Completing the regional and wealth management platform First

Completing the regional and wealth management platform First Half 2001 Results Briefing July 23, 2001 1

Completing the regional and wealth management platform n Top line earnings impacted by weaker economic conditions and adverse competitive environment n Focus on other non-interest income bolsters results n Expenses peaked amidst repositioning activities n Improved asset quality and strong capital position n Completing the regional and wealth management platform 2

Completing the regional and wealth management platform n Top line earnings impacted by weaker economic conditions and adverse competitive environment n Focus on other non-interest income bolsters results n Expenses peaked amidst repositioning activities n Improved asset quality and strong capital position n Completing the regional and wealth management platform 3

Net revenue increased by 2. 7%, net profit down 10. 6% 1 H 01 / 1 H 00 (%) 1 H 01 / 2 H 00 (%) 962 (8. 1) (3. 1) 249 251 (3. 7) 0. 8 42 73 40 (3. 7) (45. 2) 139 129 275 97. 6 113. 2 1, 488 1, 443 1, 528 2. 7 5. 9 Staff costs 281 332 389 38. 5 17. 2 Other operating expenses 313 320 360 14. 9 12. 4 Operating expenses 594 652 749 26. 1 14. 9 Operating profit 894 791 779 (12. 9) (1. 5) Specific provisions 81 30 110 36. 3 266. 7 General provisions (17) (40) (64) 284. 5 60. 0 704 685 629 (10. 6) (8. 2) Net interest margin 2. 07% 1. 97% 1. 78% Cost-to-income ratio 39. 9% 45. 4% 49. 0% Return on assets 1. 31% 1. 25% 1. 08% Return on equity 13. 1% 12. 7% 11. 4% (S$ million) 1 H 00 2 H 00 1 H 01 Net interest income 1, 046 993 260 Fees & commissions Dividend & rental income Other income Income before operating expenses Net profit attributable to shareholders 4

Modest decline in net interest income despite sharp fall in net interest margins (S$ million) Net interest income Net interest margin (gross basis) 1, 046 989 2. 00% 993 2. 04% 962 2. 07% 1. 97% 1. 78% 1 H 99 2 H 99 1 H 00 2 H 00 1 H 01 5

Excess liquidity dampens margins, but strengthens ability to fund lending growth Loan / Deposit (%) Net Interbank Placement / Asset (%) 1996 1997 1998 1999 2000 1 H 01 6

Loan growth has turned around Change in Gross Loans (S$ million) 13, 791 30. 4% 4, 373 10. 7% Jun 98 2, 209 1, 917 3. 7% 3. 5% (2, 966) (2, 219) (2, 053) -4. 8% -3. 7% Dec 98 Jun 99 Dec 99 Jun 00 Dec 00 Jun 01 Outstanding Gross Loans 72, 503 Jun 98 Dec 98 Jun 99 Dec 99 Jun 00 Dec 00 Jun 01 Dao Heng 7

Completing the regional and wealth management platform n Top line earnings impacted by weaker economic conditions and adverse competitive environment n Focus on other non-interest income bolsters results n Expenses peaked amidst repositioning activities n Improved asset quality and strong capital position n Completing the regional and wealth management platform 8

Strong fee income despite stockbroking liberalisation and weak markets 1 H 00 2 H 00 1 H 01 / 1 H 00 (%) Investment banking 42 56 39 (7. 1) (30. 2) Stockbroking 47 31 24 (48. 9) (22. 6) Trade-related 38 37 40 5. 3 7. 8 Fund management 37 25 35 (5. 4) 40. 0 Deposit-related 23 37 43 87. 0 15. 3 Loan-related 24 27 28 16. 7 4. 5 Others 49 36 42 (14. 3) 16. 3 260 249 251 (3. 7) 0. 8 (S$ million) Total fee income Fee to income ratio (%) 17. 5 17. 3 16. 4 1 H 01 / 2 H 00 (%) 1998 – 2000 Fee Income CAGR: 36. 2% 9

