DBS Group Holdings Ltd · SGX:D05
DBS — FY2003 Earnings Presentation
39 slides from DBS's earnings presentation, Feb 20, 2004
Slide 1: Second half business momentum continues into the new year
Second half business momentum continues into the new year February 20, 2004 DBS Group Holdings 2003 Financial Results Presentation to Media and Analysts This presentation is available at www.dbs.com/investor Disclaimer: The information contained in this document is intended only for use during the p
Slide 2: Second half business momentum continues into the new year
Second half business momentum continues into the new year T Profits rebound in second half, after challenging first half T Operating businesses gaining momentum T DBS Hong Kong continues double digit growth T Expenses contained T Strongest asset quality since 1998, sound capital adequacy 2
Slide 3: Achieving record operating income, up 1.3%
Achieving record operating income, up 1.3% % % 4Q 2002 (a) change (S$ million) 2003 2002 (a) change 4Q 2003 Net interest income 2,375 2,645 (10.2) 628 642 (2.2) Non-interest income (b) 1,823 1,501 21.5 425 412 3.2 Operating income 4,198 4,146 1.3 1,053 1,054 (0.1) Staff costs 865 911 (5.0) 217 225 (
Slide 4: Second half net profit up 31.9%
Second half net profit up 31.9% 2H 2003 1H 2003 % (S$ million) change Net interest income 1,216 1,159 4.9 Non-interest income 950 873 8.8 Operating income 2,166 2,032 6.6 Staff costs 436 429 1.6 Other operating expenses 504 472 6.8 Operating expenses 940 901 4.3 Operating profit (a) 1,226 1,131 8.4
Slide 5: Operating ratios improved
Operating ratios improved DBS Group Holdings Ltd 2003 2002 4Q 2003 4Q 2002 Net interest margin 1.78% 1.99% 1.81% 1.97% Cost-to-income ratio (a) 43.9% 44.6% 45.8% 44.7% Non-interest inc. / operating inc. 43.4% 36.2% 40.4% 39.1% Cash ROA (b) 0.94% 0.91% 1.01% 0.97% Cash ROE (b) 9.99% 9.95% 10.91% 10.2
Slide 6: Second half business momentum continues into the new year
Second half business momentum continues into the new year T Profits rebound in second half, after challenging first half T Operating businesses gaining momentum T DBS Hong Kong continues double digit growth T Expenses contained T Strongest asset quality since 1998, sound capital adequacy 6
Slide 7: Net interest margins improves for second consecutive quarter
Net interest margins improves for second consecutive quarter YoY Net interest income (S$ million) QoQ Net interest income (S$ million) YoY Net interest margin (%) 2,645 2,375 QoQ Net interest margin (%) 2,257 2,035 2,039 2.02% 2.02% 1.87% 1.99% 1.97% 1.78% 1.87% 1.81% 1.68% 1.72% 642 599 560 588 628
Slide 8: Customer loans increase every quarter
Customer loans increase every quarter Customer loans (a) YTD growth rate (S$ million) 6.0% 65,000 64,335 63,902 64,000 63,000 62,714 62,000 61,640 61,000 60,709 60,000 59,000 58,000 Dec 2002 Mar 2003 Jun 2003 Sep 2003 Dec 2003 (a) Net customer loans 8
Slide 9: Non interest income strong, but lower than the peak in third quarter 2003
Non interest income strong, but lower than the peak in third quarter 2003 (S$ million) (%) 1,823 1,800 50 1,501 47.2% 1,500 (a) 48% 1,275 43.4% 42.8% 43.1% 1,200 53% 40.4% 49% 39.1% 900 5% 40 36.2% 36.1% 4% 600 5% 525 47% 449 424 425 412 49% (b) (b) 46% 36% 50% 59% 300 46% 34.7% 33.0% 5% 3% 3% 7% 5%
Slide 10: Fee income constitutes 21.1% of total income
Fee income constitutes 21.1% of total income (S$ million) % % 2003 2002 change 4Q 2003 4Q 2002 change Stockbroking 169 119 42.0 60 20 200.0 Investment banking 83 76 9.2 24 20 20.0 Trade and remittances 111 112 (0.9) 29 28 3.6 Loan related 155 145 6.9 43 42 2.4 Deposit related 103 108 (4.6) 26 27 (3.
