DBS Thai Dannu Bank Announces Bt 41 Million Net Profit For 3Q01

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Bt 114 Million (US$ 2.6 Million) Net Profit for 9M01

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Loan Growth Up 10.0% While NPL Rate Drops To 6.2%

BANGKOK, OCT. 19 - DBS Thai Danu Bank, a subsidiary of Singapore's DBS Bank, today reported an unaudited net profit of Bt 114.2 million (US$ 2.6 million) for the first-nine months of 2001 (9M01), versus a net loss of Bt 12,488.0 million (US$ 284.5 million) in the same period last year. The net profit for the third quarter 2001 (3Q01) was Bt 41.0 million (US$ 0.9 million), the third consecutive quarter of net profit.

Bank officials attributed the year-on-year improvement to an increase in net interest and dividend income and stable operating expenses. Net interest and dividend income rose by 33.7% to Bt 1,615.3 million. Operating expenses decreased by 5.8% to Bt 1,542.1 million.

DBS Thai Danu Bank said the operating profit for 9M01 was Bt 605.5 million, a significant improvement from Bt 92.2 million a year ago. During the third quarter, it added a further Bt 110.0 million to its provisions for non-performing loans (NPLs). The loan loss provision is now 137.7% of the total requirement set by the Bank of Thailand. Although not required, the Bank's management considered it prudent to increase its provisions in view of the uncertain economic outlook.

As at 30 September 2001, NPLs by account basis were Bt 4,619.3 million, a decrease from Bt 5,351.3 million in the same period last year. The NPL ratio was 6.2% as compared to 7.5% in the corresponding period last year. Quarter on quarter, the NPLs increased marginally. NPLs in 2Q01 was Bt 4,533.8 million and 6.4% of total loans. "The rise in the NPLs was mainly due to a longer process in debt restructuring and a slowdown in the Thai economy," said Bank officials.

Bank Officials added that quarter-on-quarter, net interest and dividend income decreased by 4.3% to Bt 532.3 million, due mainly to intense competition in the market and the recognition of Bt 16.0 million dividend income in 2Q01. However, non-interest income grew by 7.8% to Bt 178.0 million, helped by an increase in fee and commission income and gains from sale of investments. Operating expenses were stable at Bt 514.0 million.

Operating profit for the 3Q01 was Bt 196.3 million as compared to a Bt 208.5 million in the previous quarter. At the net profit level, the corresponding figures were Bt 41.0 million and Bt 40.2 million respectively.

In 3Q01, the Bank achieved a customer loan growth rate of 5.5% over the end of 2Q01 to Bt 74,004.1 million, and a 10.0% increase over the end of last year. Total assets increased to Bt 96,035.3 million. Non-bank customer deposits increased modestly to Bt 77,284.8 million. The loan-to-deposit ratio was 95.8% in 3Q01 versus 92.0% in 2Q01. Capital adequacy ratio (CAR) stood at 12.6% against the Bank of Thailand's minimum requirement of 8.5%.

President and CEO Pornsanong Tuchinda said, "In light of the economic slowdown, we managed to grow at a satisfactory rate and stabilise expenses."

"In the third quarter, we expanded our business into large corporates, selected SMEs and consumer sectors. We are not immune from the intense price competition as the availability of quality borrowers is limited. To sustain our long-term growth, we are working very hard to build strong relationships with customers by understanding their businesses, and providing appropriate financial advice and services. This will also give us opportunities to grow fee-based income from trade-finance and foreign exchange transactions."

"In this quarter, we launched Personal Plus (an unsecured installment loan for individual customer), promoted the use of Credit Plus (an unsecured credit line with minimum monthly payment) and Home Plus (a home loan service). The feedback is positive, with good growth in business volume."

"Going forward, given the external weakness, we will seek to grow our loan book cautiously and be disciplined in cost management. However, investments in human resources in the area of training will continue, in order to service our customers better," said the Bank's President.

DBS Thai Danu Bank, a subsidiary of DBS Bank of Singapore, is a commercial bank headquartered in Bangkok, Thailand. With 62 branches, expertise in consumer, SME, and corporate lending and an international treasury function, the Bank offers a full range of banking services in Thailand.

DBS Thai Danu Bank's performance for the period ended 30 September 2001, significantly improved over the same period last year. The Bank reported an unaudited net profit of Bt 114.2 million for its 9M01, versus a net loss of Bt 12,488.0 million a year ago.

The significant improvement in the Bank's performance was due to the growth in net interest and dividend income and lower operating expenses. Net interest and dividend income for the period rose from Bt 1,207.9 million in 9M00 to Bt 1,615.3 million in 9M01, representing a 33.7% increase. Operating expenses decreased from Bt 1,637.5 million to Bt 1,542.1 million, a 5.8% decline from the same period last year. The decrease was mainly due to the Bank's bold repositioning program in 1Q00. As a result, the operating profit for the period was Bt 605.5 million versus an operating profit of Bt 92.2 million a year ago.

Quarter on quarter, net interest and dividend income declined by 4.3% to Bt 532.3 million. The decrease in net interest and dividend income was a result of a squeeze in net interest margin and recognition of Bt 16.0 million dividend income in 2Q01. Excluding the dividend income, net interest income in 2Q01 would have been Bt 540.0 million and the decline in net interest income would only be 1.7%. Non-interest income for the period rose by 7.8% to Bt 178.0 million as a result of a growth in the Bank's fee-based income and gain from investment. Operating expenses were stable at Bt 514.0 million. Operating profit in 3Q01 was Bt 196.3 million, a decline of 5.9% from 2Q01.

Net profit for the 3Q01 was Bt 41.0 million compared with a Bt 40.2 million net profit in 2Q01. The net profit in 3Q01 included a Bt 4.7 million share of profit of subsidiary, DBS Thai Danu Securities (DBSTDS). The amount was a reversal of provisions resulting from a repayment from Financial Restructuring Authority.

Year on year, as at 30 September 2001, non-bank customer loans grew from Bt 65,123.0 million to Bt 74,004.1 million. Total assets rose from Bt 94,030.2 million to Bt 96,035.3 million. Non-bank customer deposits increased from Bt 70,106.9 million to Bt 77,284.8 million. Quarter on quarter, the Bank recorded a 5.5% loan growth. Non-bank customer deposit increased by 1.3%. Loan-to-deposit ratio was 95.8% in 3Q01 versus 92.0 % in 2Q01.

Capital Adequacy
As at 30 September 2001, the Bank's capital adequacy ratio (CAR) stood at 12.6%, well above the 8.5% minimum requirement specified by the Bank of Thailand.

Table 1: DBS Thai Danu Bank's Capital Adequacy Ratio

NPLs and Provisions
As at 30 September 2001, NPLs by account basis were Bt 4,619.3 million and as a percentage of total loans was 6.2%. The NPLs increased marginally from 2Q01 (see table below) as the debt restructuring was taking longer process and the result of the weak economy.

Table 2: DBS Thai Danu Bank's NPL Figures

In 3Q01, the Bank made further loan loss provisions of Bt 110.0 million due to the uncertain economic outlook and the rise in new and re-entry NPLs across the Thai banking industry. As a result, the level of provisions was 137.7% of the level required by the Bank of Thailand.