Other income : FX & securities trading doubled 1 H 01 / 1 H 00 (%) 1 H 01 / 2 H 00 (%) 1 H 00 2 H 00 1 H 01 Foreign exchange 52 67 112 115. 4 67. 2 Gains on securities & derivatives trading 55 - 102 85. 5 - Gains on investment securities 8 33 16 100. 0 - Gains on fixed assets 4 5 26 550. 0 420. 0 20 24 19 (5. 0) (20. 8) 139 129 275 97. 6 113. 2 (S$ million) Other income Total 10

Emphasis on non-interest income yields strong returns (%) Non-interest income to Operating Income * Dec 98 Dec 99 Dec 00 Jun 01 * Excluding gains on disposal of non-core assets 11

Record growth in wealth management products Sales Volume (S$ million) Insurance Investment products 791 180 573 544 15 222 611 558 322 314 2 H 99 u 1 H 00 2 H 00 1 H 01 Investment products include Horizon, Ei 8 ht, Up and other DBSAM programs 12

Deposit base provides platform for cross selling wealth management products (S$ b) Customer Deposits Jun 2000 S$ Current accounts 5. 6 5. 8 6. 0 0. 5 S$ Autosave deposits 5. 5 5. 4 5. 7 0. 2 30. 5 31. 0 31. 1 0. 6 S$ Fixed deposits 14. 3 13. 2 12. 3 (2. 0) ACU Fixed deposits 9. 4 11. 1 12. 0 2. 6 DBS Kwong On 5. 1 5. 7 6. 3 1. 2 DBS Thai Danu 3. 3 2. 9 3. 1 (0. 2) Others* 6. 7 5. 6 13. 7 7. 0 80. 4 80. 7 90. 3 9. 9 24. 6 * Jun 2001 S$ Savings deposits 114. 9 Dec 2000 24. 6 80. 4 80. 7 31. 8% 32. 3% Sub-total Dao Heng Total Market share of S$ deposits Yo. Y Difference 114. 9 34. 5 32. 8% * Include a once off short-term deposit of $5. 0 b 13

Completing the regional and wealth management platform n Top line earnings impacted by weaker economic conditions and adverse competitive environment n Focus on other non-interest income bolsters results n Expenses peaked amidst repositioning activities n Improved asset quality and strong capital position n Completing the regional and wealth management platform 14

Operating costs increased 26% due to timing and non-recurring items (S$ million) 1 H 00 2 H 00 1 H 01 / 1 H 00 (%) 1 H 01 / 2 H 00 (%) Staff costs 281 332 389 38. 5 17. 2 Occupancy expenses 73 75 77 5. 5 2. 7 Technology-related expenses 63 69 87 38. 1 26. 1 Professional & consultancy fees 38 35 33 (13. 2) (5. 7) Others 139 141 163 17. 3 15. 6 Total 594 652 749 26. 1 14. 9 15

Focused investment in people, technology and products (S$ million) (+26. 1%) Others Cost-to-Asset Ratio(a): Advertising Cost-to-Income Ratio: Computerisation Staff costs 1 H 2000 1 H 2001 39. 90% 49. 01% 1. 10% 1. 30% (a) Annualized without Dao Heng Bank 16

Use of consultants winding down Most significant investments completed between January 1, 2000 and June 30, 2001 Consultants now limited to implementation of specific, technical projects Technology Procurement n n n n n Phone Banking DBS Securities’ Projects Customer Relationship Mgt Treasury & Mkts System E-Commerce/Payments Risk Mgt System Datawarehouse Call Centre Automation E-banking initiative Measurement n Cost & Profitability Mgt System Re-engineering Processing & Services n Institutional Banking Group Reorganisation n Process Improvement n Procurement Customer Service n Branch Reconfiguration Integration n POSBank, DTDB & DKOB Strategy Development n Retail Strategy n Improving Profitability (DTDB NPL, Recapitalisation of DTDB, Sale of DBSL shares, acquisition of BPI) 1998 1 H 99 1999 9 M 00 2000 1 H 01 2001 17

