet banking web-site
Scored a perfect 10 out of 10 for quality web-site design
Top Internet Banking Websites
(Asian/Middle East)
Commonwealth Bank of Australia
DBS
ANZ Bank Australia
National Australia Bank
Citibank Hong Kong
Emirates Bank International, UAE
Overseas Union Bank Singapore
Westpac Australia
St George Bank Australia
ANZ Bank New Zealand
Source: Lafferty Internet Ratings
1
2
2
2
5
5
7
7
7
10
Average Time
Spent Per
Access
(minutes)
Rank
Website
1
2
3
4
5
MSN
AsiaOne
Yahoo!
eCircle
DBS
42:08
42:00
38:45
25:24
24:35
6
7
8
9
10
Go Network
IRAS
Pacific Internet
Catcha
SingTel
24:35
20:07
19:48
18:07
16:40
Source: AC Nielsen report, April 2000
3
Early mover in building leading E-business
capabilities
Using IT, e-business to expand our channels
Integrating web-based initiatives with advanced ATMs,
mobile phone / hand-held device technology, call centers
B2C
Actively exploring WAP technology applications throughout
emerging Asia
Phone banking
24-hour Autophone service
State-of-the-art call center
Mobile phone banking
Internet banking
Pioneer since 1997
On-line securities trading will enhance customer
stickiness
ATM
Pioneered use of ATM for IPOs and Unit Trust
applications
Linking almost 2,000 DBS, BPI ATMs in the region
3
Early mover in building leading E-business
capabilities
Using IT, e-business to expand our channels
Enhancing web-based cash management services
B2B
platform to deliver treasury, other services through the
Internet and mobile phones
Developing partnerships, alliances, with DBS serving as
payment gateway
DBS C2Pay - Online payment solution to handle
corporates' credit, debit card transactions
DBS c2Pay
IDEAL - Integrated web-based cash management
gateway: services include account information, online
payments, trade finance, securities settlement/portfolio
management
IBEX - Global business exchange that allows
corporates to source, market, place sales orders, fulfil
orders, invoice and make payment
3
We aspire to be a top-five Asian bank
Target markets
Japan and Korea
Greater China
Southeast Asia
and Hong Kong
Australia and
India
We have the capital resources and
commitment to achieve this goal
4
Strong capital position for strategic growth,
M&A
Capital Adequacy Ratio
(%)
Tier 2
30
Tier 1
25
20
15
20.1
15.6
2.0
15.8
1.2
3.5
4.6
13.6
14.6
15.7
15.5
Dec 97
Dec 98
Dec 99
Jun 00
10
5
19.2
Raised
US$500M Tier II
capital through
subordinated
note issue in
April 2000
0
4
Managing our capital base
Optimizing the mix of capital, e.g., raised US$500 million Tier 2 capital
in April 2000
Flexibility to dispose remaining non-core assets
Utilizing excess capital for organic growth and acquisitions
Flexibility to redeem non-voting shares and buy back ordinary shares
4
More-seasoned, deeper management team
Transforming DBS into a world-class competitor
New Corporate Office leadership since 1998
New hires : 2 SMDs, 23 MDs and 65 VPs since 1999
About half of all MDs and VPs have international working experience
Average 23 years’ working experience for MDs and 17 for VPs
29% of MDs and 15% of VPs are non-Singaporean
4
Transforming to World-Class
Interim results reflect broad-based improvement in operations
Regional asset quality continues to improve
Well-positioned for expansion and growth
4
Transforming to
World-Class
Interim 2000 Results Briefing
July 2000
World-Class
Interim 2000 Results Briefing
July 2000
Transforming to World-Class
Interim results reflect broad-based improvement in operations
Regional asset quality continues to improve
Well-positioned for expansion and growth
2
Transforming to World-Class
Interim results reflect broad-based improvement in operations
Regional asset quality continues to improve
Well-positioned for expansion and growth
3
Broad-based improvement in operations
(S$ million)
1H00
1H99
Increase/
(Decrease)
Net interest income
Fee and commission income
Dividends and rental income
Other income
1,046
260
43
139
989
185
33
254
5.8
41.1
28.4
(45.2)
Income before operating expenses
Excluding SPC profits
1,489
1,460
1,343
1.9
10.8
Operating expenses
594
456
30.3
Operating profit
