DBS Group Holdings Ltd · SGX:D05
DBS — FY2002 Earnings Presentation
39 slides from DBS's earnings presentation, Feb 21, 2003
Slide 1: 2002: Better execution under difficult conditions
2002: Better execution under difficult conditions February 21, 2003 DBS Group Holdings 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 ac
Slide 2: DBS Group management team
DBS Group management team S Dhanabalan Chairman, DBS Group Jackson Tai Vice Chairman and Chief Executive Officer, DBSH and DBS Bank Ng Kee Choe Vice Chairman, DBSH and Chief Risk Officer Management Frank Wong Vice Chairman, DBS Bank and Chairman, Committee DBS Hong Kong Chong Kie Cheong MD & Joint H
Slide 3: 2002: Better execution under difficult conditions
2002: Better execution under difficult conditions ❑ Revenues, net profit up ❑ Continued improvement in mix, quality of revenues ❑ Expenses under control ❑ Regional operations contributing to overall performance ❑ Asset quality steady 3
Slide 4: Revenues surpass S$4 billion, net profit up
Revenues surpass S$4 billion, net profit up % (S$ million) 2002 2001(c) change Net interest income 2,645 2,257 17.2 Fee and commission income 797 626 27.3 Non-interest income 1,421 1,275 11.4 Operating income 4,066 3,532 15.1 Staff costs 911 865 5.2 Other operating expenses 940 864 8.8 Operating exp
Slide 5: Full year 2002 financial ratios
Full year 2002 financial ratios Comparison of 2002 vs. 2001 Net interest margin 1.99% 1.87% Cost-to-income ratio (a) 45.5% 48.9% Non-interest inc. / operating inc. 34.9% 36.1% Cash ROA 0.86% 0.86% Cash ROE 9.21% 9.99% NPL ratio 6.1% 5.7% Loan-to-deposit ratio 59.9% 63.9% Cash EPS ($) (b) 0.87 0.89 (
Slide 6: Fourth quarter 2002 operating profit up 28%
Fourth quarter 2002 operating profit up 28% % % (S$ million) 4Q 2002 3Q 2002 change 4Q 2001 change Net interest income 642 671 (4.3) 707 (9.2) Fee and commission income 191 201 (5.0) 207 (8.0) Non-interest income 406 312 30.0 259 57.1 Operating income 1,048 983 6.6 966 8.5 Staff costs 226 219 2.7 23
Slide 7: Fourth quarter 2002 financial ratios
Fourth quarter 2002 financial ratios Comparison of 4Q 2002 vs. 4Q 2001 Net interest margin 1.97% 2.11% Cost-to-income ratio (a) 45.0% 53.4% Non-interest inc. / operating inc. 38.7% 26.8% Cash ROA (b) 0.95% 0.64% Cash ROE (b) 9.95% 7.56% NPL ratio 6.1% 5.7% Loan-to-deposit ratio 59.9% 63.9% Cash EPS
Slide 8: 2002: Better execution under difficult conditions
2002: Better execution under difficult conditions ❑ Revenues, net profit up ❑ Continued improvement in mix, quality of revenues ❑ Expenses under control ❑ Regional operations contributing to overall performance ❑ Asset quality steady 8
Slide 9: Net interest income grew while interest margins remained stable
Net interest income grew while interest margins remained stable YoY net interest income (S$ million) QoQ net interest income (S$ million) 16.6% CAGR Net interest margin (%) 2,645 707 670 663 671 642 2,257 2,035 2,039 2.02% 2.11% 1.96% 1,430 1.87% 1.97% 2.02% 2.02% 2.00% 1.99% 1.77% 1998 1999 2000 20
Slide 10: Non-interest income streams steady
Non-interest income streams steady (%) Non-interest income to Operating income (a) Year on year Quarter on quarter 39 36 35 35 33 34 32 30 27 24 1998 level 1998 1999 2000 2001 2002 4Q 1Q 2Q 3Q 4Q 2001 2002 2002 2002 2002 (a) Includes extraordinary items: 2002 includes profits from the sale of NatSte
