DBS third-quarter earnings at SGD 563 million, up 40% year-on-year

Singapore.06 Nov 2009

Asset quality stabilises, operating trends remain healthy

Singapore, 06 Nov 2009 - DBS Group Holdings recorded net earnings of SGD 563 million for third quarter 2009, rising 40% from a year ago and 2% from the previous quarter as operating trends continued to be healthy.

Net interest income reached a record while fee income was the highest in seven quarters. Cost discipline was maintained. Asset quality stabilised, resulting in lower allowance charges and increased allowance coverage of non-performing assets from the previous quarter.

Net interest income grew 3% from the previous quarter to a record SGD 1.14 billion. Interest margins were stable while loans rose slightly to SGD 128.3 billion due to housing loan growth. Deposits increased 1% to SGD 180.2 billion, with the mix shifting towards current and savings accounts.

Fee income was robust at SGD 361 million. Stock broking and investment banking continued to benefit from improved capital markets, while other activities, including trade and remittances as well as credit cards, remained strong.

Other non-interest income was lower. Trading income declined to SGD 56 million as there were smaller gains from interest rate and foreign exchange activities as well as lower asset valuation gains. Gains from the sale of investment securities fell to SGD 7 million.

Expenses were kept at SGD 635 million and the cost-income ratio was healthy at 40%.

The non-performing loan rate fell from 2.8% in the previous quarter to 2.6% mainly due to customer repayments across most markets. Thirty-four percent of assets classified as non-performing were still current in interest and principal, similar to the previous quarter. Specific allowances for loans fell from 83 basis points in the previous quarter to 70 basis points. Allowance coverage of non-performing assets was prudent at

90% and at 128% if collateral was considered.

Compared to third quarter 2008, net profit rose 40% as revenues increased 13% and allowances declined 17%. The improved revenues reflected the underlying strength of DBS’ franchise and the depth of its customer relationships in a challenging period.

Return on equity of 9.1% was unchanged from the previous quarter and better than the 7.9% a year ago. DBS remained well capitalised, with the total capital adequacy ratio of 16.1% and tier-1 ratio of 12.5% being above regulatory requirements.

DBS Chairman Koh Boon Hwee said, "This is a solid set of results that reflects the strength of the DBS franchise and our ability to capture opportunities in a challenging environment. We continue to reinforce our commitment to our customers and remain disciplined and prudent in managing risk and costs.

"Our net interest income is at a quarterly record and fee income is at its highest level since the onset of the global financial crisis. I believe DBS is well positioned to take advantage of the nascent economic recovery; we will emerge fitter and stronger."

The Board declared a dividend of 14 cents per share, unchanged from the previous quarter.

About DBS

DBS - Living, Breathing Asia

DBS is one of the largest financial services groups in Asia with operations in 16 markets. Headquartered in Singapore, DBS is a well-capitalised bank with "AA-" and "Aa1" credit ratings that are among the highest in the Asia-Pacific region.

As a bank that specialises in Asia, DBS leverages its deep understanding of the region, local culture and insights to serve and build lasting relationships with its clients. DBS provides the full range of services in corporate, SME, consumer and wholesale banking activities across Asia and the Middle East. The bank is committed to expanding its pan-Asia franchise by leveraging its growing presence in mainland China, Hong Kong and Taiwan to intermediate the increasing trade and investment flows between these markets. Likewise, DBS is focused on extending its end-to-end services to facilitate capital within fast-growing countries in Indonesia and India.

DBS acknowledges the passion, commitment and can-do spirit in each of its 14,000 staff, representing over 30 nationalities. For more information, please visit www.dbs.com.