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Building an Asian Transaction Banking Franchise

Tom McCabe Global Head, GTS

19 March 2012

2 2

Financial Performance: Broad based revenue growth & increased profitability.

Market opportunity: Participating in large & rapidly growing profit pools.

New Products capturing large, high value, revenues streams with a strong element of annuity earnings.

Sustainability: Reducing risks through product structuring, customer due diligence & portfolio management.

Investment in new capabilities is creating revenue opportunities across Asia.

Executive Summary

2

3 3 3

GTS: Strong Revenue Growth & Operating Leverage

3

Source: 2011 Financials

+46%

+24% +66%

-16%

Revenue

740M

344M

Expenses

426M 396M

657M

Profit before allowance

39%

Cost to income

1.08B

47%

2011

2010 28%

34%

9%

81%

Ex SG&HK

Diversified revenues across Asia; higher income growth from ex-SG & HK

Ex SG&HK

% of GTS Income Income Growth Rate

4 4

GTS: 7 Consecutive Quarters of Growth

4

165

318 Income (S$m)

(S$b)

Trade

Cash

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11

1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11

Deposits

Loans 14

52

20

65

45

81

Source: 2011 Financials

Earnings Momentum Across All Markets and Products

Strong customer deposit and loan growth

5 5 5

GTS growing contribution to institutional banking and Bank results

5

Source : 2011 Financials

Other Businesses

Institutional Bkg (excl

GTS)

GTS

2010 2011

$7.1b $7.6b

9

9

73

Revenues Profit before allowance

14.2%

2010 2011

$4.1b

42.2%

48.2%

$4.3b

73

9.6%

37.8%

47.0%

15.2%

38.4%

47.5%

50.3%

39.2%

10.5%

6

2011

2012-2013

Our Journey towards becoming a leading Regional GTS Bank

• Assessment of Capabilities & Gaps

• Strategy Development

• Future Focused Organization

• Key Product Priorities

• Deploy Technology Investments

• Resource allocation to high ROE

Revenue Pools

• 10,000+ New Sales Calls

• Alignment with RM Organization

• Commodity Trade Finance Team

• Focus on Materiality

• Talent Recruitment/Development

New Product Launches

- Suite of RMB Services

- Supply Chain

- Sub Acct Structure, (Cash Mgt)

- Bulk Payments

- USD Mini Max Acct

- e-Advising

- AR Purchasing

- Distributor Financing

Geographic Expansion

Regional Sales Team

Expanded FI Business

ERP Systems Capability

Trade Asset Distribution Desk

Performance Mgt Tools

Talent Development

2010 IDEAL 3.0 – Redefining Internet Banking

New Products

- Interest Reallocation Structures

- Pan Asia Sweeping Capabilities

- Bundled Product Sets

- Expanded Payment Capabilities

Commercialization of new technology

- STP, Scale, Capacity

Decision Analytics

Automated Risk Tools

Record Marketing Spend

ROE Balance Sheet Strategies

Deepen Wallet Penetrations

Talent Development

7

Asia Wholesale Banking Revenue Pools by Product

Source: McKinsey Global Banking Pools

2

Post Risk Revenues; USD Bn1

1 At constant 2010 exchange rates 2 Capital Markets and Investment Banking

CAGR, %

12

12

11

12

8 8

Fundamentals driving Asia's Trade Growth

4

8

12

16

20

24

Jan-0

1

Jan-0

2

Jan-0

3

Jan-0

4

Jan-0

5

Jan-0

6

Jan-0

7

Jan-0

8

Jan-0

9

Jan-1

0

Jan-1

1

Jan-1

2

% share of total exports, 3mma

To China

To USA

Asia 8 – Domestic Exports to China and US Asia - Exports to China & USA

50 100 150 200 250 300 350 400 450 500 550 600 650 700 750

01 02 03 04 05 06 07 08 09 10 11 12

US$ terms, Jan02=100, seas adj, DX for HK, SG

Asia

Asia X

Real Global Consumption

96

100

104

108

112

116

120

124

128

132

136

Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12

3Q08=100, seas adj

Asia-10

US, EU17 JP

The growth that came "from nowhere"

Consumption Growth Since 3Q08

258.24

40.11 49.79

5.92 4.37

-25

0

25

50

75

100

125

150

175

200

225

250

275

Asia-10 Asia-10 (ex-CH, IN, ID)

USA Japan EU-17

USD bn, 3Q08 - 3Q10, seas adj

Source: DBS Research

9 9 9

Country

2010 GDP

(USD Bn)

2010 ARP Turnover (USD Bn)

2010 ARP Turnover as a % of GDP

(%)

Hong Kong 225 19.1 8.5

China 5,878 205.4 3.5

Taiwan 431 89.0 20.7

South Korea 1,007 6.7 0.7

Japan 5,459 130.8 2.4

Singapore 222 7.7 3.5

Indonesia (1) 707 - -

Thailand 319 2.8 0.9

Malaysia 238 1.4 0.6

India 1,538 3.7 0.3

Source: CIA World Factbook and FCI (1) Indonesia not included in FCI Research

Opportunity for growth in both mature and emerging markets.

