interim 2000 results briefing transforming to world-class july 2000
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Interim 2000 Results Briefing Interim 2000 Results Briefing
Transforming toTransforming toWorld-ClassWorld-Class
July 2000July 2000
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
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
Broad-based improvement in operations
(S$ million)
Net interest income 1,046 989 5.8 Fee and commission income 260 185 41.1 Dividends and rental income 43 33 28.4 Other income 139 254 (45.2)
Income before operating expenses 1,489 1,460 1.9
Excluding SPC profits 1,343 10.8
Operating expenses 594 456 30.3
Operating profit 895 1,004 (10.9) Excluding SPC profits 887 0.8
Specific provisions 80 333 (75.7) General provisions (17) 3 (674.0)
NPAM 704 655 7.5 Excluding SPC profits 538 30.9
Increase/(Decrease)1H00 1H99
5
1,046
1,430
1,002
1H99:989
0
400
800
1200
1600
2000
2400
2800
1997 1998 1999 1H00
Net interest income increased due to higher margins
Growth :+ S$58m (5.8%)
(S$ million)
Net interest income
2,035
6
1,046
1,430
1,002
1H99:989
0
400
800
1200
1600
2000
2400
2800
1997 1998 1999 1H00
Net interest income increased due to higher margins
(%)
2.072.02
1.771.73
0.0
0.5
1.0
1.5
2.0
2.5
(1H99 : 2.00)
Net interest marginNet interest income
2,035
7
Fee and commission income rose strongly
Growth :+ S$76m (41.1%)
(S$ million)
Stock broking 54 47
Investment banking 31 42
Trade related 28 38
Loan related 14 24
Service charges 15 23
Guarantees 13 14
Credit card 11 15
Fund management 7 31
Others 11 26
184 260
1H99 1H00
8
Fee and commission income rose strongly
(S$ million) 1998 1999
Stock broking 49 102 54 47
Investment banking 42 85 31 42
Trade related 51 63 28 38
Loan related 29 38 14 24
Service charges 20 32 15 23
Guarantees 27 28 13 14
Credit card 22 25 11 15
Fund management 10 20 7 31
Others 23 29 11 26
274 423 184 260
Fee to Income Ratio (%) 14.6 14.0 13.7 * 17.5
* Income excludes SPC profits.
1H99 1H00
9
“Other” income declined due to sale of SPC shares in 1H99
(S$ million)
FX trading 41 52
Sale of trading securities & derivatives trading 88 55
Disposal of investment securities:
- Sale of DBS Land shares - 3
- Sale of SPC shares 117 -
- Others - 5
Disposal of fixed assets 2 4
Other 6 20
254 139
1H99 1H00
Growth :- S$115m (45.2%)
10
334
529
23328187 134
49 64
71
5618
0
200
400
600
800
1000
1200
1998 1999 1H99 1H00
(S$ million)
456
594
Staff cost
DKOB’s expenses
Operating expenses rose 30% due to investments in staff and IT
Growth :+ S$138m (30.3%)
IT expenses
Cost to 40.2% 35.1% 31.2% 39.9% Income Ratio
754
1,064
11
894
887
1,964
1,121972
117
0
400
800
1200
1600
2000
1997 1998 1999 1H99 1H00
(S$ million)
1,004
Operating profit declined 10.9% due to SPC profits in 1H1999
Growth : - 10.9%(Excl SPC : + 0.8%)
Singapore PetroleumCompany
12
Provisions declined substantially
(S$ million)
DTDB 114 11 (103)
5 Regional Countries 54 24 (30)
Singapore 54 (9) (63)
Other Countries 3 11 8
Non-loan provisions (1) 27 28
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)
1H99 1H00 (Decrease)Increase/
13
704
538
1,072
112
436117
0
200
400
600
800
1000
1200
1997 1998 1999 1H99 1H00
(S$ million)
655
After-tax profits grew 7.5% to S$704 million
Growth : + 7.5%(Excl SPC : + 30.9%)
Singapore PetroleumCompany
14
(%)
ROA recovered to pre-crisis level
1.04
0.14
0.72
1.28
1.13
1.31
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1996 1997 1998 1999 1H99 1H00
15
10.35
1.29
5.72
10.30
11.80
13.13
0
5
10
15
1996 1997 1998 1999 1H99 1H00
(%)
ROE on track toward 15%+ target
16
Balance sheet shrank due to soft loan demand and shedding of low-yielding assets
83.1
57.8
111.4
80.4
52.4
107.6
0
20
40
60
80
100
120
140
(-3.4%)
(-9.2%)
(-3.3%)
Total Assets Customer Customer Loans Deposits
(S$ billion)
Jun 99 Jun 00 Jun 99 Jun 00 Jun 99 Jun 00
17
Ordinary dividend rate 9% 14%
Amount (S$ million) 80.6 139.2
Payout rate 19.8%
Interim1999
Interim2000
25%
241.9
22.3%
Total1999
18%
140.8
128.9%
Total1998
Dividend rate increased
Targeting to align payout ratio more with international banks
18
Transforming to World-Class
Interim results reflect broad-based improvement in operations
Regional asset quality continues to improve
Well-positioned for expansion and growth
19
649
2,425 2,452
1,249
2,705 2,824
1,5771,800
463
923
1,5061,736
543717 637
1,735
2,874
3,0183,207
3,000
1,112
3,907
7,086
@ Group NPLs excluding DTDB and DKOB.
