DBS Group Holdings 1Q 2002 Financial Results Presentation to Media and Analysts This presentation is...
23
DBS Group Holdings 1Q 2002 Financial Results Presentation to Media and Analysts This presentation is available at www.dbs.com April 29, 2002 Disclaimer: The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. DBS Bank accepts no liability whatsoever with respect to the use of this document or its contents.
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Transcript of DBS Group Holdings 1Q 2002 Financial Results Presentation to Media and Analysts This presentation is...
DBS Group Holdings1Q 2002 Financial Results
Presentation to Media and Analysts
This presentation is available at www.dbs.com
April 29, 2002
Disclaimer: The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. DBS Bank accepts no liability whatsoever with respect to the use of this document or its contents.
2
Highlights of 2002 progress (YoY incl acqn)
` Total revenue $1,024m (1Q01 : $808m) 27%
Non-interest income $355m (1Q01 : $319m) 11%
Net interest income $670m (1Q01 : $489m) 37%
Operating expenses $459m (1Q01 : $383m) 20%
Operating profit (a) $565m (1Q01 : $425m) 33%
(a) Exclude goodwill
Fee income $193m (1Q01 : $118m) 64%
Cash NPAM $346m (1Q01 : $321m) 8%
3
Highlights of 2002 progress (YoY excl acqn)
` Total revenue $785m (1Q01 : $808m) 3%
Non-interest income $254m (1Q01 : $319m) 22%
Net interest income $532m (1Q01 : $489m) 9%
Operating expenses $329m (1Q01 : $383m) 15%
Operating profit $456m (1Q01 : $425m) 7%
NPAM $321m (1Q01 : $321m) -
4
Highlights of 2002 progress (QoQ)
` Total revenue $1,024m (4Q01 : $966m) 6%
Non-interest income $355m (4Q01 : $259m) 37%
Net interest income $670m (4Q01 : $707m) 5%
Operating expenses $459m (4Q01 : $516m) 11%
Operating profit (a) $565m (4Q01 : $450m) 26%
(a) Exclude goodwill
Fee income $193m (4Q01 : $207m) 7%
Cash NPAM $346m (4Q01 : $236m) 46%
5
Net interest margin 2.02% (2001 : 1.87%)
NPLs 5.9% (2001 : 5.7%)
Most ratios improved
Cost-to-income (a) 44.8% (2001 : 49.1%)
Non-interest income / operating income 34.6% (2001 : 36.3%)
Cash ROA (b) 0.91% (2001 : 0.86%)
Cash ROE (b) 10.12% (2001 : 10.07%)
Loan-to-deposit 60.5% (2001 : 63.9%)
Cash EPS (cents) 94 (2001 : 89)
(a) Exclude goodwill(b) Annualized
6
Strong operating income growth
(S$ million)(S$ million)DBS1Q02
DBS4Q01
% Change
DBS1Q01
% Change
Net interest income 670 707 (5.2) 489 36.9
Fee income 193 207 (7.1) 118 63.7Non-interest Income 355 259 36.9 319 11.2
Total revenue 1,024 966 6.1 808 26.8
Operating expenses 459 516 (10.9) 383 19.9
Operating profit 565 450 25.6 425 33.0
Goodwill 68 68 (0.1) - NMProvisions 96 87 10.3 38 154.5
NPAM 278 169 64.8 321 (13.5)
Cash NPAM 346 236 46.2 321 7.6
7
(S$ million)
670707
588
472489
1.85%1.69%
1.77%
2.11%2.02%
1Q01 2Q01 3Q01 4Q01 1Q02
Net interest income
Net interest margin (gross basis)
Interest margins remain firm
8
Wealth management continues to grow
Sales Volume
256 359 436 502
951
11664
48141
107
0
200
400
600
800
1000
1200
1Q01 2Q01 3Q01 4Q01 1Q02
(a) Unit trusts include Horizon, Ei8ht, Up! and other DBSAM programmes while treasury investment products include Growth and structured notes
372423
484
643
1,058
(S$ million)
Unit trusts / Treasury investment products (a)
Insurance / asset plan
795
1,127
9
Emphasis on non-interest income produces stronger returns (a)
(%)(%) Non-interest Income to Operating IncomeNon-interest Income to Operating Income
34.6
