DBS. Living, Breathing Asia

183 Pages·2013·5.42 MB·English

PRESENT
FOR
THE
FUTURE
DBS Group Holdings Ltd | Annual Report 2012
DBS. Living, Breathing Asia
Present for
the Future
With our roots as the Development Bank of Singapore, DBS has
helped fi nance the growth of Singapore. Through POSB, the
nation’s oldest bank, DBS has also inculcated a culture of thrift
and savings in many generations of Singaporeans. Over the last
few decades, we have helped individuals to protect and grow their
wealth, played an integral role in developing Asia’s capital markets,
and enabled businesses across the region to expand.
As a bank that is born and bred in Asia, DBS has a passion for
the region and strives to create value for all our stakeholders.
DBS today continues to trailblaze numerous initiatives that are
charting a course for banking in a vibrant and dynamic Asia.
At DBS, we proudly embrace Asia’s past, and are boldly shaping
the future of banking in Asia.
At DBS, we are present for the future.
CONTENTS | DBS ANNUAL REPORT 2012 p1
CONTENTS
GROUP OVERVIEW ANNEXURE
02 Key Highlights 171 Share Price
08 Letter to Shareholders 172 Shareholding Statistics
14 Board of Directors 174 Financial Calendar
22 Senior Management 175 International Banking Offi ces
26 The Future of Banking 177 Main Subsidiaries and
32 Management Discussion Associated Companies
178 Awards and Accolades
REPORTS
Shareholders’ Information
57 Corporate Governance Report
74 Risk Management 182 Notice of Annual
84 Capital Management General Meeting
and Planning Proxy Form
86 Pillar 3 Disclosures C orporate Information
93 Financial Statements (Inside back cover)
165 Directors’ Report
169 Statement by the Directors
170 Independent Auditor’s Report
p2 DBS ANNUAL REPORT 2012 | KEY HIGHLIGHTS KEY HIGHLIGHTS | DBS ANNUAL REPORT 2012 p3
KEY HIGHLIGHTS
INVESTORS
NET PROFIT* Net profi t rose 11% to a LOANS Loans grew 12% in
new high of $3.36 billion, constant currency terms
as focused execution of from higher regional
strategic initiatives, prudent corporate borrowing and
+ risk management and a + Singapore consumer loans.
11% strong balance shet reshaped 8%
the franchise to deliver solid
and consistent performance.
$3,359 m $211 bn
2011: $3,035 m 03 04 05 06 07 08 09 10 11 12 2011: $195 bn 03 04 05 06 07 08 09 10 11 12
Net profi t ($ million) Loans ($ billion)
TOTAL INCOME* Total income crossed DEPOSITS Deposits grew 10% in
the $8 billion mark for the constant currency terms
fi rst time as net interest with US dollar, Singapore
income reached a new high. dollar and Hong Kong dollar
+ + deposits leading the increase.
6% 8%
$8,064 m $243 bn
2011: $7,631 m 03 04 05 06 07 08 09 10 11 12 2011: $225 bn 03 04 05 06 07 08 09 10 11 12
Total income ($ million) Deposits ($ billion)
12.5 12.3 12.7 CAPITAL
RETURN ON EQUITY* R
beOsEt oinf fi1 v1e. 2y%ea rws.as the 10.1 9.8 10.18.4 10.2 11.0 11.2 Taniedr 1to rtatl ioca opfi t1a4l a.0d%equacy 18.4
■ SRhOaEr e(h%o)lders’ funds ($ bilion) 1Tier 41 CA.R0% r
DreaBgtiSuo l iaos tfwo 1rey7l l.r-1ep%qous iwtrieoemnree dnatbso. ve 15.1 15.8 14.8 14.5 13.414.016.713.115.1 1125.9.8 174.10
11.2% t
coa pciotaml prelyq uwiritehm Beanstesl. III 10.5 11.3 10.6 10.2 8.9 10.1
2011: 11.0% 17.1% ■ Tier 1 CAR (%)
03 04 05 06 07 08 09 10 11 12 Total CAR ■ Total CAR (%) 03 04 05 06 07 08 09 10 11 12
* Excludes one-time items
14.8 4,265 1,491
16.4 4,479 1,938
16.7 4,338 1,649
18.7 5,344 2,175
20.5 6,163 2,487
