Completing the regional and

1
Completing the regional and wealth management
platform
2
Completing the regional and wealth management
platform

• Top line earnings impacted by weaker economic
  conditions and adverse competitive environment
• Focus on other non-interest income bolsters
  results
• Expenses peaked amidst repositioning activities
• Improved asset quality and strong capital
  position
• Completing the regional and wealth management
  platform

3
Completing the regional and wealth management
platform

• Top line earnings impacted by weaker economic
  conditions and adverse competitive environment
• Focus on other non-interest income bolsters
  results
• Expenses peaked amidst repositioning activities
• Improved asset quality and strong capital
  position
• Completing the regional and wealth management
  platform

4
Net revenue increased by 2.7, net profit down
10.6
1H00
2H00
1H01
1H01 / 1H00()
1H01 / 2H00()
(S million)
Net interest income 1,046 993 962 (8.1) (3.1) Fees
commissions 260 249 251 (3.7) 0.8 Dividend
rental income 42 73 40 (3.7) (45.2) Other
income 139 129 275 97.6 113.2 Income before
operating expenses 1,488 1,443 1,528 2.7 5.9 Staff
costs 281 332 389 38.5 17.2 Other operating
expenses 313 320 360 14.9 12.4 Operating
expenses 594 652 749 26.1 14.9 Operating
profit 894 791 779 (12.9) (1.5) Specific
provisions 81 30 110 36.3 266.7 General
provisions (17) (40) (64) 284.5 60.0 Net profit
attributable to shareholders 704 685 629 (10.6)
(8.2)
Net interest margin 2.07 1.97 1.78 Cost-to-inco
me ratio 39.9 45.4 49.0 Return on
assets 1.31 1.25 1.08 Return on
equity 13.1 12.7 11.4
5
Modest decline in net interest income despite
sharp fall in net interest margins
(S million)
Net interest income
Net interest margin (gross basis)
1,046
1,046
989
993
962
2.07
2.04
2.00
1.97
1.78
2H00
2H99
1H00
1H99
1H01
6
Excess liquidity dampens margins, but strengthens
ability to fund lending growth
Net Interbank Placement / Asset
Loan / Deposit
()
()
1996
1998
2000
1H01
1997
1998
1999
1997
1999
1996
2000
1H01
7
Loan growth has turned around
(S million)
Change in Gross Loans
13,791
30.4
4,373
2,209
1,917
10.7
3.7
3.5
(2,053)
(2,219)
(2,966)
-3.7
-3.8
-4.8
Jun 98
Dec 98
Jun 99
Dec 99
Jun 00
Dec 00
Jun 01
Outstanding Gross Loans
72,503
Dao Heng
Jun 98
Dec 98
Jun 99
Dec 99
Jun 00
Dec 00
Jun 01
8
Completing the regional and wealth management
platform

• Top line earnings impacted by weaker economic
  conditions and adverse competitive environment
• Focus on other non-interest income bolsters
  results
• Expenses peaked amidst repositioning activities
• Improved asset quality and strong capital
  position
• Completing the regional and wealth management
  platform

9
Strong fee income despite stockbroking
liberalisation and weak markets
1H00
2H00
1H01
1H01 / 1H00()
1H01 / 2H00()
(S million)
Investment banking 42 56 39 (7.1) (30.2) Stockbrok
ing 47 31 24 (48.9) (22.6) Trade-related 38 37 40
5.3 7.8 Fund management 37 25 35 (5.4) 40.0 Deposi
t-related 23 37 43 87.0 15.3 Loan-related 24 27 28
16.7 4.5 Others 49 36 42 (14.3) 16.3 Total fee
income 260 249 251 (3.7) 0.8
Fee to income ratio () 17.5 17.3 16.4
1998 2000 Fee Income CAGR 36.2
10
Other income FX securities trading doubled
1H00
2H00
1H01
1H01 / 1H00()
1H01 / 2H00()
(S million)
Foreign exchange 52 67 112 115.4 67.2 Gains on
securities derivatives trading 55 - 102 85.5 -
Gains on investment securities 8 33 16 100.0 - Ga
ins on fixed assets 4 5 26 550.0 420.0 Other
income 20 24 19 (5.0) (20.8) Total
139 129 275 97.6 113.2
11
Emphasis on non-interest income yields strong
returns
()
Non-interest income to Operating Income
Jun 01
Dec 98
Dec 99
Jun 00
Dec 00
Excluding gains on disposal of non-core assets
12
Record growth in wealth management products
Sales Volume
(S million)
Insurance
791
Investment products
180
573
544
15
222
611
558
322
314
1H01
2H99
1H00
2H00