Excluding SPC profits
895
1,004
887
(10.9)
0.8
Specific provisions
General provisions
80
(17)
333
3
(75.7)
(674.0)
NPAM
Excluding SPC profits
704
655
538
7.5
30.9
4
Net interest income increased due to higher
margins
(S$ million)
Net interest income
2800
Growth :
+ S$58m (5.8%)
2400
2,035
2000
1600
1200
1,430
1,046
1,002
800
1H99:
989
400
0
1997
1998
1999
1H00
5
Net interest income increased due to higher
margins
(%)
Net interest income
Net interest margin
2800
2400
1.73
1.77
2000
2.02
2.07
(1H99 : 2.00)
2.0
2,035
1.5
1600
1200
2.5
1,430
1,046
1,002
800
1H99:
989
400
1.0
0.5
0
0.0
1997
1998
1999
1H00
6
Fee and commission income rose strongly
(S$ million)
Stock broking
Investment banking
Trade related
Loan related
Service charges
Guarantees
Credit card
Fund management
Others
1H99
54
31
28
14
15
13
11
7
11
184
1H00
47
42
38
24
23
14
15
31
26
260
Growth :
+ S$76m (41.1%)
7
Fee and commission income rose strongly
(S$ million)
Stock broking
Investment banking
Trade related
Loan related
Service charges
Guarantees
Credit card
Fund management
Others
Fee to Income Ratio (%)
1998
1999
1H99
1H00
49
42
51
29
20
27
22
10
23
102
85
63
38
32
28
25
20
29
54
31
28
14
15
13
11
7
11
47
42
38
24
23
14
15
31
26
274
423
184
260
14.6
14.0
13.7 *
17.5
* Income excludes SPC profits.
8
“Other” income declined due to sale of SPC
shares in 1H99
(S$ million)
1H99
1H00
FX trading
41
52
Sale of trading securities
& derivatives trading
88
55
-
3
117
-
-
5
Disposal of fixed assets
2
4
Other
6
20
Disposal of investment securities:
- Sale of DBS Land shares
- Sale of SPC shares
- Others
254
139
Growth :
- S$115m (45.2%)
9
Operating expenses rose 30% due to
investments in staff and IT
DKOB’s expenses
IT expenses
Staff cost
1,064
(S$ million)
1200
71
1000
800
600
400
Growth :
+ S$138m (30.3%)
754
529
334
87
594
456
134
200
18
233
49
56
281
64
0
Cost to
Income Ratio
1998
1999
1H99
1H00
40.2%
35.1%
31.2%
39.9%
1
Operating profit declined 10.9% due to SPC
profits in 1H1999
(S$ million)
Growth : - 10.9%
(Excl SPC : + 0.8%)
1,964
2000
1600
1200
1,121
1,004
117
972
894
800
Singapore
Petroleum
Company
887
400
0
1997
1998
1999
1H99
1H00
1
Provisions declined substantially
Increase/
(Decrease)
1H99
1H00
114
11
(103)
5 Regional Countries
54
24
(30)
Singapore
54
(9)
(63)
3
11
8
(1)
27
28
(S$ million)
DTDB
Other Countries
Non-loan provisions
Specific Provisions
224
64
(160)
General Provisions
3
(17)
(20)
Total DBSH Group's share
227
47
(180)
Minority interests' share
109
17
(92)
Total Group Provisions
336
64
(272)
1
After-tax profits grew 7.5% to S$704 million
(S$ million)
1200
1,072
Growth : + 7.5%
(Excl SPC : + 30.9%)
1000
800
655
600
704
117
436
Singapore
Petroleum
Company
400
538
200
112
0
1997
1998
1999
1H99
1H00
1
ROA recovered to pre-crisis level
(%)
1.4
1.31
1.28
1.13
1.2
1.04
1.0
0.8
0.72
0.6
0.4
0.14
0.2
0.0
1996
1997
1998
1999
1H99
1H00
1
ROE on track toward 15%+ target
(%)
15
13.13
11.80
10.35
10.30
10
5.72
5
1.29
0
1996
1997
1998
1999
1H99
1H00
1
Balance sheet shrank due to soft loan demand
and shedding of low-yielding assets
(S$ billion)
Total Assets
140
120
Customer
Loans
Customer
Deposits
107.6
111.4 (-3.4%)
80.4
83.1 (-3.3%)
100
80
57.8
60
52.4
(-9.2%)
40
20
0
Jun 99 Jun 00
Jun 99 Jun 00
Jun 99 Jun 00
1
Dividend rate increased
Targeting to align payout ratio more with international banks
Total
1998
Ordinary dividend rate
Amount (S$ million)
Payout rate
Total
1999
Interim
1999
Interim
2000
18%
25%
9%
14%
140.8
241.9
80.6
139.2
128.9%
22.3%
19.8%
1
Transforming to World-Class
Interim results reflect broad-based improvement in operations
Regional asset quality continues to improve
Well-positioned for expansion and growth
1
NPLs have peaked
(S$ million)
DTDB
8,121
DKOB
Others
8,149
7,666
7,086
Singapore
NBk NPL/NBk Loans (%)
13.1
11.8
NBk NPL/NBk Loans
(ex-DTDB) (%)
13.0
12.7
3,207
3,018
3,000
2,874
543
8.5
9.0
7.7
3,907
2.7
1,112
463
649
Dec 97
@
2,172
8.2
1,800
@
4.9
923
637
8.4
1,736
1,506
1,735
717
@
4,211
4,560
2,705
4,029
4,225
@
@
1,577
2,824
2,425
2,452
Dec 99
Jun 00
1,249
Jun 98
Dec 98
Jun 99
@ Group NPLs excluding DTDB and DKOB.