Slide 11: Fee income up 27%
Fee income up 27% % (S$ million) 2002 2001 change Trade and remittances 111 96 15.3 Deposit related 109 100 9.3 Credit card 95 69 38.2 Loan related 138 110 25.4 Investment banking 72 72 (0.2) Stockbroking 126 73 73.2 Fund management 35 20 75.5 Wealth management 77 65 17.8 Others 34 21 62.5 Total 797
Slide 12: Fourth quarter 2002 fee income slightly down
Fourth quarter 2002 fee income slightly down 4Q 2002 3Q 2002 % 4Q 2001 % (S$ million) change change Trade and remittances 27 28 (2.2) 32 (15.3) Deposit related 27 28 (3.4) 27 - Credit card 22 24 (9.3) 24 (6.7) Loan related 39 41 (3.8) 32 24.3 Investment banking 22 19 18.2 18 19.4 Stockbroking 20 24
Slide 13: Wealth management sales continue to grow
Wealth management sales continue to grow Sales Volume of Investment Products 5000 (Singapore and Hong Kong) 4,496 Hong Kong (S$ million) 4500 Singapore 4000 1,396 3500 3000 2500 2,006 2000 453 1500 3,100 1,152 1,219 1,129 198 995 1000 880 681 232 560 406 1,552 379 379 179 500 954 763 65 65 502 660 7
Slide 14: Bancassurance sales in Singapore
Bancassurance sales in Singapore (S$ million) 2001 2002 4Q 2001 1Q 2002 2Q 2002 3Q 2002 4Q 2002 General 7 14 2 3 4 4 4 Life - Single Premium 366 251 139 103 120 8 21 Life - Regular Premium 8 21 3 3 2 5 11 Sales Volume of Bancassurance Products (Singapore) (S$ million) Weighted annualized 70 premiums
Slide 15: Other income marginally down
Other income marginally down % (S$ million) 2002 2001 change Net gain on foreign exchange, securities and derivatives 307 324 (5.3) Singapore government securities 103 80 28.5 Equities 100 (1) nm Disposal of investment securities 18 130 (86.1) Disposal of fixed assets 10 22 (54.4) Others 25 31 (19.4
Slide 16: Fourth quarter 2002 other income up
Fourth quarter 2002 other income up % % (S$ million) 4Q 2002 3Q 2002 change 4Q 2001 change Net gain on foreign exchange, securities and derivatives 77 57 34.2 25 203.0 Singapore government securities 17 39 (55.0) 2 764.7 Equities 98 (14) nm 18 442.7 Disposal of investment securities (1) 7 nm (4) nm
Slide 17: Daily earnings at Risk and Trading Income
Daily earnings at Risk and Trading Income DEaR for Trading Book (Full year 2002) DBS Group DEaR for Trading Book DBSH Group DEaR for Trading Book At Dec 60 (S$ million) 31 Average High Low 50 No. of days Interest rate 14.9 13.5 23.9 8.5 40 30 FX 7.9 5.0 11.0 2.0 20 Equity 2.4 2.6 4.9 0.3 10 Diversif
Slide 18: Diversified income streams
Diversified income streams Total Operating Income Total Operating Income S$3,532 million S$4,066 million 74 (2%) Central Operations 310 (8%) Treasury & Markets 48 (1%) 450 (11%) Funding Portfolio 269 (8%) 346 (10%) 614 (15%) Enterprise Banking 502 (14%) 788 (19%) Investment Banking 824 (23%) 1,830 (
Slide 19: 2002: Better execution under difficult conditions
2002: Better execution under difficult conditions ❑ Revenues, net profit up ❑ Continued improvement in mix, quality of revenues ❑ Expenses under control ❑ Regional operations contributing to overall performance ❑ Asset quality steady 19
Slide 20: Core expenses down 7%
