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DBS Group Holdings Ltd Annual Report 2016

Worlds Best Digital Bank

Living, Breathing Asia

What makes DBS the Worlds Best Digital Bank?
Banking It starts with reimagining banking.

Worlds Best From Singapores favourite mobile wallet to

Indias rst paperless, branchless, signatureless
Digital Bank mobile-only bank. A rst-in-its-class social network
for SMEs to hackathons across Asia and ntech
internships in DBS.

These are just some of the reasons we have been

recognised as the Worlds Best Digital Bank.

Our digital transformation pervades every part

of the bank. We are driven by one relentless
purpose, which is to live and breathe innovation
to Make Banking Joyful.

About us About this report

DBS is a leading nancial services group The Board is responsible for the
in Asia, with over 280 branches across preparation of this Annual Report.
18 markets. Headquartered and listed in It is prepared in accordance with the
Singapore, we have a growing presence following regulations, frameworks
in the three key Asian axes of growth: and guidelines:
Greater China, Southeast Asia and South
Asia. Our AA- and Aa1 credit ratings The Banking (Corporate Governance)
are among the highest in the world. Regulations 2005, and all material
We have also been recognised for our aspects of the Guidelines on Corporate
leadership in the region, having been Governance for Financial Holding
named Asias Best Bank by several Companies, Banks, Direct Insurers,
publications including The Banker, Reinsurers and Captive Insurers issued
Global Finance, IFR Asia and Euromoney on 3 April 2013 by the Monetary
since 2012. Authority of Singapore.

In addition, we have been named Safest The International Integrated Reporting

Bank in Asia by Global Finance for eight <IR> Framework issued in December 2014.
consecutive years from 2009 to 2016.
The Global Reporting Initiative (GRI)
G4 Sustainability Reporting Guidelines
issued in May 2013. This positions us well to
meet the Singapore Exchange sustainability
reporting requirements as well as The
Association of Banks in Singapore
Guidelines on Responsible Financing
that will take effect in 2017.
View our report online
Our Annual Report, accounts and other The Enhanced Disclosure Task Force
information about DBS can be found at recommendations to enhance banks
www.dbs.com risk disclosures issued in October
2012. We have implemented most
of the recommendations, including
those pertaining to expected credit loss
approaches issued in November 2015.
Overview 2 Who we are
4 Board of Directors
This section provides information on 6 Group Management Committee
who we are and our leadership team. 8 Letter from the Chairman and CEO
It also contains messages from the 12 Worlds Best Digital Bank
Chairman and CEO. 20 CEO reections

Business Model 22 How we create value our business model

24 How we use our resources
This section discusses our business 27 How we distribute value created
model and provides details on how 28 Material matters
we use our resources and distribute 30 What our stakeholders are telling us
value to our stakeholders.

Performance 32 CFO statement

38 Our 2016 priorities
This section provides information 42 Institutional Banking
on our nancials, 2016 priorities and 44 Consumer Banking/Wealth Management
performance by customer segments.

Governance and 48 Corporate governance

64 Remuneration report
Risk Management 70 Summary of disclosures
74 CRO statement
This section details our commitment
77 Risk management
to sound and effective governance,
103 Capital management and planning
risk management and sustainability.
108 Sustainability

Financial Reports
120 Financial statements
183 Directors statement
187 Independent auditors report
193 Five-year summary

194 Further information on Board of Directors
199 Further information on Group Management Committee
201 Main subsidiaries and associated companies
202 International banking ofces
204 Awards and accolades won

Shareholder Information
206 Share price
207 Financial calendar
208 Shareholding statistics
210 Notice of Annual General Meeting
Proxy form

| 1
Who we are

DBS is a commercial bank Present in 18 markets globally,

including six priority markets in Asia
headquartered and listed in
Singapore. As one of Asias
leading banks, we understand
the intricacies of the regions
markets, and provide a full range
of services in consumer banking,
wealth management and
institutional banking. To continue China
staying at the forefront of the
industry, we are reimagining Taiwan
Hong Kong
banking, using digital technology India
and innovation to extend our
reach, enhance our efciencies
and create tomorrows solutions.
We are proud to be recognised
not only as Asias Safest and Singapore
Best Bank, but also Worlds
Best Digital Bank. Indonesia

Total Assets (SGD) Over Singapore

482 bn 200,000 66%

Institutional Banking Customers of group income
Income (SGD)

11.5 bn
Over Greater China

Net Prot (SGD)

Consumer Banking/Wealth
of group income

4.24 bn
Management Customers
South, Southeast Asia
Over and Rest of the World

* As at February 2017
of group income

2 | DBS Annual Report 2016

Worlds Best
Digital Bank
Euromoney Awards for Excellence 2016

Leaders in digital banking talk about

the difference between digitising
aspects of a bank and creating a
truly digital nancial institution. DBS
is doing this better than any other
bank. It is demonstrably the case that
digital innovation pervades every part
of DBS, from consumer to corporate,
SMEs to transaction banking and even
the DBS Foundation.

Clive Horwood
Editor of Euromoney Magazine

Asias Safest, Asias Best

Safest Bank Asias Most Valuable

in Asia Best Bank Banking Brand
by Global Finance by Euromoney 2016 in ASEAN and Singapore
2016 by Brand Finance 2016

Who we are | 3
of Directors
Peter Seah

Ho Tian Yee
The Board is committed
to helping the bank
achieve long-term success.
The Board provides
direction to management
by setting the Groups Nihal Kavirat
strategy and overseeing its
Piyush Gupta
implementation. It ensures
risks and rewards are
appropriately balanced.

Deep banking Bart Broadm

knowledge an Ow Foong Phen
and experience
Two-thirds of the Board are seasoned
bankers, while the rest have extensive
industry experience ranging from Andre Sekulic
consumer goods to accounting.

Euleen Goh

A majority of our directors including
the Chairman are non-executive
and independent directors. Danny Teoh

Gender diversity
Two of nine directors are female.

4 | DBS Annual Report 2016 Board of Directors | 5

Chng Sok Hui*
Piyush Gupta* Jerry Chen Finance Eng-Kwok Seat Moey Neil Ge
Chief Executive Ofcer Taiwan Capital Markets China

The Group Management

Committee executes the
strategy and long-term
goals of the Group. It drives
business performance and
organisational synergies.
It is also responsible for
protecting and enhancing
our brand and reputation.
David Gledh
Technology & Lam Chee Kin Sim S Lim* Andrew Ng*
Operations Legal, Compliance Lee Yan Hong Singapore Treasury & Markets
& Secretariat Human Resources

Average years of experience of the

Group Management Committee.

About one-third of our Group Management

Committee members are women. Karen Ngui
Strategic Marketi
Jimmy Ng & Communicatio
ns Sebastian Paredes* Elbert Pattijn* Shee Tse Koon
Audit Hong Kong Risk Management Strategy & Planning

Those marked by * are also in the

Group Executive Committee.

For more information on the Group

Management Committee, please refer
to pages 199 to 200.
Surojit Shome Tan Su Shan* Institution Wong*
India Paulus Sutisna Consumer Banking/ a l Banking
Indonesia Wealth Management

6 | DBS Annual Report 2016 Group Management Committee | 7

Letter from the
Chairman and CEO
Much of the heavy lifting is at the back We encourage this by creating immersion
end, where the bank has spent the past
few years re-architecting our technology
infrastructure. Today, we have a common
platform of services and APIs which enables
programmes which involve experiential
learning and experimentation, such as
hackathons, where employees from across
the bank work with start-ups to develop
SGD 11.5 bn
Total income
We made good us to integrate best-in-breed technologies, solutions to business challenges. Since 2015,
Our total income rose to a record
allowing us to move faster on the front end. we have also run over 1,000 experiments
progress on our As we move forward, we aim to adopt the in the bank. on higher loan volumes, improved
net interest margin and broad-based
strategy, delivering practices of global technology companies
non-interest income growth.
known for their ability to constantly We also conduct our own incubator/
strong operating experiment, automatically scale and rapidly accelerator programmes, where digital
performance and cost bring new features to market. Like them, start-ups turn their concepts into prototypes.
the bank is embracing microservices and Over 400 start-ups were engaged in 2016
efciencies, as well
as solid returns.
cloud technology, which will enable us
to be nimbler and more ntech-like.

Embedding ourselves in the

as part of these programmes.

We have invested in creating the supporting

infrastructure for a start-up culture. Many of
Chairman Peter Seah customers journey our ofces regionally have been designed to Cost-income ratio
help foster innovation. This is done through Our cost-income ratio fell from 45% to 43%
To become more customer-centric, we have as past investments to digitalise the bank
an open ofce concept and dedicated spaces
made it a priority to embed ourselves in together with cost management initiatives
such as social hubs for networking as well
the customers journey. This means thinking yielded faster productivity gains.
as innovation and journey laboratories. In
about banking not as a separate activity, but
2015, we established DBS Academy learning
as one that should be seamlessly interwoven
centres in Singapore, Indonesia and Taiwan
DBS earnings resilience is the payoff from Ofcially launched a 15-year regional into a customers everyday life. To do so, we
An eventful year to conduct immersive programmes. In 2016,

