DBS Group Holdings Ltd Annual Report 2017 Development Bank of Singapore WorldReginfo - d394619c-1a83-4543-899e-e8949894556b Digital Bank of Singapore 2018 marks DBS’ 50th anniversary. We trace our roots back to 1968, when as the Development Bank of Singapore we played a key role in financing the industrialisation of a newly- independent nation. As Singapore grew, so did we. Today, we are not only Southeast Asia’s largest bank, but also one of the safest and best. We are excited about the future. At 50, it is a coming of age. By reimagining and innovating banking, we believe banking can be simpler, faster and more effortless for all. And as the Digital Bank of Singapore, we are committed to enabling all who deal with us to Live more, Bank less. About us About this report DBS is a leading financial services group The Board of Directors is responsible for in Asia, with over 280 branches across the preparation of this Annual Report. It is 18 markets. Headquartered and listed in prepared in accordance with the following Singapore, we have a growing presence in regulations, frameworks and guidelines: the three key Asian axes of growth: Greater • The Banking (Corporate Governance) China, Southeast Asia and South Asia. Our Regulations 2005, and all material aspects “AA-” and “Aa1” credit ratings are among of the Guidelines on Corporate Governance the highest in the world. We have also been for Financial Holding Companies, Banks, recognised for our leadership in the region, Direct Insurers, Reinsurers and Captive having been named “Asia’s Best Bank” by Insurers issued in April 2013 by the several publications including The Banker, Monetary Authority of Singapore. Global Finance, IFR Asia and Euromoney since 2012. In addition, we have been named • Singapore Exchange Securities Trading “Safest Bank in Asia” by Global Finance for Limited (SGX-ST) Listing Rules 711A and nine consecutive years from 2009 to 2017. 711B on Sustainability Report; and Practice Note 7.6 Sustainability Reporting Guide issued in July 2016 by SGX. • The International Integrated Reporting <IR> Framework issued in December 2014 by the International Integrated Reporting Council. • The Global Reporting Initiative (GRI) Standards issued in October 2016 by the Global Sustainability Standards Board. • The Guidelines on Responsible Financing issued in October 2015 by the Association of Banks in Singapore. • The recommendations on enhanced banks’ risk disclosures issued in October 2012 by the Enhanced Disclosure Task Force (EDTF). We have implemented View our report online and on the go most of the recommendations, including Our Annual Report, accounts and other information those pertaining to expected credit loss about DBS can be found at www.dbs.com. approaches issued in November 2015. WorldReginfo - d394619c-1a83-4543-899e-e8949894556b 1 Overview 2 Who we are This section provides information on 4 Board of Directors who we are and our leadership team. It also contains messages from 6 Group Management Committee the Chairman and CEO. 8 Letter from the Chairman and CEO 12 Digital Bank of Singapore: Deeper. Broader. Smarter. 18 CEO reflections Business Model 20 How we create value – our business model This section discusses our business model and 22 How we use our resources provides details on how we use our resources and distribute value to our stakeholders. 24 How we distribute value created 25 Material matters 28 What our stakeholders are telling us Performance 30 CFO statement This section provides information on our financials, 2017 priorities and 38 Our 2017 priorities performance by customer segments. 42 Institutional Banking 44 Consumer Banking/ Wealth Management Governance and Risk Management This section details our commitment 48 Corporate governance to sound and effective governance, 62 Remuneration report risk management and sustainability. 68 CRO statement 71 Risk management 92 Capital management and planning 97 Sustainability 108 Summary of disclosures 108 Corporate governance 112 Enhanced Disclosure Task Force recommendations 117 Global Reporting Initiative Content Index 124 Independent limited assurance report on sustainability information Financial Reports 126 Financial statements 189 Directors’ statement 193 Independent auditor’s report 200 Five-year summary Annexure 201 Further information on Board of Directors 206 Further information on Group Management Committee 209 Main subsidiaries and associated companies 210 International banking offices 212 Awards and accolades won Shareholder Information 214 Share price 215 Financial calendar 216 Shareholding statistics 218 Notice of Annual General Meeting Proxy form WorldReginfo - d394619c-1a83-4543-899e-e8949894556b 2 DBS Annual Report 2017 Who we are DBS is a commercial bank headquartered and listed Total Assets (SGD) in Singapore. As one of Asia’s leading banks, we understand the intricacies of the region’s markets, and billion provide a full range of services in consumer banking, 518 wealth management and institutional banking. To Income (SGD) continue staying at the forefront of the industry, we are reimagining banking. We are