Slide 11: Investment banking capabilities reaching across Asia
Investment banking capabilities reaching across Asia Singapore • Singapore Post (S$787 million IPO, S$150 million 3 year-syndicated loan, S$300 million 10 year-bond) • Singtel Yellow Pages (S$150 million LBO financing) • Senoko Power (S$200 million 10 year-bond, S$100 million 3 year-revolving credit
Slide 12: Retail wealth management sales double again
Retail wealth management sales double again Sales Volume of Investment Products (a) 8,806 9000 (S$ million) Hong Kong 8000 Singapore 7000 4,824 6000 5000 4,434 4000 1,396 3000 2,438 2,481 2,005 2,065 2000 1,822 453 3,982 3,039 1,129 978 1,207 1,120 1,004 1,370 1,403 880 1,047 1000 198 232 559 406 37
Slide 13: Other income improves by 32.3%
Other income improves by 32.3% (S$ million) 2003 2002 % 4Q 2003 4Q 2002 % change change Net gain on treasury activities 648 397 63.2 120 72 66.7 Net gain on investment securities 183 214 (14.5) 28 127 (78.0) Net gain on fixed assets 3 10 (70.0) 3 5 (40.0) Others 18 23 (21.7) 2 5 (60.0) Total (a) 852
Slide 14: Second half business momentum continues into the new year
Second half business momentum continues into the new year T Profits rebound in second half, after challenging first half T Operating businesses gaining momentum T DBS Hong Kong continues double digit growth T Expenses contained T Strongest asset quality since 1998, sound capital adequacy 14
Slide 15: DBS Hong Kong continues double digit growth
DBS Hong Kong continues double digit growth 2003 2002 % 4Q 2003 4Q 2002 % (S$ million) (a) change change Net interest income 800 812 (1.5) 211 195 8.2 Non-interest income 384 273 40.7 106 71 49.3 Operating income 1,184 1,085 9.1 317 266 19.2 Operating expenses 476 490 (2.9) 123 125 (1.6) Impairment
Slide 16: DBS Hong Kong key ratios continue to support Group results
DBS Hong Kong key ratios continue to support Group results DBS Bank (Hong Kong) Limited 2003 2002 4Q 2003 4Q 2002 Net interest margin 2.38% 2.36% 2.45% 2.33% Cost-to-income ratio (a) 40.2% 45.2% 38.8% 47.0% Non-interest inc. / operating inc. 32.4% 25.2% 33.4% 26.7% Loan-to-deposit ratio (b) 76.0% 76
Slide 17: Second half business momentum continues into the new year
Second half business momentum continues into the new year T Profits rebound in second half, after challenging first half T Operating businesses gaining momentum T DBS Hong Kong continues double digit growth T Expenses contained T Strongest asset quality since 1998, sound capital adequacy 17
Slide 18: Operating expenses were contained
Operating expenses were contained (S$ million) 2003 2002 % 4Q 2003 4Q 2002 % change change Group operating expenses Staff costs 865 911 (5.0) 217 225 (3.6) Occupancy expenses 203 219 (7.3) 54 58 (6.9) Technology-related 287 228 25.9 74 66 12.1 Revenue-related 183 140 30.7 53 32 65.6 Others 303 353 (
Slide 19: Second half business momentum continues into the new year
Second half business momentum continues into the new year T Profits rebound in second half, after challenging first half T Operating businesses gaining momentum T DBS Hong Kong continues double digit growth T Expenses contained T Strongest asset quality since 1998, sound capital adequacy 19
Slide 20: NPL rate trending down to a record low in 6 years
NPL rate trending down to a record low in 6 years Substandard (S$ million) Doubtful Loss 11.8% 13.0% NBk NPLs / NBk Loans (%) 8,149 7500 7,086 7.6% 5.7% 6.1% 3,799 5,121 5.2% (54%) (63%) 5000 4,411 4,512 4,224 3,780 452 3,607 3,411 3,114 951 (82%) (76%) (74%) (5%) 2500 (13%) 2,777 (73%) 258 282 2,57
