DBS Group Holdings Ltd · SGX:D05
DBS — Q4 2008 Earnings Presentation
30 slides from DBS's earnings presentation, Feb 13, 2009
Slide 1: Well-positioned to weather uncertainties
Well-positioned to weather uncertainties DBS Group Holdings 4Q 2008 financial results Feb 13, 2009 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 accep
Slide 2: Well-positioned to weather uncertainties
Well-positioned to weather uncertainties Customer business resilient amid challenging environment Lower earnings from Hong Kong compensated by stronger contributions from other regions Balance sheet remains strong 2
Slide 3: 4Q net profit down 5% on quarter and 31% on year
4Q net profit down 5% on quarter and 31% on year 4Q YoY QoQ (S$m) 2008 % % Net interest income 1,115 5 4 Fee income 263 (31) (17) Trading income (25) nm nm Other income 118 2 >100 Non-interest income 356 (25) 9 Income 1,471 (4) 5 Staff expenses 346 7 84 Other expenses 343 6 (12) Expenses 689 6 19 Pr
Slide 4: Full-year profit affected by market dislocations and tougher economic environment
Full-year profit affected by market dislocations and tougher economic environment FY YoY (S$m) 2008 % Net interest income 4,301 5 Fee income 1,274 (13) Trading income 23 (76) Other income 433 (13) Non-interest income 1,730 (16) Income 6,031 (2) Staff expenses 1,256 (9) Other expenses 1,354 10 Expens
Slide 5: Most ratios affected by weaker operating conditions
Most ratios affected by weaker operating conditions (%) 4Q 3Q 4Q FY FY 2008 2008 2007 2008 2007 Net interest margin 2.04 1.99 2.11 2.04 2.17 Fee income/total income 18 23 25 21 24 Non-interest income/total income 24 23 31 29 33 Cost/income 47 41 42 43 42 ROE 7.6 7.9 10.9 10.1 12.7 Loans/deposits 74
Slide 6: Net interest margin improved on quarter as interest income continued to grow
Net interest margin improved on quarter as interest income continued to grow (S$m) Net interest margin (%) 4,301 4,108 3,591 2.20 2.17 2.21 2.21 2.14 2.11 2.09 2.04 2.04 2.04 1.99 1,059 1,057 1,058 1,071 1,115 974 1,027 1,048 2006 2007 2008 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2007 2008 6
Slide 7: Loans down 1% on quarter, up 17% on year
Loans down 1% on quarter, up 17% on year (S$m) 127,541 126,481 118,615 (1%) 8% 114,227 108,433 4% 5% 104,714 4% 98,957 6% 94,294 5% 9% 86,630 85,254 83,410 2% 2% 79,462 78,818 6% (1%) Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec 2005 2006 2007 2008 7
Slide 8: Prudent approach to loan growth
Prudent approach to loan growth % contribution to S$m % mix % growth since growth since Dec Dec Dec Dec Dec Dec Dec 08 Dec 08 05 06 07 05 06 07 By industry Manufacturing 15,958 12 87 47 10 16 13 8 Construction 17,931 14 100 65 38 19 17 27 Housing 29,375 23 17 17 12 9 11 17 Commerce 13,075 10 51 46 3
Slide 9: Non-interest income remains affected by weakness in market activities
Non-interest income remains affected by weakness in market activities (S$m) Fee income 2,055 Other income Non-interest income / total income (%) 1,753 1,730 37 34 34 32 32 31 33 33 1,462 23 29 24 1,155 1,274 568 524 506 541 489 474 309 342 327 356 371 403 379 353 598 593 263 456 316 259 153 153 199
Slide 10: Wealth management sales and fees decline
Wealth management sales and fees decline (S$m) Structured deposits Bancassurance 7,768 Unit trusts 6,912 1,889 2,492 144 2,125 1,962 248 1,829 1,852 612 61 690 472 479 2,842 28 28 27 1,237 5,735 929 1,176 560 3,808 1,816 239 521 245 1,244 1,329 1,346 27 148 155 280 1,421 650 543 43 97 198 28 30 2006
