Singapore, Hong Kong, Indonesia, India, China, Taiwan, 21 Feb 2003 - DBS Group Holdings ("DBS") today announced its full year 2002, and fourth quarter 2002 results.

Year-on-year Highlights
Fourth Quarter 2002	Full Year 2002
§ Net profit increased 68.9% to S$282 million § Net profit excluding goodwill amortisation increased 49.8% to S$355 million	§ Net profit increased 1.9% to S$1.017 billion § Net profit excluding goodwill amortisation increased 14.5% to S$1.295 billion
* * *	* * *
· Total income up 8.5% to S$1.048 billion § Operating expenses down 8.5% to S$471 million § Operating profit before goodwill amortisation and provisions up 28.0% to S$577 million § Provision charges up 108.2% to S$181 million § Non-performing loan (NPL) rate increased to 6.1% due partially to a lower non-bank loan base § Cost-to-income ratio down from 53.4% to 45.0%	§ Total income increased 15.1% to S$4.066 billion § Operating expenses increased 7.0% to S$1.851 billion due to the full-year consolidation of Dao Heng Bank versus a half-year consolidation in 2001 § Operating expenses excluding acquisitions down 7.0% § Operating profit before goodwill amortisation and provisions increased 22.9% to S$2.215 billion § Provision charges up 41.0% to $534 million § Cost-to-income ratio down from 48.9% to 45.5%

Full year 2002 results

Total income for the year ended December 31, 2002 rose 15.1% to S$4.066 billion. Compared to last year, net profit attributable to members was up 1.9% to S$1.017 billion. However, net profit attributable to members excluding goodwill amortisation was up 14.5% from the previous year to S$1.295 billion. Earnings per share for the year was S$0.68, and excluding goodwill amortisation was S$0.87.

For the full year 2002, expenses increased by 7.0% with the full year consolidation of Dao Heng Bank and DBS Vickers Securities. Expenses in 2001 were lower because of the partial year consolidation of the two subsidiaries - Dao Heng Bank profit and loss was consolidated into DBS results from July 2001, and DBS Vickers Securities was consolidated from September, 2001. Excluding the effects of these acquisitions, expenses would have declined 7.0%. The cost-to-income ratio for the year improved from 48.9% in the previous year to 45.5%.

Operating profit before goodwill amortisation and provisions increased 22.9% to S$2.215 billion from S$1.803 billion a year ago. The year-on-year operating profit comparison is favourable even though 2002 operating profit was supported by the fourth quarter gain of S$96 million from the sale of NatSteel Ltd shares, as compared to the larger gain in 2001 of S$181 million for the sale of DBS' ownership in The Insurance Corporation of Singapore and the shares of Keppel Capital Holdings.

Fourth quarter 2002 results

Net profit attributable to members was S$282 million, an increase of 68.9% compared to the fourth quarter of 2001. Excluding goodwill amortisation, net profit attributable to members for the quarter rose 49.8% to S$355 million.Total operating costs for the quarter were S$471 million, compared with S$516 million in the fourth quarter of 2001, a reduction of 8.5%. The improvement in expenses was primarily driven by the cost containment initiatives set in place in 2001.

Notwithstanding the improvement, expenses would have been lower if not for one-time charges that include a write-down of assets at DBS Kwong On Bank with the completed integration with Dao Heng Bank, a write-down of other assets, severance costs, and set-up costs related to the 10-year S$1.2 billion IT outsourcing alliance with IBM. The outsourcing contract is expected to help the Group achieve cost savings in future years. The cost-to-income ratio for the quarter decreased from 53.4% to 45.0%.Operating profit for the fourth quarter was S$577 million, up 28.0% compared to the fourth quarter of 2001. Net profit was boosted by the previously described NatSteel gain, but held back by S$181 million in provision charges, an 108.2% increase compared to a lower fourth quarter 2001 provision amount that included equity provision writebacks.

