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DBS Group Holdings 1H 2002 Financial Results Presentation to Media and Analysts

Review of DBS Group Holdings' 1st Half 2002 financial performance, showcasing improved execution despite market challenges. Key metrics, trends, and comparisons provided in the presentation.

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DBS Group Holdings 1H 2002 Financial Results Presentation to Media and Analysts

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  1. July 22, 2002 Better execution despite weak markets DBS Group Holdings 1H 2002 Financial Results Presentation to Media and Analysts This presentation is available at www.dbs.com Disclaimer: The material that follows is a presentation of general background information about the Bank’s activities current at the date of thepresentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These factors should be considered, with or without professional advice, when deciding if an investment is appropriate. DBS accepts no liability whatsoever with respect to the use of this document or its contents.

  2. Better execution despite weak markets • Delivering more disciplined financial results • Strategy intact, focus is now on execution

  3. 1st Half 2nd Half 1st Half 2Q 1Q 4Q 3Q 2Q 1Q 2002 2001 2001 YoY operating profit up 41% % Change % Change (S$ million) 2H 2001 1H 2002 1H 2001 Net interest income 1,321 1,295 2 962 37 Fee income 403 388 4 251 61 Non-interest income 698 722 (3) 567 23 Operating income 2,020 2,017 - 1,528 32 Staff costs 462 476 (3) 389 19 Other operating expenses 457 516 (11) 360 27 Operating expenses 920 993 (7) 749 23 Operating profit 1,100 1,024 7 779 41 Goodwill 136 131 4 - nm Provisions 201 332 (40) 46 332 Net profit 531 370 44 629 (16) Cash net profit (a) 668 501 33 629 6 (a) Net profit before goodwill amortization

  4. Comparison of 1H 2002 1H 2001 vs. Net interest income $1,321m $962m 37% 1st Half 2nd Half 1st Half Fee income $403m $251m 61% 2Q 1Q 4Q 3Q 2Q 1Q 2002 2001 2001 Non-interest income $698m $567m 23% Total operating income $2,020m $1,528m 32% ` Operating expenses $920m $749m 23% Operating profit (a) $1,100m $779m 41% Cash net profit (b) $668m $629m 6% (a) Excludes goodwill (b) Net profit before goodwill amortization

  5. Comparison of 1H 2002 1H 2001 vs. Net interest margin 1.99% 1.78% Cost-to-income (a) 45.5% 49.0% 1st Half 2nd Half 1st Half 2Q 1Q 4Q 3Q 2Q 1Q Non-interest inc. / operating inc. 34.6% 37.1% 2002 2001 2001 Cash ROA (b) 0.88% 1.08% Cash ROE (b) 9.71% 11.36% NPLs 5.9% 6.2% Loan-to-deposit 62.7% 60.6% Cash EPS ($) (c) 0.91 1.02 (a) Excludes goodwill (b) Annualized (c) Earnings per share before goodwill amortization, annualized

  6. 1st Half 2nd Half 1st Half 2Q 1Q 4Q 3Q 2Q 1Q 2002 2001 2001 HoH operating profit up 7% % Change % Change (S$ million) 2H 2001 1H 2002 1H2001 Net interest income 1,321 1,295 2 962 37 Fee income 403 388 4 251 61 Non-interest income 698 722 (3) 567 23 Operating income 2,020 2,017 - 1,528 32 Staff costs 462 476 (3) 389 19 Other operating expenses 457 516 (11) 360 27 Operating expenses 920 993 (7) 749 23 Operating profit 1,100 1,024 7 779 41 Goodwill 136 131 4 - nm Provisions 201 332 (40) 46 332 Net profit 531 370 44 629 (16) Cash net profit (a) 668 501 33 629 6 (a) Net profit before goodwill amortization