Slide 11: Cost-income ratio for year at 43%
Cost-income ratio for year at 43% (S$m) Cost/Income (%) 2,618 2,610 2,369 44 43 47 42 43 43 42 42 42 43 41 658 660 652 648 656 687 578 689 2006 2007 2008 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2007 2008 Headcount 12,907 14,523 14,683 13,177 13,364 13,842 14,523 14,551 15,219 15,591 14,683 Staff costs (S$m) 1,244 1
Slide 12: Well-positioned to weather uncertainties
Well-positioned to weather uncertainties Customer business resilient amid challenging environment Lower earnings from Hong Kong compensated by stronger contributions from other regions Balance sheet remains strong 12
Slide 13: Hong Kong's earnings fall on quarter from higher expenses and allowances
Hong Kong’s earnings fall on quarter from higher expenses and allowances (S$m) 4Q YoY QoQ 2008 % % Net interest income 221 (12) 4 Non-interest income 114 (27) 5 Income 335 (18) 4 Expenses 205 8 21 Profit before allowances 130 (40) (14) Allowances for credit & other losses 112 >100 81 Net profit 16 (
Slide 14: Hong Kong's full-year earnings down 43% in Singapore-dollar terms
Hong Kong’s full-year earnings down 43% in Singapore-dollar terms (S$m) 2008 YoY % Net interest income 873 (18) Non-interest income 538 (3) Income 1,411 (13) Expenses 723 4 Profit before allowances 688 (25) Allowances for credit & other losses 233 >100 Net profit 390 (43) Figures for Hong Kong geogr
Slide 15: Hong Kong's key ratios impacted by challenging conditions
Hong Kong’s key ratios impacted by challenging conditions (%) 4Q 3Q 4Q 2008 2008 2007 2008 2007 Net interest margin 1.82 1.81 2.03 1.86 2.21 Non-interest income/total income 34 34 38 38 34 Cost/income 62 53 47 51 43 ROA 0.11 0.58 1.15 0.74 1.28 Loans/deposits 84 86 72 84 72 Excluding one-time gains
Slide 16: Regional operations deliver strong profit growth
Regional operations deliver strong profit growth (S$m) 2008 YoY % Net interest income 559 72 Non-interest income 389 40 Income 948 57 Expenses 420 36 Profit before allowances 528 80 Allowances for credit & other losses 128 (14) Net profit 322 94 (%) 2008 2007 Cost/income 44 51 Net profit contributio
Slide 17: Well-positioned to weather uncertainties
Well-positioned to weather uncertainties Customer business resilient amid challenging environment Lower earnings from Hong Kong compensated by stronger contributions from other regions Balance sheet remains strong 17
Slide 18: Allowance coverage ratio at 114%, with 36% of NPAs still current
Allowance coverage ratio at 114%, with 36% of NPAs still current >90 days overdue <90 days overdue (S$m) Not overdue NPL ratio (%) 1.7 1.5 1.5 1.4 1.5 1.4 1.3 1.1 1.2 1.1 1.0 2,392 2,392 1,978 2,054 45% 45% 1,533 1,442 1,460 1,494 1,426 1,442 1,464 42% 45% 51% 44% 19% 57% 52% 55% 44% 43% 19% 16% 14%
Slide 19: Non-performing assets up on weaker credit conditions
Non-performing assets up on weaker credit conditions (S$m) 4Q 3Q 4Q 2008 2008 2007 NPAs at start of period 2,054 1,978 1,426 New NPAs 539 311 270 Net recoveries of existing NPAs (117) (91) (162) Write-offs (84) (144) (92) NPAs at end of period 2,392 2,054 1,442 19
Slide 20: NPL rise due to SME and private banking loans
NPL rise due to SME and private banking loans Gross loans NPL rate (%) Dec 08 (S$bn) Dec 08 Sep 08 Consumer Banking 34.8 0.8 0.9 - Singapore 24.4 0.7 0.7 - Hong Kong 8.7 0.7 0.7 - Others 1.7 3.9 5.7 Institutional Banking 87.4 1.7 1.3 - Singapore 45.6 1.0 0.8 - Hong Kong 22.9 2.1 1.6 - Others 18.9 2.
