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DBS Group Holdings. Title. Sound Strategy Backed by Strong Capitalization. November 5, 2001.

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  1. DBS Group Holdings Title Sound Strategy Backed by Strong Capitalization November 5, 2001 THESE PRESS MATERIALS ARE NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES, SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION, AND ANY PUBLIC OFFERING OF SECURITIES TO BE MADE IN THE UNITED STATES WILL BE MADE BY MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM THE ISSUER AND THAT WILL CONTAIN DETAILED INFORMATION ABOUT THE COMPANY AND MANAGEMENT, AS WELL AS FINANCIAL STATEMENTS. "UNITED STATES" MEANS THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES, AND THE DISTRICT OF COLUMBIA.

  2. Ensuring strong capitalization and asset quality coverage • Top-line growth offset by conservative provisioning • Strong asset quality and provision coverage • Stabilized interest margin and interest income • Improved efficiency in expense management • Non-interest income continues to shine

  3. Operating profit up 49.9% QoQ DBS 3Q00 DBS 3Q01 % Change DBS 2Q01 % Change (S$ million) Net interest income 513 588 14.7 472 24.6 Fees and commissions 131 174 32.7 133 30.8 Dividend & rental 12 15 25.0 28 -46.4 Other income 67 267 300.3 87 206.2 Operating income 723 1,044 44.4 720 45.0 Staff costs 178 244 36.7 177 38.1 Operating expenses 162 226 39.7 189 19.4 Total expenses 340 470 38.1 366 28.5 Operating profit 383 574 49.9 354 62.0 Loan loss provisions 26 246 NM 8 NM Cash net profit 338 265 -21.6 308 -14.0 Goodwill 0 64 NM 0 NM Net profit 338 201 -40.5 308 -34.8 Financial Indicators (%) Net interest margin 2.05 1.78 0 1.71 4.1 Cost-to-income ratio 47.0 45.0 -4.3 50.8 11.4

  4. Dao Heng disproportionately contributed to top line growth DBS 3Q01 DHB 3Q01 DBS excl DHB DBS 2Q01 % Change (S$ million) Net interest income 588 150 438 472 -7.1 Fees and commissions 174 51 123 133 -7.6 Dividend & rental 15 1 14 28 -50.0 Other income 267 22 245 87 180.6 Operating income 1,044 224 820 720 13.8 Staff costs 244 56 188 177 6.8 Operating expenses 226 50 176 189 -7.4 Total expenses 470 106 364 366 57.4 Operating profit 574 118 456 354 28.8 Loan loss provisions 246 24 222 8 NM Cash profits 265 60 205 308 -33.4 Goodwill 64 0 64 0 NM Net profit 201 60 141 308 -54.2

  5. Dao Heng synergy targets raised 39% Original Estimate: HK$540 million New: HK$750 million Revenue : HK$275 million Cost: HK$265 million Revenue : HK$450 million Cost: HK$300 million

  6. Ensuring strong capitalization and asset quality coverage • Top-line growth offset by conservative provisioning • Strong asset quality and provision coverage • Stabilized interest margin and interest income • Non-interest income continues to shine • Improved efficiency in expense management

  7. Prudent provisioning % Change (S$ million) 9M00 9M01 25 20 4 - - - 19 22 16 82 (44) 38 263 132 123 8 24 13 12 16 21 349 (58) 292 947.9 554.7 2,653.1NM NM NM (34.4) (26.7) 27.0 325.8 28.3 678.5 DBS Bank - Loans - Equities - Others Dao Heng Bank DBS Kwong On Bank DBS Thai Danu Bank (DTDB) DBS China Square Others Specific provisions General provisions Total DBSH Group provisions

  8. A significant portion of 3Q provision is driven by September 11 attacks (S$ million) 246 146 100 Total 3Q provision exercise - Loan related provision - Mark-to-market provision for marketable securities Out of the S$100 million mark-to-market provision expense, S$48 million was written-back after market recovery in October

