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1999 Results Briefing

DBS Group Holdings. 1999 Results Briefing. John Olds, CEO Kee Choe Ng, COO Jackson Tai, CFO Oon Kum Loon, MD, Risk Management Ong Siew Mooi, MD, Finance Susan Ho, MD, Finance. 1999 : Recovery and strong progress. Dominant Singapore franchise post POSBank merger

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1999 Results Briefing

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  1. DBS Group Holdings 1999 Results Briefing

  2. John Olds, CEO • Kee Choe Ng, COO • Jackson Tai, CFO • Oon Kum Loon, MD, Risk Management • Ong Siew Mooi, MD, Finance • Susan Ho, MD, Finance

  3. 1999 : Recovery and strong progress • Dominant Singapore franchise post POSBank merger • Strong results even with conservative provisioning • DBS shareholders are cushioned against DTDB NPLs • Among strongest capitalized banks in Asia • Building more seasoned, experienced management team

  4. Dominant Singapore franchise post POSBank merger Market Position Post-POSBank Loans 24% Share 1 Deposits 33% Share 1 Mortgages 40%Share 1 Capital Markets 1 53% Share of IPOs over 5 years Branches 145 1 ATMs 900+ 1 Customers 4 million 1

  5. 1999 : Recovery and strong progress • Dominant Singapore franchise post POSBank merger • Strong results even with conservative provisioning • DBS shareholders are cushioned against DTDB NPLs • Among strongest capitalized banks in Asia • Building more seasoned, experienced management team

  6. DTDB (S$’M) KOB 1,964.2 POSBank Growth : 75% 64.2 Group 358.6 1,121.5 89.5 1,616.1 1,069.6 (37.6) (74.7) 1998 1999 Operating profit up 75% to $1.96 billion

  7. DTDB (S$’M) KOB Contribution from POSBank ($359m) KOB ($64m) 1,964.2 POSBank 64.2 Group 358.6 1,121.5 Growth excl POSB/KOB/ DTDB 51% 89.5 1,616.1 1,069.6 (37.6) (74.7) 1998 1999 Strong contribution from POSBank, DBS Kwong on Bank

  8. DTDB (S$’M) KOB 1,964.2 POSBank 64.2 Growth in : Group 358.6 Net interest $605m (42%) Fee & comm. $149m (54%) Other Income $412m (425%) 1,121.5 89.5 1,616.1 1,069.6 (37.6) (74.7) 1998 1999 Growth from Net Interest Income, Fees, Other Income

  9. GP for Loans (S$’M) SP for Loans SP for Invts 1,063.2 996.4 1998 1999 Continued conservative provisioning to improve NPL coverage

  10. (S$ Million) 1998 1999 DBS share (excluding DTDB) 751 295 DBS share of DTDB 121 395 Sub-total DBS share 872 690 Minority Interest Share 124 373 Total Group Provisions 996 1,063 Loan provisions are divided between DBS and Minority Interest

  11. DTDB (S$’M) KOB 1,071.8 POSBank Growth : 857% 60.2 Group 304.1 Growth excl POSB/KOB/ DTDB : 489% 1,205.4 112.0 42.4 204.8 (135.2) (497.9) 1998 1999 After-tax profit grew 857% to $1.07 billion

  12. (S$’M) + 1,001 - 41 1,072 112 Optg Exp Share of Assoc. cos’ P&L Tax & MI Prov 1998 Group NPAM Net Int Inc Fee & Other Inc POSB DTDB KOB 1999 Group NPAM Acquisitions Strong income generation offset increases in operating expenses, provisions

  13. NPLs by Country DTDB KOB (S$’M) 5 Regional C’tries Others 8,121 8,149 S’pore 7,086 NB NPLs/NB Loans (%) 13.1* 13.0* NB NPLs/NB Loans (excl DTDB) (%) 11.8* 3,907 7.7 9.0 8.5 8.4 @ @ 1,112 4,560 4.9 @ 4,225 2.7 4,211 @ 2,172 Dec 98 Jun 98 Dec 99 Dec 97 Jun 99 5 Regional Countries comprise Indonesia, Thailand, Malaysia, Korea and the Philippines. * Include POSBank’s loans since Nov 98 and KOB’s loans since May 99. @ Group NPLs excluding DTDB and KOB. NPLs are stabilizing as the region recovers

  14. (S$’M) 2,425 S’pore Substandard Doubtful 86% 1,365 5RC Loss 67% 435 Others 717 KOB Total (Excl. DTDB) 4,942 3,207 76% DTDB 3% 37% 60% Total (Incl. DTDB) 8,149 7% 32% 61% Majority of NPLs are in substandard grade

  15. SEC Standard 1999 NPLs S$ Million MAS 612 NPLs 1999 Singapore 2,425.0 1,858.8 Regional Countries 4,571.2 4,172.9 Other Countries 1,152.8 769.7 Total Group 8,149.0 6,801.4 NPLs / Total Loans 13.0% 11.1% LLR / NPLs 52.6% 63.0% MAS NPL classification more conservative than under SEC reporting