Slide 21: Specific allowances for loans higher
Specific allowances for loans higher (S$m) 4Q 3Q 4Q 2008 2008 2007 Add charges for New NPLs 198 74 42 Existing NPLs 109 65 38 307 139 80 Subtract charges for Upgrading 0 1 1 Settlements 62 28 55 Recoveries 21 4 8 83 33 63 Total SP charges 224 106 16 21
Slide 22: Housing loan credit quality remains strong
Housing loan credit quality remains strong Delinquency rate – Singapore (%) Delinquency rate – Hong Kong (%) 0.24 0.20 0.18 0.14 0.14 0.11 0.10 0.11 0.09 0.08 0.07 0.06 0.05 0.04 0.02 0.05 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec 2007 2008 2007 2008 Negative equity – Singapore
Slide 23: AFS portfolio well-balanced between investment-grade government and corporate debt
AFS portfolio well-balanced between investment- grade government and corporate debt (S$m) Dec 08 Sep 08 Singapore government securities 11,734 10,684 Other government securities 4,549 3,748 Corporate debt 11,986 15,241 Others 1,144 1,484 Total 29,413 31,157 Corporate debt securities with fair value
Slide 24: CDO allowance coverage adequate
CDO allowance coverage adequate Amount as at Cumulative % (S$m) allowances coverage 31 Dec 30 Sep Investment portfolio 1,056 1,134 459 43 ABS CDOs 264 263 246 93 Non-ABS CDOs 792 871 213 27 – CLOs 691 700 193 28 – Others 101 171 20 20 Trading portfolio 206 291 – – Total 1,262 1,425 459 – Non-ABS CDO
Slide 25: CLO portfolio remains healthy
100% 10% 20% 30% 40% 50% 60% 70% 80% 90% 0% CLO 1 CLO 2 CLO 3 CLO 4 CLO 5 CLO 6 CLO 7 CLO 8 CLO 9 CLO 10 CLO 11 CLO 12 CLO 13 CLO 14 CLO 15 CLO 16 CLO 17 CLO 18 CLO 19 CLO 20 CLO 21 CLO 22 CLO 23 CLO portfolio remains healthy CLO 24 CLO 25 CLO 26 CLO 27 CLO 28 CLO 29 CLO 30 CLO 31 CLO 32 CLO 33 Buff
Slide 26: Derivative counterparty risks carefully managed
Derivative counterparty risks carefully managed Counterparty Nominal Positive MTM Negative MTM Net MTM (S$m) (S$m) (S$m) (S$m) US bank 24,599 1,152 (659) 493 S'pore corporate 10,040 557 (236) 321 Asian corporate 613 180 (2) 178 Asian corporate 733 166 (0) 166 Asian corporate 2,985 339 (196) 142 Aust
Slide 27: Capital base strengthened by rights issue
Capital base strengthened by rights issue (%) Tier 2 (Basel I) Tier 1 (Basel I) Rights issue of Tier 2 (Basel II) S$4.0 bn Tier 1 (Basel II) 16.2 14.5 14.0 13.4 13.4 13.8 13.4 3.9 4.3 3.8 3.9 4.5 4.2 3.7 12.2 10.2 8.9 9.2 10.0 9.7 10.1 Dec Dec Mar Jun Sep Dec Proforma 2006 2007 2008 2008 2008 2008 (
Slide 28: Proposed final dividend of 14 cents
Proposed final dividend of 14 cents (S¢) Special (gross) Ordinary (gross) Ordinary (one-tier) 4 17 14 17 14 17 17 14 13 17 17 14 13 14 17 17 9 2005 2006 2007 2008 Adjusted for rights issue 28
Slide 29: In summary – well-positioned to weather uncertainties
In summary – well-positioned to weather uncertainties Conservative approach in recognising non-performing loans and taking allowances early Adequate allowance coverage on CDOs Extensive review of off-balance sheet exposures Balance sheet strengthened by rights issue – pro-forma Tier 1 CAR of 12.2% a
Slide 30: Well-positioned to weather uncertainties
Well-positioned to weather uncertainties DBS Group Holdings 4Q 2008 financial results Feb 13, 2009 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 accep