Core expenses down 7% % (S$ million) 2002 2001 change DBSH (exclude Dao Heng & DBS Vickers) Staff costs 654 714 (8.4) Occupancy expenses 156 166 (5.7) Technology-related expenses 183 173 5.9 Others (a) 303 340 (10.7) Sub-total 1,296 1,393 (7.0) Dao Heng 371 205 80.6 (b) DBS Vickers 162 91 78.8 (b) R
Slide 21: Fourth quarter 2002 expenses declined despite one-time charges
Fourth quarter 2002 expenses declined despite one- time charges (S$ million) Staff costs 232 4Q 2001 3% 226 4Q 2002 Occupancy 68 15% expenses 58 12% IT-related 75 expenses 66 11% Others (a) 101 112 Restructuring 40 78% & integration 9 9% Total operating 516 expenses 471 0 100 200 300 400 500 600 (a)
Slide 22: 2002: Better execution under difficult conditions
2002: Better execution under difficult conditions ❑ Revenues, net profit up ❑ Continued improvement in mix, quality of revenues ❑ Expenses under control ❑ Regional operations contributing to overall performance ❑ Asset quality steady 22
Slide 23: Dao Heng operating profit up
Dao Heng operating profit up 2002 2H 2001 (b) (S$ million) (a) Net interest income 622 321 Non-interest income 231 126 Operating income 853 446 Operating expenses 375 224 Operating profit 478 222 Provisions 185 22 Net profit after tax 272 208 (a) Based on Singapore GAAP (b) Includes a half-year impa
Slide 24: Combined Dao Heng and DBS Kwong On performance
Combined Dao Heng and DBS Kwong On performance 2002 2001 % (S$ million) (a) change Net interest income 826 826 0.1 Non-interest income 284 261 (b) 8.7 Operating income 1,110 1,087 2.1 Operating expenses 498 585 (c) (14.9) Operating profit 612 502 22.0 Provisions (d) 221 243 (9.2) Net profit after ta
Slide 25: 2002 financial ratios for combined Dao Heng and DBS Kwong On
2002 financial ratios for combined Dao Heng and DBS Kwong On Comparison of 2002 vs. 2001 Net interest margin 2.37% 2.33% Fee-to-income ratio 17.9% 18.9% Non-interest inc. / operating inc. 25.6% 24.0% Cost-to-income ratio (a) 44.9% 49.9% Loan-to-deposit ratio 74.0% 77.4% CAR 22.1% 22.0% ROE (b) 8.1%
Slide 26: Synergies achieved; focus now on revenue opportunities in Greater China
Synergies achieved; focus now on revenue opportunities in Greater China Targeted Achieved Key Revenue Initiatives: synergies synergies ◆ Launch of new funds HK$450 million HK$698 million ◆ ALCO Liquidity Management ◆ Cross-selling opportunities (e.g.T&M, Private Banking, equipment finance and some e
Slide 27: Wealth management sales continue to grow
Wealth management sales continue to grow Sales Volume of Investment Products (Hong Kong) (S$ million) Unit trusts / Treasury investment products (a) 1800 1600 1400 1200 1000 800 1,396 600 965 400 200 453 430 294 160 0 2001 2002 1H 2001 2H 2001 1H 2002 2H 2002 (a) Unit trusts include Horizon, Ei8ht,
Slide 28: DBS Thai Danu Bank continues to be profitable
DBS Thai Danu Bank continues to be profitable % (S$ million) (a) 2002 2001 change Net interest income (b) 96.1 86.7 10.9 Fee and commission income 22.2 18.9 17.3 Other income 15.9 10.8 46.7 Non-interest income 38.1 29.8 28.0 Operating income 134.2 116.5 15.2 Operating expenses 89.9 83.0 8.3 Operatin
Slide 29: 2002: Better execution under difficult conditions
2002: Better execution under difficult conditions ❑ Revenues, net profit up ❑ Continued improvement in mix, quality of revenues ❑ Expenses under control ❑ Regional operations contributing to overall performance ❑ Asset quality steady 29
