DBSBANK ANNUAL REPORT 198 5 Financial Calendar 1984 final dividend paid 7th May 1985 1985 interim dividend paid 5th September 1985 Financial year-end 31st December 1985 Announcement of half-year results 1985 6th August 1985 Announcement of full-year results 1985 4th March 1986 Annual General Meeting 13th May 1986 Proposed payment date of 1985 final dividend 13th May 1986 Announcement of half-year results 1986 August 1986 Announcement of full-year results 1986 March 1987 CONTENTS Chairman's Statement 3 Review of Operations 7 Financial Report 15 Economic Review 41 Corporate Directory 44 DBS Bank Offices 46 Subsidiaries and Associated Companies 48 Notice of Annual General Meeting 50 In Brief * Adjusted for the rights issue in 1984 and shares arising from conversion. **Figure for 1985 excludes employees of Raffles City Pte Ltd, which ceased to be a subsidiary in August 1985. Earnings and Dividends Average Shareholders' Funds Average Assets and Return Declared and Return on Shareholders' on Assets Funds excluding contra Net Dividends Declared and Return On Average Shareholders' Return on Average Assets Retained Earnings Funds excluding contra Chairman's Statement he Singapore economy, in a significant increase in the after two decades of Bank's market share of Singapore continuous growth, dollar deposits. contracted in 1985. Its In August 1985, the Bank's 28th TGDP, instead of attaining real branch, at Kent Ridge, was opened. growth, actually fell by 1.8%. The With the commissioning of 18 main domestic factors that affected more Autobanks in 1985, the total the poor economic performance number of Autobanks has been consisted of oversupply in the increased to 80, making this network property market, structural the largest among commercial banks problems in shipping, shipbuilding in Singapore. and marine-related and other In January 1986, the Bank industries, and high labour and launched DBS Autophone, a operating costs. The manufacturing telephone banking service. DBS and construction sectors expe- Autolink was introduced on a pilot rienced sharp declines in activities basis as a corporate terminal service in 1985. for customers in November 1985. Against this background, the Working in cooperation with the DBS Group's after-tax earnings per other major local banks, DBS Bank share declined to 29.7 cents as participated in the scheme for compared with 45.6 cents in 1984. electronic funds transfer at point-of- Return on average shareholders' sale (EFTPOS). Under this scheme, funds was also reduced from 8.0% in all ATM card-holders of the partici- 1984 to 5.1% in 1985. Total assets pating banks can pay for their (including contra items) grew by purchases at selected outlets using 24.2% to reach S$22,058.9 million at their ATM cards. year-end. The Bank continued to play a An interim dividend of 8% less leading role in the domestic capital income tax of 40% was paid in market in 1985. It accounted for 58% September 1985. In view of the of the funds raised by Singapore- continuing adverse trends in the incorporated companies on the local operating environment, the Stock Exchange. DBS Bank was the Directors have deemed it prudent to lead manager and underwriter of the recommend a smaller second and Singapore Airlines Limited (SIA) final dividend of 6% less income tax. public share offer. This offer of 100 This will bring the total dividend for million SIA shares at S$5 per share the year to 14% as against 16% for was the largest share offer made so 1984. far in Singapore. Though the public While banking income increased issue of SIA shares was marred by by 8.0% over 1984 with useful the year-end crisis in the stock contributions from fee-and market, the confidence shown by the commission-based operations and subscribers to the shares was most from securities transactions, non- encouraging and, to all intents and banking operations drastically purposes, this public offer was a declined. Dividend income was very resounding success. Although the much reduced. Rental income activity in the Asian Dollar Bond suffered severely due to lower rents market was subdued and there were from the Bank's and the Group's only four bond issues throughout properties even though the the year, DBS Bank co-managed two occupancy rates were held close to of these issues. 