60 cents
investments made in recent years to build distribution agreement with Manulife need to have a relentless focus on customers
we launched DBS Asia X a 16,000 sq ft
multiple business engines and to digitalise covering Singapore, Hong Kong, China true jobs-to-be-done.
In 2016, the global economy registered space at Fusionopolis in Singapore, dedicated
tepid growth for the sixth year. Markets the bank. and Indonesia. The partnership combines to designing iconic customer experiences
DBS Asian banking franchise with the As an example, in the past, a home-buyer
were volatile, exacerbated by political shocks and fostering greater collaboration with the
With China slowing, trade nance came insurance and wealth management might have interacted with us only when
such as Brexit and the results of the US ntech ecosystem. Dividends
under pressure. However, weakness in expertise of Manulife. he or she had identied a dream home,
presidential elections. Across the globe, We proposed full-year dividends
trade was offset by broad-based growth in and was in need of a mortgage. Today,
a rising tide of populism and discontent All these allow employees to be immersed of 60 cents per share, unchanged
consumer banking, investment banking, cash we seek to understand customers needs
reared its head, adding to the uncertainty. Worlds Best Digital Bank from the start, beginning with the house-
in new technologies, a start-up culture, from 2015.
Technology disruption also continued to management and non-trade corporate loans. agile methodology and other digital
hunting process, identifying pain-points
force rapid change upon businesses and Since 2009, DBS has executed well against working concepts.
Digitalisation also improved the efciency of and addressing these long before any
whole industries. strategy, doubling both top-line and
the bank, with our cost-income ratio falling banking is done.
bottom-line. Many of our regional priorities Producing results
Against this backdrop, we made good two percentage points to 43%. including becoming a leading regional wealth To be effective, journey thinking involves Having invested time and resources in
progress on our strategy, delivering strong and transaction banking player, as well as digitalising the bank, we have seen
During the year, we completed two milestone research and interviews, business case
operating performance and cost efciencies, growing outside Singapore, remain relevant visible results in a number of areas:
transactions, which will further strengthen development, conducting experiments
as well as solid returns. These results are and continue to have a lot of headroom. At
our franchise and cement our ambitions in and prototyping, before a new product
commendable given China headwinds the same time, we have also been making Expanded customer reach and acquisition.
the wealth and digital space: or process is rolled out.
which reduced customer activity, as well progress in driving a digital agenda. In 2016, 25% of wealth customers
as the collapse of oil prices which caused and more than 60% of Singapore SME
Acquired ANZs wealth and consumer Many of our employees have been trained
stress in the offshore oil support services Our vision in the next phase of growth is to customers were acquired via digital
banking business in ve markets in journey thinking and human-centred
sector. We increased our credit allowances Make Banking Joyful. We seek to act like a channels. In India, DBS launched digibank,
Singapore, Hong Kong, China, Taiwan design. Today, over 300 journeys are being
substantially, and our provision coverage 22,000-person start-up, able to respond and the countrys rst mobile-only bank,
and Indonesia. The transaction adds run across the bank. These journeys involve
ratios remain strong. innovate quickly to deliver simple, fast and a groundbreaking proposition, to penetrate
SGD 17 billion in deposits, SGD 11 billion collaborations across business and support
contextual banking in the digital age. units, as well as across geographies, engaging the retail banking segment. The bank has
in loans and 1.3 million customers, of
acquired more than 840,000 digibank
A strong, resilient franchise which over 100,000 are in the afuent/ Our three-pronged approach involves:
a large part of the organisation.
customers in just 10 months.
private wealth segment, to our franchise.
We delivered record total income of Not only does this solidify our position Creating a start-up mindset
SGD 11.5 billion, while prot before as Asias fth-largest private bank, it
Embracing digital Efciency of the bank. Our cost-income
To be truly digital involves a complete Finally, we are re-wiring the organisation to ratio improved two percentage points to
allowances increased 10% to a new high also enables rapid scale-up of our digital have a start-up culture and mindset. In
transformation of the bank. This goes beyond 43%, due in part to improved productivity
of SGD 6.52 billion. Despite the higher strategy in Indonesia and Taiwan. We addition to being familiar with technology,
customer interfaces, such as digital apps or arising from digitalisation initiatives.
allowances, net prot fell only marginally, expect the deal to be ROE and earnings every employee needs to embrace
mobile/ Internet banking on the front end. In particular, fewer manual processes
down 2% to SGD 4.24 billion. accretive one year after completion. experimentation, entrepreneurship have enabled the bank to support higher
and innovation.

8 | DBS Annual Report 2016 Letter from the Chairman and CEO | 9
business volumes with the same level of of promoting the nations savings habit and We will further our Going forward
resources. For example, digibank India uses facilitating home ownership. Today, DBS and
one-fth of the resources required in a POSB continue to uphold our responsibility to digital agenda in We expect 2017 to continue to be
traditional bank set-up. the communities we operate in across Asia,
whether through providing inclusive and
the coming year by challenging. Our base case is that the global
economy will be somewhat better, backed
Harnessing the power of analytics. subsidised banking, supporting SMEs continuing to roll out by stronger growth in the US economy.
We have leveraged analytics for various or championing social entrepreneurship. Peter Seah Lim Huat
purposes; for example, providing
digibank, pressing However, there is tremendous geopolitical Chairman
uncertainty, both in the US and Europe. There
contextual offers and advice to customers, We also recognise that our lending ahead with customer could also be continuing sectoral weaknesses,
DBS Group Holdings
reducing ATM downtime, predicting and practices play an inuential role in shaping
preventing trade fraud, and lowering the behaviours of our customers towards
journeys and becoming which will pose problems for our clients.

employee attrition. sustainable development, and are committed more data-driven. Nevertheless, our core business should be
to supporting and implementing responsible
DBS digital transformation has won us banking in line with The Association of Banks These initiatives will stable, helped by additional revenues from
the ANZ deal, as well as a potential pickup
external validation not just in Asia but in Singapore Guidelines on Responsible enable us to forge in interest rates.
globally DBS was named Worlds Best Financing. To this end, we have expanded Piyush Gupta
Digital Bank by Euromoney and recognised as our Core Credit Risk Policy to incorporate ahead in our quest to In awarding DBS the Worlds Best Digital CEO
being best in the world for digital distribution the principles and approach to managing reimagine banking. Bank accolade, Euromoney had said this DBS Group Holdings
at the Efma Accenture Innovation Awards. environmental, social and governance (ESG) of the bank:
issues in our lending practices and capital
Sustainability market activities. We have also launched CEO Piyush Gupta Leaders in digital banking talk about the
a new Responsible Financing Standard difference between digitising aspects
which sets out our overarching approach of a bank and creating a truly digital nancial
Sustainability has always been at the core
to responsible nancing. institution. DBS is doing this better than
of our purpose-driven DNA. We recognise
any other bank. It is demonstrably the
that not all returns can be found in nancial
We are on a journey, and in the coming years, case that digital innovation pervades every
statements and that our responsibility
will continue to work on integrating ESG, part of DBS, from consumer to corporate, From left to right:
to shareholders is complemented by
including climate change considerations, into SMEs to transaction banking and even
responsibility to society at large. 1. DBS Asia X, the banks new innovation
our business processes to more fully live our the DBS Foundation. facility, is a space where employees
In serving our customers, we are committed ethos of Making Banking Joyful. come together to design iconic customer
We will further our digital agenda in the experiences as well as collaborate
to a culture that is sensitive to regulations with ntechs.
coming year by continuing to roll out
and suitability of transactions, and we hold Dividends digibank, pressing ahead with customer
2. DBS acquires ANZs wealth and consumer
ourselves accountable at every level, banking business in ve Asian markets.
journeys and becoming more data-driven. 3. Launch of digibank, Indias rst
starting at the very top. The Board has proposed a nal dividend
These initiatives will enable us to forge ahead mobile-only bank.
of 30 cents per share for approval at the
in our quest to reimagine banking.
Both DBS and POSB were established with forthcoming annual general meeting. This will
strong social mandates DBS was formed bring the full-year dividend to 60 cents per
to nance Singapores industrialisation, while share, unchanged from the previous year.
POSB as the Peoples Bank had a mission

10 | DBS Annual Report 2016 Letter from the Chairman and CEO | 11
Re-architecting Transforming
the back end the front end
We have invested more than SGD 5 billion in the past few years Today, customers individuals and corporates alike are increasingly starting
to develop a platform which enables us to be faster to market. relationships, transacting or engaging with us online or via mobile. A growing
We can now plug and play technologies from partners using number of customers are online and mobile banking users over 3 million and
Application Programming Interfaces (APIs) and have started 2.2 million respectively.
to leverage cloud technology and microservices to be even
more agile, scalable and ntech-like.

Online wealth
DBS iWealth clients can conduct their
banking transactions, manage their
wealth and trade on a single platform
a rst in Singapore. More than 70% of
DBS wealth clients are online and mobile

Digital to the core banking users.

From re-architecting our technology infrastructure to transforming our

front end, DBS is seeking to become digital to the core. Whether it is Online SME
credit cards, wealth or SME, we make it simple and easy for customers
to engage with us digitally. Coupled with a focus on agile methodology More than 60% of SME
and journey thinking, we have been able to improve speed to market customers in Singapore start their
and the customer experience. This translates to more digitally-engaged relationships with us digitally,
customers, as well as higher returns per customer. In particular, opening their accounts online.
consumer banking and SME customers who engage with us digitally
account for 2x more revenue, on average, than other customers.
Online cards
Online payments About 140,000 customers use DBS Omni,
a rst-of-its-kind credit card app in Hong
Kong, to instantly verify card transactions,
POSB Smart Buddy, a global rst, allows track personal nances and redeem cash
school children to pay for their food using rebates. DBS Omni users spent 2.8x more
wearable tech. than other card-holders.

With DBS Remit, customers can remit funds

online to nine countries including China,
India and USA, without incurring any charges
in most cases.

DBS PayLah! has become the fastest-growing

personal mobile wallet in Singapore, with
more than 450,000 users.

12 | DBS Annual Report 2016 Worlds Best Digital Bank | 13

A bank with no
paper, no forms,
A bank created no signature
for mobile that
Bye bye form-lling and paperwork.
travels with you Customers open an account with just
their thumbprint and Aadhaar ID
Bye bye branches. Instead of card. Aadhaar is the worlds largest
having to go to a bank branch, biometric identication programme.
A bank that customers open a savings
account at any designated outlet.
signs you up in Thereafter, digibank is a whole
just 90 seconds bank in a mobile phone.

To open a digibank e-wallet

and become a customer takes
only 90 seconds.

A bank whose call

Reimagining agent is an AI bot
Bye bye humans. Customers chat

banking not with call agents, but with an

AI-driven Virtual Assistant, which
today successfully answers around
80% of queries.
Launched in April, digibank by DBS is all about reimagining banking.
As Indias rst mobile-only bank, it turns banking on its head by doing
away with branches, forms, signatures and call agents. Instead, front
and centre are biometrics, articial intelligence (AI), analytics and
dynamic security. With digibank, DBS has penetrated Indias retail
banking market, acquiring more than 840,000 customers in 10 months.
Plans are underway to introduce it in other markets.

A bank that
your interests
Digibank leverages customer
data, including spending patterns
A bank with and savings habits, to better
understand clients, so as
tremendous security to provide recommendations
aligned to their preferences.
Security is enhanced through dynamic
inbuilt security, which is safer than
A bank that learns
a one-time password. as it goes along
As time goes by, digibanks AI
function gets to know customers
better and better.

14 | DBS Annual Report 2016 Worlds Best Digital Bank | 15


Building a Immersion through

experiential learning

start-up culture Our people, through a broad-based

digital curriculum, hackathons, incubators/
accelerators and ntech partnerships, have
To reimagine banking, we are re-wiring the organisation to have embraced experimentation and innovation.
We also deploy digital champions to build
a start-up culture and mindset. We have established experiential
digital quotient among our staff.
learning platforms, introduced new ways of working, re-designed
ofce spaces and fostered ecosystem partnerships to encourage
our people to embrace a spirit of experimentation and innovation. Adding digital skillsets
This is part of our larger vision of creating a 22,000-person start-up.
We augmented our digital capabilities by
hiring user experience designers, coders,
software engineers and data analysts.