1
Note: Loans and NPLs include POSBank’s loans since Nov 98 and DKOB’s
loans since May 99.
Most NPLs are classified substandard; some
are still current
NPLs (30 Jun 00)
Substandard
Doubtful
Total
(ex-DTDB)
Loss
483 475 4,666
3,708
79%
96
DTDB
1,235
41%
Total
(Incl-DTDB)
4,943
2,000
3%
579
64%
0
1,669
4,000
56%
2,144
8%
3,000
7,666
28%
6,000
8,000
(S$ million)
2
DBS NPL classification more conservative
than SEC Reporting
NPLs (30 Jun 00)
(S$ million)
MAS 612
Standard
SEC
Reporting
Singapore
2,452
1,888
5 Regional Countries
4,144
3,953
Other Countries
1,071
702
Total Group
7,666
6,543
Non bank NPLs / Non bank loans
12.7%
11.1%
Provisions / NPLs
51.9%
60.8%
Difference :
S$ 1.12 bn
(14.8%)
2
Most NPLs are classified substandard; some
are still current
NPLs (30 Jun 00)
Substandard
Doubtful
Total
(ex-DTDB)
Loss
483 475 4,666
3,708
79%
96
Approx. S$1.1 bn
current, or 22.7%
of Substandard
DTDB
Total
(Incl-DTDB)
1,235
41%
4,943
2,000
3%
579
64%
0
1,669
4,000
56%
2,144
8%
3,000
7,666
28%
6,000
8,000
(S$ million)
2
Provision coverage at 52% of NPLs or 61% on
SEC basis
(S$ million)
General Provisions (GP)
4,286
Specific Provisions (SP)
SP+GP/NPLs (%)
1,191
SP+GP/NPLs (SEC) (%)
SP+GP/Unsec NPLs (%)
164.6
3,147
1,174
1,294
1,115
1,894
102.7
119.6
110.6
118.4
3,095
88.1
2,558
946
2,032
980
801
3,978
3,852
48.5
948
55.3
44.4
47.4
Dec 98
Jun 99
114.8
2,804
63.0
60.8
52.6
51.9
179
Dec 97
Jun 98
Dec 99
Jun 00
2
DBS Thai Danu Bank : Crossed over to
operating breakeven
by
Sep 99
Dec 99
Mar 2000
IT systems upgraded
Rigorous Credit & Risk Management in place
Specialized NPL units
Regional Integration Center in Bangkok
Scrubbed loan book
Reclassified NPLs
60% reserves in DBS’ books
Branch network cut by 1/3, headcount by 40%
Restructured more than 1/2 of NPLs
Raised Bt 13.5 bn through rights issue
Jun 2000
CAR
increased to 26.1%
Flexibility
to sell or write off NPLs
Sell and/or write down NPLs
2
Raised Bt 13.5 billion through rights / private
placement
(48.3%) minority &
outside investor
subscription
(51.7%) DBS
subscription
Bt 2.5 bn private placement
Bt 0.94 bn
Bt 0.96 bn
Bt 11.0 bn rights offering
Bt 1.96 bn
Bt 2.14 bn
Convertible preference shares
(MCAPs)
Total
Bt 2.9 bn
(43%)
Bt 7.5 bn
Bt 10.6 bn
(57%)
DBS’ ownership is 51.8%, or 73.4% on fully-diluted basis.
