Dah Sing Bank, Limited


The Directors of Dah Sing Bank, Limited (the "Bank") announce that the audited results of the Bank and its subsidiaries (the "Group") for the year ended 31st December 1999 are as follows:

Consolidated Profit and Loss Account
for the year ended 31st December

  1. The Bank adopted a new accounting policy on investments in securities to comply with the new Statement of Standard Accounting Practice no. 24 "Accounting for investment in securities" ("SSAP 24"). Dated debt securities intended to be held to maturity are accounted for as held-to-maturity securities, and are stated in the balance sheet at amortised cost less any provision for diminution in value. Investments in other than held-to-maturity securities are classified as either trading securities or non-trading securities. Both are stated at fair value in the balance sheet in accordance with the alternative treatment as defined in SSAP 24. Changes in fair value of trading securities are recognised in the profit and loss account as they arise. Changes in fair value of non-trading securities are taken to shareholders' funds until the security is sold, matures or is determined as impaired, at which time the relevant gain or loss is transferred from the investment revaluation reserve to the profit and loss account.

    The comparative amounts for 1998 have been restated, with the opening retained earnings for 1998 decreased by HK$5,553,000 to reflect changes in the Group's profit after taxation for periods prior to 1998, and a reduction of HK$3,941,000 in the Group's profit after taxation for the year ended 31st December 1998.

  2. The charge for bad and doubtful debts for the year comprises:

  3. Taxation

    1. Hong Kong profits tax has been provided at 16% (1998: 16%) on the estimated assessable profit for the year.

    2. Breakdown of taxation

      The Group's investments in limited partnerships are written off in the same year as the taxation benefits resulting from those investments are received and utilised.

    3. There is no significant deferred taxation liability not provided for.

Other Financial Indicators
Consolidated Balance Sheet

Financial Ratios

Additional Information on Advances to Customers and Other Accounts
as at 31st December

  1. Advances to customers and other accounts:


  2. Gross advances to customers by industry sector:

  3. The total advances on which interest is being placed in suspense or on which interest accrual has ceased:

  4. Overdue advances:

  5. Overdue advances are reconciled to non-accrual advances as follows:

  6. The amount of rescheduled advances (net of those which have been overdue for over three months and reported in Note (d) above):

Review of Business

After a difficult 1998, the operating environment in 1999 improved resulting in a gradual GDP recovery from mid year. With lower interest rates, the stabilization of property prices, a rise in domestic consumption and easing in unemployment, our economy worked its way out of the recession triggered by the 1997 Asian financial turmoil.

Benefiting from the improving operating environment, the Bank was able to achieve a very respectable performance in 1999, generating a stronger profitability relative to 1998. Operating profit before provisions was 60.5% higher, resulting from a stronger revenue growth and good expense management.

Net interest income grew 38.9% in the year as a result of a higher net interest margin brought about by the wider spread between average Prime rate and interbank interest rates, growth in our higher yielding lending, and a reduced funding cost assisted in part by the easing in local interbank interest rates.

Other operating income was 7.3% lower than 1998, as a result of lower contribution from foreign exchange and securities dealing. A HK$12.8 million gain arising from the disposal of interest in a subsidiary in 1998 boosted income in 1998. Partly offsetting the lower contribution was a stronger credit card income, and the servicing fees from securitized and sold mortgages.

Operating expenses decreased 1.3% relative to 1998. This reflected our effort taken in the past two years to trim our expense base and improve productivity.

On 30th December 1999, the Bank entered into a data centre outsourcing agreement with IBM by outsourcing the Bank's data centre operation to the latter for a 7-year period. This arrangement is expected to bring meaningful saving in our IT expenses, an improvement in our system performance and contribute to an enhancement in our services to customers. This is a part of our long-term strategy to upgrade the efficiency of our services.

The Bank's charge for bad and doubtful debts was 56.2% higher in the year, reflecting the Bank's prudent provisioning practice. Due to the general credit contraction in the local market and depressed cash flow of some of our customers, our specific provision charge was 39.5% higher relative to 1998. Our loan book growth in 1999 led to a rise in general provision in the year.

Total loans and advances to customers net of provisions were 8.2% higher when compared with the 1998 year-end balance. Total deposits, comprised of customers' deposits and certificates of deposit, were up by 9.4% relative to 1998. Our loan to deposit ratio of 71.1% was similar to the level in 1998. An average liquidity ratio of 47.5% was maintained in 1999.

Our 1998 performance was significantly and negatively affected by the dramatic fall in local property prices, with a total revaluation deficit of HK$108.6 million charged to our profit in that year booked under "Loss from disposal/revaluation of fixed assets". The annual revaluation of investment properties in 1999 revealed that the market value of our investment properties was steady over the year, resulting in a small revaluation surplus.

We made substantial progress in developing our e-banking infrastructure and technology in the second half of 1999. We have already developed our "www.dahsing.com" web site as another distribution channel to promote our banking business and acquire new customers. The site provides a range of e-banking services, including online credit card and personal loan applications, mortgage valuation, foreign exchange and deposit rate quotes, and online insurance application. We are the first and the only provider so far for automatic add-value for the Octopus debit cards if the cardholders have a credit card or deposit account with us. We set up our WAP (Wireless Application Protocol) site in December 1999 and are offering updated product news, real-time financial information and financial modelling tools to our WAP mobile phone customers.

Hong Kong, Monday, 6th March 2000

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