• Investment products include Horizon, Ei8ht, Up
  and other DBSAM programs

13
Deposit base provides platform for cross selling
wealth management products
Customer Deposits
Dec 2000
Jun 2000
Jun 2001
YoY Difference
(S b)
S Current accounts 5.6 5.8 6.0 0.5 S Autosave
deposits 5.5 5.4 5.7 0.2 S Savings
deposits 30.5 31.0 31.1 0.6 S Fixed
deposits 14.3 13.2 12.3 (2.0) ACU Fixed
deposits 9.4 11.1 12.0 2.6 DBS Kwong
On 5.1 5.7 6.3 1.2 DBS Thai Danu 3.3 2.9 3.1 (0.2)
Others 6.7 5.6 13.7 7.0 Sub-total 80.4 80.7 90.
3 9.9 Dao Heng - - 24.6 24.6 Total 80.4 80.7 114.
9 34.5 Market share of S deposits 31.8 32.3
32.8
114.9

Include a once off short-term deposit of 5.0b
14
Completing the regional and wealth management
platform

• Top line earnings impacted by weaker economic
  conditions and adverse competitive environment
• Focus on other non-interest income bolsters
  results
• Expenses peaked amidst repositioning activities
• Improved asset quality and strong capital
  position
• Completing the regional and wealth management
  platform

15
Operating costs increased 26 due to timing and
non-recurring items
16
Focused investment in people, technology and
products
(S million)
(26.1)
Others
Advertising
Computerisation
Staff costs
1H2001
1H2000
Cost-to-Income Ratio 39.90 49.01 Cost-
to-AssetRatio(a) 1.10 1.30
(a) Annualized without Dao Heng Bank
17
Use of consultants winding down
Most significant investments completed between
January 1, 2000 and June 30, 2001 Consultants now
limited to implementation of specific, technical
projects
Technology Procurement

• Phone Banking

• DBS Securities Projects

• Customer Relationship Mgt

• Treasury Mkts System

• E-Commerce/Payments

• Risk Mgt System

• Datawarehouse

• Call Centre Automation

• E-banking initiative

Measurement

• Cost Profitability Mgt System

Re-engineering Processing Services

• Institutional Banking Group Reorganisation

• Process Improvement

Customer Service

• Branch Reconfiguration

Integration

• POSBank, DTDB DKOB

Strategy Development

• Retail Strategy

• Improving Profitability (DTDB NPL,
  Recapitalisation of DTDB, Sale of DBSL shares,
  acquisition of BPI)

1998
1999
2000
2001
1H99
9M00
1H01
18
Performance enhancement program to optimise
efficiency
19
Low cost/income ratio by international standards
Cost/Income for International Peers (a)
()
49.2
1H2001
(a) Based on Dec 2000 cost/income ratios
20
Completing the regional and wealth management
platform

• Top line earnings impacted by weaker economic
  conditions and adverse competitive environment
• Focus on other non-interest income bolsters
  results
• Expenses peaked amidst repositioning activities
• Improved asset quality and strong capital
  position
• Completing the regional and wealth management
  platform

21

Asset quality continues to improve
Dao Heng Bank
DBS Thai Danu Bank
(S million)
5 Regional Countries
Others
Singapore
8,149
8,121
7,666
NBk NPL/NBk Loans ()
7,085
4,834
4,411
6.2
3,907
1,112
22
73 of NPLs are graded Substandard
1,610
85
624
72
318
323
815
1,143
82
17
1
Total
4,834
73
9
18
(SM )
23
Cumulative provisions covered 146.5 of unsecured
NPLs and 54.7 of total NPLs
General Provisions (GP)
(S million)
Specific Provisions (SP)
4,286
SPGP/Unsec NPLs ()
3,978
SPGP/NPLs (SEC) ()
3,852
SPGP/NPLS ()
3,147
2,643
2,286
1,894
980
24
Further diversification post acquisition of Dao
Heng Bank
DBS Dao Heng
DBS
36 Hong Kong
13 Hong Kong
12Others
9Others
75 Singapore
55 Singapore
Total Assets S116 bn
Total Assets S156 bn
(June 2001)
25
Efficient capital management
DBS Group Holdings Consolidated Capital Adequacy
()
(a)
(b)
Dec 2000
Hybrid Tier 1
Tier 2 Sub-debt
Adjustments for Dao Heng/ Others
Jun 2001
Preference Shares
1H01 Net Income
(a) Includes goodwill, minority interest and
capital required against asset base.
26
DBS capital position post Dao Heng
DBS will maintain a healthy buffer above the
regulatory Tier I requirement of 8
()
DBS
BNP
HSBC
ANZ
Fortis
Westpac
CitiGroup
StanChart
Dresdner
Source Annual reports of respective banks
27
Completing the regional and wealth management
platform

• Top line earnings impacted by weaker economic
  conditions and adverse competitive environment
• Focus on other non-interest income bolsters
  results
• Expenses peaked amidst repositioning activities
• Improved asset quality and strong capital
  position
• Completing the regional and wealth management
  platform

28
Putting the strategy together positioning for
the future
Consumer Banking
Wealth
Management

• Focused areas

Brokerage Services
Bancassurance
Wholesale Banking Capital Markets, Advisory,
Treasury, FX and Trade Financing

• Scale / Scope
• Regionalisation / diversification
• Growth / market share
• Pricing flexibility