2
Selling DTDB NPLs
DTDB to sell Bt 30.6 billion (or 77%) of total NPLs, including most
difficult NPLs
Aggregate sale price is 28.8%, resulting in total proceeds to DTDB
of Bt 8.4 billion
Approximately 86% of the Bt 13.5 billion recapitalization will be
applied against the expected loss from the DTDB NPL sale
Closing expected by summer for the corporate and non-legal retail
tranches. 3-4 months’ time period required for the legal retail
tranche, due to the need for DTDB to establish an AMC
2
Sale of NPLs will reduce DTDB NPLs to 14%
DTDB Books
30 Jun 00
Pro Forma
on Sale of NPLs
BOT Standards
NPLs
Loan Loss Reserve
CAR - Tier I
CAR - Total
Bt 39.8 bn (41.5%)
Bt 15.0 bn (37.6%)
21.8%
26.1%
Bt 9.2 bn (14.1%)
Bt 3.8 bn (41.3%)
11.0%
16.0%
MAS Standards
NPLs
Bt 68.1 bn (68.6%)
Bt 37.5 bn (54.6%)
Loan Loss Reserve
Bt 41.6 bn (61.1%)
Bt 18.8 bn (50.1%)
2
DBS’ group NPLs will decline to 10.6%
DBSH Group Books
30 Jun 00
Pro Forma
on Sale of NPLs
NPLs
S$ 7.7 bn (12.7%)
S$ 6.3 bn (10.6%)
Loan Loss Reserve
S$ 4.0 bn (51.9%)
S$ 3.0 bn (47.1%)
2
DBS’ group NPLs will decline to 10.6%
(S$ million)
DTDB
8,121
DKOB
Others
7,666
7,086
Singapore
NBk NPL/
NBk Loans (%)
11.8
Pro forma DTDB NPL sale
NBk NPL/NBk Loans
(ex-DTDB) (%)
13.1
3,018
463
649
3,000
10.6
717
9.0
7.7
1,506
637
8.4
1,736
8.2
1,800
@
4.9
1,112
12.7
3,207
543
1,735
923
13.0
2,874
8.5
3,907
2.7
8,149
@
4,211
2,705
4,560
4,029
4,225
@
@
1,577
DBS
DBSNPLs
NPLs
headed
headeddown
down
with
DTDB
with DTDB
resolution
resolution
2,824
@
2,425
2,452
Dec 99
Jun 00
2,172 1,249
Dec 97
Jun 98
Dec 98
Jun 99
@ Group NPLs excluding DTDB and DKOB.
2
Note: Loans and NPLs include POSBank’s loans since Nov 98 and DKOB’s
loans since May 99.
DBS Thai Danu Bank well-positioned to
compete
Other Thai banks paralyzed: NPLs, capital-starved, legacy IT
Focus on developing treasury, institutional banking
Rebuild
Revenues
and retail banking capabilities
Grow fee-based income through retail banking
initiatives
Target large Thai corporates
Leverage DBS customer relationships, expertise
Regional Integration Center in Bangkok to accelerate
Continued
Integration
Efforts
integration of regional operations, including DBS
Kwong On Bank and DTDB
IT platform to reach 70% of DBS’ standards by year
end
Migrating DBS products and capabilities into Thailand
3
Transforming to World-Class
Interim results reflect broad-based improvement in operations
Regional asset quality continues to improve
Well-positioned for expansion and growth
3
Right-sizing branch network
Singapore
Number of
branches
Post POSBank merger (Nov 1998)
173
31 Dec 1999
155
30 Jun 2000
120
Estimated 31 Dec 2000
Approx. 100
3
New branch design will focus on sales
Pre-Branch Improvement
Program
Post-Branch Improvement
Program (by October 2000)
Sales
14%
Service
86%
Sales
33%
Service
67%
Moving from a ratio of 1 sales staff : 6 service staff
to 1 sales staff : 2 service staff
Convert deposit collection branch to point of sales
Sales in 3 pilot branches increased by up to 700%
3
Centralizing processing and servicing
functions
Formed Processing and Servicing division last year transform back
office into efficient, cost-accountable business
Centralizing processing capabilities and platforms across the firm:
Eliminating duplication
Aggregating for scale economies and quality control
Accelerating push for straight-through processing
Exploring opportunities for outsourcing and strategic procurement
3
Leveraging IT, improving efficiency
IT supports cross selling, targeted marketing and multi-channel
delivery
IT:
Ensuring a
robust, integrated
IT platform
Activity Based
Costing:
Will enable measurement
of profitability & hit rates
by product, channel
& customer
Data warehousing
& mining:
Developing capabilities
since 1997 to track cross