26.823.8
32.8 30.436.3
39.5
Dec 98 Dec 99 Dec 00 Dec 01 1Q01 4Q01 1Q02
(a) Exclude extraordinary items
10
DBSH (excl DHB and DBSV) (a) 312 333 (6.1) 366 (14.7)
DHB 96 105 (8.3) - NM
DBSV 46 38 23.4 17 172.9
Restructuring costs 4 40 (89.8) - NM
Total 459 516 (10.9) 383 19.9
Greater operating efficiency
(S$ million)(S$ million)
(a) Dao Heng Bank (“DHB”), DBS Vickers (“DBSV”)(a) Dao Heng Bank (“DHB”), DBS Vickers (“DBSV”)
DBS1Q02
DBS4Q01
% Change
DBS1Q01
% Change
Group Operating ExpensesGroup Operating Expenses
11
383366 364
329337
1Q01 2Q01 3Q01 4Q01 1Q02
Cost control initiatives effective
(a) Normalized expenses exclude goodwill and impact of acquisitions
Period expenses (a)(S$ million)
12
Net interest income 162 171 (5.3)
Fee income 47 50 (6.4)Non-interest income 66 57 15.3
Total revenue 228 228 (0.1)
Operating expenses 96 124 (22.3)
Operating profit 131 104 26.3
Provisions 37 (2) NM
Net profit before tax 97 105 (7.7)
Net profit after tax 80 114 (30.0)
Net interest income 162 171 (5.3)
Fee income 47 50 (6.4)Non-interest income 66 57 15.3
Total revenue 228 228 (0.1)
Operating expenses 96 124 (22.3)
Operating profit 131 104 26.3
Provisions 37 (2) NM
Net profit before tax 97 105 (7.7)
Net profit after tax 80 114 (30.0)
Dao Heng Bank operating profits up
(S$ million) (a)(S$ million) (a)DHB1Q02
% Change
DHB4Q01
(a) Based on Singapore GAAP(a) Based on Singapore GAAP
13
Net interest income 162 171 (5.3)
Fee income 47 50 (6.4)Non-interest income 66 57 15.3
Total revenue 228 228 (0.1)
Operating expenses 96 124 (22.3)
Operating profit 131 104 26.3
Provisions (a) 10 30 (66.1)
Net profit before tax 121 74 63.4
Net interest income 162 171 (5.3)
Fee income 47 50 (6.4)Non-interest income 66 57 15.3
Total revenue 228 228 (0.1)
Operating expenses 96 124 (22.3)
Operating profit 131 104 26.3
Provisions (a) 10 30 (66.1)
Net profit before tax 121 74 63.4
Dao Heng Bank with HK GAAP provisions
(S$ million)(S$ million)DHB1Q02
% Change
DHB4Q01
(a) Based on Hong Kong GAAP(a) Based on Hong Kong GAAP
14
DBS Thai Danu Bank operating profits up
Net interest income 23 23 1.9 22 4.1
Fee income 5 5 (1.6) 4 24.7Non-interest income 9 9 1.8 8 12.3
Total revenue 32 32 1.8 30 6.2
Operating expenses 22 22 2.1 22 3.0
Operating profit 10 10 1.3 8 14.4
Non-operating expenses 2 2 (1.2) 2 (13.5)
Provisions 5 5 - 5 9.1
Net profit after tax 3 2 6.4 1 81.0
Net interest income 23 23 1.9 22 4.1
Fee income 5 5 (1.6) 4 24.7Non-interest income 9 9 1.8 8 12.3
Total revenue 32 32 1.8 30 6.2
Operating expenses 22 22 2.1 22 3.0
Operating profit 10 10 1.3 8 14.4
Non-operating expenses 2 2 (1.2) 2 (13.5)
Provisions 5 5 - 5 9.1
Net profit after tax 3 2 6.4 1 81.0
(S$ million) (a)(S$ million) (a)
(a) Assume exchange rate of 1 baht to S$0.0423. Based on Thai GAAP(a) Assume exchange rate of 1 baht to S$0.0423. Based on Thai GAAP
DTDB1Q02
DTDB4Q01
% Change
DTDB1Q01
% Change
15
649
2,705 2,4251,735 1,730 1,610 1,486 1,528 1,478
1,152
770 723
1,239
1,365
667 661 624 606 632 768
2,874
3,207
1,238 1,1911,143 1,101 1,004 995
815777 744 699
642 563605607
267
366
5.9%5.7%6.0%6.2%7.3%7.6%
13.0%11.8%
2.7%
Dec 97 Dec 98 Dec 99 Dec 00 Mar 01 Jun 01 Sep 01 Dec 01 Mar 02
NPL quantum down slightly while NPL rate marginally up
Dao Heng BankDBS Thai Danu BankRegional 5 CountriesOthersSingaporeNBk NPLs / NBk Loans (%)
1,112
4,503
(S$ million)
7,086
8,149
4,834 4,5774,411 4,305 4,512
16
NPLs improving at major subsidiaries (a)
(S$ million)