  16. GP for S&OC GP for 5RC (S$’M) 4,286 SP 3,852 SP+GP/Unsec NPLs (%) SP+GP/NPLs (%) 3,147 164.6 1,894 118.4 119.6 110.6 102.7 980 88.1 52.6 48.5 47.4 44.4 Dec 97 Jun 99 Dec 98 Jun 98 Dec 99 Provision coverage raised to above 50% Cumulative Provisions

  17. 1999 : Recovery and strong progress • Dominant Singapore franchise post POSBank merger • Strong results even with conservative provisioning • DBS shareholders are cushioned against DTDB NPLs • Among strongest capitalized banks in Asia • Building more seasoned, experienced management team

  18. BOT Standards MAS Standards 6/99 12/99 6/99 12/99 THB Non-Performing Loans Bt 61.4 bn Bt 42.2 bn Bt 65.4 bn Bt 72.3 bn Loan Loss Reserves 19.0 bn 17.6 bn 31.1 bn 43.4 bn Coverage of NPLs 30.9% 41.7% 47.5% 60.0% $763.4 million additional provisions for DTDB NPLsfurther insulates DBS shareholders Comparison of LLR Coverage for DTDB

  19. Close one-third of DTDB branches • Reduce headcount by additional 700+ • One-time restructuring charge of Bt 590 million in 4Q99; annual cost svings of Bt 215 million Cost Reduction • Grow fee-based income through Retail Banking initiatives • Leverage on DBSH Group expertise Revenue Enhancement • Coordinate corporate lending opportunities • Integrate IT systems, loan approval, risk management Regional Integration Centre • Explore potential NPL outsourcing to third party servicer • Focus senior management on growing business NPL Outsourcing Accelerating steps to ensure DBS Thai Danu Competitiveness

  20. 1999 : Recovery and strong progress • Dominant Singapore franchise post POSBank merger • Strong results even with conservative provisioning • DBS shareholders are cushioned against DTDB NPLs • Among strongest capitalized banks in Asia • Building more seasoned, experienced management team

  21. KOB DTDB (S$’B) 82.3 (+11.4%) POSBank 73.9 4.8 4.0 5.0 30.0 28.1 43.4 (+6.5%) 40.7 1998 1999 Customer deposits grew 11.4% to $82.3 billion

  22. KOB DTDB (S$’B) POSBank 54.4 (-3.3%) 56.2 3.9 3.6 3.1 13.4 11.6 36.1 (-7.3%) 38.9 1998 1999 Customer loans declined 3.3% to $54.4 billion

  23. KOB DTDB (S$’B) POSBank 106.5 (+6.4%) 100.0 5.9 5.5 4.3 29.4 31.6 64.7 (-0.7%) 65.1 1998 1999 Total assets increased 6.4% to $106.5 billion

  24. ROA ROE (%) (%) 10.35 1.04 0.14 1.29 1998 1998 1999 1999 ROE increased to 10.35%, ROA to 1.04%

  25. Tier 2 (%) Tier 1 19.2 Raised US$750M Tier II capital through subordinated note issue 15.8 1998 1999 Strong capital position for strategic growth, M&A Capital Adequacy Ratio

  26. MAS Method (Tier 1 + 2) 19.5% Minimum 12.0% BIS Method (Tier 1 + 2) 19.2% Minimum 8.0% Strong capital position for strategic growth, M&A Capital Adequacy Ratio at December 31, 1999

  27. (%) Tier 2 Tier 1 19.2 15.0 13.2 12.4 11.5 10.9 10.9 10.2 DBS SCB HSBC Citigrp NAB Bank America ABN Amro Bank of Nova Scotia(1) (1) As of June 1999 Among the strongest capitalized banks in Asia CAR Comparison as of December 31, 1999

  28. 1997 1998 1999 Dividend rate 18% 18% 25% Dividend paid ($ million) 93.5 140.8 238.5 Payout rate 21.7% 131.1% 22.3% Payout ratio to be more aligned with other banks Increasing DBS regular dividend rate from 18% to 25%, for a 1999 payout of 22.3%

  29. 1999 : Recovery and strong progress • Dominant Singapore franchise post POSBank merger • Strong results even with conservative provisioning • DBS shareholders are cushioned against DTDB NPLs • Among strongest capitalized banks in Asia • Building more seasoned, experienced management team

  30. Building seasoned, experienced management team • 20 new MDs, 38 new VPs since 1999, most with international banking experience • Performance appraisals link individual performance and compensation • Shift towards stock-based compensation • Flatter, customer-driven organization

  31. 1999 : Recovery and strong progress • Dominant Singapore franchise post POSBank merger • Strong results even with conservative provisioning • DBS shareholders are cushioned against DTDB NPLs • Among strongest capitalized banks in Asia • Building more seasoned, experienced management team

  32. DBS Group Holdings

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