Industry partnerships 1,000 experiments

We have over 50 industry partnerships, Since 2015, we have run over 1,000 experiments,
including with universities, government signifying a culture of innovation that goes
agencies and knowledge partners, to leverage broader and runs deeper than at many
best-in-class research and thinking. organisations. Employees are encouraged
to be intrapreneurs, and with mentorship
and funding from the bank, a number have
DBS HotSpot established start-ups while pursuing their
day jobs.
We are actively engaging the start-up
community with initiatives such as DBS
HotSpot, a pre-accelerator programme Using cloud
created and wholly run by an Asian bank. in a major way
Dedicated spaces DBS was the rst Singapore bank to adopt
Ofce 365, a cloud-based productivity
An open ofce concept, social hubs for technology, in the workplace. This is part of
networking and dedicated spaces for immersive our efforts to build a ntech-like workforce,
learning encourage collaboration and ideation. enabling employees to work collaboratively
DBS Asia X is our newest space where employees from anywhere, conduct meetings remotely,
create iconic customer experiences and foster and form closer communities online.
partnerships with the ntech ecosystem.

16 | DBS Annual Report 2016 Worlds Best Digital Bank | 17

Homage Singapore
Matches healthcare workers with
Shanghai Better seniors through an online marketplace,
giving these elders appropriate and
Education Development cost-effective care at home.
Centre China
Siam Organic Thailand
Provides education to latchkey children
of migrant workers and low-income families Helps to alleviate farmers poverty in Thailand
in large cities of China. by paying them fair prices for innovative
organic products. Its Jasberry rice is a variety
of GMO-free, antioxidant-rich, organic purple
rice grown by farmers in Northeast Thailand.

social innovators
Social enterprises (SEs) offer innovative and sustainable solutions
to address social challenges in a rapidly growing Asia. The DBS
Foundation supports social entrepreneurs across Asia by:

Building awareness and advocacy for SEs. WateROAM Singapore

Catalysing growth of promising SEs through incubation
programmes, skilled mentorship and funding. Designs water ltration systems that provide
Growing high potential SEs through customised support, clean water instantly in rural regions and
advisory and nancing. disaster relief zones.

To date, DBS has reached out to more than 5,000 SEs, and supported
over 100 SEs in the region with more than SGD 4 million in grant
funding through various initiatives.

LongGood Taiwan
Uses Kinect technology for patients
to conduct their rehabilitation
programmes at home, saving time
and costs.

Greensole Footwear India

Manufactures low-cost footwear made from
discarded shoes, saving on carbon emissions by
recycling while providing employment opportunities
to marginalised communities in India.
18 | DBS Annual Report 2016 Worlds Best Digital Bank | 19

Piyush Gupta shares his thoughts on

asset quality and the outlook for 2017.

Asset quality was the did not pass on to the exporter, or the tenor
of the hedges did not foresee and factor the
Overall, I believe that
biggest headwind DBS reversal of the business cycle. the management of our
faced in 2016. The increase portfolio continues to
in NPLs from 0.9% to 1.4% Overall, over the ve-year period, this
and doubling of allowances
business has proven to be benecial for our be quite robust.
clients. However, we have learnt the need to
to SGD 1.4 billion were have a better understanding of the dynamics
of the contract between the buyer and seller, biggest impact on a small sub-segment of
higher than the guidance our portfolio the contractors. We have
and perhaps hedging at a transaction level
provided at the beginning rather than at a portfolio level for certain taken away several lessons from this episode,
of 2016. What caused the segments of our customer base. including revisiting our credit policies for
contractor nancing.
Second, our biggest challenge was
deterioration? undoubtedly in the oil and gas support Overall, I believe that the management of
services sector. This is a big industry for our portfolio continues to be quite robust.
The headwinds were related to two key areas. Our more recent target market selection,
Singapore, in which we have a meaningful
market share. Exposures had built up in the customer origination, and credit underwriting
First, over the past ve years, we built up have not been cause for concern. In fact, we
2012-2014 period, when consistently rising
capabilities to provide risk management and have strengthened our industry framework,
oil prices caused several of our clients to take
hedging solutions for our exporter clients in so that industry experts now participate in
an expansionary view of their business. The
Greater China. In essence, exporters tend to the selection and underwriting process more
crash in prices from USD 130 to USD 30 per
be disadvantaged when their home currency consistently. We have reviewed our approval
barrel in the second half of 2014 put strain
strengthens versus the dollar, so they were authority matrix, with clearer accountability
on the sector, which was to be expected. We
hedging against a consistent appreciation in both origination and credit teams. The one
took comfort in the fact that our customers
of the RMB. area in which we could do better is that of
generally had long-term contracts with their
counter-parties, our exposures were generally early warning triggers. By and large, banks
For the vast majority of our customers, the still tend to be driven by nancials that they
well secured against vessels and the loan-to-
hedge worked as it was meant to. However, obtain from clients periodically.
value was conservative.
in some cases, the benet of the hedges
did not accrue as intended because of two Unfortunately, these tend to be lagging
In hindsight, the extent of the liquidity
reasons either the importer (our clients indicators. Our forward looking assessment
squeeze on the industry was unexpected, as
counterparty) forced a renegotiation of terms, tends to be very judgmental, leaving too
major oil companies renegotiated contracts
so that the benets of the currency weakness much scope for variance in quality. I think
and new contracts dried up. This had the

20 | DBS Annual Report 2016

that we could do much better using a big cities have rebounded to pre-nancial crisis
data driven approach to this. This is something levels. This has a wealth effect, so despite
The risks, however,
DBS has started experimenting with. the deleveraging in some areas, consumers are real. We will need
feel wealthier and this should support
to be very careful
What do you think will be the and thoughtful.
outlook for Asia in 2017 given The labour market is near full employment.
the uncertainties related This is showing up in rising wages, which
is a catalyst for continued robustness in A much faster interest rate hike cycle
to a Trump administration consumer demand. in the US than people are taking into
in the US, a more complex account right now. This could create
So far, the only y in the ointment is business liquidity and credit challenges in Asia.
geopolitical situation globally
investment. This is likely to get positive
and a slowing China? impetus if President Trump does end up Geopolitics. Europe faces growing
pushing through tax reforms, which will spur uncertainties in 2017, with upcoming
While 2017 will continue to be challenging, domestic investments. Fiscal stimulus, albeit elections in France, Germany and the
my base case is that the global economy small, should also create investment in the Netherlands. In the face of Chinas
may well surprise on the upside, backed by economy. Taking all this into account, the increased regional interests in Asia, there
stronger growth in the US economy. This US economy may nally break through the could also be rising tensions with the US.
positive momentum should spill over to Asia, shackles of the 2% GDP growth weve seen
benetting the region. for the past four to ve years. Were likely to On balance, however, I believe we will see the
see a GDP growth rate this year of 2.5% to US economy continue to gain momentum,
I base my views on two broad considerations. 3%. Historically, a strengthening US economy and if so, this year will offer opportunities for
also eventually results in signicant outbound us in Asia. The risks, however, are real. We
First, the US economy has a lot more investments, which will benet Asia. The will need to be very careful and thoughtful.
momentum and strength than is currently correlation between a higher USD and Asian
being forecasted, and contrary to popular equity is very positive, for example.
belief, growth is not a zero sum game.
A strong US economy lifts a lot of boats Second, while President Trump has been
around the world. This is further coupled difcult to predict, and markets will likely
with short-term resilience in Europe (Germany see-saw through the year in reaction to his
in particular is quite strong), and a degree tweets, many of the ofcials that he has
of stability in China, where there is every appointed so far are pragmatic and business
incentive to cushion the economy going into friendly. His teams early engagement with
the year-end Standing Committee elections. Europe and Asia has been encouraging.
It is more balanced and constructive than
US President Donald Trump has inherited was expected.
an economy that is looking pretty good.
In recent quarters, consumption has
improved notably. Consumer condence Uncertainty will be a main
is at a high. Retail sales continue to move driver in 2017
upwards, and housing prices in many large
What could go wrong?

While 2017 will continue Trade protectionism. A general

border tax, if implemented, will have
to be challenging, my base signicant implications on Asia. But trade
case is that the global protectionism hurts the US more than
many people think, and my own bias
economy may well surprise is that a pragmatic view will eventually
on the upside, backed by prevail, and any controls implemented
will likely be on selected industries.
stronger growth in the
US economy.

CEO reections | 21
Our business model Our strategy is clear and simple. It denes Further, we have a balanced scorecard
How we create value seeks to create value
the businesses that we will do and will
not do. We use our resources to build
to measure our performance and align
compensation to desired behaviours.

our business model for stakeholders in a

sustainable way.
competitive advantages. We have put in
place a governance framework to ensure
effective execution and risk management.
Read more about How we use our resources
on page 24.

Our resources How we create value Our stakeholders

Our strategy Our businesses

Brand Asian-focused strategy Making Banking Joyful We have 3 core
Our strategy is predicated on Asias Going forward, we hope to leverage We periodically review our strategy, business segments:
megatrends, including the rising middle class, digital technologies to extend our reach to taking into account emerging megatrends,
Institutional Banking
growing intra-regional trade, urbanisation, individuals and SMEs outside Singapore. the operating environment and what our
and the rapid adoption of technology that stakeholders are telling us. These are Consumer Banking/
Customer is fuelling new innovations. material matters that can impact our Wealth Management
Our vision in the next phase of growth is to
relationships Make Banking Joyful. We seek to transform ability to create value. Treasury Customers
We seek to intermediate trade and capital ourselves into a 22,000-person start-up, able
ows as well as support wealth creation in Read about our stakeholders and material Read about our businesses from
to respond and innovate quickly to deliver matters on pages 28 and 30. pages 42 to 47 and 174 to 175.
Asia. Our established and growing presence in simple, fast and contextual banking in the
Greater China, South Asia and Southeast Asia digital age.
Innovation and makes us a compelling Asian bank of choice.
digital banking Read about our digital transformation Employees
In Singapore, we serve all customer segments. journey from pages 8 to 10.
Outside Singapore, we traditionally focus
on afuent individuals, corporates and
institutional investors.
Differentiating ourselves Regulators

Banking the Asian Way Asian insights Technology and infrastructure

Funding We marry the professionalism of a best-in- We know Asia better; we provide unique Asian Over the years, we have built a solid The bank is leveraging microservices, cloud
class bank with an understanding of Asias insights and create bespoke Asian products. technological backbone that is standardised, technology and automation of technology
cultural nuances. resilient and scalable. Today, we have a development, which will enable us to be
Asian innovation common platform of services and APIs nimbler, more ntech-like and faster to Society
Asian relationships We constantly innovate new ways of banking that enables us to integrate best-in-breed market in delivering cutting-edge solutions.
Employees We recognise that relationships have swings as we strive to make banking faster and technologies, including open source systems.
and roundabouts, and stay by our clients simpler, while delivering contextualised We have embraced the practices of global Nimbleness and agility
through down cycles. and relevant Asian products and services. technology companies in design and We are of a goldilocks size big enough
technology adopting agile methodology, to have meaningful scale yet nimble enough
Asian service Asian connectivity user interface and human-centred designs to quickly identify and act on opportunities.
Society and other Our service ethos is to be Respectful, We work in a collaborative manner across to develop front-end applications. We are also creating a start-up culture to
relationships Easy to deal with and Dependable. geographies and businesses, supporting embed customer centricity and drive internal
our customers as they expand across Asia. collaboration by embracing experimentation,
entrepreneurship and innovation.