Slide 21: Provision coverage levels up to 63%
Provision coverage levels up to 63% 5000 General Provisions (GP) (S$ million) 4,286 Specific Provisions (SP) 4000 1,191 3000 2,719 2,500 2,477 2,496 2,605 2,387 2,286 1,060 2000 989 1,003 1,017 1,061 1,064 1,049 3,095 1000 1,659 1,511 1,474 1,479 1,544 1,323 1,237 0 Dec Dec Dec Dec Mar Jun Sep Dec 1
Slide 22: Specific provision charges down
Specific provision charges down (S$ million) 2003 2002 4Q 2003 4Q 2002 Loans 352 401 78 112 Securities 65 25 7 29 Properties & other assets 35 153 (14) 39 Specific provision 452 579 71 180 General provision 89 (35) 11 1 Total 541 544 82 181 22
Slide 23: Continued strong capital position
Continued strong capital position BIS capital adequacy ratio Tier 2 capital ratio (%) 24 Tier 1 capital ratio (%) 20 17.4 15.5 15.2 15.1 16 14.5 14.2 5.2 5.2 4.7 4.7 4.6 12 4.5 8 12.2 (a) 10.3 9.8 9.7 10.5 10.5 4 Dec 2001 Dec 2002 Mar 2003 Jun 2003 Sep 2003 Dec 2003 (a) Compared to end December 2001
Slide 24: Setting the dividend rate on a sustainable basis
Setting the dividend rate on a sustainable basis (Cents) (%) 50 36% 40 (a) 33% 33% 31% 40 15 30 22% 20 16 16 16 16 20 16 10 14 14 14 14 9 0 0 1999 2000 2001 2002 2003 Interim dividends Final dividends Special dividends Payout rate (%) (a) Dividend payout ratio in 2002 was restated for accounting pol
Slide 25: Second half business momentum continues into the new year
Second half business momentum continues into the new year T Profits rebound in second half, after challenging first half T Operating businesses gaining momentum T DBS Hong Kong continues double digit growth T Expenses contained T Strongest asset quality since 1998, sound capital adequacy 25
Slide 26: Supplemental information
Second half business momentum continues into the new year T Supplemental information Page T Accounting policy change 27 T Interest margins 28 - 29 T Regional operations 30 - 31 T Treasury & Markets 32 - 33 T Asset quality and Capital 34 - 39 26
Slide 27: Accounting policy change reduces YoY growth
Accounting policy change reduces YoY growth 2003 2002 (S$ million) Post Pre Impact Post Pre Impact Change Change S$ million Change Change S$ million Net interest income 2,375 2,375 2,645 2,645 Non-interest income 1,823 1,890 67 1,501 1,421 80 Operating income 4,198 4,265 4,146 4,066 Operating expens
Slide 28: Continuing compression in the mortgage business, lower and flattening yield curve affect 2003 margin
Continuing compression in the mortgage business, lower and flattening yield curve affect 2003 margin (S$ million) 2003 2002 Average Average Average Average Bal. Interest rate % Bal. Interest rate % Interest bearing assets Customer loans and advances 62,593 2,342 3.74 64,221 2,705 4.21 Interbank item
Slide 29: Continuing compression in the mortgage business, low interest rate environment lower fourth quarter 2003 margin
Continuing compression in the mortgage business, low interest rate environment lower fourth quarter 2003 margin (S$ million) 4Q 2003 4Q 2002 Average Average Average Average Bal. Interest rate % Bal. Interest rate % Interest bearing assets Customer loans and advances 63,965 575 3.57 61,735 647 4.16 I
Slide 30: Loan provisions reduce DBS Thai Danu's net profit; no effect on the Group's results
