DBSH GROUP OPERATING PROFIT CLIMBS 75% TO S$1.96 BILLION

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Net Profit Jumps 857% To S$1.07 Billion

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Acquisitions, Net Interest, Proprietary Trading and Investment Banking Income All Contribute

SINGAPORE, MAR. 6 -- DBS Group Holdings ("DBSH") today reported an increase in total operating profit to S$1.96 billion for the year ended Dec. 31, a 75% increase over 1998.

Net profit for the period jumped to S$1.07 billion for 1999, an increase of 857% over the S$112 million reported for the year-earlier period.

The Company said acquisitions of POSBank in Singapore and Kwong On Bank ("KOB") in Hong Kong each contributed to total operating profit, as did increases in net interest income, proprietary trading profits and income from stockbroking and investment banking.

Net interest income was up 42% for the year, to S$2.03 billion, reflecting higher net interest margins which climbed to 2.02% from the 1.77% a year ago, and contribution from acquisitions. Fee and commission income saw a similar increase, to S$423 million from the S$274 million reported for the 1998 fiscal year, up 54%.

Exceptional profits totaled S$175 million, resulting from the sale of the Company's shareholdings in Singapore Petroleum Company ("SPC") (S$117 million) and from the securitised sale of DBS Tampines Centre (S$58 million). The sales of the SPC stake and DBS Tampines Centre were made as part of the Company's plans to focus on core banking and financial services.

John T. Olds, CEO, said, "The improved performance reflects the early returns of a more competitive company, and DBS' ability to capitalize on the recovery of Asian economies."

"Unquestionably, Asia is recovering, and we are benefiting from that recovery throughout the region. The Group has weathered the storm, and transformation to a more competitive institution is underway. There will be challenges ahead but, with a more diverse and experienced management team, we believe the Group is well-positioned for the future," said Olds.

In today's announcement, DBSH said it had increased provisions to S$1,063 million compared to the S$996 million reported a year earlier.

Total cumulative specific and general provisions at year-end 1999 amounted to 118% of unsecured non-performing loans ("NPLs") and 53% of total NPLs, compared to 103% and 44% recorded in 1998.

For DBS, total Group NPLs at year-end were S$8.1 billion, and non-bank NPLs amounted to S$7,614 million, representing 13% of total non-bank loans, which was down slightly from the 13.1% registered in the first half of 1999. Total Group NPLs increased 15% over 1998's S$7.1 billion, largely due to the consolidation of NPLs at Kwong On Bank in Hong Kong. Excluding KOB's impact, the increase in NPLs would have been 5% for the year.

Of the total 1999 provisions, S$763.4 million in specific provisions were related to 52%-owned DBS Thai Danu Bank in Thailand ("DTDB"). In 1998, these DTDB provisions were S$240.9 million. DBSH' share of the total DTDB provisions were S$395.3 million in 1999, compared to S$121.1 million a year earlier.

On Jan. 21, DTDB reported a Baht 12.9 billion loss for 1999, but said material progress had been made during 1999 in the restructuring of NPLs. Based on current Bank of Thailand guidelines for classifying NPLs, DTDB NPLs stood at Baht 42.2 billion at year-end 1999, or 41% of total loans, down nearly 33% from a year ago.

Previously, DTDB has said that 35 of its branches in Thailand would be consolidated into a 60-branch network, and headcount reduced by approximately 700 during the first half of 2000 to help bolster DTDB's competitive position.

Olds said the Group is encouraged by the improving economy in Thailand and the active restructuring of NPLs underway at DTDB. But the Group remains cautious about the scope of restructuring required in the banking sector as well as the implementation of legislative and regulatory changes in both banking and industrial sectors.

"Our goals for DTDB are changing from a focus on the past to a focus on the future," Olds said. "Although there are signs that NPLs have peaked, we believe it is prudent for us to continue to build loan-loss reserves in overseas locations at this time. Going forward, the outlook for both the domestic and regional economies is improving, and barring unforeseen circumstances, we expect provisioning to abate in 2000."

"We are maintaining our conservative approach to the classification of DTDB's non-performing loans and have increased loan-loss provisions to 60% of NPLs. We want there to be no question that we are doing everything within our control to insulate DBSH shareholders," said Olds.

For 1999, the Group registered a 10.35% return on equity, compared to 1.29% reported in 1998. Excluding the consolidation of DTDB, POSBank and KOB, Group return on equity would have been 13.15% for 1999.

Return on total assets was 1.04%, versus 0.14% for 1998.

Unrealized valuation surpluses in quoted investments and properties increased by S$800 million to S$2.2 billion. This unrealized valuation surplus includes S$805 million related to the Group's share of reserves in associated listed companies now included in Group shareholders' funds following a change to equity accounting in 1999.

For the year, total assets increased by S$6.4 billion to S$106.5 billion, a 6.4% increase, reflecting in part the consolidation of KOB from May 1, 1999 onwards. Group customer deposits increased 11.4% for the year, from S$73.9 billion to S$82.3 billion, while customer loans declined by S$1.8 billion, or 3.3% for the year.

The Group's total Capital Adequacy Ratio ("CAR") increased to 19.2% at year-end, more than twice the minimum Bank for International Settlements ("BIS") requirement. The increase reflected additional qualifying Tier II capital resulting from the issuance of US$750 million in subordinated debt in August 1999 and profit generated during the year. For the year, Tier I capital increased from S$9.6 billion at year-end 1998 to S$10.5 billion at year-end 1999. Tier II capital rose from S$0.8 billion at year-end 1998 to S$2.4 billion at year-end 1999.

In releasing its results today, DBSH Board of Directors said it will recommend to shareholders an increase in the dividend payout on DBSH ordinary shares and non-voting convertible preference shares equivalent to 25% (gross) for 1999, compared to last year's 18% (gross).

The proposed final dividend for 1999 of 16%, together with the interim 9% dividends already paid, bring the total net dividend payout to S$238.5 million, compared with S$140.8 million in 1998. The dividend increase reflects improved results and a focus on generating higher returns for shareholders.

Results released today do not include DBSH's purchase of a 19.7% stake in the merger of The Bank of the Philippine Islands ("BPI") and Far East Bank & Trust Company, announced in December. Following completion of that merger in the first half of 2000, the Company plans to equity account for the investment.

"We are looking forward to working closely with BPI management to develop strategic linkages between BPI and DBSH, two market leaders in Southeast Asia."

"The two firms comprise a distribution network of over 800 banking locations and 1,800 ATMs in Singapore and the Philippines. We want to take advantage of the Group's market position in Singapore and extend our reach in the region to further enhance returns and shareholder value," Olds said.

Full details regarding DBSH 1999 results can be found at 1999 Performance Supplement.