Technology Governing ourselves Measuring ourselves

and physical
infrastructure Competent leadership Effective internal controls Values-led culture We use a balanced scorecard approach to
A strong, well-informed and fully Three lines of defence guard our operational Our PRIDE! values shape the way we do assess our performance, track the progress
engaged board provides strategic direction excellence: identication and management business and work with each other: Purpose- we have made in executing our strategy and
to management. Management executes of risks by units, corporate oversight exercised driven, Relationship-led, Innovative, Decisive, determine remuneration.
on strategy and drives performance by control functions and independent Everything Fun!
Natural and organisational synergies. A matrix assurance by Group Audit. Read about our balanced scorecard
Rooted in our DNA is a role beyond short- on page 38.
resources reporting structure drives joint ownership
Read about our internal controls from term prot maximisation: doing real things
between regional function heads and
pages 59 to 60. for real people to create social value in the
local country heads. long run, while ensuring that DBS is a joy
to deal with.
Read about our leaders from pages 4 to 7.
Read about our sustainability efforts
on page 108.

22 | DBS Annual Report 2016 How we create value our business model | 23
How we use
our resources

We use our resources (1) to We seek to strike a balance between using our resources in the current period and enhancing
and retaining them for future periods.
differentiate ourselves and
While the monetary value of many of our resources is difcult to quantify, we provide quantitative
maximise value creation indicators as proxies and explain how we have utilised or enhanced our resources during the year.
for our stakeholders in
the long run.
Resources Indicators 2015 2016 How we manage our resources

Brand value (2) USD USD Our brand value in 2016 reached another record of USD 5.31 billion, and
4.40 bn 5.31 bn DBS continues to be recognised as the most valuable brand in ASEAN
and Singapore.

Brand The increase in brand value is a testament to our efforts over the past few
Our well- years to create multiple engines of growth and to reimagine banking. It also
recognised reects our belief in a higher purpose that goes beyond banking, recognising
name the role we play in benetting society at large and the communities we are
present in.

Customers Our customer relationships provide us with an understanding of

IBG > 200,000 > 200,000 Asias cultural nuances, helping us to Bank the Asian Way.
CBG/Wealth > 6.2 m > 6.9 m
Management We continue to embed ourselves in the customers journey, with a relentless
Customer focus on their true jobs to be done. We leverage technology to deliver
relationships Customer simple, fast and contextual banking to our customers.
Our loyal engagement
customer measures (3) Our insights in the region have helped us foster deeper conversations and
base (1=worst, 5=best) relationships with IBG clients, deepening our wallet share. In 2016, we
SME 4.13 4.10 continued to make investments in product capabilities, such as in cash
CBG 3.97 4.09 management, and developed our industry knowledge, networks and
Wealth 4.10 4.17 cross-border expertise to drive initiatives that add value to our customers.
In the CBG segment, we continued to focus on delivering seamless solutions
Large 5th 4th for customers investment and protection needs.
market Our satisfactory customers scores are a testament to their ongoing loyalty
penetration and trust in DBS.
Read more about our customer initiatives on page 42 Institutional Banking,
page 44 Consumer Banking/Wealth Management and page 46 POSB.

Customer > 100 > 300 A thriving innovation culture enables us to deliver simple,
journeys fast and contextual banking solutions to our customers more
since 2015 quickly than competitors.

Innovation CBG/Wealth Since 2015, we have run over 1,000 experiments across the bank, signifying
and digital Management a culture of innovation that goes broad and runs deep. We embrace agile
banking customers methodology and have embarked on over 300 customer journeys to explore
Our using ways to make banking more joyful for our customers.
intellectual Internet > 2.9 m > 3.0 m
capital platform In April, we launched digibank, Indias rst mobile-only bank that is
mobile > 1.3m > 2.2 m completely paperless, signatureless and branchless. We continued to
platform enhance our existing digital offerings, including adding advisory services to
our state-of-the-art digital platform IDEALTM. For our mobile wallet PayLah!,
new features such as bill payments and unique payment links or QR codes
for online sellers to request payments were added during the year.

24 | DBS Annual Report 2016

Resources Indicators 2015 2016 How we manage our resources

(continued) CBG customers > 300,000 > 450,000 Today, customers individuals and corporates alike are increasingly
Innovation using DBS starting relationships, transacting or engaging with us online or via mobile.
and digital PayLah! The increases in CBG customers using Internet and mobile platforms and
banking in corporate transactions and enquiries on IDEALTM are a testament to the
Transactions on > 89.7m > 102.2m strength of our innovative offerings.
We received worldwide recognition for our innovation efforts, becoming the
Enquiries on > 9.2m > 10.6m rst bank to be named Worlds Best Digital Bank at the Euromoney Awards
DBS IDEALTM(4) for Excellence in 2016.

Read more about our digital transformation from pages 12 to 17.

Shareholders SGD SGD Our capital base allows us to support our customers through good
funds 40 bn 45 bn and difcult times.

Basel III fully 12.4% 13.3% We created distributable nancial value of SGD 5.80 billion in 2016 and
Capital phased-in retained SGD 2.80 billion for reinvestment in our resources and future
Our strong Common business growth. Our CET1 CAR strengthened to 13.3%, well above the nal
capital base Equity regulatory requirement of 9%. Our rst Basel III-compliant USD Additional
Tier 1 Capital Tier 1 perpetual capital securities issued by DBSH during the year was the
Adequacy lowest coupon paid by any issuer globally for similar instruments (5).
(CET1 CAR) Our strong capital base and attractive funding position continue to allow
us to support our customers funding needs through economic cycles.
This enables us to build long-term relationships with our customers.

Refer to page 103 for more information on our capital management

and planning.

Customer SGD SGD Our diversied funding base enables us to provide banking solutions
deposits 320 bn 347 bn to our customers competitively.

Wholesale SGD SGD Our funding strategy remains anchored on strengthening our core deposit
Funding funding 38 bn 28 bn franchise. We grew our customer deposits by SGD 27 billion in 2016 due to,
Our among other initiatives, a focused effort to grow current and savings deposits,
diversied which are favourable for the liquidity coverage ratio.
funding base
Refer to page 91 for more information on our liquidity management and
funding strategy.

Employees 22,017 22,194 A 22,000-person start-up workforce will help us to be nimble and
agile and quickly act on opportunities.
Employee 79% 81%
engagement We continue to develop our people to their full potential through structured
Employees score talent development, future-proong their skills and providing more options
Our people for career growth at their own pace.
Voluntary 13.2% 11.8%
attrition rate Our talent development initiatives are built upon the triple-E framework
experience, exposure and education. In place of formal classroom training,
Training Days 6.4 5.2 we are increasingly placing our employees in immersion programmes
per employee to expose them to journey thinking, human-centred design and agile
project management.

Our strong employer value proposition is validated through the

improvement in our employee engagement score and the reduction
in the voluntary attrition rate.

In 2016, we were awarded Asias Best Employer by Aon Hewitt. We also

received country Best Employer awards for Singapore, Hong Kong,
Taiwan and Indonesia.

Read more about our employee initiatives on page 113 Employer

of Choice.

How we use our resources | 25

Resources Indicators 2015 2016 How we manage our resources

Customers 398 459 As a leading regional bank, we recognise the impact our lending practices
under Social have on society and the environment. In 2016, we signicantly enhanced our
Enterprise responsible nancing policies. We also proactively engaged with regulators
(SE) Package in Singapore and standard setters globally on developments relating to
Society sustainability and climate change reporting. With a representative on
and other SEs awarded 16 12 the GRI Stakeholder Council, we have further shown our commitment to
relationships grants enhancing these agendas.
Our relationship via DBS
with Foundation Through DBS Foundation, we awarded SGD 1 million in grants in 2016
stakeholders to support the growth of 12 social enterprises in six markets to encourage
Volunteer 27,000 37,000 social innovation in areas such as healthcare, education and environmental
hours sustainability.

Our subsidised banking packages for social enterprises remain popular,

with an increase of 61 customers in 2016.

Our staff contributed 37,000 man-hours of volunteer work regionally

during the year.

Read more about our sustainability initiatives on page 108.

Cumulative SGD SGD Our continual investments in best-in-class technology and physical
expenditure 4.6 bn 5.0 bn infrastructure allow us to be nimble and resilient.
in IT rolling
5 years (6) We have spent the past few years re-architecting our technology
Technology infrastructure. Today, we have a common platform of services and
and physical Of which SGD SGD APIs which enables us to integrate best-in-breed technologies, allowing
infrastructure relating 1.7 bn 1.9 bn us to move faster on the front end.
Our IT to specic IT
infrastructure initiatives (7) We are now leveraging microservices, cloud technology and automation
and customer of technology development, which will enable us to be nimbler, more
touch points Branches >280 >280 ntech-like and faster to market in delivering cutting-edge solutions.

Read more on page 12 Digital to the Core.

Carbon 47,205 45,307 Recognising that everyone has a role to play in combating climate change,
emissions we continue to undertake initiatives to reduce our environmental footprint.
purchased In Singapore, DBS was the rst bank to achieve the Building and Construction
Natural electricity Authority Green Mark certication for over 20 branches. Endorsed by
resources (tCO2 ) the National Environment Agency, the award recognises efforts to achieve
The natural a sustainable built environment by incorporating best practices in
resources Energy 79,202 77,612 environmental design and construction, as well as by the adoption
used for our consumption of green building technologies, with some branches reducing as much
operations (mWh) as 50% of their carbon emissions.

Paper 462 456 Read more about our initiatives to manage our environmental footprint
on page 110.
(tonnes) (8)

Through the enhancements of our resources, value is created.

We distribute this value to our stakeholders in several ways.
Read more on page 27.

