DBS Thai Danu Bank Announces 1Q03 Net Profit Of Baht 98.3 Million, A 64.7% Improvement Over 1Q02

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Loans grew by 4.1% year-on-year amidst challenging environment

BANGKOK, APRIL 16, 2003 - DBS Thai Danu Bank, a subsidiary of DBS Bank, today announced an unaudited net profit of Baht 98.3 million for the quarter ended 31 March 2003 (1Q03). This was a 64.7% improvement over the Baht 59.7 million reported in the corresponding period in 2002 and a 9.3% increase over the Baht 89.9 million achieved in 4Q02.

The improved year-on-year performance was due to a 17.6% rise in total income that outpaced expense growth of 8.6%. Total income grew by Baht 134.2 million or 17.6% due mainly to a larger loan base as well as higher gains from sale of government securities. On the other hand, operating expenses rose by 8.6% due chiefly to higher specific business tax as a result of the increased income base and higher technology-related expenditure. Operating profit rose 38.6% to Baht 318.4 million.

Quarter-on-quarter total income grew 3.1% on the back of higher gains on sale of government securities. Operating expenses went up marginally by 1.5%. As a consequence, operating profit grew 6.1% quarter-on-quarter.

The Bank's non-bank customer loans as at end March 2003 stood at Baht 79,128 million. This was a Baht 3,111 million or 4.1% increase over the same period last year. Non-bank deposits rose by Baht 9,286 million or 11.8% to Baht 87,677 million. The Bank's loan to deposit ratio as at end-1Q03 was 90.2% compared to 97.0% as at end-1Q02. Quarter-on-quarter non-bank loans grew 2.0% while non-bank deposits rose by 13.5%.

As at 31 March 2003, the Bank's non-performing loans (NPLs) was Baht 6,750 million, a decrease of Baht 822 million over the same period last year (NPLs for the period ending 1Q02 have been adjusted to the latest definition issued by the Bank of Thailand). The NPL to total loans ratio of 8.4% for end 1Q03 was a 1.3 percentage points improvement over the 9.7% ratio reported in the same period last year.

With recent events in the Middle-east clouding the overall general macro-economic directions, the Bank's Board of Directors decided to retain its cautious loan provisioning approach. In this regard, the Bank made loan provisions of Baht 220 million in 1Q03.

DBS Thai Danu Bank's President and CEO Pornsanong Tuchinda said, "Overall business sentiments in the first quarter were affected by the uncertainties surrounding recent events in the Middle-east. The Bank continued to show reasonable progress during these difficult times."

DBS Thai Danu Bank, a subsidiary of DBS Bank, is a commercial bank headquartered in Bangkok, Thailand. With 61 branches, the bank offers a full range of banking services in Thailand including consumer, SME, and corporate lending as well as an international treasury function.

DBS Thai Danu Bank today reported a net profit of Baht 98.3 million for the first quarter of 2003 (1Q03), a 64.7% improvement over the same period last year. The improved results were due primarily to a 17.6% growth in total income that outpaced operating expense growth of 8.6%.

The total income growth of 17.6% was attributable to (i) higher net interest and dividend income of 10.3% arising from a 4.1% increase in loan volume, and (ii) increased other income of 103.8% mainly from higher gains on sale of government securities. On the other hand, operating expenses went up by 8.6% mainly from (i) higher business tax in line with increased income base, and (ii) higher technology-related costs. Year-on-year operating profit rose by Baht 88.7 million or 38.6% to Baht 318.4 million.

In view of the overall economic uncertainties arising from recent events in the Middle-East, the Bank's Board of Directors continued its cautious provisioning policy and made Baht 220 million in loan provisions. Net profit went up by Baht 38.6 million or 64.7% year-on-year.

Quarter-on-quarter, operating profit grew by Baht 18.3 million or 6.1% as a result of higher income of 3.1%. Total income grew by Baht 26.6 million mainly from higher gains from sales of government securities that were partially offset by a 4.3% decline in net interest and dividend income due to competitive pressures on yields. Fee and commission income was also 30.7% lower quarter-on-quarter arising from the combination of high once-off fees received in 4Q02 and a slowdown in new fee-generating activities as customers opted to wait for clearer economic directions. Operating expenses rose marginally by 1.5%.

Quarter-on-quarter non-bank loans rose by 2.0% to Baht 79,128 million while non-bank deposits increased by 13.5% to Baht 87,677 million. The Bank took the opportunity to grow its deposit base in 1Q03. As at end-1Q03, the Bank's loan to deposit ratio stood at 90.2% compared to 97.0% as at end-1Q02.

Capital Adequacy

As at 31 March 2003, the Bank's capital adequacy ratio (CAR) stood at 12.4%, well above the 8.5% minimum requirement required by the Bank of Thailand.

Non-Performing Loans (NPLs)

NPLs continued to decline. As at 31 March 2003, the Bank reported total NPLs of Baht 6,750 million or 8.4% of total loans. This was a Baht 822 million improvement from the same period last year.