selling effectiveness
Robust CRM system
to be developed over
18-24 month period
3
Linking Bricks and Mortar, Call Centers and Ebusiness
DBS’ integrated delivery model
E-business
ATM
Phone Banking
Mobile Banking
Internet Banking
Brand
Products &
Services
Bricks &
Mortar
Fulfilment
Direct Marketing
(Call Center)
3
DBS website leads Asian banks
Internet user base more than tripled in the last year to 130,000
Only Asian Bank with top-rated internet banking web-site
Scored a perfect 10 out of 10 for quality web-site design
Top Internet Banking Websites
(Asian/Middle East)
Commonwealth Bank of Australia
DBS
ANZ Bank Australia
National Australia Bank
Citibank Hong Kong
Emirates Bank International, UAE
Overseas Union Bank Singapore
Westpac Australia
St George Bank Australia
ANZ Bank New Zealand
Source: Lafferty Internet Ratings
1
2
2
2
5
5
7
7
7
10
Average Time
Spent Per
Access
(minutes)
Rank
Website
1
2
3
4
5
MSN
AsiaOne
Yahoo!
eCircle
DBS
42:08
42:00
38:45
25:24
24:35
6
7
8
9
10
Go Network
IRAS
Pacific Internet
Catcha
SingTel
24:35
20:07
19:48
18:07
16:40
Source: AC Nielsen report, April 2000
3
Early mover in building leading E-business
capabilities
Using IT, e-business to expand our channels
Integrating web-based initiatives with advanced ATMs,
mobile phone / hand-held device technology, call centers
B2C
Actively exploring WAP technology applications throughout
emerging Asia
Phone banking
24-hour Autophone service
State-of-the-art call center
Mobile phone banking
Internet banking
Pioneer since 1997
On-line securities trading will enhance customer
stickiness
ATM
Pioneered use of ATM for IPOs and Unit Trust
applications
Linking almost 2,000 DBS, BPI ATMs in the region
3
Early mover in building leading E-business
capabilities
Using IT, e-business to expand our channels
Enhancing web-based cash management services
B2B
platform to deliver treasury, other services through the
Internet and mobile phones
Developing partnerships, alliances, with DBS serving as
payment gateway
DBS C2Pay - Online payment solution to handle
corporates' credit, debit card transactions
DBS c2Pay
IDEAL - Integrated web-based cash management
gateway: services include account information, online
payments, trade finance, securities settlement/portfolio
management
IBEX - Global business exchange that allows
corporates to source, market, place sales orders, fulfil
orders, invoice and make payment
3
We aspire to be a top-five Asian bank
Target markets
Japan and Korea
Greater China
Southeast Asia
and Hong Kong
Australia and
India
We have the capital resources and
commitment to achieve this goal
4
Strong capital position for strategic growth,
M&A
Capital Adequacy Ratio
(%)
Tier 2
30
Tier 1
25
20
15
20.1
15.6
2.0
15.8
1.2
3.5
4.6
13.6
14.6
15.7
15.5
Dec 97
Dec 98
Dec 99
Jun 00
10
5
19.2
Raised
US$500M Tier II
capital through
subordinated
note issue in
April 2000
0
4
Managing our capital base
Optimizing the mix of capital, e.g., raised US$500 million Tier 2 capital
in April 2000
Flexibility to dispose remaining non-core assets
Utilizing excess capital for organic growth and acquisitions
Flexibility to redeem non-voting shares and buy back ordinary shares
4
More-seasoned, deeper management team
Transforming DBS into a world-class competitor
New Corporate Office leadership since 1998
New hires : 2 SMDs, 23 MDs and 65 VPs since 1999
About half of all MDs and VPs have international working experience
Average 23 years’ working experience for MDs and 17 for VPs
29% of MDs and 15% of VPs are non-Singaporean
4
Transforming to World-Class
Interim results reflect broad-based improvement in operations
Regional asset quality continues to improve
Well-positioned for expansion and growth
4
Transforming to
World-Class
Interim 2000 Results Briefing
July 2000