(1) Resources are referred to as Capitals in the International Integrated Reporting <IR> Framework. We have classied our resources differently
from the Framework to better reect how we manage our resources
(2) Source: Brand Finance Global 500 - League Table Report 2016
(3) Customer engagement scores based on Nielsen SME Survey, Scorpio Partnership Customer Satisfaction Survey (CSS) for CBG and Ipsos CSS
for Wealth Management. Large corporate penetration ranking based on Greenwich survey of large corporate banking relationships
(4) DBS IDEALTM is our corporate Internet platform
(5) Source: Dealogic
(6) The amount represents the rolling 5-year cumulative amount of capitalised and expensed cost relating to outsourcing and professional fees,
software, hardware and relevant related staff cost for IT. It excludes depreciation
(7) The amount represents the rolling 5-year cumulative amount of capitalised and expensed cost relating to specic IT initiatives such as digital
channels and mobile banking and is a subset of our cumulative expenditure in IT. It includes an estimated apportionment of relevant related
staff costs
(8) Comparative gures have been restated to include recycled condential waste in Singapore

26 | DBS Annual Report 2016

How we distribute
value created

We distribute value to our stakeholders in several ways. Some manifest themselves

in nancial value while others bring about intangible benets.
We dene distributable nancial value as net prot before discretionary bonus, taxes (direct and indirect) and community investments.
In 2016, the distributable nancial value amounted to SGD 5.80 billion (2015: SGD 6.03 billion).

Distributable nancial value

Dividends paid to ordinary and
preference shareholders and
perpetual capital securities holders
SGD 5.80 bn 48% Retained earnings
Retained for reinvestment in
Distributable our resources and businesses
nancial for growth, which over time
value benets all our stakeholders

Society 11%
Contributions to society through
direct and indirect taxes, and
community investments including
donations, in-kind contributions
Discretionary bonus paid to employees
and associated management costs
through variable cash bonus and long-
term incentives

We also distribute non-nancial value to our stakeholders in the following ways.

Customers Society
Delivering suitable products in an Supporting social enterprises,
innovative, easily accessible and promoting nancial inclusion,
responsible way. investing in and implementing
environmentally-friendly practices.
For more information, see pages 42 to 47.
For more information, see pages 109 to 112.

Employees Regulators
Training, enhanced learning experiences Active engagement with local and
as well as health and other benets for global regulators and policy makers on
our employees. reforms and new initiatives that help
to build a prudent banking industry.
For more information, see pages 113 to 114.
For more information, see page 30.

How we distribute value created | 27


Material matters have Identify

the most impact on our
We identify matters that may impact the execution of our
ability to create long- strategy. This is a group-wide effort involving inputs from all
term value. These matters business and support units, and takes into account feedback
from stakeholders.
inuence how the Board
Read more about our stakeholder engagement on page 30.
and senior management
steer the bank.
The matters that are material to us are similar From the list of identied matters, we prioritise those that
to last year, with environmental matters most signicantly impact our ability to successfully execute
becoming more prominent on our agenda. our strategy and deliver long-term value to our stakeholders.
This is reected in the inclusion of climate
change as a material matter.
Those matters most material to value creation are integrated
into our balanced scorecard.

Read more about our balanced scorecard on page 38.

Balanced Material What are the risks? Where do we see What are
scorecard matters the opportunities? we doing
indicator about it?

Challenging The macroeconomic environment, Our multiple business lines, nimble Refer to CEO

macroeconomic characterised by a global and regional execution and strong balance sheet reections on
page 20, CFO
trends slowdown, oil price weakness and enable us to capture opportunities statement on
market volatility exacerbated by in a challenging environment. page 32 and
political shocks such as Brexit and CRO statement
the outcome of the US presidential on page 74.
elections, gives rise to business and
credit risks.

Talent Failure to attract and retain talent We see the opportunity to transform Refer to
management impedes succession planning and our workforce into an innovative and Employer
of Choice
and retention expansion into new areas such as tech-savvy 22,000-person start-up. This on page 113.
digital. Employees risk obsolescence will enable us to be nimble and agile in
if they are not well-equipped with responding to changes in our operating
changing skillsets required in this environment.
new digital age.

Digital Technology and mobility are A successful digital transformation will Refer to
disruption increasingly shaping consumer allow us to respond and innovate quickly Worlds Best
Digital Bank
and changing behaviour. Traditional banks to deliver simple, fast and contextual on page 12.
consumer risk losing relevance to platform banking to our customers.
behaviour companies and ntechs.
This will help us protect our position in
core markets as well as extend our reach
into larger geographies.

28 | DBS Annual Report 2016

Balanced Material What are the risks? Where do we see What are
scorecard matters the opportunities? we doing
indicator about it?

Cyber security The prevalent threat of cyber attacks A well-dened cyber security strategy Refer to CRO

on nancial institutions remains one that is well executed gives condence to statement
on page 74
of our top concerns. customers and can differentiate us. and Customer
privacy and
cyber security
on page 109.

Combating Financial crime, including money A reputation for being clean and Refer to CRO
nancial laundering and corruption, has trustworthy can help us attract and statement
on page 74 and
crime corrosive effects on society and retain customers and investors. Combating
gives rise to compliance and nancial crime
reputational risks. on page 109.

Fair dealing Failure to observe fair dealing Customers are more likely to do business Refer to Fair
guidelines gives rise to compliance with us if they believe that we are fair dealing
on page 74.
and reputational risks. and transparent.

Evolving The evolving regulatory and reporting With capital well above regulatory Refer to CRO

regulatory landscape, including Basel reforms, requirements, we are in a strong position statement
on page 74,
and reporting overhaul of accounting standards to serve existing and new customers. Capital
landscape such as FRS 109 and tax measures We also have greater exibility for capital management
to counter base erosion and prot and liquidity planning. and planning
shifting, may affect banks existing on page 103
and New
business models and gives rise to impairment
compliance risks. methodology
on page 102.

Responsible The public demands that banks We have an opportunity to make a Refer to
nancing lend only for appropriate corporate positive impact on society and the Responsible
activities. Failure to do so gives rise environment through our lending on page 109.
to reputational and credit risks. practices. Investors are increasingly
looking to invest in sustainable companies.

Climate change Climate change poses serious threats Banks can play an inuential role in Climate change
to the global economy and can shaping the transition to a low carbon is a wide topic
give rise to reputational, credit and economy, which in turn brings new areas addressed in
operational risks. of opportunity and business growth. various parts
of our business,
Managing our
footprint and

Refer to
pages 109 to
111 for more

Financial While Asias rapid economic With technological advancements, Refer to

inclusion growth and development have we see opportunities to drive costs Financial
led to an improvement in living down and develop a more inclusive on page 110.
standards across the region, certain nancial system. This resonates with
marginalised segments remain our digital agenda.
underserved in nancial services.
Developing niche products for such
segments may come at relatively high
operating and credit costs for banks
and erode shareholder value.

Material matters | 29
What our
are telling us Shareholders Customers Employees Society Regulators and policy makers
We provide investors with We interact with customers to better We communicate with our We engage the community to better We strive to be a good corporate
relevant information to make understand their requirements so that employees using multiple channels understand the role we can play to citizen and a long-term participant
informed investment decisions we can propose the right financial to ensure they are aligned with address the needs of society. in our markets by providing input
about DBS as well as seek their solutions for them. our strategic priorities. This also to and implementing public policies.
perspectives on our financial allows us to be up to date with More broadly, we seek to be a strong
performance and strategy. their concerns. representative voice for Asia in
Dialogue and industry and global forums.

collaboration with
We engage shareholders through We interact with our customers in We communicate with our people using We work with social enterprises (SEs) across Led by our country chief executives and
our key stakeholders detailed quarterly briefings of our multiple ways through digital banking, multiple channels throughout the year. CEO our key markets to understand their needs supported by their respective heads of legal
provide insights financial performance as well as regular
one-on-one or group meetings with
call centres, branches, relationship
managers and senior management.
Piyush Gupta chairs quarterly group-wide
townhalls. In 2016, these became fully digital
and help them become commercially viable
while pursuing their social objectives.
and compliance, we develop and maintain
strong relationships with governments,
into the matters of top management and senior business
heads. We also conduct roadshows and We continually push the envelope in
with real-time webcasts across the region.
In Singapore, we partner the Community
regulators and other public policy agencies.
How did we engage?

relevance to them. participate in investor conferences. designing the best digital experience for Piyush also engages and interacts with Development Council and Peoples In addition to frequent meetings and
our customers with social media as a key employees through Yammer our digital Association to further our outreach consultations, we provide data and thought
Our key stakeholders are those who most focus. We are active on Twitter, Facebook community platform and receives employee to the community. leadership in support of their efforts for
and LinkedIn, and respond to almost 100% queries and suggestions through his online ensuring financial stability.
materially impact our strategy, or are of all queries/ feedback through these blog Tell Piyush. In 2016, more than 5,000 staff contributed
directly impacted by it. They comprise platforms within one hour. to the community through 37,000 hours In 2016, we actively participated in various
our shareholders, customers, employees, In addition, senior management hold regular of volunteering activities. industry forums, such as the Bank for
regulators and society at large. We conduct annual surveys to identify department townhalls and events to engage International Settlements annual roundtable
areas for improving our value proposition their teams on business plans, performance and the inaugural EU-Asia Forum on
Engagement with stakeholders provides to customers. goals and other areas of interest. Financial Regulation.
us with an understanding of the matters Customer engagement is integral to the The results of engagement can be seen in the
they are most concerned with. These more than 300 customer journeys we improvement in engagement scores through
matters help us define our strategic have undertaken to date to redesign an employee survey conducted by Aon Hewitt,
priorities and guide our initiatives. our processes. which named us Asias Best Employer in 2016.

The key concerns raised by shareholders in We continued to see improved In 2016, 192 questions and comments covering Sustainability and climate change are During the year, key regulatory and
2016 related to credit risks of our oil and customer satisfaction scores across topics such as strategy and business, DBS matters of increasing importance to reporting issues surrounding the banking
What were the key topics

gas sector exposures and asset quality in markets and segments. culture, customer service, human resource, our societal constituents. The public industry included:
general. They were also concerned about technology and operations and workplace is demanding that banks exert greater
and concerns raised?

business growth prospects. Positive feedback was received for our management were raised by employees influence on their customers and employees Financial crime
customer service across all channels, through Tell Piyush. to act responsibly in environmental, social Cyber security
A greater number of shareholders showed particularly for call centres, which and governance matters. Data governance and data privacy
interest in how we are embedding benefitted from our initiative to empower In our engagement survey, we scored well Customer suitability
sustainability considerations into our customer service officers to resolve for our customer focus and branding. Areas Through our engagement with SEs, we Credit risk management
business practices. customer issues with minimal escalation. we need to continue working on include identified the challenges they face, including Suite of regulatory reforms that the
performance management and our enterprise a lack of funding and commercial expertise, industry has termed Basel IV
Implementation of new major accounting
Through customer journeys, customers enabling infrastructure. as well as an inability to attract talent. SEs
standard IFRS 9
provided insights on how we could make also suffer from inadequate public awareness
Tax reforms including base erosion and
banking simpler, more intuitive and faster. about the work they do.
profit shifting (BEPS)
We elaborate on some of these issues
in Sustainability on page 108.