19.8 6,031 2,056
25.4 6,603 2,064
26.6 7,066 2,650
28.8 7,631 3,035
31.7 8,064 3,359
108 64
113 70
117 79
131 87
153 108
170 126
183 131
194 152
225 195
243 211
p4 DBS ANNUAL REPORT 2012 | KEY HIGHLIGHTS KEY HIGHLIGHTS | DBS ANNUAL REPORT 2012 p5
TEN YEAR SUMMARY CUSTOMERS
Group 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003
Selected Income Statement Customers in DBS’ six key markets
Items ($ million)
Total income 8,064 7,631 7,066 6,603 6,031 6,163 5,344 4,338 4,479 4,265
Profi t before alowances 4,450 4,328 4,141 3,999 3,421 3,545 2,975 2,312 2,523 2,473 No. of retail customers No. of corporate customers
Allowances 417 722 911 1,529 784 431 135 203 63 541
Profi t before tax 4,157 3,733 3,332 2,536 2,712 3,224 2,910 2,163 2,509 1,992
Net profi t excluding one-time
items and goodwill charges 3,359 3,035 2,650 2,064 2,056 2,487 2,175 1,649 1,938 1,491
One-time items 1 450 – – (23) (127) (209) 94 303 497 –
Godwil charges – – 1,018 – – – – 1,128 40 430 180,000
Net profi t 3,809 3,035 1,632 2,041 1,929 2,278 2,269 824 1,995 1,061

Selected Balance Shet 5.3m
Items ($ million)
Total assets 353,033 340,847 283,710 258,644 256,718 232,963 197,372 180,204 175,671 159,479
Customer loans 2 210,519 194,720 152,094 130,583 126,481 108,433 86,630 79,462 69,659 64,330
Total liabilities 317,035 307,778 250,608 229,145 232,715 209,805 176,326 161,014 156,796 143,574
Customer deposits 2 242,907 225,346 193,692 183,432 169,858 152,944 131,373 116,884 113,206 108,041
Ordinary shareholders’ funds 31,574 28,178 25,985 24,759 19,386 20,048 18,242 16,291 16,011 14,259 No. of Internet banking
Preference shares 163 616 614 614 433 433 433 433 433 559 No. of mobile banking
T
ot al sh areholders’ funds 31,737 28,794 26,599 25,373 19,819 20,481 18,675 16,724 16,444 14,818 customers in Singapore customers in Singapore
Per Ordinary Share ($) 3
Earnings excluding one-time
items and goodwill charges 1.39 1.30 1.15 0.91 1.14 1.39 1.22 0.94 1.10 0.85
Earnings 1.57 1.30 0.70 0.90 1.07 1.27 1.28 0.46 1.13 0.60
Net tangible asets 10.9 9.95 9.18 8.29 7.69 7.98 7.2 6.41 5.80 4.87 1.9m
Net aset value 12.96 1.9 1.25 10.85 10.25 10.5 9.79 8.98 8.8 8.18 6 0 0 0 0 0
Dividends 4 0.56 0.56 0.56 0.56 0.65 0.68 0.65 0.49 0.34 0.26
,
Selected Financial Ratios (%)
Dividend cover for ordinary
shares (number of times) 2.79 2.28 1.25 1.57 1.55 2.15 2.46 1.17 4.14 3.03
Cost-to-income 44.8 43.3 41.4 39.4 43.3 42.5 44.3 46.7 43.7 42.0
Return on assets excluding
one-time items and Reduced branch queue Customer waiting time
goodwil charges 0.97 0.97 0.98 0.80 0.84 1.15 1.15 0.93 1.16 0.97 times in Singapore eliminated in past 3 years
Return on assets 1.10 0.97 0.60 0.79 0.79 1.06 1.20 0.46 1.19 0.69
Return on shareholders’ funds % of customers served within 15 minutes
excluding one-time items
and goodwill charges 11.2 11.0 10.2 8.4 10.1 12.7 12.3 9.8 12.5 10.1
Return on shareholders’ funds 12.7 11.0 6.3 8.4 9.5 11.7 12.8 5.0 12.8 7.3
Non-performing loan rate 1.2 1.3 1.9 2.9 1.5 1.1 1.7 2.1 2.5 5.2 237m
Los alowance coverage 142 126 10 83 14 135 15 97 89 63 84%
Capital adequacy hours
Tier I 14.0 12.9 15.1 13.1 10.1 8.9 10.2 10.6 11.3 10.5
Total 17.1 15.8 18.4 16.7 14.0 13.4 14.5 14.8 15.8 15.1
Prior years’ fi gures have been restated to make them consistent with current period’s presentation
1 One-time items arise from gains on sale of properties and/or investments, impairment charges for investments and restructuring costs
