Building an Asian Powerhouse: Strengthening Our Home Base
June 2001 Disclaimer and Responsibility Statement
I The Directors of DBS (including any who may have delegated detailed supervision of this presentation) have taken all reasonable care to ensure that the facts and estimates in this presentation are fair and accurate and no material facts are omitted from this presentation
I Where information contained in this presentation has been derived from publicly available sources, including forecasts of the analyst community, the sole responsibility of the Directors of DBS has been to ensure through reasonable enquiries that such information is accurately extracted from such sources or, as the case may be, reflected or reproduced in this presentation
I Neither Goldman Sachs, nor any of its affiliates or staff vouch for the accuracy of the information contained herein and nothing in this document should be construed as a warranty or representation in regard to the assumptions, facts, estimates or conclusions contained herein
I You would appreciate that DBS is subject to various laws, rules and regulations as a listed company and in the context of the current general offer, which may restrict its ability to provide certain information or to respond to certain queries
1 Building Even Greater Strength: Summary of Offer
I 0.61 DBS shares for every OUB share Consideration I S$1.14 in cash for every OUB share
I 36.6% over 60 day average
Premium I 11.1% over close of market on 21st June, 2001 price
I Acceptance greater than 50% Conditions I Regulatory and shareholder approvals
2 Delivering Value Quickly
Offer Announcement 22 June 2001
Notice of Takeover Within 14 days of Offer and Part B Offer announcement Statement
Between 14 and 28 Launch of Offer days after offer announcement
Offer Period At least 21 days
3 Building an Asian Powerhouse: Strengthening Our Home Base
Transaction Build Even Greater Strength Summary
Strategic Complete Domestic Leadership and Extend into Rationale New Markets
Financial Enhance Shareholder Value Through Growth Rationale Opportunities and Synergies
Superior Manage for Growth and Value Equity Story
4 Continuing History of Growth
Total Assets Acquisition Track Record of DBS
(S$ bn) 1997 I Thai Danu Bank 200 194.2
180 1998 I Kwong On Bank, Hong Kong
160 I POSBank, Singapore 147.6 140
1999 I Bank of Philippine Islands 120 (strategic stake)
100
I Vickers Ballas, Singapore 80 2001
60 I Dao Heng Bank, Hong Kong 106.5 111.2 100.0 40 I Joint venture with TD Waterhouse 66.0 55.7 for regional online financial 49.2 20 services alliance
0 I Offer for OUB 1995 1996 1997 1998 1999 2000 (a)(b)
(a) ….. Proforma for Dao Heng Bank 5 (b) ….. Proforma for OUB Putting the Strategy Together Positioning for the Future
n Regionalization n Growth n Top 5 in Hong Kong
DaoDaoHeng HengBank Bank
Integrated Wealth VickersVickers BallasBallas n Cost Synergies Management OUBOUB n Scale Strategy TDTD WaterhouseWaterhouse n Market Share
HybridHybrid TierTier II SubordinatedSubordinated DebtDebt PreferencePreference SharesShares
Optimal Capital Structure 6 Compelling Strategic Rationale
#1 Consolidate domestic franchise
#2 Gain presence in Malaysia and enhance regional footprint
#3 Broaden shareholder ownership and increase liquidity
7 A Comparative Snapshot
DBS (a) OUB (in S$ millions) Total Assets 147,555 46,603
Total Advances 66,570 28,101
Total Customer Deposits 105,433 26,899
Shareholders’ Funds 10,495 5,161
Operating expenses 1,626 486
Profit Attributable to Shareholders 1,824 545
Branches(b) 115(c) 33
ATMs(b) 930(c) 140
Employees 10,800(c) 3,100
Source: Company Reports for FY 2000 (a) DBS financials pro forma for acquisition of Dao Heng Bank, ignoring the effects of financing, synergies and any potential discrepancies in accounting standards (b) Only Singapore 8 (c) Excluding Dao Heng Strengthening Retail Banking Market Leadership in Singapore
Domestic Assets(a) Domestic Gross Customer Loans(a)
#1 31.0% #1 32.8% DBS S$131 bn DBS S$63 bn 21.2% 21.3%
OUB OUB 9.7% 11.5% Others Others 69.1% 67.2%
Domestic Customer Deposits(a)(b) Credit Cards(c)
25.3% 43.1% DBS #1 #1 600,000 DBS S$89 bn 14.8% 31.6% Cards OUB 10.5% Others 56.9% Others OUB 74.7% 11.5%
Source: MAS, Company Reports for FY 2000 and GS Equity Research (a) System wide market share of domestic assets, domestic gross customer loans and domestic customer deposits is based on share of respective banks of the aggregate financials of the commercial banks, merchant banks and finance companies in Singapore (includes foreign banks) (b) No geographical breakdown of customer deposits available for the local banks. Domestic customer deposits derived based on the proportion of domestic assets and overseas assets of these banks 9 (c) System wide market share for credit card is based on the number of cards issued by respective banks as a % of total issued credit cards in Singapore (includes foreign banks) Extending Investment Banking Leadership in Singapore