  7. 1st Half 2nd Half 1st Half 2Q 1Q 1Q 4Q 3Q 2Q 1Q Quarterly operating profit up 51% 2002 2001 2001 % Change % Change (S$ million) 2Q 2002 1Q 2002 2Q 2001 Net interest income 651 670 (3) 472 38 Fee income 210 193 9 133 58 Non-interest income 344 354 (3) 248 39 Operating income 995 1,024 (3) 720 38 Operating expenses 460 459 - 366 26 Operating profit 535 565 (5) 354 51 Goodwill 69 68 1 - nm Provisions 105 96 10 9 1088 Net profit 253 278 (9) 308 (18) Cash net profit (a) 322 346 (7) 308 5 (a) Net profit before goodwill amortization

  8. 1st Half 2nd Half 1st Half 2Q 1Q 4Q 3Q 1Q 2Q 1Q 2002 2001 2001 Comparison of 2Q 2002 1Q 2002 vs. Net interest income $651m $670m 3% Fee income $210m $193m 9% Non-interest income $344m $354m 3% Total operating income $995m $1,024m 3% ` Operating expenses $460m $459m no change Operating profit (a) $535m $565m 5% Cash net profit (b) $322m $346m 7% (a) Excludes goodwill (b) Net profit before goodwill amortization

  9. 1st Half 2nd Half 1st Half 2Q 1Q 4Q 3Q 1Q 2Q 1Q 2002 2001 2001 Net interest margin 1.96% 2.02% Cost-to-income (a) 46.3% 44.8% Non-interest inc. / operating inc. 34.5% 34.6% Cash ROA (b) 0.84% 0.91% Cash ROE (b) 9.22% 10.12% NPLs 5.9% 5.9% Loan-to-deposit 62.7% 60.5% Cash EPS ($) (c) 0.88 0.94 (a) Excludes goodwill (b) Annualized (c) Earnings per share before goodwill amortization, annualized Comparison of 2Q 2002 1Q 2002 vs.

  10. Interest margins improving (S$ million) Net interest income Net interest margin

  11. Non-interest income holding well at mid 30% range Non-interest income to Operating income (a) (%) (a) Excludes extraordinary items

  12. Fee income now 20% of revenues % Change % Change (S$ million) 2H 2001 1H 2002 1H 2001 Trade finance 55 61 (11) 35 56 Deposit-related 54 57 (5) 43 24 Credit card 48 53 (8) 16 197 Loan-related 57 67 (15) 43 33 Investment banking 33 33 - 39 (15) Stockbroking 83 49 68 24 251 Fund management 43 37 16 35 24 Others 30 31 (3) 16 87 Total 403 388 4 251 61 Fee-to-income ratio (%) 20 19 16

  13. Core expenses tracking well below previous target % Change % Change (S$ million) 2H 2001 1H 2002 1H 2001 DBSH (exclude DHB & DBSV) (a) Staff costs 335 339 (1) 374 (10) Occupancy expenses 74 93 (20) 73 2 Technology-related expenses 83 90 (8) 83 - Revenue-related expenses 31 26 20 21 44 Others (include administration and 123 133 (8) 161 (24) advertising expenses) Total (exclude DHB & DBSV) 645 680 (5) 712 (9) DHB 178 218 (18) - nm DBSV / DBS Securities Group 86 54 61 37 134 Restructuring costs 10 40 (76) - nm Total 920 993 (7) 749 23 Cost-to-income ratio (%) 45.5 49.2 49.0 (a) Dao Heng Bank (“DHB”), DBS Vickers (“DBSV”)

  14. IT-related expenses 8% 1% Staff costs Occupancy expenses 20% Managing our costs and investments with discipline (S$ million) 1H 2002 2H 2001 Total operating expenses (excl. DHB & DBSV) 5%

  15. Focusing on cost containment Period expenses (a) (S$ million) 712 680 645 (a) Normalized expenses excludes goodwill, restructuring costs and impact of acquisitions

  16. Singapore, Hong Kong are our twin hubs Operating income 1H 2002 Assets 1H 2002 Regional countries 3.9% Regional countries 3.1% Rest of the world 1.8% Rest of the world 3.6% Hong Kong 28.2% Hong Kong 31.5% Singapore 66.1% Singapore 61.8% Total operating income S$2,020 million Total assets S$152 billion