Net Interest Income

Compared to the same period last year, net interest income in the fourth quarter of 2002 declined 9.2% to S$642 million. Margins were under pressure due to high rates of refinancing in home mortgages as a result of the intense price competition in Singapore. Additionally, there were more interest rate gapping opportunities during the previous year as noted in the fourth quarter of 2001. The net interest margin was 1.97%, down from 2.11% in the fourth quarter of 2001. For the full year, the net interest margin increased to 1.99% from 1.87% a year ago.

Customer loans declined by 11.0% during the year to S$60.709 billion. DBS refrained from the price-driven competition in home mortgage lending through most of the year. Only in the fourth quarter did DBS start to match rates in the Singapore housing mortgage market due to the potential for incremental revenues offered by the Housing Development Board (HDB) privatisation initiative.

Non-Interest Income

Fee and commission income for the quarter was S$191 million, compared with S$207 million in the fourth quarter of 2001, a reduction of 8.0%. Though stockbroking fees declined due to the weak markets, investment banking, trade, loan, deposit, and fund management fees remained stable.

For the year, fee and commission income rose 27.3% to S$797 million. DBS sold S$4.5 billion of various wealth management products, issued over 100,000 new credit cards during the year to a total of over 1.4 million credit cards, grew the personal unsecured credit business by over 100,000 accounts to capture an estimated 20% market share, and closed some of the largest investment banking deals in the markets it operates in.

For the quarter, other income, up 364.6% to S$203 million, was largely driven by DBS' foreign exchange, interest rate, and derivatives market making activities, as well as by the NatSteel gain. Excluding the NatSteel gain, other income would have grown 144.4% compared to the previous year.

Asset quality

DBS' total non-performing loans at year end were S$4.224 billion, down 6.4% from S$4.512 billion at end of year 2001. However, the calculated ratio of non-performing loans to total non-bank loans at the end of 2002 was up to 6.1% from 5.7% at the end of 2001 because the total volume of non-bank loans declined for the period.

Although NPLs declined compared to the end of 2001, NPLs rose by S$69 million in the fourth quarter compared to the third quarter of 2002. The overall grading of the NPLs remained satisfactory with 68% of NPLs classified as substandard and only 32% graded doubtful or loss. The credit quality of consumer loans, though good compared to the rest of the portfolio, was affected by the higher charge-off rates for credit cards in Hong Kong. The charge-off rate for the year 2002 of 11.6%, was lower than the 13.3% rate for the industry as reported by Hong Kong Monetary Authority (HKMA). Under the same calculation basis, Singapore charge-off rates for the year 2002 would have been 2.8%.

Provisions were S$181 million in the quarter, compared to S$87 million in the same quarter in 2001, a period that had S$44 million in net writebacks for equities and properties. Of the total provisions in the fourth quarter 2002, S$121 million was for loans, S$18 million was for equities and S$36 million was for properties and other assets.

Asset Quality Statistics
	Fourth Quarter 2002	Fourth Quarter 2001
NPLs (in S$ billion)	4.224	4.512
Non-bank loans	60.709	68.208
NPL ratio *	6.1%	5.7%
Substandard	68%	68%
Doubtful	10%	11%
Loss	22%	21%
Total Provision Charge (in S$ million)	181	87
Specific Provision Loans	121	141
Specific Provision Equities	18	(114)
Specific Provision - Properties and Other Assets	36	70
General Provision	5	(10)
	December 31, 2002	September 30, 2002
Hong Kong Credit Cards
Annualised Charge-off rate	11.6%	10.8%
90-day Delinquency rate	1.2%	1.2%
Singapore Credit Cards
Annualised Charge-off rate	2.8%	2.8%
90-day Delinquency rate	1.3%	1.3%
*Although NPLs include loans, debt securities and contingent facilities, the NPL ratio is calculated using non-performing non-bank loans divided by total non-bank loans. In the calculation of the ratio, the numerator and denominator excludes debt securities and contingent facilities.