Large & Growing Open Account Trade Opportunity

10

10

World 8%

Asia 27%

Core 39%

DBS well positioned to tap into Open Acct Trade Opportunity

10

2010 (US$2,325 bn)

Source : 2007 & 2010 FCI Annual Statistics

Asia 502.0 22%

Europe 1,475.3

63%

Australasia 64.3

3%

Africa 23.6

1% Americas

261.7

11%

2007 (US$1,835 bn)

Asia 246.0 13%

Australasia 47.7

3%

Africa 15.1

1% Americas

211.3

11%

Europe 1,316.0

72%

CAGR

11

Company as Buyer - Payables + Inventory

Purchase

Order

Issued

Goods

Rec’vd

Acquisition

Fixed

Assets

Expansion

CapEx

Goods

Shipped

Paym’t

Made

Request

For

Quote

Inventory/

WIP

Receive

PO

Goods

Arrive Goods

Shipped Paym’t

Rec’vd

Finished

Goods

Ready

Profit

Generation

/ Surplus

Company as Seller - Distribution - Receivables

Doc Prep Shipping Manufacturing Doc Prep Shipping Buyer & Distributor Mgmt

Receivables Management

Doc

Prep LC

Acceptance

Term

Lending

Fxd Asset

Financing

LC

Issuance

Bonds /

Guarantees

Vendor

Financing

FX Fwd

FX Spot

Payment Svc

Cash Mgmt

FX Fwd

FX Spot

Cash /

Credit Card

Collections

Cash Mgmt

Receivables

Securitisation

Fxd Depo

Liab Mgmt

Va

lue

to

DB

S

LC

Confirmations

Bonds / Gtee

LC

Nego

Distributor Financing Financing via Term Loans / Overdraft

Inventory Financing

Pre-Ship Fin Post-Ship Fin

Va

lue

to

Cli

en

t

Improve

Info flow Stretch Payables Shortening

Order cycle

Reduce,

manage

& finance

Inventory

Stocks / Inventory Management

Strengthen

Distribution

Network

Reduce

Collection

Costs and outsource for

increased efficiency

(Channels)

Finance

(incl. Non-

recourse) for

Receivables

(timing and

B/Sheet)

Selling into the Working Capital Cycle

12 12

Managing risk for profitability & sustainability – Trade Finance Products

12

Self-liquidating and short tenors.

Working Capital Loans are the life blood of organization.

Provide more secure sources of repayment & quicker insight to potential risks.

Ownership of underlying goods.

Network of Trade Eco System: Surveyors, International Maritime Bureau, Bonded Warehouses, Insurers, Shippers/Logistic Companies, etc.

DBS’s Governance, Compliance Procedures, Risk Policies, KYC.

Expertise to structure solutions mitigates risk for DBS.

DBS’s depth of staff with trade “DNA” across sales, risk, & operations.

Trade loans carry less risk relative to other bank products

13 13

IDEAL 3.0 – Redefining internet banking…

13

May’12 NORTH ASIA

China, Hong Kong, Taiwan

Jun/ Jul ’12 SOUTH ASIA

Singapore, India, Indonesia

Jul ’12 onwards REGIONAL

Full scale launch events and marketing

activities

General Availability Official Launch

14 14

Marquee Awards

A Leadership Position in Global Transaction Services

14

Best Trade Finance

Bank - Singapore

Best Treasury & Cash

Management Bank,

Foreign in China

Best Cash

Management Bank -

Singapore

Top 5

Cash Management

Bank in Asia

Best MNC/Large Corps

Bank in Treasury &

Working Capital

Singapore, China

and Indonesia

Best Cash

Management Bank

in Singapore

Best Sub-Custodian

Bank in Singapore

Best Trade Finance

Provider - Singapore

15 15

The Asset Triple A Transaction Banking Awards 2012

Leadership across Asia, MNC’s, Large Asia Corporates, SME’s

15

Best Cash

Management Solution

- China

Host to host and

entrustment loan

solution

Best Cash

Management Solution

- Singapore

Bill collections, lockbox

and migration of direct

debit authorizations

Best Trade Finance

Solution - Singapore

Supplier financing

programme

Best

Cash Management

Solution – Indonesia

Payments integration

and workflow

management

Best Bank for

Emerging

Corporates in Asia

Best Trade Finance

Solution in India - Idia

US$60 million pre-

export structured trade

advance facility

Best Structured

Trade Deal - Hong

Kong

US$100 million back-

to-back and front-to-

back trade credit

issuance structure

Best Trade Finance

Solution - Indonesia

US$100 million

financing facility

16 16

Acquiring new customers Delivering high ROE revenues

Future Focus - The Foundation for Sustained Growth

16

Flight to quality – new US & European clients

Increased need for Pan Asia services

Materiality of mid market names

DBS’s strong balance sheet

Willingness to lend

Broad range of RMB trade & cash products

Supply chain & open acct programs

Innovative USD deposit account

Liquidity mgt structures

Ideal 3.0: Redefining internet banking

Multi geographic deals

Higher credit quality names

Larger deals…..less operating costs

Multi product deals: Trade, Cash, & FX

Positive operating leverage

Over 30,000 sales calls per annum

Working capital approach to building solutions

RM team over 1,400 strong

Increased spend on marketing and brand

Creating new product revenues Expanded Sales Capacity Across Asia

17 17 17

Q & A