IPO(a) Equity Underwriting(a)
#1 #1 DBS 35.9% DBS Others Others 37.2% 40.7% 59.3% 41.6% 58.4% S$2,255 mm S$3,380 mm
OUB OUB 21.2% 23.4%
Debt Underwriting(a)
#1 39.3% S$6,587 mm DBS 33.7%
Others 60.7%
OUB 5.6%
Source: Bondware, 1998 – 2000 10 (a) Market share is based on share of respective banks of the total capital issuance in Singapore (including foreign banks) Widening the Regional Footprint
DBS + Dao Heng Bank(a) DBS + Dao Heng Bank + OUB
Malaysia 3.5% Malaysia Others Thailand Others 0.8% 5.4% 2.8% Thailand 6.8% 3.9%
Hong Kong Singapore 31.4% 58.4% Hong Kong Singapore 23.9% 63.1%
Total Loans: S$69,980 mm Total Loans: S$99,721 mm
11 (a) Assuming S$1 = HK$4.33 – Proforma 2000 Widening the Regional Footprint
(US$ bn)
226
124 124 121 111
90 86
57
37 33 26
HSBC(a) Kookmin NAB (a) CBA (a) DBS Westpac (a) ANZ (a) Stanchart (a) UOB OCBC OUB + H&CB + Dao Heng + OUB UK Korea Australia Australia Singapore Australia Australia UK Singapore Singapore Singapore
(a) Asia Pacific assets only 12 Source: Annual reports 2000, Interim Reports 2000 Note: Excludes Chinese banks Broadening Shareholder Ownership and Increasing Liquidity
Share Ownership in DBS Market Implications
Pre-Transaction Liquidity
LTM Daily Trading Value(a)
DBS S$47.9 mm 37% Government 63% OUB S$18.5 mm Other Shareholders
Post Transaction Index Implications
DBS OUB
25% MSCI üû Government 75% DBS50 üû Other Shareholders STI Index üü
Note: Assuming all OUB shares tendered; Fully diluted 13 (a) Source: Bloomberg Building an Asian Powerhouse: Strengthening Our Home Base
Transaction Build Even Greater Strength Summary
Strategic Complete Domestic Leadership and Extend into Rationale New Markets
Financial Enhance Shareholder Value Through Growth Rationale Opportunities and Synergies
Superior Equity Story Manage for Growth and Value
14 Compelling Financial Rationale
#1I Enhanced operating measures
#2I Attractive synergy potential
#3I Enhanced balance sheet
#4I Bolstered Tier I and Total Capital Ratios
#5I Disciplined approach to value maximisation of non-core assets
15 Enhanced Operating Measures Dec 2000
Dao Heng Combined DBS OUB Bank Entity Net Interest Margin 2.02% 2.51% 2.34%
Cost Income Ratio 42.5% 40.2% 38.1%
Loan Deposit Ratio 63.2% 62.9% 104.5%
The pro forma consolidated financial information contained herein is provided for illustrative purposes only. Such information does not purport to represent what the actual results of operations or financial position of DBS or the combined entity would have been had the acquisition been completed as of the relevant date. Nor is such information necessarily indicative of the future results of operations or financial position of DBS or the combined entity. 16 Important Realizable Synergies
All Shareholders will Benefit from Sustainable Synergies of Transaction
I Eliminate duplicative expenses
I Reconfigure branch network
I Rationalize IT systems
I Consolidate back office operations
I Improve productivity
I Scale of e-business investment
Note: Full synergies expected to be realized within two years after the completion of the offer 17 Synergies Expected to be in Line with Other In-Market Mergers
Announced Synergies % of Acquiror Target Country Ann. Date Target Operating Cost Base
Barclays Woolwich UK Aug 2000 37%
Santander BCH Spain Jan 1999 36%
Fortis Generale de Banque Belgium Jun 1998 23%
Credito Italiano Unicredito Italy Apr 1998 29%
UBS SBC Switzerland Dec 1997 49%
Range of in-market mergers 23% - 49%
Source: Company filings, press releases and investor presentations and Securities Data Corporation 18 Note: Announced synergies are not necessarily indicative of actual synergies achieved Bolstering Capital Ratios
Agency Rating Comment Standard & Poors I A+ Senior ratings reaffirmed “The acquisition of Overseas Union Bank will solidify DBS’ position as the market I Removed from Creditwatch leader in Singapore, controlling about Negative one-third of the domestic banking assets…”
“…strong likelihood that additional equity of appropriate quality and quantity will be injected into DBS Bank, aside from the further equity that may be issued under the proposed OUB acquisition.” That would allay the rating company’s concerns about the bank’s capital structure.
