1998 Results

THE DEVELOPMENT BANK OF SINGAPORE LTD

(Incorporated in the Republic of Singapore)

To :  All Shareholders

The Bank defines a Year 2000-ready system or product as one in which neither the performance nor functionality is affected by dates prior to, during and after Year 2000. This is in accordance with the definition specified by British Standards Institute.

The Bank took cognizance of the Year 2000 impact on software and as early as the 1980s, it has been taking steps to address the problem. Since then, it has completed the majority of its Year 2000 efforts and has put in place a comprehensive compliance and testing programme that includes both IT and non-IT business components. The Bank is on target to achieve our goal of a smooth transition into the new millennium, transparent to our customers. To achieve our goal, we have committed sufficient resources and necessary expenses to resolving Year 2000 issues. The costs associated with these efforts have been absorbed as part of the operating expenses or capitalised as capital expenditure in the financial statements for the past years. The Year 2000 renovation and testing efforts are largely undertaken by in-house technical experts, together with external consultants, where deemed necessary.

A global inventory of all IT hardware / software components, non-IT equipment and interfaces with external parties has been completed. Each item in the inventory has been reviewed for Year 2000 impact and a compliance strategy worked out. As part of the ongoing Year 2000 compliance effort, we are monitoring the inventory list closely with the intention of ensuring timely completion of non-compliant items. We have conducted a series of tests to verify compliance of our critical systems in line with general industry practices for Year 2000 renovation and testing. Our focus for 1999 is to conduct external testing with various financial infrastructure providers, following timelines established by The Association of Banks in Singapore (ABS) for industry wide testing within the financial sector.

We are also actively working with key external parties, including clients, counterparties, vendors, exchanges, depositories, utilities, suppliers, agents and regulatory agencies, to stem the potential risks the Year 2000 problem poses to us and to the global financial community.

The Bank is committed to taking all reasonable steps to ensure that all computer systems and business services will continue to function without interruption on 1 Jan 2000 and beyond. Nevertheless, some disruptions may still occur as the Year 2000 problem is complex. Hence the Bank is also focussing on business risk management and contingency planning to ensure business continuity.

DBS' disclosure template, as well as its Year 2000 compliance programme and efforts can be found in the Bank's Year 2000 website at http://www.dbs.com.

The Directors are recommending a gross Preferential Dividend of 1.5% or 3 cents per DBS Non-Redeemable CPS (1997: 1.5% or 3 cents) less 26% Singapore income tax, amounting to S$4,573,920 (1997: S$5,255,735), a gross Final Preferential Dividend of 9 cents per DBS Non-Voting CPS less 26% Singapore income tax, amounting to S$14,969,341 and a gross Final Dividend of 9 cents per S$1.00 ordinary share (1997: 9 cents) in respect of the financial year ended 31 December 1998. Including the gross interim dividend of 9 cents per ordinary share, the total dividend on ordinary shares for the financial year 1998 will be 18 cents per S$1.00 ordinary share (1997: 18 cents) less 26% Singapore income tax amounting to S$123,444,205 (1997: S$93,505,398).

The proposed Preferential Dividend payout may be smaller if the DBS Non-Redeemable CPS or DBS Non-Voting CPS are converted into ordinary shares pursuant to paragraph 4(h) on or before 28 June 1999, while the Final Dividend payout on ordinary shares may be greater if additional ordinary shares are issued pursuant to paragraph 4(h) on or before the same date. Subject to shareholders’ approval at the Annual General Meeting to be held on 19 June 1999, the dividends will be paid on 9 July 1999.