Loan provisions reduce DBS Thai Danu’s net profit; no effect on the Group’s results 2003 2002 % 4Q 2003 3Q 2003 % (S$ million) (a) change change Net interest income 106 102 3.4 29 25 14.7 Non-interest income 45 41 11.8 15 11 33.6 Operating income 151 143 5.8 43 36 20.4 Operating expenses 98 96 2.1 2
Slide 31: Group net profit more balanced
Group net profit more balanced 2002 Net Profit 2003 Net Profit S$1,375 million (a) S$1,455 million (a) (S$ million) (S$ million) Regional countries Regional countries 67 81 (5%) (6%) Singapore Singapore Hong Kong 937 Hong Kong 850 336 486 (68%) (58%) (33%) (24%) Rest of the world 35 Rest of the worl
Slide 32: DBS' earnings diversified
DBS’ earnings diversified 2002 Revenues 2003 Revenues S$4,146 million S$4,198 million (S$ million) (S$ million) Enterprise Enterprise Banking Banking 602 631 Consumer T&M Consumer T&M (15%) (15%) Banking Funding Portfolio Banking Funding Portfolio 1,452 415 1,441 461 (35%) (10%) (34%) (11%) Treasury
Slide 33: Daily earnings at risk and trading income
Daily earnings at risk and trading income DEaR for Trading Book DBSH Group DEaR for Trading Book (January 1, 2003 to December 31, 2003) DBSH Group DEaR for Trading Book 60 At 31 (a) (a) 52 (S$ million) Dec Average High Low 50 40 37 Interest rate 22.7 23.3 33.7 15.3 30 25 FX 3.3 7.0 18.2 2.3 20 17 16
Slide 34: DBS Hong Kong Consumer Banking asset quality
DBS Hong Kong Consumer Banking asset quality 15.00% Credit card charge-off rates Credit card delinquency rates 13.3% 90 days 4Q02 1Q03 2Q03 3Q03 4Q03 12.9% past due 12.4% 12.0% 12.00% 11.8% 11.8% 11.8% DBS (HK) (a) 1.2% 1.1% 1.5% 1.8% 1.5% 11.0% 10.8% Industry (c) 1.3% 1.3% 1.3% 1.2% 0.9% 10.0% 9.00
Slide 35: DBS Singapore Consumer Banking asset quality
DBS Singapore Consumer Banking asset quality Credit card charge-off rates Credit Card Delinquency Rates (a) 6.00% 3.00% 4.5% 4.6% 4.5% 2.2% 2.2% 4.0% 2.0% 2.00% 1.8% 1.7% 3.00% 2.8% 2.9% 1.4% 1.4% 2.6% 1.00% 0.00% 0.00% 6M 9M 12M 3M 6M 9M 12M 2Q 3Q 4Q 1Q 2Q 3Q 4Q 2002 2002 2002 2003 2003 2003 2003 2
Slide 36: Residential mortgage delinquency rates
Residential mortgage delinquency rates (a) DBS Bank (Hong Kong) Limited DBS Singapore Consumer Banking 2.00% 2.00% 1.50% 1.30% 1.27% 1.18% 1.11% 1.15% 1.04% 1.00% 1.00% 0.82% 0.81% 0.70% 0.69% 0.69% 0.62% 0.62% 0.62% 0.50% 0.00% 0.00% Jun Sept Dec Mar Jun Sep Dec Jun Sept Dec Mar Jun Sep Dec 2002 20
Slide 37: Total capital versus RWA
Total capital versus RWA (S$ billion) Total Capital Risk Weighted Assets 15 +1.5 -0.4 +0.2 13.9 12.6 (a) +9.6 -1.6 +1.9 +1.0 92.1 100 Others (b) Dividend 81.2 Others 10 Financial 75 Cash Derivatives Earnings Inter-Bank Placements 50 & Bank Bonds 5 Loans & Bonds 25 0 0 Dec Dec Dec Dec 2002 2003 2002
Slide 38: Total capital versus RWA
Total capital versus RWA (S$ billion) Total Capital Risk Weighted Assets 15 +0.4 -0.2 13.9 13.7 +2.9 90.5 -1.0 -0.3 92.1 100 Dividend (a) Others Cash Earnings Financial 75 10 Derivatives Loans & Bonds 50 5 25 0 0 Sep Dec Sep Dec 2003 2003 2003 2003 (a) Includes accounts receivables and other assets
Slide 39: Second half business momentum continues into the new year
Second half business momentum continues into the new year February 20, 2004 DBS Group Holdings 2003 Financial Results Presentation to Media and Analysts This presentation is available at www.dbs.com/investor Disclaimer: The information contained in this document is intended only for use during the p