using digital technology and billion innovation to extend our reach, enhance our efficiencies 11.9 and create tomorrow’s solutions. We are proud to be Net Profit (SGD) recognised not only as Asia’s Safest and Best Bank, but also Asia’s Best Digital Bank. 4.39 billion Present in 18 markets globally, Over including six priority markets in Asia 200,000 Institutional Banking customers Over 8.8 million Consumer Banking/ Wealth Management customers Mainland China Over Taiwan 24,000 India Hong Kong Employees Group Income 9% 26% Singapore 65% Indonesia Singapore Greater China South, Southeast Asia and Rest of the World WorldReginfo - d394619c-1a83-4543-899e-e8949894556b Who we are 3 Asia’s Safest, Top of the Asia’s Best Asia’s Best Digital Class Digital Bank Euromoney 2017 “DBS is perhaps the only bank that does a good job of quantifying what tech means for profitability. It can dissect to a minute degree the Best Bank performance of digital versus traditional customers, on return on equity, in Asia Pacific income, frequency of transaction, cost to service and a host of other IDC Financial Insights 2017 metrics.” Euromoney “DBS presented one of the most comprehensive digital strategies of any bank in the world, let alone Asia.” Citi Safest Bank in Asia Global Finance 2017 “DBS is rapidly evolving into flagbearer of digital initiatives in ASEAN, where we believe the bank has been ahead of the curve.” JP Morgan Most Valuable Bank “For investors who feel banks need a strong grasp of technology, DBS Brand in ASEAN shows edge.” Bernstein Brand Finance 2018 “This could be one of the first banks to develop a methodology in measuring digital value creation.” Deutsche Bank WorldReginfo - d394619c-1a83-4543-899e-e8949894556b 4 DBS Annual Report 2017 Board of Directors 5 Board of Directors Peter Seah Piyush Gupta Bart Broadman Euleen Goh Ho Tian Yee Nihal Kaviratne Olivier Lim Ow Foong Pheng Andre Sekulic Danny Teoh The Board is committed to helping the bank achieve long-term success. The Board provides direction to management by setting the Group’s strategy and Best Managed Deep banking knowledge Board Gender overseeing its implementation. It ensures risks and Board and experience independence diversity rewards are appropriately balanced. Singapore Corporate More than two-thirds of the A majority of our directors Two of ten directors Awards 2017 Board are seasoned bankers, including the Chairman are female. while the rest have extensive are non-executive and independent industry experience ranging from directors. consumer goods to accounting. WorldReginfo - d394619c-1a83-4543-899e-e8949894556b 6 DBS Annual Report 2017 Group Management Committee 7 The Group Management Committee executes the Group stategy and long-term goals of the Group. It drives business performance and organisational synergies. It Management Average years of About one-third of our is also responsible for protecting and enhancing our experience of the Group Management Group Management Committee members Committee brand and reputation. Committee. are women. Piyush Gupta* Jerry Chen Chng Sok Hui* Eng-Kwok Seat Moey Philip Fernandez^ Neil Ge David Gledhill* Derrick Goh^ Chief Exective Officer Taiwan Finance Capital Markets Corporate Treasury China Technology & Operations Audit Karen Ngui Sebastian Paredes* Elbert Pattijn* Lam Chee Kin Lee Yan Hong Sim S Lim* Andrew Ng* Jimmy Ng Strategic Marketing Legal, Compliance & Secretariat Human Resources Singapore Treasury & Markets Audit Hong Kong Risk Management & Communications Those marked by * are also in the Group Executive Committee. Those marked by ^ are new members of the Group Management Committee in 2018. Jimmy stepped down from the Group Management Committee at end 2017 following an appointment to a new role. Pearlyn Phau^ Shee Tse Koon Surojit Shome Paulus Sutisna Tan Su Shan* Tan Teck Long^ Jeanette Wong* Consumer Banking/ Consumer Banking/ Read more about the Group Strategy & Planning India Indonesia Institutional Banking Institutional Banking Wealth Management Wealth Management Management Committee on page 206. WorldReginfo - d394619c-1a83-4543-899e-e8949894556b 8 DBS Annual Report 2017 Letter from the Chairman and CEO 9 Letter from the Chairman and CEO “2017 was a great year for DBS’ business franchise and digital + transformation.” 11.9 4.39 93 50 SGD billion SGD billion cents cents Chairman Peter Seah Total income Net profit Dividend Total income reached a new high, bolstered Net profit increased 4% to a record We proposed a final dividend of 60 cents per by growth in loans and fee income. SGD 4.39 billion from broad-based growth share, bringing the full-year ordinary dividend in business volumes. to 93 cents per share, up 55%. Special dividend A 50-cent special dividend has been proposed. A strong, resilient franchise Cash management income grew 32% to population in Asia’s third-most populous of new applications, and enable scalability on the front end. In 2017, we launched the reimagining banking, using digital technology SGD 1.11 billion while trade loans rose 25% nation. It follows the introduction of through ecosystem partnerships.