2 Includes fi nancial assets/liabilities at fair value through profi t or loss
3 Per ordinary share fi gures have been adjusted for a rights issue in 2008
4 D ividend amounts are on gross basis prior to fourth quarter 2007 and on one-tier tax-exempt basis thereafter.
2006 includes special dividends of 4 cents
p6 DBS ANNUAL REPORT 2012 | KEY HIGHLIGHTS KEY HIGHLIGHTS | DBS ANNUAL REPORT 2012 p7
EMPLOYEES REGULATORS
Senior management
actively engaged regulators DBS implemented the
by participating in industry Basel III capital framework on
forums, including those on 1 January 2013. DBS’ liquidity
x18,000 risk, capital and accounting. ratios are comfortably above
the benchmarks set by the
Total number of employees Basel Committee.
Workplace gender diversity
Employee engagement
Ranked SOCIETY
42%
among MALE WORKFORCE Funds raised for No. of accounts
underprivileged children on electronic
top10% of statement programme
al companies 58%
FEMALE WORKFORCE
surveyed $1m
1.2m
by Gallup for POSB PAssion Kids Fund
1 in 3 leadership positions
globally are fi lled by women
Waste paper recycled
No. of Social Enterprises supported through
funding and coaching
Total number of training days
307
tonnes
29
137,000
p8 DBS ANNUAL REPORT 2012 | LETTER TO SHAREHOLDERS
LETTER TO
SHAREHOLDERS
DBS TODAY IS A MARKEDLY
“DIFFERENT BANK. WE ARE
MORE RESILIENT AND DIVERSIFIED,
AND ARE OPERATING ON A
HIGHER PLANE.
”— Chairman Peter Seah
and CEO Piyush Gupta
LETTER TO SHAREHOLDERS | DBS ANNUAL REPORT 2012 p9
Scan here for CEO
Piyush Gupta’s video
on DBS’ progress.
2012 was a challenging year for the RESHAPING OUR FRANCHISE domestic loan market share grew to
global economy. 24% from 23% in the previous year.
Our record performance represents We continued to achieve strong growth
While active monetary easing from the the third consecutive year of solid in consumer and institutional banking. In
European Central Bank and US Federal results, and is testament to the capital markets, we remained a leading
Reserve prevented an international soundness of our business strategy player in equities, fi xed income, real estate
fi nancial crisis, global growth was and disciplined execution. investment trusts and business trusts.
uninspiring. The US economy continued Hong Kong, which anchors our Greater
to grind along at a sub-par growth rate Since 2010, we have consistently China presence, is also a much stronger
of 2% while Europe fell into recession. executed on our strategic priorities. entity; 2012 earnings at SGD 716 million
We have entrenched our leadership in are a record in local-currency terms.
This was compounded by sluggish Singapore, repositioned Hong Kong and
growth in China, the world’s second- diversifi ed our earnings base to other At the same time, we have shifted the
largest economy. Investment growth Asian markets. We have also built leading composition of our business. Income
in China slowed down, resulting in its regional customer franchises in wealth from higher-return annuity businesses has
economy growing by 7.8% from management, SME banking, transaction grown substantially. For example, cash
9.3% in 2011. banking and treasury activities. management, trade fi nance and treasury

These external headwinds had a ripple
effect on the markets we operate in.
Singapore, our home market, grew just
1.3% from 5.2% the previous year,
weighed down by weaker demand for
exports. Hong Kong, our second-largest
market, grew 1.4% from 4.9% the
previous year.

General concerns about the
macroeconomic situation in Europe in
the second half put a dampener on
capital markets activities and amid an
DBS was named “Bank of the Year, Asia”
uncertain environment and fl ush liquidity
by The Banker, a subsidiary of the Financial Times.
conditions, net interest margins continued
to be squeezed.