We provided detailed disclosures on We incorporated customer feedback sought Piyush personally responded to all the During the year, we significantly enhanced our We participated in the following regulatory
the asset quality and stress test results as part of our customer journeys in the questions and comments raised on responsible financing policies in line with the initiatives in 2016:
of portfolios that were of concern design of our products and services. Tell Piyush to address employees Guidelines on Responsible Financing issued
to shareholders. concerns. Where applicable, issues or by The Association of Banks in Singapore to Improving capabilities to counter
We refined our customer communications suggestions were directed to the relevant support sustainable development across our financial crime, including the
How did we respond?

Additionally, we undertook various to be contextual and relevant, equipped departments for follow-up. Examples of key markets. mutualisation of Know Your Client
initiatives to embed sustainability our relationship managers with improved initiatives implemented include the roll-out processes among banks
considerations into our business model. tools to better engage customers on their of contactless payment vending machines We have applied the GRI G4 Sustainability Improving information-sharing on criminal
In 2016, we responded to the CDP
retirement and financial planning needs, in our premises, improvements to the staff Reporting Guidelines in the preparation typologies within the financial sector
(formerly the Carbon Disclosure Project)
Climate Change Information Request and revamped our iWealth online platform. loans application process and an annual of our Sustainability Report, which provides Analysing risks and opportunities
for the first time, demonstrating our refresh of staff uniforms. further clarity around our impact on society related to fintech, particularly the issue
commitment to measuring and managing For more information, see Institutional and the environment. of data privacy laws in an increasingly
Banking on page 42, Consumer Results from the employee survey were ubiquitous digital world
our environmental impact.
Banking/Wealth Management analysed and taskforces set up to address We strive to generate awareness and Contributing to the development of best
For more information, see CEO on page 44 and POSB on page 46. specific areas of concern. Each department is advocacy for SEs in our key markets through practices in foreign exchange markets
reflections on page 20, CRO accountable for devising and implementing a digital outreach and signature events. Contributing responses to Basel IV
statement on page 74 and plan for improving their engagement results. consultations, some of which are in
Sustainability on page 108. For more information, see Sustainability partnership with peer banks
For more information, see Employer on page 108.
of choice on page 113.

30 | DBS Annual Report 2016 What our stakeholders are telling us | 31


We reported another set of strong operating results,

which enabled us to absorb an increase in allowance
charges. CFO Chng Sok Hui highlights the years
nancial performance and the factors behind it.

A resilient franchise Past investments and from the previous year to 32%, making us
the market leader for the rst time as we
in a challenging year nimble execution pay off overtook the longstanding incumbent.
The strong performance more than offset
We achieved another year of strong operating The factors contributing to our strong a decline in unit trust fees from a high year-
performance. Total income rose 6% to operating performance had one common ago base, enabling wealth management fee
a record SGD 11.5 billion from sustained theme: they were payoffs from investments income to grow 19% to SGD 714 million.
growth in a wide range of businesses. Our we had the foresight to make in earlier years
concerted efforts to digitalise the bank as and from executing our plans well. Total cash management income grew 25%
well as our strategic cost management efforts to SGD 835 million. The number of new
yielded faster productivity gains, containing At home, our share of housing loans rose customer mandates accelerated as we
expense growth to 1% and improving the another two percentage points the same progressively added products, including
cost-income ratio by two percentage points. as the previous year as we offered more advisory services, to our state-of-the-art
As a result, prot before allowances increased stable and attractive pricing packages than digital platform, IDEALTM, and invested in
10% to a new high of SGD 6.52 billion. competitors could. What enabled us to do headcount to provide service excellence.
so was our stable-cost current and savings Cash management was a major contributor
The performance was particularly satisfying deposit base; lacking such a strength, to the growth of our institutional investor
because the operating environment was competitors seeking to match our packages and western MNC customer base, which
challenging. Unlike the previous year, we would have had to take undue interest are target segments.
did not benet materially from interest rate rate risks. Despite stiff competition, we
and currency movements in 2016. China maintained our leading share of savings Investment banking was another growth
continued to affect our performance, causing deposits because of the investments we area as fees rose 15% to SGD 189 million.
a drag of four percentage points to total made to enhance the convenience of cash We maintained our leadership in the
income. Our performance was the result of withdrawals and electronic payments for Singapore equity and xed income markets
double-digit growth from other businesses our ve million retail customers in Singapore. as well as the regional REITs market. We also
as we nimbly captured opportunities in an We captured the increasing prevalence of won several strategic advisory mandates
environment of slower economic growth. digital payments as debit and credit card from customers around the region.
fees rose 11% to SGD 483 million.
The strong operating results enabled us to Non-trade corporate loans grew 8% to
absorb a doubling of total allowances as the Bancassurance income growth accelerated SGD 168 billion. The growth was broad-
non-performing loan rate rose from 0.9% to 60% as we embarked on our regional based across sectors. It included loans
to 1.4%, due largely to stresses in the oil partnership with Manulife. The 15-year to Singapore as well as China companies
and gas support services sector. The higher agreement included a payment by Manulife that were making acquisitions or purchasing
allowances offset the improved operating to DBS of SGD 1.6 billion accrued over the assets in developed markets as part of their
performance, resulting in a 2% decline in period in addition to sales commissions, overseas expansion.
net prot to SGD 4.24 billion. performance-related commissions and
marketing expenses. The attractive terms These sources of growth more than offset
reected the potential of the regional weakness related to China. Trade loans
bancassurance distribution franchise we contracted 5% to SGD 39 billion due to the
built up with investments in technology and absence of onshore-offshore RMB arbitrage
headcount. Our share of bancassurance sales opportunities. (Trade loans excluding China
in Singapore rose two percentage points were stable.) Uncertainty over the direction

32 | DBS Annual Report 2016

of the RMB depressed demand for currency will be set aside as general allowances, raising New methodology
hedging products from China and Hong Kong general allowance reserves to SGD 3.52 billion
exporters. (We were largely able to make up and allowance coverage to 104%. If collateral
for allowances
for the shortfall in other areas, which limited was considered, allowance coverage would
the decline in overall treasury customer Last year, I outlined the preparations we
be at 226%.
income to 3%.) were making for implementing Financial
Reporting Standard (FRS) 109, which will take
Liquidity and capital effect in 2018. Among other things, the new
Interest rate and currency movements
provided less benet than the previous year. remain strong accounting standard governs how Singapore
Domestic benchmark interest rates used for reporting entities take allowance charges.
pricing SGD loans peaked in the rst quarter, We had adequate liquidity to support At present, Singapore banks comply with
putting pressure on net interest margin in the growth and, during parts of the year, built MAS Notice 612, under which they maintain,
second half. As a result, full-year net interest up additional buffers to meet possible in addition to specic allowances, a prudent
margin rose three basis points to 1.80%, contingencies arising from external level of general allowances of at least 1%
compared to a nine basis point increase circumstances. The loan-deposit ratio of uncollateralised credit exposures. This
in 2015. The USD-SGD exchange rate was was comfortable at 87%. Deposits rose 9% is an intended departure from the incurred
stable compared to the positive impact that to SGD 347 billion and were supplemented loss approach prescribed under FRS 39.
a 7% depreciation of the SGD had in the by wholesale funding across a range of
previous year. tenors. The liquidity coverage ratio in the We will be able to quantify the impact
fourth quarter of the year was 133%, well of FRS 109, including its effect on capital
Our past investments did not only boost the above the nal regulatory requirement of requirements, when there is clarity on
top line: they were instrumental in enabling 100% effective 2019. We also met the net changes to current regulatory specications.
us to contain expense growth to 1%. stable funding ratio requirement of 100% We expect to be able to do so by next years
Our progress in digitalising the bank and effective 2018. annual report. At this juncture, our view
managing costs yielded faster productivity remains that any such changes are unlikely
gains during the year. Underlying headcount Our Basel III fully-phased in Common Equity to result in additional allowance charges for
(excluding staff in certain technology Tier 1 capital adequacy ratio was 13.3%, DBS at the point of adoption.
functions that were previously outsourced) fell well above the nal regulatory requirement
by 300 staff or 1% as process improvements of 9%, which is more stringent than Basel Read more about FRS 109 in the Risk
requirements. Our leverage ratio of 7.7% was Management report on page 102.
enabled us to support higher business
volumes with fewer resources. The cost- more than twice the requirement of 3.0%
income ratio improved from 45% to 43%. envisaged by the Basel Committee. Outlook
Our operating performance was better than There are changes to the regulatory capital The coming year is likely to continue to be
peer banks. The 6% total income growth we adequacy framework that will be adopted challenging. Geopolitical uncertainty and
achieved was signicantly higher. At the same in the near future. They include changes in policy direction of the US and China will have
time, the cost-income ratio was the lowest the standardised approach for measuring a bearing on Asias economic growth. At the
and the only one to show an improvement. counterparty credit risk exposures and the same time, although we are not seeing signs
revised market risk framework, which are of stress in our portfolio outside of oil and
not expected to increase our risk-weighted gas support services, we remain vigilant on
Headroom to absorb assets signicantly. The Basel Committee is asset quality.
higher allowances considering further rule changes but they
have yet to be nalised. We will continue We have strong foundations to meet the
The resulting 10% rise in prot before to assess the impact of the outstanding challenges. The nancial discipline we
allowances provided us with a buffer to regulatory reforms and, if necessary, will exercised over the years in building up buffers
absorb a doubling of total allowances. manage exposures within our strategy, for capital, liquidity and allowance reserves
The increase in allowances was due largely to help mitigate that impact. has ensured that our balance sheet remains
to a handful of exposures in the oil and resilient. We have continued momentum
gas support services sector, which was We intend to maintain our existing dividend in a broad range of businesses from cash
experiencing stresses. In addition, we set policy, which is to pay sustainable dividends management to wealth management.
aside allowances for several SME customers over time, consistent with our capital Higher interest rates will be a net positive
in Hong Kong and China that had taken management objective, long term growth for us. While stresses in the oil and gas
hedging positions on the expectation prospects and the need to maintain prudent support services sector could persist, new
of RMB appreciation. capital levels in view of the uncertain impact NPL formation and specic allowances for
of regulatory change. the sector are expected to be lower than in
We continued to maintain a healthy 2016. Finally, the speedy integration of the
allowance coverage of non-performing Net book value per share increased 7% retail and wealth management businesses of
assets. On 10 February 2017, we announced to SGD 16.87. The increase was in line ANZ announced in October 2016 will provide
that we had sold our stake in DBS China with total shareholder returns for the year, additional support to income and earnings
Square Ltd, a subsidiary whose main asset is comprising a 4% appreciation in the share in 2017.
PWC Building in Singapore. The divestment price and a dividend payout of 60 cents per
gains of SGD 350 million, which will be share. DBS had a market capitalisation of
recorded in the rst quarter 2017 results, SGD 44.0 billion at 31 December 2016.

