DBS Group Holdings Ltd · SGX:D05
DBS — Q4 2005 Earnings Presentation
37 slides from DBS's earnings presentation, Feb 17, 2006
Slide 1: Operating growth trends continue
Operating growth trends continue DBS Group Holdings 4Q 2005 financial results February 17, 2006 Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. DBS Bank accepts
Slide 2: Full-year net profit excluding one-time gains and goodwill charges declined 15%
Full-year net profit excluding one-time gains and goodwill charges declined 15% % (S$m) 2005 2004 change Full-year 2005 net profit 1,649 1,938 15% 4Q05 net profit 384 432 11% All figures exclude one-time gains and goodwill charges 2
Slide 3: Net interest and fee income reached a record high
Net interest and fee income reached a record high (S$m) Fee income Net interest income 3,929 3,624 3,537 3,332 2,883 986 2,547 755 933 2,458 825 626 1,704 423 508 274 2,943 2,782 2,507 2,691 2,035 2,039 2,257 1,430 1998 1999 2000 2001 2002 2003 2004 2005 Operating income on this chart shows net inte
Slide 4: Customer loans grew 14% in 2005
Customer loans grew 14% in 2005 Net interest income 9% to $2,943 million Net interest margin from 1.87% in 2004 to 1.91% in 2005 Fourth Quarter 2005 net interest margin to 2.06%, boosting net interest income to quarterly record s (S$m) 2 quarter on o ver past 1 billi r S$21.3 +37% o 78,712 78,
Slide 5: Fee income rose for the seventh consecutive year
Fee income rose for the seventh consecutive year Fee income up 6% to $986 million Fee income ratio at record 23% (S$m) 933 986 825 755 626 508 423 274 0 1998 1999 2000 2001 2002 2003 2004 2005 5
Slide 6: Larger contribution from higher-return consumer, SME businesses
Larger contribution from higher-return consumer, SME businesses Consumer, SME operating profit before tax: S$1,165 million 24% Consumer, SME together accounted for 54% of DBS Group operating profit, from 37% last year All figures exclude one-time gains and goodwill charges 6
Slide 7: Asset quality, credit ratings remain strong
Asset quality, credit ratings remain strong One of the best asset quality among Asian banks Ö NPL rate of 2.1% Ö Provision coverage of 97% Strong capital ratios Ö Tier 1: 10.6% Ö Overall: 14.8% One of the highest credit ratings among Asian banks Ö DBS Bank: Moody’s Aa2, S&P’s AA- , Fitch’s AA-
Slide 8: Committed to providing higher returns to shareholders
Committed to providing higher returns to shareholders Fourth-quarter dividend of 17 cents per share, from 15 cents per share in previous quarter Total dividends of 58 cents per share for full year 2005, 45% from 2004’s 40 cents per share Dividend policy reflects our policy of rewarding shareho
Slide 9: Operating growth trends continue
Operating growth trends continue DBS Group Holdings 4Q 2005 financial results February 17, 2006 Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. DBS Bank accepts
Slide 10: Operating growth trends continue
Operating growth trends continue GAAP earnings affected by non-operating items Sustained growth in customer businesses Better sequential operating performance in Hong Kong Asset quality remains benign 10
Slide 11: Earnings affected by non-operating items
Earnings affected by non-operating items One-time gains of S$303 million from sale of office buildings in Singapore Goodwill impairment charge of S$1,128 million for DBS Hong Kong Change in accounting treatment for US$725m and S$100m of non- cumulative non-convertible preference shares from de
Slide 12: Earnings affected by non-operating items
Earnings affected by non-operating items Goodwill impairment charge for DBS Hong Kong – summary (S$m) Carrying value (before impairment) as at December 31, 2005 10,765 NTA 3,988 Unamortised goodwill 6,777 Recoverable value as at December 31, 2005 9,637 Goodwill impairment charge 1,128 12
Slide 13: Earnings affected by non-operating items
Earnings affected by non-operating items Goodwill impairment charge for DBS Hong Kong – methodology Discounted cash flow method Detailed five-year projections with 2006 - 2010 net earnings Cagr of 8.7% Long-term growth rate of 4.5% from 2011 Discount rate of 9.5% 13
Slide 14: Earnings affected by non-operating items
Earnings affected by non-operating items Change in accounting treatment for non-cumulative non-convertible perpetual preference shares (NCPS) Under revised FRS 32, NCPS now accounted for as an equity instrument, not debt. Applied retrospectively Under FRS 39, interest rate swap (from fixed to fl
Slide 15: Operating growth trends continue
Operating growth trends continue GAAP earnings affected by non-operating items Sustained growth in customer businesses Better sequential operating performance in Hong Kong Asset quality remains benign 15
Slide 16: 4Q operating income and operating profit improve on year and on quarter
4Q operating income and operating profit improve on year and on quarter (S$m) 4Q 4Q % 3Q % 2005 2004 change 2005 change Net interest income 800 665 20 746 7 Non-interest income 314 372 (16) 307 2 Operating income 1,114 1,037 7 1,053 6 Staff costs 279 257 9 255 9 Other operating expenses 272 263 3 25
Slide 17: Full-year interest and fee income rise, operating profit dampened by market-related activities
Full-year interest and fee income rise, operating profit dampened by market-related activities (S$m) % 2005 2004 change Net interest income 2,943 2,691 9 Non-interest income 1,395 1,788 (22) Operating income 4,338 4,479 (3) Staff costs 1,052 993 6 Other operating expenses 974 963 1 Operating expense
Slide 18: Interest income drivers improve, other ratios affected by lower non-interest income contribution
Interest income drivers improve, other ratios affected by lower non-interest income contribution (%) 4Q 3Q 4Q 2005 2005 2004 2005 2004 Net interest margin 2.06 1.92 1.83 1.91 1.87 Fee income/total income 22 23 22 23 21 Non-interest income/total income 28 29 36 32 40 Cost/income 49 48 50 47 44 ROE 8.