Over the course of the past three years, customer income today account for 28%
EARNINGS AT RECORD SGD 3.81 the fundamental construct of the bank of the Group’s income, compared to 17%
BILLION, RETURN ON EQUITY AT has changed. Our business profi le in 2009. Our SME and wealth businesses
FIVE-YEAR HIGH and earnings drivers have improved now account for 25% of Group income.
and the bank today is more resilient
Despite the challenging operating and better diversifi ed. We have also reshaped our balance sheet.
environment, focused implementation of With a loan-deposit ratio of 87%, we
our strategy, prudent risk management Singapore now contributes 58% of are now utilising our balance sheet more
and a strong balance sheet enabled DBS the Group’s income compared to 65% effectively to achieve growth and stability.
to capture opportunities across the region. three years ago, based on internal Over the past two years, we have also
measurements. This is due to an increase diversifi ed our funding sources to include
Full-year earnings reached a record SGD in customer acquisition and a deepening wholesale funding. With our reputation
3.81 billion. Excluding a SGD 450 million of customer relationships in the region. as the Safest Bank in Asia, an accolade
divestment gain, net profi t rose 11% to Even as the income contribution from our conferred to us by Global Finance
SGD 3.36 billion. Return on equity before markets outside Singapore has increased, magazine since 2009, and credit ratings
the divestment gain rose to 11.2%, the our leading market share in Singapore that are among the highest in the world,
best in fi ve years. Our balance sheet is continues to grow – not an easy feat we are able to secure attractive pricing
healthy, with capital, liquidity and asset given our size and the maturity of our when we tap the debt markets
quality remaining strong. home market. In 2012, our Singapore for funding.
p10 DBS ANNUAL REPORT 2012 | LETTER TO SHAREHOLDERS
The DBS Treasures Private Client lounge at DBS Asia
Central serves high net worth individuals.
Our achievements are being recognised. • Innovation and technology, especially local subsidiary, DBS Bank (Taiwan). In
In 2012, DBS was named “Bank of the in the SME and wealth management China, we continued to expand our
Year, Asia” by the industry’s authoritative customer segments, and across branch network. We also continued
trade publication The Banker, a subsidiary all our customer channels and to provide new product opportunities,
of the Financial Times, based in London. touchpoints. One specifi c area of including offshore RMB activities, and
This is a coveted award that has typically focus will be electronic payments. strengthened our customer proposition
been the stranglehold of global banks. New technologies, coupled with the in wealth management, SME and
high penetration rates of mobile transaction banking activities. Our
During the year, we entered into an and Internet banking, have initiative to enhance customers’ banking
agreement to acquire a stake in Bank revolutionised the way people bank, experience has resulted in the completion
Danamon in Indonesia. We hope to and we want to lead the industry in of 184 service improvement projects in
become a meaningful player in Indonesia this space. the past three years, saving 237 million
and are awaiting regulatory approvals customer hours over the same period.
for the proposed transaction. • Fixed income business. Debt markets
complement bank fi nancing, and are DBS is also committed to our employees.
WELL-POSITIONED FOR GROWTH becoming more important for funding Over the past three years, we have been
infrastructure investments, which are strengthening our DBS culture to one that
The Board recently reviewed and validated expected to reach USD 8 trillion over is more defi ned by teamwork, individual
our strategy to become a leading Asia- the next decade in Asia. accountability and empowerment.
centric commercial bank, present in Asia’s We have worked hard on instilling a
three key axes of growth. We articulated DELIVERING VALUE TO sense of purpose and pride within the
our strategic priorities three years ago OUR STAKEHOLDERS DBS family.
and will continue to execute on them.
In the coming years, we will also give In 2012, we continued to add value
added focus to an additional two areas: to our customers. Underscoring our
commitment to Taiwan, we set up a
LETTER TO SHAREHOLDERS | DBS ANNUAL REPORT 2012 p11
DESPITE THE CHALLENGING OPERATING
“ENVIRONMENT, DBS’ FOCUSED EXECUTION OF
OUR STRATEGY, PRUDENT RISK MANAGEMENT
AND A STRONG BALANCE SHEET ENABLED
US TO CAPTURE OPPORTUNITIES ACROSS
THE REGION.
”
In addition, DBS has created more Today, DBS employees are among the
conducive working spaces for our most engaged globally, according to
people. In Singapore, the bank’s new an independent employee engagement
headquarters DBS Asia Central at Marina survey conducted by Gallup, an
Bay Financial Centre Tower 3 (MBFC T3) international research fi rm. In 2012, DBS’
epitomises the future of work. DBS Asia overall employee engagement scores put
Central at MBFC T3 also raises the bar the bank at the top 10% of all companies
in workplace design in Asia. By coupling surveyed by Gallup globally, and in the
spatial design with effective change top 10% of all fi nancial and insurance
management, the bank has established companies as well.
a living, collaborative workplace that
fosters ideation among our employees.
DBS Chairman Peter Seah (left) and Chongqing Yuzhong
District Party Secretary Liu Qiang celebrating the opening of
DBS’ Chongqing branch, our fi rst in Western China.