CFO statement | 33
Net interest income
(SGD m) Net interest margin (%)
Net interest income increased 3% to a record
SGD 7.31 billion. 7,305 1.87
7,100 1.84 1.85
Net interest margin was three basis points 1.78
higher at 1.80%. Higher domestic interbank 1.80 1.77
and swap offer rates in the rst quarter 1.77
boosted Singapore-dollar loan yields. These 1.69
benets were largely offset by a decline in
benchmark Singapore-dollar interest rates 1,854
1,813 1,833 1,833 1,815 1,824
from the second quarter. As a result, a rising 1,743
net interest margin in the rst half gave
way to a decline in the second half.

Gross loans grew 6% to SGD 305 billion.

Non-trade corporate loans expanded 8%
as customers from across the region
borrowed for a wide range of activities.
Market share gains resulted in an 11% 2015 2016 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
growth in Singapore housing loans. These
increases more than offset a 5% decline
in trade loans due to China. Trade loans 2015 2016
excluding China were stable.

Deposits rose 9% to SGD 347 billion. (SGD bn) Change Change

Savings and current accounts accounted
for the majority of the increase in line with Reported Underlying Reported Underlying
efforts to grow transactional accounts.
347 +27 +25

305 +18 +17

130 +10 +8
CBG 95 +6 +6 Fixed


Other 168 +13 +12 Current +18 +16

IBG account

Trade 39 -2 -2 account

Gross loans Deposits

34 | DBS Annual Report 2016

Non-interest income Fee income
Net fee income increased 9% to a new high (SGD m) 2016 2015 % chg
of SGD 2.33 billion. The growth was broad-
based. Wealth management fees rose 19% Brokerage 155 180 (14)
as a 60% increase in bancassurance fees Investment banking 189 165 15
more than offset a decline in fees from unit Transaction services (1) 585 556 5
trusts due to a high year-ago base. Card fees Loan-related 434 442 (2)
grew 11% from increased credit and debit Cards (2) 483 434 11
card transactions in Singapore. Investment Wealth management 714 599 19
banking fees were 15% higher from stronger Others 86 76 13
advisory and equity underwriting activities. Fee and commission income 2,646 2,452 8
A 12% increase in cash management fees Less: Fee and commission expense 315 308 2
more than offset a decline in trade nance
Total 2,331 2,144 9
fees, resulting in a 5% increase in transaction
banking fees. (1) Includes trade and remittances, guarantees and deposit-related fees
(2) Net of interchange fees paid

Other non-interest income grew 19% to Other non-interest income

SGD 1.85 billion. Trading income rose 13%
as an increase in trading gains and wealth (SGD m) 2016 2015 % chg
management customer treasury income was
Net trading income 1,357 1,204 13
partially offset by lower corporate customer
Net income from investment securities 330 203 63
treasury income. An increase in net gain on
Net gain on xed assets 54 90 (40)
investment securities was partially offset by
Others (1) 112 60 87
lower gains on xed assets.
Total 1,853 1,557 19

(1) Includes share of prots or losses of associates

Business unit and Total income

geography performance (SGD m) 2016 2015 % chg

By business unit, total income from Consumer By business unit

Banking / Wealth Management rose 21% Consumer Banking/ Wealth Management (CBG) 4,279 3,547 21
to SGD 4.28 billion. The growth was broad-
Retail 2,598 2,131 22
based across loans, deposits, bancassurance
Wealth Management 1,681 1,416 19
and cards. Income from the Wealth
Management customer segment increased Institutional Banking (IBG) 5,216 5,290 (1)
19% to SGD 1.68 billion as assets under
Corporate 3,670 3,759 (2)
management grew 14% to SGD 166 billion,
SME 1,546 1,531 1
putting DBS among the top ve banks in the
Asia Pacic. Institutional Banking income was Treasury 1,129 1,140 (1)
little changed at SGD 5.22 billion. Growth Others 865 824 5
in income from cash management, loan
Total 11,489 10,801 6
activities and capital markets was offset
by declines in trade nance and treasury
customer income due to uncertainty related By country
to China and the RMB. Treasury segment Singapore 7,540 6,673 13
income was also stable at SGD 1.13 billion. Hong Kong 2,102 2,289 (8)
Rest of Greater China 834 1,032 (19)
By geography, Singapore total income South and Southeast Asia 717 561 28
increased 13% to SGD 7.54 billion from Rest of the World 296 246 20
higher net interest income and from a wide
Total 11,489 10,801 6
range of non-interest income activities.
Hong Kong income declined 8% to SGD
2.10 billion as uncertainty related to China
affected trade and treasury customer income.
Rest of Greater China income fell 19% to
SGD 834 million from a lower net interest
margin and lower treasury customer income.
South and Southeast Asia income increased
28% to SGD 717 million. Net interest income
rose from loan growth, while fee and trading
income were also higher.

CFO statement | 35
Expenses increased 1% to SGD 4.97 billion.
The cost-income ratio improved from 45%
to 43% as we yielded faster productivity
gains from digitalisation and strategic
cost management.
Cost/income (%) 45 44 45 45
There was strong growth in the digital 43
acquisition of customers at lower unit
costs. We also drove more transactions YoY growth (%) 13
and execution towards digital channels, 11
9 8
which had lower cost to serve compared
to traditional channels. We had higher
straight-through processing, which reduced 1
or eliminated the amount of manual inputs
and paperwork for an increasing number of
mid- and back-ofce functions. This enabled (SGD m) 4,972
us to process higher business volumes
with fewer resources, improving operating
leverage as additional income earned
owed to the bottom line. 3,918
At the same time, a strategic cost
management programme initiated in
2012 continued to deliver savings by
identifying new ways to streamline more
processes, leverage new technology and Expenses
manage sourcing costs.

One outcome of the productivity gains

was a decline in underlying headcount
of 300 over the past year even as
business volumes expanded. 2012 2013 2014 2015 2016

Asset quality and allowances NPL ratio (%) 1.4

Non-performing assets increased 74% 1.1
to SGD 4.86 billion. The increase was due 0.9 0.9
largely to stresses in the oil and gas support
services sector. It also included exposures
NPA (SGD m) 4,856
to Hong Kong and China exporters that
had taken RMB hedging positions. Total 15%
allowances doubled to SGD 1.43 billion.
Allowance coverage remained healthy. 2,996
2,726 2,792
The gains of SGD 350 million from an 2,513
investment property divestment announced 19%
43% 24%
in February 2017 will be set aside as general Not overdue 46% 18%
allowances. To be recorded in the rst 9% 11% 71%
quarter 2017 results, they will raise general <90 days overdue 11%
allowance reserves to SGD 3.52 billion and 48% 65% 63%
allowance coverage to 104%. If collateral >90 days overdue 43%
was considered, allowance coverage would
be at 226%. 2012 2013 2014 2015 2016

SP/loans (bp) 10 18 18 19 38

Cumulative general and specic allowances as % of:

NPA 142 135 163 148 104*

Unsecured NPA 183 204 296 303 226*

* Includes SGD 350 million of general allowances set aside from divestment of an investment
property announced in February 2017

36 | DBS Annual Report 2016

Key performance indicators
1. Grow income Income (SGD m)

Target: Deliver consistent income growth 11,489

Outcome: 6% income growth to 9,618
SGD 11.5 billion 8,064

2012 2013 2014 2015 2016

2. Manage expenses Cost/income (%)

Target: Be cost efcient while investing

for growth, with cost-income ratio improving 45 44 45 45
over time

Outcome: Cost-income ratio improved two

percentage points to 43%, the result of
productivity gains from digitalisation efforts
and strategic cost management initiatives

2012 2013 2014 2015 2016

3. Manage portfolio risks Specic allowances/

average loans (bp)
Target: Grow exposures prudently, aligned
to risk appetite, with specic allowances 38
expected to average 25 basis points of
loans through the economic cycle

Outcome: Specic allowances rose to

18 18 19
38 basis points, with the increase due to
stresses in the oil and gas support services
sector. Specic allowances in other sectors
were stable

2012 2013 2014 2015 2016

4. Improve returns Return on equity (%)

Target: Return on equity of 12% or better 11.2 10.8 10.9 11.2

in a normalised interest rate environment 10.1

Outcome: Return on equity fell to 10.1%

as total allowances doubled due to stresses
in the oil and gas support services sector

2012 2013 2014 2015 2016

CFO statement | 37
Our 2016
Areas of focus (45%)

Regional businesses Enablers Regulators

We use a balanced scorecard approach to of the total weighting is focused on control Performance is assessed against the scorecard
measure how successfully we are serving and compliance metrics. On top of that, to determine remuneration, providing a Grow our regional businesses in Strengthening management processes, Contribute to the stability of the
multiple stakeholders and driving the in line with our digital agenda, we have clear line of sight between employee goals Consumer/Wealth Management technology and infrastructure platform nancial system
execution of our long-term strategy. Our introduced KPIs around our vision to and organisational imperatives. We have and Institutional Banking
scorecard is based on our strategy and is Make Banking Joyful achieved a well-established rhythm towards For more information on fair dealing and For more information, see page 31.
used to set objectives, drive behaviours, Across multiple stakeholders performance monitoring and our rewards For more information, see pages 42 to 47. cyber security, see page 109.
measure performance and determine the Between current year targets and are closely linked to scorecard outcomes. For more information on our technology, Society
remuneration of our people, making this long-term strategic outcomes Geographic mix see pages 23 and 26.
a living tool. Read more about our remuneration policy
on page 64. Enhance the communities we serve,
The scorecard is updated yearly and approved Scale our growth in India, driving sustainable outcomes
The scorecard is divided into three parts by the Board before being cascaded throughout Read more about our Making Banking China and Indonesia
and is balanced in the following ways: the organisation, ensuring that the goals of Joyful agenda from pages 8 to 10. For more information, see page 108.
every business, country and support function For more information on countries nancial
Between nancial and non-nancial are aligned to those of the Group. performance, see page 35.
performance indicators. Almost one-third

The following section provides the balanced scorecard metrics that we measure ourselves on. (Shareholder metrics are found on page 37)
Traditional KPIs (40%) We gave ourselves a lower overall balanced scorecard rating in 2016 because of a mixed performance.