1984 levels. With the expected liberalisation The Bank's total loans and in the use of Central Provident Fund advances declined by 6.6%. There balances, the Bank can look forward was an increase in non-bank to new financial services, opportu- customer deposits of 24.6% resulting nities in funds management and 3 investment consultancy activities. In programme to modernise banking anticipation, it plans to establish a operations. The manhours spent in number of unit trusts to provide staff training increased by 7% in avenues for investment by Central 1985. Training programmes Provident Fund contributors and focussed mainly on job-specific other customers. The first of these technical skills and on enhancing unit trusts, the Shenton Growth and improving the attitudes of staff Fund, was launched in June 1985. to render new and better quality The local stock market closed the customer services. year on a tumultuous note. Over- During the year, further speculation in certain counters substantial investments were made caused a crisis to be developed in in computer resources to ensure the local stock market towards the efficiency and competitiveness in latter part of the year. Many stock- the longer term. An additional brokers who were actively involved mainframe computer was purchased in futures trading were in deep to extend the capacity for data trouble. When one of the speculative processing. Computer literacy was counters collapsed, the very founda- actively promoted among staff at all tions of the Singapore stock market levels. The use of computers, were shaken. The Stock Exchange wherever practical to improve resorted to the unprecedented efficiency, was extended in all areas action of suspending trading for of operations. Through a wide range three days in December 1985. The of training programmes, bank staff four major local banks were invited enjoyed easy access not only to to support the stock market so that appropriate computer hardware but the financial structure would not also to technical guidance, hands-on suffer from a crisis of confidence. experience and software. They were also to render every The real estate subsidiary of the possible assistance so as to prevent a Group, DBS Land, achieved satis- major financial catastrophe. Long factory levels of occupancy for its hours were spent hammering out shops, warehouses, residential what has since become known as the properties, and office spaces. "lifeboat" scheme to maintain However, profit after tax for DBS confidence and to maintain the Land and its subsidiaries declined smooth functioning of the local from S$7.6 million in 1984 to S$5.5 stock market. In return for their million in 1985. During the assistance, the Stock Exchange year, the corporate structure of the agreed to admit the four banks as DBS Land Group of companies was members, to help to restore stability streamlined. A partly-owned and confidence. DBS Securities investment holding subsidiary, Singapore Pte Ltd was set up and Raffles Holdings Pte Ltd, whose commenced trading on the Stock only investment was in shares in Exchange on 19th February 1986. Raffles City Pte Ltd (RCPL) was The Bank is investing voluntarily liquidated. The shares increasingly in trained manpower, were distributed to its shareholders, electronic equipment and techno- and RCPL ceased to be a subsidiary logy. This will enhance and widen of DBS Land. the range of sophisticated services DBS Finance was able to to its customers. It continued to increase its operating profit by recruit staff to further enhance its 10.2% to reach S$23.1 million. in-house specialist skills in new and However, as in the case of the Bank, expanding areas of business and it increased its general and specific financial services, particularly in the provisions. This resulted in a lower field of computers and electronic profit after tax of S$5.3 million equipment to support the compared with S$9.7 million in 4 1984. In line with its growing scale industries, uncompetitive pro- of operations, DBS Finance, in duction costs and a difficult December 1985, increased its issued business environment in South East and paid-up capital from S$5.2 Asia. However, recent Singapore million to S$12.0 million through a Government initiatives, fiscal bonus issue. measures, tax concessions, efforts to The Insurance Corporation of improve productivity, and other Singapore maintained profits at regulatory changes should present close to the previous year's level new growth opportunities. The with S$7.3 million in after-tax property sector may continue to be profits in 1985. Lower profits from gloomy but given the limitations of general insurance business were land in Singapore, and fewer new offset by increases in investment buildings being approved for income and in life insurance construction, the current depressed business. prices and rentals should not be On 14th February 1986, Mr regarded as a permanent phase in Chua Kim Yeow relinquished his the real estate cycle. In the longer executive appointment in the Bank term, the value of properties in to become Chairman of the Post Singapore should recover. Office Savings Bank. He continues 1985 was also a demanding year as Deputy Chairman on the Bank's for the staff of the Bank. On behalf Board of Directors. We would like of the Board, I must thank our staff to thank him for his many contri- at all levels for their dedicated butions as an executive of the Bank service and hard work.