9951,0041,1011,1431,1911,238
28.7%29.8%35.2%38.0%40.3%
42.7%
Dec 00 Mar 01 Jun 01 Sep 01 Dec 01 Mar 02
(a) Based on MAS guidelines(a) Based on MAS guidelines
DBS Thai DanuDBS Hong Kong
1,0111,0851,150
1,238
494541
4.1%4.3%4.9%5.2%
7.1%8.3%
Dec 00 Mar 01 Jun 01 Sep 01 Dec 01 Mar 02
17
Provision coverage stable at 60.4%
1,6661,6581,5301,240 1,223
1,464
1,048
1,179 1,155 1,061
1,051
1,055
143.9% 142.5% 132.0%146.5%147.8%
129.9%
51.8% 52.8% 54.7% 58.7% 60.3% 60.4%
Dec 00 Mar 01 Jun 01 Sep 01 Dec 01 Mar 02
General Provisions (GP)Specific Provisions (SP)
SP+GP / NPLs (%)SP+GP / Unsec NPLs (%)
2,286
2,721
(S$ million)
2,274
2,643 2,687 2,719
18
2,576
4,952
3,086 3,094
546 921906
621
358 520 488
3,508
5.9%5.7%7.6%
13.0%
-800
200
1200
2200
3200
4200
5200
6200
7200
8200
Dec 99 Dec 00 Dec 01 Mar 02
Percentage of doubtful and loss NPLs stable
Loss
Doubtful(S$ million) Substandard
8,149
4,411 4,512
NPLs / Loans (%)
(61%)
(8%)
(32%)
(80%)
(12%)
(8%)
(68%)
(12%)
(20%)
(69%)
(11%)
(21%)
4,503
19
15.7 14.412.2 12.5
4.55.2 5.2
3.5
0
4
8
12
16
20
24
Dec 99 Dec 00 Dec 01 Mar 02 Mar 02Proforma for
Dao Heng2nd tranche
Mar 02Proforma for
Dao Heng2nd tranche
Well buffered against risks
DBS Group Holdings Consolidated Capital Adequacy Ratio(%)(%)
14.6
17.717.418.919.2
5.6
9.0
20
Buy-out of minorities in DBS Kwong On Bank (a)
Minorities agree to sell their 12.68% of DKOB to DBS
Purchase consideration of S$210.7 mm / HK$903.8 mm
Purchase price per share is S$4.43 / HK$19
Approximately 15 mm new DBSH shares (b)
would be issued to the minorities
Transaction Highlights
Minority shareholders have agreed to exchange
their 12.68% stake for new DBSH shares
DBS’ shareholding in DKOB
(a) DBS owns 87% of DBS Group Holdings HK which in turn owns 100% of DKOB(b) Computed using DBSH share price of S$13.92 (based on simple average closing price from April 10 to 23,
2002) and a cross HK$/S$ exchange rate of 4.2896
DBS’ shareholding(87.26%)
Remaining Minorities
(0.05%)
Shares to be acquired(12.68%)
21
Operating profit 304 19 301%
Net profit after tax 234 16 278%
Total Assets 34,647 28,512 10%
Customer loans 23,979 17,281 18%
NPL ratio (%) (b) 2.7 15.3 58%
Credit cards in force 100,000 0 NM
Operating profit 304 19 301%
Net profit after tax 234 16 278%
Total Assets 34,647 28,512 10%
Customer loans 23,979 17,281 18%
NPL ratio (%) (b) 2.7 15.3 58%
Credit cards in force 100,000 0 NM
DKOB2001(HK$ million)
DKOB1999
CAGR1999 - 2001
DBS Kwong On’s integration success(a)
(a) Kwong On Bank became a subsidiary of DBS in March 1999(b) Based on HKMA standards
22
Achieved1Q02
Revised Target
Synergies to exceed original HK$540 million estimates
Key Revenue Initiatives:
Launch of new funds (knowledge sharing) ALCO Liquidity Management Cross-selling opportunities (eg, T&M, Private
banking, Equipment finance, Credit cards and other existing products)
Select Cost Initiatives:
Accelerated implementation of branch closures
Active capacity management largely through vacancies and attrition
Back office and IT centralization
Total Synergies
HK$147.4 m HK$750 m (a)
46%
54% 60%
40%
(a) 60% of synergy target is expected for 2002
DBS Group Holdings1Q 2002 Financial Results
Presentation to Media and Analysts
This presentation is available at www.dbs.com
April 29, 2002
Disclaimer: The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate. DBS Bank accepts no liability whatsoever with respect to the use of this document or its contents.