Slide 19: Loan growth and higher margins boost interest income to annual and quarterly record
Loan growth and higher margins boost interest income to annual and quarterly record (S$m) Net interest margin (%) 2,943 2,691 2,507 2.06 1.87 1.91 1.88 1.88 1.92 1.92 1.88 1.83 1.82 1.84 712 746 800 665 684 677 665 685 2003 2004 2005 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2004 2005 19
Slide 20: Loans expand 14% on year, improving asset mix
Loans expand 14% on year, improving asset mix (S$m) DTDB loans 78,776 79,462 78,712 0% 1% 11% 71,055 69,659 2% 67,216 4% 65,048 3% 4% 2% 2,915 2,915 61,415 62,424 Dec Mar Jun Sep Dec Mar Jun Sep Dec 2003 2004 2005 20
Slide 21: Fee incomes rise for seventh year
Fee incomes rise for seventh year (S$m) Fee income Dividend & rental a Other income 1,767 1,788 56 Non-interest income / 933 total income (%) 825 48 46 b 1,395 44 41 986 39 36 37 40 a 37 34 36 a 29 28 b 87 32 b 104 604 248 a 425 421 855 387 372 353 751 13 229 307 314 b 127 224 274 233 229 242 241 34
Slide 22: 4Q and full-year wealth management revenues increase
4Q and full-year wealth management revenues increase (S$m) Structured deposits 9,006 9,242 Bancassurance Unit trusts 7,428 7,227 5,908 4,334 429 247 2,766 2,545 1,732 2,093 2,066 1,863 2,042 200 1,526 1,838 1,157 1,457 2,905 2,847 1,685 964 1,245 1,249 27 327 41 41 41 683 1,578 1,006 34 44 121 374 6
Slide 23: Full-year cost-income ratio within target range
Full-year cost-income ratio within target range (S$m) Cost/Income (%) 2,026 1,801 1,956 47 b 50 47 48 49 b 42 44 a 44 a 44 43 38 39 44 39 30 483 473 480 520 486 484 505 551 2003 2004 2005 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2004 2005 Annualised cost / average assets (%) 1.15 1.16 1.12 1.18 1.13 1.17 1.24 1.09 1
Slide 24: Full-year operating profit contribution of customer businesses increase
Full-year operating profit contribution of customer businesses increase (S$m) 2005 2004 % change Consumer Banking 804 671 20 Enterprise Banking 450 484 (7) Corporate and Investment Banking 498 450 11 Customer business sub-total 1,752 1,605 9 Global Financial Markets 186 553 (66) Central Treasury Uni
Slide 25: Operating growth trends continue
Operating growth trends continue GAAP earnings affected by non-operating items Sustained growth in customer businesses Better sequential operating performance in Hong Kong Asset quality remains benign 25
Slide 26: Hong Kong's operating profit continues to improve on quarter
Hong Kong’s operating profit continues to improve on quarter (S$m) 4Q 4Q % 3Q % 2005 2004 change 2005 change Net interest income 275 212 30 247 11 Non-interest income 65 121 (46) 77 (16) Operating income 340 333 2 324 5 Operating expenses 179 156 15 167 7 Operating profit 161 177 (9) 157 3 Provision
Slide 27: Hong Kong's full-year performance lower as operating income falls
Hong Kong’s full-year performance lower as operating income falls (S$m) % 2005 2004 change Net interest income 947 899 5 Non-interest income 319 485 (34) Operating income 1,266 1,384 (9) Operating expenses 653 598 9 Operating profit 613 786 (22) Provisions 44 104 (58) Net profit after tax 481 588 (1
