DBS first-quarter earnings at SGD 532 million, up 17% from year ago

Singapore, Hong Kong, Indonesia, India, China, Taiwan, Regional, 07 May 2010 - DBS Group Holdings recorded net earnings of SGD 532 million for first quarter 2010, up 17% from a year ago and 8% from the previous quarter. Revenues were higher as business volume growth across customer segments was sustained. While non-performing assets declined, additional allowances were set aside to improve their coverage.

Loans grew 3% from the previous quarter. The rise was more broad-based than recent quarters as corporate loans expanded in addition to housing loans. In Singapore, DBS continued to gain market share in housing and corporate loans with its differentiated offerings. Strengthening regional economic conditions contributed to corporate loan growth across various markets. The overall loan pipeline remained healthy.

Net interest margins fell nine basis points from the previous quarter to 1.93% as a normalising credit environment and increased competition resulted in lower loan yields for housing loans and trade finance. The lower interest margins resulted in net interest income declining 5% from the previous quarter to SGD 1.07 billion.

Non-interest income grew 45% from the previous quarter to SGD 647 million, which contributed to a 9% improvement in overall revenues. Better market opportunities and customer flows in interest rate, foreign exchange and credit activities resulted in a three-fold rise in treasury income to SGD 230 million. Customer flows were one-third higher than the previous quarter and accounted for more than half of the first-quarter’s treasury income. Fee income fell 5% to SGD 341 million. While investment banking revenues declined from the previous quarter’s strong levels, the pipeline was healthy.

Contributions from loan-related and trade and remittance activities remained strong. Expenses were similar to the previous quarter at SGD 702 million, and the costincome ratio was 41%.

The non-performing loan rate fell from 2.9% in the previous quarter to 2.7% due to customer repayments. DBS continued to be prudent in its classification and 41% of assets recognised as non-performing were still current in interest and principal repayments, similar to the previous quarter. Additional general and specific allowances of SGD 355 million were set aside during the quarter, resulting in the coverage of nonperforming assets rising to 92% from 83% in the previous quarter. If collateral was considered, the coverage was 119%.

Compared to first quarter 2009, net profit rose 17% as non-interest income rose 10% and allowances declined 14%.

DBS continued to be strongly capitalised, with the total capital adequacy ratio of 17.1% and the tier-1 ratio of 13.4% being higher than the previous quarter.

DBS CEO Piyush Gupta said, “This quarter, we've started to lay the groundwork on our strategic priorities across the region, including on our leadership positioning in Singapore and the re-energising of Hong Kong. We've taken steps to strengthen our wealth management and SME businesses, and are developing more customer-centric processes. DBS has had good momentum so far, and in the months to come, we will continue to single-mindedly execute against strategy so as to become a leading Asian bank."

The Board declared a first-quarter dividend of 14 cents per share. The DBS Scrip Dividend Scheme will be applicable to the dividend. New shares will be issued, to shareholders who elect to receive the dividend in scrip, at a price which is at a 5% discount to the average of the last dealt price for DBS shares on each of 20, 21 and 24 May 2010.

DBS will maintain the frequency of its dividend payments for first half 2010. With effect from the second half of the year, DBS will move to semi-annual dividend payments. There are no other changes to DBS’ dividend payout policy.

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About DBS
DBS - Living, Breathing Asia
DBS is a leading financial services group in Asia, with branches across 15 markets. Headquartered and listed in Singapore, DBS is a market leader in Singapore with over four million customers and also has a growing presence in the three key Asian axes of growth, namely, Greater China, Southeast Asia and South Asia.

DBS provides the full range of services in corporate, SME, consumer and wholesale banking activities across Asia and the Middle East. As a bank born and bred in Asia, DBS also understands the intricacies of doing business in the region’s most dynamic markets. This market insight and regional connectivity have helped to drive the bank’s growth as it sets out to be the Asian bank of choice. The bank believes that building lasting relationships with its customers is an integral part of banking the Asian way.

With its extensive network of operations in Asia and emphasis on engaging and empowering its staff, DBS presents exciting career opportunities. The bank 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.