Performance enhancement program to optimise efficiency Improve processes for greater efficiency Cost management measures initiated to contain increase to 2000 growth rate Reduce focus on non-performing businesses Defer low revenue yielding projects 18

Low cost/income ratio by international standards (%) Cost/Income for International Peers (a) 49. 2 1 H 2001 (a) Based on Dec 2000 cost/income ratios 19

Completing the regional and wealth management platform n Top line earnings impacted by weaker economic conditions and adverse competitive environment n Focus on other non-interest income bolsters results n Expenses peaked amidst repositioning activities n Improved asset quality and strong capital position n Completing the regional and wealth management platform 20

Asset quality continues to improve Dao Heng Bank DBS Thai Danu Bank 5 Regional Countries Others Singapore NBk NPL/NBk Loans (%) (S$ million) 8, 121 8, 149 7, 666 7, 085 3, 907 4, 411 4, 834 6. 2% 1, 112 21

73% of NPLs are graded “Substandard” 1, 610 Substandard 85% Doubtful 624 Loss 72% 318 323 815 1, 143 82% 1% 17% Total 4, 834 73% 9% 18% (S$’M ) 22

Cumulative provisions covered 146. 5% of unsecured NPLs and 54. 7% of total NPLs General Provisions (GP) Specific Provisions (SP) (S$ million) 4, 286 3, 852 SP+GP/Unsec NPLs (%) SP+GP/NPLs (SEC) (%) SP+GP/NPLS (%) 3, 978 3, 147 2, 643 2, 286 1, 894 980 23

Further diversification post acquisition of Dao Heng Bank DBS + Dao Heng DBS 13% Hong Kong 12% Others 36% Hong Kong 75% Singapore Total Assets: S$116 bn 9% Others 55% Singapore (June 2001) Total Assets: S$156 bn 24

Efficient capital management DBS Group Holdings Consolidated Capital Adequacy (%) 6. 5% (a) Dec 2000 Hybrid Tier 1 Preference Tier 2 Sub-debt Shares (b) 1 H 01 Adjustments for Net Income Dao Heng/ Others Jun 2001 (a) Includes goodwill, minority interest and capital required against asset base. 25

DBS capital position post Dao Heng DBS will maintain a healthy buffer above the regulatory Tier I requirement of 8% (%) S DB H C SB rt p Ci ti. G u ro St an a Ch P BN * Source : Annual reports of respective banks Z AN c We a stp tis r Fo r e dn es Dr 26

Completing the regional and wealth management platform n Top line earnings impacted by weaker economic conditions and adverse competitive environment n Focus on other non-interest income bolsters results n Expenses peaked amidst repositioning activities n Improved asset quality and strong capital position n Completing the regional and wealth management platform 27

Putting the strategy together – positioning for the future a We lth Consumer Banking Brokerage Services Ma na ge me n nt Focused areas Bancassurance Wholesale Banking: Capital Markets, Advisory, Treasury, FX and Trade Financing DBS / OUB Optimal Organisation Policies, Processes and Systems Vickers Ballas Frank Russell TD Waterhouse CGNU Leading IT Capabilities Dao Heng Kwong On Thai Danu BPI Balanced Channel Mix Efficient Capital Structure n Comprehensive, n Usage of sophisticated complementary n Data warehouse application capital channel mix n Built seasoned with data mining capabilities instruments management team (CRM) n Reconfigured n Strengthened risk n Maximise nonbranches management and credit n Enhanced training n E-commerce infrastructure dilutive capital approval policies n Integrated on-line n Redesigned incentive n E-payment gateway n Sale of non-core services n Prudent management of off systems assets -balance sheet exposures and liquidity, forex, interest rate and investment risks n Business units reorganised n Aligned internal practices to global standards Scale / Scope Regionalisation / diversification n Growth / market share n Pricing flexibility n n n On-line, real-time systems n Infrastructure building and reorganisation substantially completed 28