  9. 6.0% NPLs fell to 6.0% Dao Heng Bank DBS Thai Danu Bank (S$ million) 5 Regional Countries Others Singapore 8,121 8,149 7,666 NBk NPL/NBk Loans (%) 7,085 4,834 4,577 4,411 3,907 1,112 Dec 97 Dec 98 Dec 99 Dec 00 Sep 01 Jun 99 Jun 00 Jun 01 Jun 98

  10. 71% of NPLs are graded “Substandard” 5 Substandard 1,486 1,207 275 Doubtful 81% 83 Loss 589 421 85 71% 10 340 273 58 103 268 7 158 777 290 221 266 7 1,101 191 903 17% 1% 82% 4,577 3,251 881 445 71% 10% 19% Of which 9% have never been delinquent or defaulted

  11. 143.8% 62.9% 58.7% Provision coverage improved from 55% to 59% General Provisions (GP) Specific Provisions (SP) (S$ million) SP+GP/Unsec NPLs (%) 4,286 SP+GP/NPLs (SEC) (%) 3,978 3,852 SP+GP/NPLS (%) 3,147 2,687 2,643 2,286 1,894 980 Dec 97 Dec 98 Dec 99 Dec 00 Sep 01 Jun 99 Jun 00 Jun 01 Jun 98

  12. 41% of NPLs restructured Sep 00 Jun 01 Sep 01 Singapore Restructured / non-accrual Regional countries Restructured / non-accrual Other countries Restructured / non-accrual Total Restructured / non accrual NPLs under SEC reporting Non-restructured NPLs / total loans 25.2% 67.3% 16.3% 38.5% 5.6% 3.8% 32.5% 66.0% 18.2% 41.2% 5.5% 3.4% 16.9% 59.1% 22.1% 37.7% 6.3% 5.4%

  13. Ensuring strong capitalization and asset quality coverage • Top-line growth offset by conservative provisioning • Strong asset quality and provision coverage • Stabilized interest margin and interest income • Improved efficiency in expense management • Non-interest income continues to shine

  14. Margins stabilized at 1.78% in 3Q01 (S$ million) Net interest income Net interest margin (gross basis) 1,176* 1,046 1,046 993 989 962 2.07% 2.04% 2.00% 1.97% 1.78% 1.78% 2H00 2H99 1H00 1H99 1H01 3Q01 * Semi-annualised earnings derived from quarterly performance.

  15. Ensuring strong capitalization and asset quality coverage • Top-line growth offset by conservative provisioning • Strong asset quality and provision coverage • Stabilized interest margin and interest income • Improved efficiency in expense management • Non-interest income continues to shine

  16. On track with target growth rate of YoY 17% expense growth % Change (S$ million) 9M00 9M01 DBSH Group (excluding DHG) Staff costs Occupancy expenses Technology-related expenses Professional and consultancy fees Others Non Dao Heng restructuring costs Total (excluding Dao Heng) Dao Heng Total Cost-to-income ratio (%) 460 110 99 54 211 934 - 934 - 934 42.2 567 120 121 44 250 1,102 11 1,113 106 1,219 47.4 23.2 9.2 21.9 (18.6) 18.5 17.9 NM 19.1 NM 30.5

  17. Set to achieve 17% expense growth target by end-2001 (S$ million) (%) 470 500 30 26 106 382 400 366 19 20 17 300 200 364* 10 100 0 0 FY2001 Target 1Q2001 2Q2001 3Q2001 1H2001 3Q2001 * Includes S$11mn restructuring charge Cost containment program is producing results - Operating expenses (excluding Dao Heng) have been declining steadily quarter-on-quarter Year-on-year expense growth expected to meet management target