Note: Loans and NPLs include POSBank’s loans since Nov 98 and DKOB’s loans since May 99.
8,121
Others
Singapore
DTDB
DKOB8,149
NBk NPL/NBk Loans (%)
NBk NPL/NBk Loans(ex-DTDB) (%)
Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00
7,666
8.2
4.9
8.49.07.7
2,172
4,211 4,5604,225@
@
@
@@
4,029
NPLs have peaked
(S$ million)
12.7 13.013.1
11.8
8.5
2.7
20
4,943 579 2,144
1,669
475
1,235
3,708 483
96
0 2,000 4,000 6,000 8,000
DTDB
4,666
7,666
79%
64%
3,000
41%
Total (ex-DTDB)
Total (Incl-DTDB)
8% 28%
56%
(S$ million)
3%
Most NPLs are classified substandard; some are still current
NPLs (30 Jun 00)
Substandard
Doubtful
Loss
21
DBS NPL classification more conservative than SEC Reporting
NPLs (30 Jun 00)
MAS 612Standard
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%
(S$ million)SEC
Reporting
Difference :S$ 1.12 bn
(14.8%)
22
4,943 579 2,144
1,669
475
1,235
3,708 483
96
0 2,000 4,000 6,000 8,000
DTDB
4,666
7,666
79%
64%
3,000
41%
Total (ex-DTDB)
Total (Incl-DTDB)
8% 28%
56%
(S$ million)
3%
Most NPLs are classified substandard; some are still current
NPLs (30 Jun 00)
Substandard
Doubtful
Loss
Approx. S$1.1 bn current, or 22.7% of Substandard
23
801
1,191
1,174
2,558
948
2,032
3,0952,804
179
946
1,115
1,294
980
3,852
3,147
1,894
4,286
Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00
3,978SP+GP/NPLs (%)
51.952.647.444.448.5
88.1
SP+GP/Unsec NPLs (%)
164.6
114.8 102.7 110.6119.6
118.4
Provision coverage at 52% of NPLs or 61% on SEC basis
(S$ million)
General Provisions (GP)
Specific Provisions (SP)
60.863.055.3
SP+GP/NPLs (SEC) (%)
24
Sep 99
Jun 2000
IT systems upgraded
Rigorous Credit & Risk Management in place
Specialized NPL units
Dec 99
Regional Integration Center in Bangkok
Scrubbed loan book
Reclassified NPLs
Mar 2000
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 CAR increased to 26.1%Flexibility to sell or write off NPLs
Sell and/or write down NPLs
by
DBS Thai Danu Bank : Crossed over to operating breakeven
25
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 11.0 bn rights offering
Convertible preference shares (MCAPs)
Total
Bt 0.94 bn
Bt 1.96 bn
-
Bt 2.9 bn
Bt 0.96 bn
Bt 2.14 bn
Bt 7.5 bn
Bt 10.6 bn
DBS’ ownership is 51.8%, or 73.4% on fully-diluted basis.
(43%) (57%)
26
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
27
Sale of NPLs will reduce DTDB NPLs to 14%
30 Jun 00
NPLs
Loan Loss Reserve
CAR - Tier I
DTDB Books
Bt 39.8 bn
Bt 15.0 bn
21.8%
26.1%
BOT Standards
CAR - Total
(41.5%)
(37.6%)
Pro Formaon Sale of NPLs
Bt 9.2 bn
Bt 3.8 bn
11.0%
16.0%
(14.1%)
(41.3%)
Bt 37.5 bn
Bt 18.8 bn
(54.6%)
(50.1%)
NPLs
Loan Loss Reserve
Bt 68.1 bn
Bt 41.6 bn
MAS Standards
(68.6%)
(61.1%)
28
DBS’ group NPLs will decline to 10.6%
30 Jun 00DBSH Group Books
NPLs
Loan Loss Reserve
S$ 7.7 bn
S$ 4.0 bn
(12.7%)
(51.9%)
Pro Formaon Sale of NPLs
S$ 6.3 bn
S$ 3.0 bn
(10.6%)
(47.1%)
29
649
2,425 2,452
1,249
2,705 2,824
1,5771,800
463
923
1,5061,736
543717
637
1,735
2,874
3,0183,207
3,000
1,112
3,907
7,086
@ Group NPLs excluding DTDB and DKOB.
