DBS Thai Danu Announces Second Consecutive Quarter Net Profit

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Net Profit of Bt 73.2 Million (US$ 1.6 Million) for 1H01

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Profitability Sustained Despite Economic Slowdown

BANGKOK, 18 JUL - DBS Thai Danu Bank, a subsidiary of Singapore's DBS Bank, today reported an unaudited net profit of Bt 73.2 million for the first half of 2001 (1H01), versus a net loss of Bt 399.5 million in the same period last year. The net profit for the second quarter 2001 (2Q01) was Bt 40.2 million, a second consecutive quarter of net profit since 1998. "Despite aworsening weak economy, we maintained a steady course - growing modestly and controlling costs," said President & CEO Pornsanong Tuchinda. Bank officials attributed the year-on-year improvement mainly to an increase in net interest income and lower operating expenses. Net interest income increased by 38.9% to Bt 1,083.0 million. Operating expenses decreased by 10.4% to Bt 1,028.0 million. DBS Thai Danu Bank said the operating profit for 1H01 was Bt 409.3 million, a significant improvement from an operating profit of Bt 7.1 million a year ago. During the second quarter, it added a further Bt 110.0 million to its provisions for non-performing loans (NPLs). The loan loss provision is now 151.2% of the total requirement set by the Bank of Thailand. Although not required, the Bank's management considered it prudent to increase its provisions in view of the uncertain economic outlook. The President & CEO added that quarter-on-quarter, net interest income was modestly higher than 1Q01, despite intense competition in the market due to sluggish loan demand. Net interest income in 2Q01 rose by 5.5%. Fee and commission income grew by 20.2%. However, the uncertainties in the bond and foreign exchange markets resulted in a decline in gain from investment and foreign exchange. Operating expenses decreased marginally from Bt 515.5 million to Bt 512.6 million. As a result, the Bank had an operating profit of Bt 208.5 million as compared to a Bt 200.8 million operating profit in 1Q01. In 2Q01, the Bank achieved a moderate customer loan growth of 2.1% over the end of 1Q01, to Bt 70,163.1 million. Total assets increased to Bt 93,612.7 million. Non-bank customer deposits increased to Bt 76,294.4 million, the increase was part of the Bank's strategy to lock in longer term funds to meet business requirement. Consequently, the loan-to-deposit ratio was 92.0% in 2Q01 versus 97.0 % in 1Q01. Capital adequacy ratio (CAR) stood at 13.2% against the Bank of Thailand's minimum requirement of 8.5%. As at 30 June 2001, NPLs by account basis were Bt 4,533.9 million, a reduction from Bt 32,734.0 million in the same period last year. The NPL ratio was 6.4% as compared to 34.1% in the corresponding period last year. The Bank sold 77% of its NPLs in 3Q00. Quarter on quarter, the NPLs decreased from Bt 5,133.0 million and 7.4% in 1Q01. "Our level of NPLs didn't happen by accident, we have worked hard to control credit risk especially in this difficult economic environment," said Bank officials. Pornsanong Tuchinda said, "Despite the soft economy, we managed to grow modestly and stabilise expenses. In NPL management, we continued to exercise strong discipline. We managed to stay focused on the customer. We continued to reach out to existing and new customers in the corporate and SME sectors to build sustainable business flows and relationships. In the consumer sector, we also enhanced our products to meet customer needs." DBS Thai Danu Bank, a subsidiary of DBS Bank of Singapore, is a commercial bank headquartered in Bangkok, Thailand. With 63 branches, expertise in consumer, SME, and corporate lending and an international treasury function, the Bank offers a full range of banking services in Thailand.

DBS THAI DANU BANK UNAUDITED FINANCIAL PERFORMANCE FOR

DBS Thai Danu Bank's performance for the period ended 30 June 2001, significantly improved over the same period last year. The Bank reported an unaudited net profit of Bt 73.2 million for its 1H01, versus a net loss of 399.5 million a year ago. The significant improvement in the Bank's performance was mainly due to the growth in net interest income and lower operating expenses. Net interest income for the period rose from Bt 779.6 million in 1H00, to Bt 1,083.0 million in 1H01, representing a 38.9% increase. Operating expenses decreased from Bt 1,147.1 million to Bt 1,028.0 million, a 10.4% decline from the same period last year. The decrease was mainly due to the Bank's bold repositioning program in 1Q00. As a result, the operating profit for the period was Bt 409.3 million versus an operating profit of Bt 7.1 million a year ago. Quarter on quarter, operating profit grew by 3.8% or from Bt 200.8 million to Bt 208.5 million. During the period, net interest income expanded by 5.5% and fee and commission income grew at a significant rate of 20.2%. However, the uncertainties in the bond and foreign exchange markets resulted in a decline in gain from investment and foreign exchange by 56.0% and 42.1% respectively. As at 30 June 2001, total loans declined from Bt 92,839.2 million as at 30 June 2000, to Bt 70,163.1 million, attributed mainly to a 77% sale of NPLs in 3Q00. As a result, total assets declined from Bt 106,814.9 million to Bt 93,612.7 million. Quarter on quarter, customer loans grew by 2.1%. During 2Q01, non-bank customer deposit surged from Bt 70,867.3 million to Bt 76,294.4 million. The increase was part of the Bank's strategy to lock in longer term funds to meet business requirement. Consequently, the loan-to-deposit ratio was 92.0% in 2Q01 versus 97.0 % in 1Q01.

Capital Adequacy

As at 30 June 2001, the Bank's capital adequacy ratio (CAR) stood at 13.2%, well above the 8.5% minimum requirement specified by the Bank of Thailand.

Table 1 :DBS Thai Danu Bank's Capital Adequacy Ratio