Slide 28: Hong Kong full-year ratios less favourable, 4Q margins improve on quarter
Hong Kong full-year ratios less favourable, 4Q margins improve on quarter (%) 4Q 3Q 4Q 2005 2005 2004 2005 2004 Net interest margin 2.42 2.26 2.03 2.18 2.22 Non-interest income/total income 20 24 37 25 35 Cost/income 53 52 48 52 43 ROA 0.94 1.02 1.13 1.00 1.29 Loans/deposits 78 77 75 78 75 28
Slide 29: Operating growth trends continue
Operating growth trends continue GAAP earnings affected by non-operating items Sustained growth in customer businesses Better sequential operating performance in Hong Kong Asset quality remains benign 29
Slide 30: NPL rate at 2.1%
NPL rate at 2.1% (S$m) Substandard Doubtful Loss 5.2 NPL rate (%) 4.6 2.5 3.0 2.6 2.5 2.1 2.4 2.2 2.0 2.1 3,780 3,359 73% 75% 2,182 1,919 1,865 1,934 1,919 1,928 1,896 1,807 1,865 71% 65% 72% 70% 71% 72% 71% 68% 65% 5% 6% 9% 15% 9% 9% 9% 9% 11% 14% 15% 22% 20% 20% 19% 19% 21% 20% 19% 18% 18% 20% 200
Slide 31: Non-performing assets increase slightly in 4Q
Non-performing assets increase slightly in 4Q (S$m) 4Q 4Q 3Q 2005 2004 2005 NPAs at start of period 1,807 2,182 1,896 New NPAs 250 114 180 Net recoveries of existing NPAs (150) (283) (225) Write-offs (42) (79) (44) NPAs at end of period 1,865 1,934 1,807 31
Slide 32: Specific provision charges higher in 4Q from lower write-backs
Specific provision charges higher in 4Q from lower write-backs (S$m) 4Q 4Q 3Q 2005 2004 2005 Add charges for New NPLs 86 74 40 Existing NPLs 33 42 49 119 116 89 Subtract charges for Upgrading 1 2 1 Settlements 41 64 40 Recoveries 6 13 18 48 79 59 Total SP charges 71 37 30 tangerinesin\Analyst presen
Slide 33: Specific provision charges for 2005 higher from lower write-backs
Specific provision charges for 2005 higher from lower write-backs (S$m) 2005 2004 Add charges for New NPLs 223 217 Existing NPLs 169 179 392 396 Subtract charges for Upgrading 7 24 Settlements 154 245 Recoveries 35 34 196 303 Total SP charges 196 93 tangerinesin\Analyst presentation\1H2001 Results\0
Slide 34: Provision coverage maintained at 97%
Provision coverage maintained at 97% (S$m) GP SP 2,387 2,271 1,800 1,819 1,752 1,064 1,706 1,706 1,736 1,784 1,757 1,800 1,072 1,025 1,037 1,017 1,031 1,017 1,036 1,068 1,031 1,031 1,323 1,199 689 769 794 715 689 700 716 726 769 2003 2004 2005 Mar Jun Sep Dec Mar Jun Sep Dec 2004 2005 Coverage ratio
Slide 35: CAR unchanged on quarter, lower on year as RWA expands
CAR unchanged on quarter, lower on year as RWA expands (%) Tier-2 Tier-1 15.8 15.6 15.4 15.8 15.3 15.1 14.8 14.5 14.7 14.7 14.8 4.5 4.0 3.6 4.5 4.4 4.6 4.2 4.1 4.1 4.3 4.2 11.8 11.3 10.9 10.6 10.4 10.6 10.5 11.3 10.6 10.4 11.6 2003 2004 2005 Mar Jun Sep Dec Mar Jun Sep Dec (S$bn) 2004 2005 Tier-1 ca
Slide 36: 4Q dividend rate of 17 cents raises full-year payout by 45% to 58 cents
4Q dividend rate of 17 cents raises full-year payout by 45% to 58 cents (S¢) Final Interim Quarterly 58 17 40 30 30 15 22 16 16 15 14 14 18 11 2002 2003 2004 2005 36
Slide 37: Operating growth trends continue
Operating growth trends continue GAAP earnings affected by non-operating items Sustained growth in customer businesses Better sequential operating performance in Hong Kong Asset quality remains benign 37