  18. Increasing straight-through levels improve productivity Remittance Operations STP rates leap from 14% to 89% % of txns processed ‘Straight Through % Transactions processed Straight Through Benchmark: Operations Council Bench Mark Dec 00 Mar 01 Sep 01 Contact Centre Benchmark: Operations Council Assumes full service IVR capability % Calls handled by IVR Bench Mark Dec 00 Mar 01 Sep 01 Clearing Operations • Implementation of CRM & Interactive Voice Recognition will bring Contact Centre STP rates close to Global bench marks • IDEAL & BBS-2000 Enhancements, will drive the Remittance Operations STP rates up to approximately 45-50% • Cheque Truncation Scheme implementation in 2Q-02 along with other initiatives will move the Clearing Operations STP rates closer to the 100% Mark Bench mark: Int. research % Transactions processed Straight Through Bench Mark Dec 00 Mar 01 Sep 01

  19. Unit costs are low Remittance Operations-Outward TTs Clearing Operations - Inward Cheques (Index) (Index) Budget YTD (Avg) YTD (Avg) Budget (Avg) Remittance Operations - Cashiers Orders Trade Operations - Collections (Index) (Index) YTD (Avg) YTD (Avg) Budget (Avg) Budget (Avg)

  20. Processing productivity is improving Large Productivity Gains from Centralisation & Re-engineering Remittance Operations Processing & Servicing rolled-up Transactions / FTE (Index) Dec 00 Mar 01 Sep 01 Transaction / FTE (Index) Contact Centre Transactions / FTE (Index) Dec 00 Mar 01 Sep 01 Process Quality Clearing Operations • Clearing operations : 5.25 Sigma • Account services : 5.00 Sigma • Remittance operations : 4.25 Sigma • Clearing & Remittance Operations ISO-9000 Certified Transactions / FTE (Index) Dec 00 Mar 01 Sep 01

  21. Ensuring strong capitalisation and asset quality coverage • Top-line growth offset by conservative provisioning • Strong asset quality and provision coverage • Stabilized interest margin and interest income • Improved efficiency in expense management • Non-interest income continues to shine

  22. Strong fee income despite stockbroking liberalization and weak markets % Change (S$ million) 9M00 9M01 37 42 55 77 25 52 65 39 392 17.7 56 72 71 54 51 50 31 40 425 16.5 52.5 70.6 30.3 (29.7) 102.8 (3.9) (52.3) 1.3 8.5 Loan-related Deposit-related Trade-related Investment Banking Credit Card Fund Management Stockbroking Others Total Fee-to-income ratio (%)

  23. Other income: FX & securities trading doubled % Change (S$ million) 9M00 9M01 86 39 25 27 4 25 206 29.5 141 158 58 135 24 26 542 39.7 64.1 306.1 130.5 401.3 533.5 4.4 163.3 Net gains on treasury activities - foreign exchange - trading securities and derivatives Net gains on sale of government securities and equities Net gains on disposal of investment securities Net gains on disposal of fixed assets Others Total Non-interest income to operating income ratio (%)

  24. Significant growth in Treasury & Markets business with consistent risk profile Hong Kong DEaR Singapore T&M DEaR • Singapore Treasury and Markets have expanded earnings while maintaining DEaR levels • Hong Kong has benefited from a significant decline in DEaR

  25. Ensuring strong capitalization and asset quality coverage • Top-line growth offset by conservative provisioning • Strong asset quality and provision coverage • Stabilized interest margin and interest income • Improved efficiency in expense management • Non-interest income continues to shine

  26. DBS Group Holdings Title Sound Strategy Backed by Strong Capitalization Presentation to Media and Analysts November 5, 2001 THESE MATERIALS ARE NOT AN OFFER OF SECURITIES FOR SALE IN THE UNITED STATES, SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION, AND ANY PUBLIC OFFERING OF SECURITIES TO BE MADE IN THE UNITED STATES WILL BE MADE BY MEANS OF A PROSPECTUS THAT MAY BE OBTAINED FROM THE ISSUER AND THAT WILL CONTAIN DETAILED INFORMATION ABOUT THE COMPANY AND MANAGEMENT, AS WELL AS FINANCIAL STATEMENTS. "UNITED STATES" MEANS THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES, AND THE DISTRICT OF COLUMBIA.

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