  17. Dao Heng Bank operating profit up % Change DHB 2H 2001 DHB 1H 2002 (S$ million) (a) Net interest income 309 321 (4) Non-interest income 106 139 (24) Operating income 414 459 (10) Operating expenses 182 237 (23) Operating profit 233 222 5 Provisions 104 22 371 Net profit before tax 132 203 (35) (a) Based on Singapore GAAP

  18. 48 16% 16 5% 84 28% 147 50% 15 5% 123 41% 11 4% 149 50% Synergies achieved - focus now on revenue opportunities in Greater China Achieved 1H 2002 Distribution (%) 2002 Target Key Revenue Initiatives: • Launch of new funds (knowledge sharing) • ALCO Liquidity Management • Cross-selling opportunities (eg, T&M, Private banking, Equipment finance, Credit cards and other existing products) Revenue synergies Select Cost Initiatives: • Accelerated implementation of branch closures • Active capacity management largely through vacancies and attrition • Back office and IT centralization Cost synergies Total synergies 60% 40% HK$450 m (a) HK$296 m 100% (a) 60% of synergy target is expected for 2002 of a total of HK$750 million

  19. DBS Thai Danu Bank operating profit up % Change % Change (S$ million) 2H 2001 1H 2002 1H 2001 Net interest income 48 45 7 46 5 Fee income 11 6 74 9 21 Non-interest income 18 17 7 15 18 Operating income 66 62 7 61 8 Operating expenses 46 44 5 44 6 Operating profit 20 18 11 17 15 Non-operating expenses 4 5 (11) 4 - Provisions 10 10 4 9 9 Net profit after tax 6 4 35 3 79 (a) Assume exchange rate of 1 baht to S$0.042. Based on Thai GAAP

  20. Deepening DBS franchise in three core businesses (S$ million) Operating income 1H 2001 Operating income 1H 2002 Consumer banking 846 Investment banking 420 Consumer banking 1,230 Investment banking 345 17% 27% Treasury 375 Treasury 424 25% 21% 61% 55% 1% Central operations (113) Central operations 20 Total operating income S$1,528 million Total operating income S$2,020 million

  21. Wealth management continues to grow (S$ million) Insurance / asset plan Sales Volume Unit trusts / Treasury investment products (a) 1,952 1,127 795 573 544 314 (a) Unit trusts include Horizon, Ei8ht, Up! and other DBSAM programmes while treasury investment products include Growth, Surf and structured notes

  22. Expanding credit card franchise in twin hubs 1H 2002 2000 2001 Singapore Cards in issue (‘000) Receivables outstanding (S$ million) Market position Hong Kong Cards in issue (‘000) Receivables outstanding (S$ million) Market position 359 326 #3 450 424 #2 501 466 #2 914 1,187 #3 - - - 850 1,300 #3

  23. delivers impressive results in 8 months Launch to 1H 2002 1H 2001 Singapore - launched in 4Q 2001 Customers (‘000) Receivables outstanding (S$ million) Market share 85 191 18% 0 0 0

  24. Seizing opportunities in Investment Banking Fee income 1H 2002 % Change vs 2H 2001 (S$ million) Equity capital markets 11.8 37% Debt capital markets 5.3 7% Syndicated loans 16.3 105% Mergers & acquisitions 5.6 113%

  25. Improving Treasury & Markets’ depth, geographic diversity Accolades • “2nd Place: Top Forex & Derivatives Bank in Singapore” - Asia Money, 2002 • “Best Foreign Exchange Bank in SE Asia (Regional & Singapore)” - Global Finance Ranking, 2002 • “1st Place: FX Products - Singapore” - Asia Risk, 2001 • “2nd Place: Interest Rate Products - Hong Kong” - Asia Risk, 2001 Treasury revenues better diversified Operating income 1H 2002 Operating income 1H 2001 (a) Hong Kong 28% Hong Kong 8% Singapore 70% Singapore 89% Others 3% Others 2% (a) Excludes Dao Heng

  26. Quantum of NPLs continues to decline Dao Heng Bank (S$ million) DBS Thai Danu Bank Regional 5 Countries Others 8,149 Singapore 7,086 NBk NPLs / NBk Loans (%) 4,834 4,577 4,503 4,512 4,411 4,360 4,305 1,112