Note: Loans and NPLs include POSBank’s loans since Nov 98 and DKOB’s loans since May 99.
8,121
Others
Singapore
DTDB
DKOB8,149
NBk NPL/NBk Loans (%)
NBk NPL/NBk Loans(ex-DTDB) (%)
Dec 97 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00
7,666
12.7 13.013.1
11.8
8.5
2.7
2,172
4,211 4,5604,225@
@
@
@@
4,029
DBS’ group NPLs will decline to 10.6%
(S$ million)
DBS NPLs headed down
with DTDB resolution
DBS NPLs headed down
with DTDB resolution
10.6Pro forma DTDB NPL sale
8.2
4.9
8.49.07.7
30
DBS Thai Danu Bank well-positioned to compete
RebuildRevenues
Focus on developing treasury, institutional banking 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 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
ContinuedIntegration
Efforts
Other Thai banks paralyzed: NPLs, capital-starved, legacy IT
31
Transforming to World-Class
Interim results reflect broad-based improvement in operations
Regional asset quality continues to improve
Well-positioned for expansion and growth
32
Right-sizing branch network
SingaporeNumber of
branches
Post POSBank merger (Nov 1998) 173
31 Dec 1999 155
30 Jun 2000 120
Estimated 31 Dec 2000 Approx. 100
33
Pre-Branch Improvement Program
Post-Branch Improvement Program (by October 2000)
New branch design will focus on sales
Sales14%
Service86%
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%
Sales33%
Service67%
34
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
35
Leveraging IT, improving efficiency
IT supports cross selling, targeted marketing and multi-channel delivery
IT: Ensuring a
robust, integrated IT platform
Robust CRM systemto be developed over18-24 month period
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
36
E-business
Bricks & Mortar
Direct Marketing (Call Center)
Linking Bricks and Mortar, Call Centers and E-business DBS’ integrated delivery model
Brand
Products & Services
ATMPhone BankingMobile BankingInternet Banking
Fulfilment
37
DBS website leads Asian banks
Commonwealth Bank of Australia
ANZ Bank Australia
DBS
National Australia Bank
Citibank Hong Kong
Emirates Bank International, UAE
Overseas Union Bank Singapore
Westpac Australia
St George Bank Australia
ANZ Bank New Zealand
1
2
2
2
5
5
7
7
7
10
Top Internet Banking Websites (Asian/Middle East)
Source: Lafferty Internet Ratings
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
Rank Website
Average TimeSpent Per
Access(minutes)
1 MSN 42:08
2 AsiaOne 42:00
3 Yahoo! 38:45
4 eCircle 25:24
5 DBS 24:35
6 Go Network 24:35
7 IRAS 20:07
8 Pacific Internet 19:48
9 Catcha 18:07
10 SingTel 16:40
Source: AC Nielsen report, April 2000
38
Early mover in building leading E-business capabilities
B2C
Integrating web-based initiatives with advanced ATMs, mobile phone / hand-held device technology, call centers
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
Using IT, e-business to expand our channels
39
B2B
Using IT, e-business to expand our channels
DBS c2Pay
Enhancing web-based cash management services 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
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
Early mover in building leading E-business capabilities
40
Japan and Korea
We aspire to be a top-five Asian bank
Target markets
We have the capital resources and commitment to achieve this goal
Greater China
Australia and India
Southeast Asia and Hong Kong
41
Capital Adequacy Ratio
Strong capital position for strategic growth, M&A
15.7 15.514.613.6
2.0
4.63.51.2
0
5
10
15
20
25
30
Dec 97 Dec 98 Dec 99 Jun 00
Tier 1Raised
US$500M Tier IIcapital throughsubordinatednote issue in
April 2000
Tier 2
19.2 20.1
(%)
15.6 15.8
42
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
43
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
More-seasoned, deeper management team
44
Transforming to World-Class
Interim results reflect broad-based improvement in operations
Regional asset quality continues to improve
Well-positioned for expansion and growth
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