Slide 30: NPL quantum declines for the year
NPL quantum declines for the year Dao Heng Bank (S$ million) DBS Thai Danu Bank Regional 5 countries Others 13.0% 11.8% Singapore 8,149 NBk NPLs / NBk loans (%) 7,086 7.6% 3,207 5.7% 5.9% 5.9% 5.7% 6.1% 2,874 4,411 4,512 4,503 4,360 4,155 4,224 2.7% 1,365 744 699 580 556 542 1,239 1,238 1,004 995 97
Slide 31: Percentage of doubtful and loss NPLs
Percentage of doubtful and loss NPLs (S$ million) Substandard Doubtful Loss 13.0% NBk NPLs / NBk Loans (%) 8,149 7500 7.6% 5.7% 5.9% 5.9% 5.7% 6.1% 4,952 5000 (61%) 4,411 4,512 4,503 4,360 4,155 4,224 3,094 621 3,508 3,086 (69%) 3,003 (8%) 2,732 2,883 2500 (80%) (68%) (69%) (66%) (68%) 358 520 488 4
Slide 32: NPLs of major subsidiaries
NPLs of major subsidiaries (S$ million) DBS Hong Kong (a) DBS Thai Danu (a) 8.3% 42.7% 4.3% 29.8% 28.7% 27.8% 4.1% 27.1% 27.0% 3.7% 3.5% 3.5% 1,238 1,085 1,004 1,011 995 879 972 933 905 810 772 541 Dec 00 Dec 01 Mar 02 Jun 02 Sep 02 Dec 02 Dec 00 Dec 01 Mar 02 Jun 02 Sep 02 Dec 02 (a) Based on MAS g
Slide 33: DBS Hong Kong asset quality
DBS Hong Kong asset quality 5.00% Credit card charge-off rates Credit card delinquency rates 13.3% 90 days 1Q02 2Q02 3Q02 4Q02 12.8% past due 2.00% 11.6% DBS (HK) (a) 1.1% 1.0% 1.2% 1.2% 11.2% 10.8% Industry (b) 1.9% 1.7% 1.3% 1.3% 10.2% 9.0% 9.00% 8.5% Residential mortgage delinquency rates Dec 200
Slide 34: Provision coverage
Provision coverage (S$ million) 4,286 General Provisions (GP) Specific Provisions (SP) 1,191 3,147 2,719 2,721 2,633 2,533 2,500 1,115 2,286 1,061 1,055 1,031 1,012 989 1,048 2,032 3,095 1,658 1,666 1,602 1,521 1,237 1,511 Dec 98 Dec 99 Dec 00 Dec 01 Mar 02 Jun 02 Sep 02 Dec 02 Coverage ratios (%) S
Slide 35: Non-loan provision charges up
Non-loan provision charges up (S$ million) 2002 2001 4Q 2002 3Q 2002 4Q 2001 Loans 397 332 121 112 141 Equities 61 25 18 47 (114) Properties & other 117 89 36 - 70 assets Specific provision 575 446 176 159 96 General provision (41) (67) 5 (9) (10) Total 534 379 181 150 87 35
Slide 36: Following final Dao Heng Bank payment, Tier 1 still above requirement
Following final Dao Heng Bank payment, Tier 1 still above requirement Capital adequacy ratio 24 Tier 1 capital ratio (%) Tier 2 capital ratio (%) 20 19.0 17.4 17.7 17.6 Includes 16 5.3 15.5 Dao Heng 5.2 5.2 4.9 2nd tranche 5.2 12 12.5 12.7 13.7 8 12.2 10.3 4 Dec 2001 Mar 2002 Jun 2002 Sep 2002 Dec 2
Slide 37: Maintaining dividend rate for shareholders
Maintaining dividend rate for shareholders (Cents) (%) 50 36% 40 33% 31% 40 15 30 22% 20 16 16 16 20 16 10 14 14 14 9 0 0 1999 2000 2001 2002 Interim dividends Final dividends Special dividends Payout rate (%) 37
Slide 38: 2002: Better execution under difficult conditions
2002: Better execution under difficult conditions ❑ Revenues, net profit up ❑ Continued improvement in mix, quality of revenues ❑ Expenses under control ❑ Regional operations contributing to overall performance ❑ Asset quality steady 38
Slide 39: 2002: Better execution under difficult conditions
2002: Better execution under difficult conditions February 21, 2003 DBS Group Holdings 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 ac