DBS THAI DANU BANK POSTS SHARP TURNAROUND IN FIRST QUARTER OPERATING RESULTS

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Gains From Net Interest Income & Investments, Decrease In Operating Expenses Have Positive Impact

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Baht 33.7 Million Operating Loss Smallest Since June, 1998

BANGKOK, Apr.20 - DBS Thai Danu Bank (DTDB) today reported a sharp turnaround in first quarter operating results, reporting a Bt 33.7 million loss, its smallest in eight quarters.

A year ago, the Bank reported a Bt 342.5 million operating loss for the first quarter.

Overall, DTDB reported a net loss for the quarter of Bt 174.7 million on income of Bt 586.9 million, a Bt 172.6 million or 49.7 % improvement over the Bt 347.3 million loss reported for the same period in 1999. Improvements came from interest income, up 19.8% to Bt 348.6 million, and from investments, which increased to Bt 124.1 million from the Bt 67.6 million loss a year ago. Operating expenses for the period declined by Bt 56.3 million, or 8.3% over first quarter 1999 results.

Net losses were attributable to provisions for loss on sale of foreclosed properties of Bt 40.1 million, write-offs of Bt 97.7 million arising from loan restructuring, and taxes of Bt 3.2 million.

Pornsanong Tuchinda, President of DTDB, said that first quarter results were beginning to reflect the bank's efforts to return DTDB to operating profitability.

"We have gone through a difficult period over the past two quarters as we made the tough decisions necessary to get DTDB back on track," he said.

"But while not as good as we would like, the results are beginning to show. We experienced gains in interest income, fees and commissions and investments. Operating expenses for the first quarter are down from a year ago, and given recent actions to right size the Bank, we expect personnel expenses and certain non-personnel expenses to fall further.

"Our focus remains on getting DTDB back to break-even on an operating income basis during 2000, and we will continue to do everything possible to make that happen. Importantly, we are putting as much emphasis now on growing income as we are on cutting and managing expenses. We are not involved simply with fixing things short term, but in putting in place the products and services and sales and marketing effort which will generate positive results far down the line. In addition, we are putting in a better infrastructure and improving our processes." Pornsanong said.

Bank officials said that NPLs for the quarter fell 32% to Bt 45,132 million from Bt 66,697 million in the first quarter of 1999 on a customer basis. On an account basis, NPLs fell 30.9%, to Bt 39,793 million from the Bt 57,617 million reported a year earlier. Total loan loss provisions under Bank of Thailand (BOT) guidelines fell from Bt 21,745 million at year end to Bt 20,990 million at the end of the first quarter 2000. No addition to provisions for loan losses was made during the first quarter.

Since the fourth quarter of 1998, DTDB has resolved a total of Bt 36.8 billion of NPLs. DTDB officials said they believe the Bank has reduced a larger proportion of its NPLs than most banks in Thailand. With existing provisions for loan losses of Bt 16,833 million, the Bank has met 80.2% of the BOT's requirement, exceeding the 60% provisioning required by the BOT by the end of the first quarter 2000.

DTDB announced on 23 December 1999 several aggressive steps to speed up the Bank's return to operating profitability and positioning itself to participate in Thailand's economic recovery. These steps include a refocus of its sales and marketing activities on more credit-worthy, higher value business; rationalisation of its branch network in Thailand; the undertaking of a bank wide review of staffing levels; and aggressive management of the non-performing loans in its portfolio.

In the wake of these announcements, more than 700 staff have left the service of the bank and the number of branches currently stand at 61, compared to 95 as at the end of last year.

DTDB said it expects to further increase the pace of integration with its parent DBS Bank, of Singapore, and the rest of the DBS group. This follows the establishment of DBS' Regional Integration Centre in Bangkok to manage integration of DBS' subsidiaries in Thailand, Hong Kong, Philippines and Indonesia. In line with the integration effort, DTDB expects to witness significant upgrading of its IT platforms and delivery channels to global standards in the second half of 2000.

ABOUT DBS
DBS Group Holdings is the holding company for the largest banking group in Southeast Asia. Its flagship DBS Bank in Singapore is ranked among the top banks in Asia, the 70th largest in the world, a recognised leader in internet banking and e-commerce and the market leader in Singapore-dollar loans and deposits. Beyond Singapore, the DBS Group serves corporate, institutional and retail customers through subsidiaries in Hong Kong, The Philippines, Indonesia and Thailand, and international banking services through a network of overseas branches and offices. For more information, check out our website at http://www.dbs.com.

DBS THAI DANU BANK FINANCIAL PERFORMANCE FOR THREE-MONTH PERIOD ENDED 31 MARCH FINANCIAL HIGHLIGHTS

PERFORMANCE SUMMARY

For the first quarter of 2000, the Bank's operating loss year-on-year narrowed from Bt 342.5 million to Bt 33.7million. Net loss for the quarter also narrowed year-on-year from Bt 347.3 million to Bt 174.7million. Compared to the previous quarter, the Bank's operating loss and net loss declined by 94.8% and 89.4% respectively.

The Bt 308.8 million year-on-year fall in operating loss was due to an increase in net interest income, net gain on sales of investments and a decrease in operating expenses.

Net Interest Income
Net interest income increased from Bt 291.0 million to Bt 348.6 million year-on-year due to a decline in interest expense. The drop in interest expense was due to lower interest rates in 1Q2000 compared to 1Q1999 and improved liquidity management.
The Bank achieved gain on sales of government and state enterprise bonds of Bt 124.1 million in the first quarter against a net loss of Bt 67.6 million in 1Q1999 due to write-downs on certain investments.

Operating Expenses
Overall, the Bank was successful in reducing its costs. The cost to income ratio fell from 202.4% to 105.7%. Operating expenses fell 8% or Bt 56.3 million year-on-year. This was due mainly to a drop in personnel expenses and taxes and duties.
In 1Q2000, the Bank provided Bt 40.1million against potential losses on sales of foreclosed properties.

Assets and Liabilities
Non-bank customer loans fell 10.3% from Bt 106.9 billion to Bt 95.9 billion year-on-year. Compared to the previous quarter, non-bank customer loans fell by 3.0% or Bt 2,937 million. This was substantially due to loan repayments, write-offs and assets taken in the course of loan restructuring.
Properties foreclosed increased sharply year-on-year by 604% from Bt 799.4 million to Bt 5,629.1 million due to the taking of assets during loan workouts. Vis-à-vis 4Q1999, the increase was 18.1%.
Non-bank customer deposits fell 28.3% year-on-year due to the Bank's conscious effort to reduce excess liquidity. The loan-to-deposit ratio rose from 98.1% in 1Q1999 to 122.7% in 1Q2000. Compared to the previous quarter, non-bank customer deposits fell by Bt 11,105 million to Bt 78,163 million.

Capital Adequacy
The Bank's capital adequacy ratio improved from 11.15% at 31 December 1999 to 12.22% at 31 March 2000 (including net loss of 1Q2000) due to the Tier Two government support programme.

NPLs and Provisions
NPLs on a customer basis have fallen to Bt 45,132 million from a peak of Bt 66,697 million in 1Q1999. The table below compares the position of Bank's NPLs as of 31 March 2000, 31 March and 31 December 1999.

Total loan loss provisions required as per BOT guidelines fell from Bt 21,745 million at 31 December 1999 to Bt 20,990 million at 31 March 2000. With existing provisions for loan losses of Bt 16,833 million, the Bank has met 80.2% of the total requirement. This compares with the BOT's requirement of 60% provisioning by 1Q2000. Provisions for loan losses were not increased in 1Q2000.