As of December 31, 2002, DBS' capital adequacy ratio (CAR) stood at 15.5% after including the impact of goodwill arising from the purchase of the remaining stake in Dao Heng Bank in early January 2003, comfortably above BIS capital adequacy standards. The Tier 1 CAR was 10.3%. The Group has no plans for external fund raising.

Overseas operations

Under Singapore accounting standards, the consolidated Dao Heng Bank Group operating profit before provisions for the year 2002 rose to S$478 million from S$222 million. The increase was primarily attributable to integration benefits and the full year consolidation of Dao Heng Bank Group for 2002 versus a half year consolidation in 2001. Net profit increased to S$272 million from S$208 million. Net interest income increased to S$622 million from S$321 million and non-interest income increased to S$231 million from S$126 million. Expenses increased to S$375 million from S$224 million, but the cost-to-income ratio was reduced from 50% in 2001 to 44%. The Group has rationalized branches in Hong Kong by 20%, integrated processes around the region and helped drive sales of investment products in Hong Kong for the second half of 2002 to more than six times the levels achieved in the first half of 2001.

As reported on January 17, 2003, DBS Thai Danu Bank (DTDB) achieved net profit growth of 76.6% to Baht 301 million (S$12.1 million) for the year 2002. DTDB achieved 10.9% growth in interest and dividend income to Baht 2.387 billion (S$96.1 million) and non-interest income growth of 28.0% to Baht 945 million (S$38.1 million). The interest income growth was primarily driven by loan growth of 3.1% to Baht 77.543 billion (S$3.123 billion). Operating expenses were up 8.3% to Baht 2.232 billion (S$89.9 million) primarily due to technology related investments to enhance service quality and higher business taxes and Financial Institutions Development Fund contributions.

Dividend

At its meeting today, the DBS Board approved the maintenance of it second-half dividend of 16 cents per share. Combined with the dividend of 14 cents per share in the first half, the full-year 2002 dividend was maintained at 30 cents per share.

Conclusion

While 2001 was a transformational year for the Group in which mergers and alliances and in-house investments enhance the Group's product capabilities and geographic reach, 2002 was a year of focused consolidation and integration. Chairman S. Dhanabalan said, "We have streamlined our operations around the region and DBS now has a wider range of product offerings which we can deliver more competitively in the markets where we operate."

"The current economic condition has dampened revenue and has required increases in provisions thus holding back DBS' performance. Until we see near-term improvements in the environment, DBS will continue to focus on improving its operational and processing efficiency."DBS Bank is the largest bank in Singapore as measured by assets, with dominant positions in consumer banking, treasury and markets, securities brokerage, Singapore dollar loans, deposits, and equity and debt fund raising.

Through its integrated Dao Heng Bank and DBS Kwong On Bank operations, DBS Bank is the fourth largest banking group in Hong Kong. Beyond the anchor markets of Singapore and Hong Kong, DBS Bank serves corporate, institutional and retail customers through its operations in Thailand, The Philippines, and Indonesia. The Bank's credit ratings are amongst the highest in the Asia Pacific region. More information about DBS Group Holdings and DBS Bank can be obtained through our company website www.dbs.com.More information on the above announcement is available at www.dbs.com/investor.

 

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About DBS

Headquartered in Singapore, DBS is one of the largest financial services groups in Asia. The largest bank in Singapore and the fifth largest banking group in Hong Kong as measured by assets, DBS has leading positions in consumer banking, treasury and markets, asset management, securities brokerage, equity and debt fund raising. Beyond the anchor markets of Singapore and Hong Kong, DBS serves corporate, institutional and retail customers through its operations in Thailand, Malaysia, Indonesia, India and the Philippines. In China, the bank has branches and representative offices in Shanghai, Beijing, Guangzhou, Shenzhen, Fuzhou, Tianjin and Dongguan. The Bank's credit ratings are one of the highest among banks competing in the Asia-Pacific region, and the highest among banks in Singapore. More information about DBS Group Holdings and DBS Bank can be obtained from our website www.dbs.com.