  27. NPLs improving at major subsidiaries (a) (S$ million) DBS Thai Danu DBS Hong Kong (a) Based on MAS guidelines

  28. Provision coverage remains healthy General Provisions (GP) (S$ million) Specific Provisions (SP) SP+GP / Unsec NPLs (%) 4,286 SP+GP / NPLs (%) 3,147 2,719 2,643 2,633 2,286

  29. Percentage of doubtful and loss NPLs stable Substandard (S$ million) Doubtful Loss 8,149 NPLs / Loans (%) 4,503 4,512 4,411 (61%) 4,360 (8%) (68%) (69%) (69%) (80%) (9%) (8%) (12%) (11%) (32%) (12%) (20%) (22%) (20%)

  30. Proforma Tier 1 approaching target cushion DBS Group Holdings Consolidated Capital Adequacy Ratio (%) 19.2 18.9 17.6 17.4 14.4 14.1 Dec 01 Proforma for Dao Heng 2nd tranche Jun 02 Proforma for Dao Heng 2nd tranche

  31. Maintaining dividend rate for shareholders (Cents) (%)

  32. Better execution despite weak markets • Delivering more disciplined financial results • Strategy intact, focus is now on execution

  33. New DBS management team S Dhanabalan : Chairman Corporate Office Jackson Tai : Vice Chairman & CEO Ng Kee Choe : Vice Chairman, DBS Bank Frank Wong : Chairman, DBS Hong Kong Oon Kum Loon (CFO) Frank Wong Ng Kee Choe Jackson Tai Geography • Overall • Singapore • Hong Kong • Greater China • Consumer Banking Group • Enterprise Banking • Support units • Risk Management • Credit Management • Information Technology • Processing & Servicing • Finance • Shared Services • Treasury & Markets • Investment Banking • DBS Vickers Products & Services

  34. Strategy intact, now focussed on execution • Build coherent Pan-Asian financial franchise, with early focus on Singapore, Hong Kong and Greater China • Leverage dominant market position and retail distribution in Singapore and Hong Kong • Differentiate with Treasury & Markets, Capital Markets, Wealth Management, Risk Management and Credit Management • Become lower cost producer through scale, integrated up-to-date information technology and straight-through processing • Intermediate regional capital flows between issuers and investors • Recalibrate investments and resources to changed market conditions

  35. Focused on delivery Dec 2000 % change Jun 2002 • Branches • Singapore 93 114 18% • Hong Kong 81 101 20% • Group head count 12,337 >14,200 13% (a) (a) Approximate combined head count number because Dao Heng was only consolidated starting June 29, 2001

  36. Corporate Office S. Dhanabalan Chairman > 42 years Jackson Tai Vice Chairman & CEO > 28 years Ng Kee Choe Vice Chairman, DBS Bank > 35 years Frank Wong Chairman, DBS Hong Kong > 36 years Policy Committee Eric Ang Investment banking > 23 years Chan Tak Kin Consumer banking, Hong Kong > 30 years Chong Kie Cheong Investment banking - institutional & corporate clients > 30 years Elsie Foh Personal banking & private banking > 30 years Hong Tuck Kun Enterprise banking > 26 years Steve Ingram Information technology > 19 years Edmund Koh Consumer banking, Singapore > 18 years David Lau Treasury & markets > 19 years Oon Kum Loon Finance > 28 years Rajan Raju Processing & servicing > 12 years Seck Wai Kwong Wealth management > 20 years Greg Seow Securities > 25 years Randy Sullivan Hong Kong > 31 years Pornsanong Tuchinda Thailand > 16 years Wong Ban Suan Central treasury > 20 years Management depth for the next phase Management Experience Area of focus

  37. July 22, 2002 Better execution despite weak markets DBS Group Holdings 1H 2002 Financial Results Presentation to Media and Analysts This presentation is available at www.dbs.com Disclaimer: The material that follows is a presentation of general background information about the Bank’s activities current at the date of thepresentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These factors should be considered, with or without professional advice, when deciding if an investment is appropriate. DBS accepts no liability whatsoever with respect to the use of this document or its contents.

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