DBS / OUB
Vickers Ballas Frank Russell TD WaterhouseCGNU
Dao Heng Kwong On Thai Danu BPI
Balanced Channel Mix
Policies, Processes and Systems
Efficient Capital Structure

• Optimal Organisation
• Business units reorganised
• Built seasoned management team
• Enhanced training
• Redesigned incentive systems

• Leading IT Capabilities
• On-line, real-time systems
• Data warehouse application with data mining
  capabilities (CRM)
• E-commerce infrastructure
• E-payment gateway

• Usage of sophisticated capital instruments
• Maximise non-dilutive capital
• Sale of non-core assets

• Aligned internal practices to global
  standards
• Strengthened risk management and credit approval
  policies
• Prudent management of off-balance sheet exposures
  and liquidity, forex, interest rate and
  investment risks

• Comprehensive, complementary channel mix
• Reconfigured branches
• Integrated on-line services

• Infrastructure building and reorganisation
  substantially completed

29
Strategic roadmap
Infrastructure
Infrastructure

• Significant infrastructure investment to create
  world class back office and STP initiatives

• Vickers Ballas
• TD Waterhouse
• Frank Russell
• CGNU

Products
Geography

• Dao Heng / Kwong On
• OUB

30
Strategic roadmap Geography
Infrastructure
Infrastructure

• Establish critical mass, presence and scale in
  twin pillars (Singapore, Hong Kong)
• Selectively strengthen presence in certain
  markets(e.g. Thailand, Malaysia after OUB)
• Monitor increased Greater China presence post WTO
  liberalization
• No plans for Australia, North Asia (Korea and
  Japan), but carefully watching opportunities

Products
Geography
31
Dao Heng harmonization ahead of schedule
Dao Heng Bank became a DBS subsidiary on June 29,
2001

• As of first close on July 20, DBS effective
  ownership in Dao Heng Bank is 71
• 98 of Dao Heng shareholders have tendered their
  shares
• Dao Heng Bank governance and management in place
• Harmonization objectives and implementation plan
  defined
• Harmonization infrastructure up and running
• Key milestones defined with good progress to date

(a) Assumes 100 of outstanding options exercised
32
Strategic roadmap Infrastructure

• Leverage infrastructure across business units
• Create Regional Processing Centres for
  appropriate processes
• Centralize remaining branch back-office processes
• Pursue selected out-sourcing, in-sourcing and
  co-sourcing
• Focus on quality (ISO certification of process
  factories, 6 sigma initiative)

Infrastructure
Infrastructure
Products
Geography
Continue trend of significant unit cost
reductions and increase of straight-through
processing rates
33
Strategic roadmap Products
Asset Accumulation

• Retail brokerage Vickers Ballas, TD Waterhouse
• Wealth management leverage distribution for
  best-in-breed products, capitalize on MPF / CPF
  deregulation and excess liquidity
• Bancassurance provide insurance related savings
  products. Life and general insurance partnership
  with CGNU
• Unsecured consumer lending
• Credit cards
• SME lending
• Treasury / FX
• Trade finance
• Corporate finance
• Leveraged finance

Infrastructure
Infrastructure
Products
Geography
Enterprise and Consumer Lending
Corporate Investment Banking
34
Bancassurance alliance accelerates wealth
management business
DBS has concluded a bancassurance alliance with
CGNU
Transaction Highlights
Strategic Rationale

• Sale of 100 of ICS to CGNU
• 10-year exclusive bancassurance strategic
  alliance for life and general insurance
• Total proceeds to DBS of S446 million of which
• S395 million as payment for ICS and the
  bancassurance alliance
• S51 million special dividend from ICS
• DBS to receive additional payments of up to S20
  million on meeting performance targets
• DBS will record a net initial gain of S139
  million

• Accelerates revenue growth in DBS wealth
  management business
• Expands DBS sales channels with the
  establishment of a specialist sales force
  dedicated to insurance, wealth management
  products
• Provides DBS with a dedicated bancassurance
  product provider without equity investment
• DBS retains ownership of customers, concentrates
  on distribution, leaving product manufacturing to
  CGNU
• Allows DBS to rationalize ownership in ICS and
  continue policy of monetizing assets
• Allows DBS to strengthen capital position by 139
  million

35
Only bank whose non-core asset disposals largely
completed

• Focusing on core banking and financial businesses
• Divested non-core assets ahead of MAS guidelines

What needs to be done
What we have done

• Singapore Petroleum Company
• DBS Land
• DBS Tampines Centre
• POSBank Centre
• DBS Securities Building
• Insurance Corporation of Singapore (ICS)

• 4 listed companies (Keppel Capital, NatSteel,
  Intraco, CWT)

Insignificant
36
Significant Events Affecting Results and Outlook
37
Completing the regional and wealth management
platform

• Top line earnings impacted by weaker economic
  conditions and adverse competitive environment
• Focus on other non-interest income bolsters
  results
• Expenses peaked amidst repositioning activities
• Improved asset quality and strong capital
  position
• Completing the regional and wealth management
  platform

38
Completing the regional and wealth management
platform