Moody’s I Aa2 Senior ratings reaffirmed “Like most in-market combinations, the acquisition of OUB would be beneficial”
“Moody’s is positive about the long-term synergies and fortification of DBS Bank’s franchise that would result from a successful offer for OUB…”
“Furthermore, the offer which is comprised 88% of shares, will bring DBS Group Holdings a timely infusion of common equity”
19 Building an Asian Powerhouse: Strengthening Our Home Base
Transaction Build Even Greater Strength Summary
Strategic Complete Domestic Leadership and Extend into Rationale New Markets
Financial Enhance Shareholder Value Through Growth Rationale Opportunities and Synergies
Superior Manage for Growth and Value Equity Story
20 Managing for Growth and Value
DBS OUB
I Tier 2
Capital I Hybrid Tier 1 û Management I Tier 1 Preference Shares issue
I Hong Kong Regional I Philippines Diversification û Initiatives I Thailand
I DBS Land
Non-Core I Singapore Petroleum û Asset Divestitures I DBS Tampines Centre
21 Applying Disciplined Approach to Value Maximization of Non-Core Assets
I We believe a number of OUB’s assets to be non-core and will carefully examine their value to DBS. These include:
N OUE (Market Capitalization(a): S$1.6 billion)
N OUL (Private)
N Hotel properties (Private)
N OUB Insurance (Private)
22 (a) As at June 22, 2001. Source: Bloomberg Managing for Scale Long Term Asset Growth
1996 Asset Growth 2000
DBS S$55.7 bn S$111.2 bn 100%
DBS + S$55.7 bn Dao Heng S$146.3 bn 163%
OCBC S$51.5 bn S$59.7 bn 16%
S$33.6 bn OUB S$46.6 bn 39%
UOB S$45.8 bn S$66.3 bn 45%
23 Source: Company reports Managing for Returns Long Term Return to Shareholders
1996 ROE Growth 2000
DBS 10.3% 12.9% 25%
OUB 10.1% 9% 11.0%
UOB 15.6% (10)% 14.1%
OCBC 12.8% 10.7% (17)%
24 Source: Company reports Restructuring for Value DBS Thai Danu Bank
1Q 1999 1Q 2001 Change %
NPL Ratio 49.0 % 7.4 % (85) %
Branches 95 61 (36) %
Personnel 3,450 1,850 (46) %
Operating Costs 676.9 mm Baht 515.5 mm Baht (24) %
Net Income Margin 0.9 % 2.6 % 189 %
Net Income (347.3) mm Baht 33.0 mm Baht NM
25 Source: DBS Bank Growing for Value DBS Kwong On Bank
Dec 1999(a) Dec 2000 Change %
Net Interest Margin 2.79 % 2.95 % 6 %
Customer Loans S$3.6 bn S$4.6 bn 26 %
Customer Deposits S$4.8 bn S$5.7 bn 18 %
NPL Ratio 15.3 % 5.6 % (63) %
Net Profit after Minority S$60.2 mm S$73.7 mm 22 %
26 (a) Consolidated from May 1999 Source: DBS Integrating for Value DBS and POSBank
1998 2000 Change
Branches 173 115 (34) %
Deposits S$65.8 bn S$69.1 bn 5 %
Operating Profits(a) S$1.1 bn S$1.6 bn 45 %
27 Source: DBS prospectus – DBS Bank data 1998 vs. 2000 (a) DBS Bank solo earnings. POSB consolidated from May I 1998. Excludes one time gains form sale of DBS Land and other units Commitment to Value
Philippe Paillart CEO
Jackson Tai President and COO
OUB Dao Heng Bank Integration Team Integration Team
Randolph Sullivan Chong Kie Cheong (Dao Heng Bank) Finance Director Managing Director & Alternate CEO of Dao Heng Edmund Koh Bank Managing Director Chan Tak Kin Managing Director Oon Kum Loon Managing Director Rajan Raju Managing Director Greg Seow Managing Director
28 Deep Integration Teams: Dao Heng
Name Experience (Years)
William Hon 23 Consumer and Ted Ling 27 Enterprise Banking TK Chan 29 R Strickland 28
Corporate, Corporate, S F Wong Investment Banking 26 and Treasury PS Tam 22
Rajan Raju 11 Jennifer Lynn 16 Finance, IT and Infrastructure David Faulkner 26 Kendy Wong 20
Randy Sullivan, CEO Designate 28 Michael Chan 25 Dao Heng Personnel Sunny Cheung 26 David Tsui 34 Steve Wong 26
Total 367 Years 29 Deep Integration Teams: OUB
Name Experience (Years)
Greg Seow 22
Consumer and Edmund Koh 17 Enterprise Hong Tuck Kun 26 Banking Craig Townend 33
Corporate, Oon Kum Loon 27 Investment Seck Wai Kwong 21 Banking and Treasury Wong Ban Suan 21
Chong Kie Cheong 30
Finance, IT and Tom Vainius 21 Infrastructure Infrastructure Chua Bee Choo 26
Andy Chan 21
Total 265 Years 30 Best Positioned to Create Value
I Unparalleled record in Singapore
I Experienced management team
I Sophisticated user of capital management
I Existing infrastructure
I Investments in technology
I Renewed focus on cost management
31 Building an Asian Powerhouse: Strengthening Our Home Base
Transaction Build Even Greater Strength Summary
Strategic Complete Domestic Leadership and Extend into Rationale New Markets
Financial Enhance Shareholder Value Through Growth Rationale Opportunities and Synergies
Superior Manage for Growth and Value Equity Story
32