Strategic roadmap Infrastructure n Vickers Ballas ture Products n TD Waterhouse n Frank Russell n CGNU Significant infrastructure investment to create world class back office and STP initiatives Geography n Dao Heng / Kwong On n OUB 29

Strategic roadmap: Geography n Establish critical mass, presence and scale in twin pillars (Singapore, Hong Kong) Infrastructure Products Infr astr uct ure Geography n Selectively strengthen presence in certain markets (e. g. Thailand, Malaysia after OUB) n Monitor increased Greater China presence post WTO liberalization n No plans for Australia, North Asia (Korea and Japan), but carefully watching opportunities 30

Dao Heng harmonization ahead of schedule Dao Heng Bank became a DBS subsidiary on June 29, 2001 n As of first close on July 20, DBS’ effective ownership in Dao Heng Bank is 71% n 98% of Dao Heng shareholders have tendered their shares n Dao Heng Bank governance and management in place n Harmonization objectives and implementation plan defined n Harmonization infrastructure up and running n Key milestones defined with good progress to date (a) Assumes 100% of outstanding options exercised 31

Strategic roadmap: Infrastructure n Leverage infrastructure across business units Infrastructure Products n Create Regional Processing Centres for appropriate processes n Pursue selected out-sourcing, in-sourcing and cosourcing n Geography Centralize remaining branch back-office processes n Infr astr uct ure Focus on quality (ISO certification of process factories, 6 sigma initiative) Continue trend of significant unit cost reductions and increase of straight-through processing rates 32

Strategic roadmap: Products n n Asset Accumulation n Retail brokerage – Vickers Ballas, TD Waterhouse Wealth management – leverage distribution for best-in-breed products, capitalize on MPF / CPF deregulation and excess liquidity Bancassurance – provide insurance related savings products. Life and general insurance partnership with CGNU Corporate & Investment Banking n n Treasury / FX Trade finance n Corporate finance n Geography SME lending n Infr astr uct ure Credit cards n Products Unsecured consumer lending n Enterprise and Consumer Lending Infrastructure Leveraged finance 33

Bancassurance alliance accelerates wealth management business DBS has concluded a bancassurance alliance with CGNU Transaction Highlights n Sale of 100% of ICS to CGNU n 10 -year exclusive bancassurance strategic alliance for life and general insurance n Total proceeds to DBS of S$446 million of which: u S$395 million as payment for ICS and the bancassurance alliance u S$51 million special dividend from ICS n DBS to receive additional payments of up to S$20 million on meeting performance targets n DBS will record a net initial gain of S$139 million Strategic Rationale n Accelerates revenue growth in DBS’ wealth management business n Expands DBS’ sales channels with the establishment of a specialist sales force dedicated to insurance, wealth management products n Provides DBS with a dedicated bancassurance product provider without equity investment n DBS retains ownership of customers, concentrates on distribution, leaving product manufacturing to CGNU n Allows DBS to rationalize ownership in ICS and continue policy of monetizing assets n Allows DBS to strengthen capital position by $139 million 34

Only bank whose non-core asset disposals largely completed n Focusing on core banking and financial businesses n Divested non-core assets ahead of MAS guidelines What needs to be done What we have done n Singapore Petroleum Company n DBS Land n n POSBank Centre n DBS Securities Building n 4 listed companies (Keppel Capital, Nat. Steel, Intraco, CWT) DBS Tampines Centre Insurance Corporation of Singapore (ICS) n Insignificant 35

Significant Events Affecting Results and Outlook 36

Completing the regional and wealth management platform n Top line earnings impacted by weaker economic conditions and adverse competitive environment n Focus on other non-interest income bolsters results n Expenses peaked amidst repositioning activities n Improved asset quality and strong capital position n Completing the regional and wealth management platform 37

Completing the regional and wealth management platform First Half 2001 Results Briefing July 23, 2001 38