Shareholders Customers Employees Customer KPIs Employee KPIs

Achieve sustainable growth Position DBS as bank Position DBS as

Shareholder metrics measure both nancial of choice employer of choice
Increase customer satisfaction Increase wallet share Maintain high
outcomes achieved for the year as well as Customer metrics measure the Employee metrics measure the progress Target: Broad-based increase in customer Target: Deepen wallet share of individual employee engagement
risk-related KPIs to ensure that growth is Groups achievement in increasing made in being an employer of choice, satisfaction across markets and segments and corporate customers
Target: Improve employee engagement
balanced against the level of risk taken, customer satisfaction and depth including employee engagement and
Outcome: Based on customer surveys, Outcome: Institutional Banking (IBG) non- levels; top quartile of My Voice engagement
including compliance and control of customer relationships people development
we improved customer satisfaction in loan income ratio was marginally lower as peer group
For more information, see page 37. Consumer Banking (CBG) and maintained a decline in RMB-related trade and treasury
For more information, see page 39. For more information, see pages 39 to 40 ows was mitigated by strong growth in cash Outcome: Ranked among top quartile in
and 113 to 115. customer satisfaction in SME Banking. We Aon Hewitt My Voice survey; score increased
increased our penetration of large corporate management and investment banking income.
CBG non-interest income ratio declined on by two percentage points. We were named
relationships and are the only Asian bank by Aon as one of the Regional Best Employers
the back of higher net interest income driven
Making Banking Joyful KPIs (15%) ranked in the top 5 on this measure. in Asia Pacic in 2016.
by improved margins and volume growth
across both loans and deposits.
Customer Satisfaction Measures My Voice Employee
Digital transformation Reimagining customer Creating a start-up culture 2015 2016 IBG Non-Loan Income Ratio (%) Engagement Score (%)
and employee experiences Wealth Management 4.10 4.17 50 50 50 81
Acquire Measure the progress in re-wiring mindsets 79
Customer Engagement Score 47 46
Measure the progress made in leveraging Measure the progress in embedding to be a 22,000-person start-up anchored
digital channels to acquire new customers ourselves in the customer journey on our PRIDE! values
Consumer Bank Customer 3.97 4.09
and employee journey to challenge Engagement Score
For more information, see page 16.
Transact the status quo
SME Bank Customer 4.13 4.10
Measure the reduction in manual efforts
For more information, see page 41. Engagement Score
by driving straight-through processing 2012 2013 2014 2015 2016 2015 2016
and instant fullment Large corporates market 5th 4th
penetration ranking
CBG Non-interest Income Ratio (%)
Engage * Customer engagement scores (1 = worst;
Measure the progress made in growing 5 = best) based on Ipsos Customer 41 41
Satisfaction Survey (CSS) for Wealth 38 39 37
customers digital engagements with
the bank Management, Scorpio Partnership CSS
for CBG and Nielsen SME Survey. Large
For more information, see pages 40 to 41. corporate penetration ranking based Regional Best Employers
on Greenwich survey of large corporate in Asia Pacic, 2016
banking relationships

2012 2013 2014 2015 2016

38 | DBS Annual Report 2016 Our 2016 priorities | 39

Employee KPIs (continued) Digital Transformation KPIs Engage KPIs Reimagining
customer and employee
People development Acquire KPIs Increase customers digital giving them access to industry experts, experiences KPIs
investors, research and knowledge, as well
engagements with the bank as instant advice from the bank. Today,
Target: Provide our people with opportunities
for internal mobility to enhance professional
Growth in customers Growth in digibank India there are over 32,000 members discussing Reimagining customer and
Target: Drive engagement of customers
and personal growth acquired digitally through digital channels
over 650 topics on the platform.
employee experiences KPIs
Target: Grow digital acquisition of customers In Singapore, the total financial value of
Outcome: Enabled our people to broaden Outcome: Made progress in driving Target: Embed journey thinking and drive
financial transactions on our mobile banking
their exposure across businesses, functions and increase digital channel share customers digital engagement across 150 customer and employee journeys
platforms increased by 51%, while total
and markets; 30% of positions were filled retail and SME segments. Digitally engaged transactions increased 47% over the
by internal candidates in 2016. Outcome: Surpassed target growth in > 840,000 customers acquired customers generate 2x more revenue on Outcome: Embarked on over 300 journeys
same period.
customers acquired digitally. Increased in 10 months since launch average versus traditional customers. to explore ways to make banking more joyful
Mobility: the proportion of retail products sold Through our Asian Insights platform, for both customers and employees; 250 of our
positions filled internally (%) digitally to 43% Enhanced suite of front-end apps we continue to see good increase in traffic most senior leaders each sponsored a journey.
to drive customer engagement and engagement with customers who value
30 30 Growth in customers Growth in channel share our advice and insights into local markets As part of our journeys, we have harnessed
27 We continued to enhance our suite of front-
26 acquired digitally* (%) of retail products sold digitally end apps to drive customer engagement and industries, allowing them to make the predictive power of analytics to improve
23 across the group. The DBS Omni Credit better business and investment decisions. productivity, drive efficiency and improve
41 Card Companion mobile app in Hong Kong controls across our support functions.
enables customers to be in control of their Data analytics driving Our contact centre uses data analytics to

37% 43% spending all with a simple touch on their

smartphones. There are now about 140,000
users of the app who demonstrate higher
spend versus non-users.
contextual offerings
In our wealth, retail and SME businesses,
the use of data analytics to provide
identify, prioritise and proactively reach out
to customers who face issues before the
customer calls in, resulting in faster resolution
and greater customer satisfaction. Predictive
contextual offerings to our customers
has resulted in higher acquisition and sales analytics are used to optimise our ATM
Target Actual 2015 2016 DBS BusinessClass creates a regional of products that are relevant to customers network efficiency, minimising out-of-cash
2012 2013 2014 2015 2016 community of like-minded entrepreneurs, when they need them. occurrences while reducing the number of
*Wealth + SME customers
trips needed to reload the network.

Turnover Transact KPIs Creating a start-up culture KPIs

Over 300 Journeys
Target: Maintain or reduce voluntary
attrition; top quartile in all core markets Reduction in manual Reduction in manual efforts Start-up Culture KPIs inspire our employees. We also mentor and 302
support our staff who have similar aspirations.
efforts through in targeted operations (%)
Outcome: Improved our voluntary attrition; Target: Drive a start-up culture and mindset
in 2016, DBS was best-in-class in Singapore improved productivity 12 shift for employees to be more fintech-like Spaces and platforms
and Indonesia and our voluntary attrition We have invested in spaces across the region to 150
Target: Reduce manual efforts by 10% 10 Outcome: Made good progress, with foster collaboration and drive an agile way of
rates were much lower than market average
in key markets like China, Taiwan and India. in targeted operations by driving straight- many of our people embracing a spirit of working. These include an open office concept,
through processing experimentation and innovation through journey laboratories and innovation facilities
Turnover (%) immersion programmes, experiential learning such as DBS Asia X (our latest innovation
Outcome: Achieved reduction in efforts, platforms and ecosystem partnerships centre which we launched in 2016).
above target. Digibank Indias operating Target Actual
14.1 13.6 Target Actual
13.2 model leverages technology, requiring fewer Immersion programmes We deployed a regional crowdsourcing
12.4 11.8 resources than a traditional bank. Employees were involved in immersion platform for all employees. They are now able
programmes such as hackathons, incubators, to contribute, share and vote for innovative
accelerators and partnerships with the fintech ideas effectively within the DBS community.
community. We invite start-up founders and This will encourage and empower employees
entrepreneurs to share their experiences and to make real changes.

Digibank India uses one-fifth of the

2012 2013 2014 2015 2016
resources required in a traditional bank
set-up. Its AI-driven virtual assistant
responds to more than 80% of queries.

>400 start-ups >1,000 experiments, >1,000 ideas

engaged >100 prototypes generated from
>6,000 staff

40 | DBS Annual Report 2016 Our 2016 priorities | 41


Strong growth in
(SGD m) 2016 2015 % open account trade
Our open account trade business delivered
Total income 5,216 5,290 (1) growth of 7% with 80 new client mandates.
Corporate 3,670 3,759 (2) Corporate treasurers seeking to improve the
SME 1,546 1,531 1 liquidity of their balance sheets worked with
us to tap into our supply chain nancing
Expenses 1,737 1,722 1 and account receivable purchasing solutions,
including some of the largest structured deals
seen in the market in 2016.
Prot before allowances 3,479 3,568 (2)
Our trade business received industry
Allowances 1,499 558 >100 recognition including Best Trade Finance
Provider and Best Supply Chain Finance Bank
Prot before tax 1,980 3,010 (34) in Asia Pacic from Global Finance.

Banner year in
Financial performance insights in the region have also helped us
foster deeper conversations and relationships
investment banking
We had a banner year in investment banking
For Institutional Banking Group (IBG), with clients, deepening our wallet share.
and DBS was named Best Asian Investment
dislocations in commodity prices as well Bank for the second year by FinanceAsia.
as challenging operating conditions in In 2016, we continued to make investments
Greater China affected trade and treasury in product capabilities, such as in cash
In difcult market conditions marked by
ows. The stability of IBGs income despite management, and developed our industry
stressed credits and volatile rates, our xed
these headwinds reects the resilience knowledge, networks and cross-border
income franchise continued to grow. We not
of the franchise. expertise to drive initiatives that add value to
only maintained our leadership position in the
our customers. Here are some key highlights.
SGD bond market, but grew our market share
IBGs total income declined marginally by to 43.2%. We were also ranked among the
1% to SGD 5.22 billion. The shortfall from A leading cash top eight bookrunners in Asia ex-Japan in the
Greater China markets was moderated by management franchise US dollar corporate space.
higher earnings from Singapore and the other Our cash management income grew 25% as
international markets. By product, an increase investments in cash management capabilities We continued to bring debut issuers to
in contributions from cash management and yielded strong returns. Revenue growth was the market such as Indias Jubilant Pharma
investment banking offset a decline in trade broad-based across all key markets. (5-year USD 300 million high yield bond),
and treasury activities. Expense growth was and also worked with repeat issuers such
contained at 1% to SGD 1.74 billion. We continued to invest in our global suite as Chinas Huawei (10-year USD 2 billion
of cash solutions with signicant progress in jumbo issue, the largest unrated single
Total allowances increased SGD 941 million the next generation of payments, receivables tranche US dollar transaction for a corporate
to SGD 1.50 billion, due largely to stresses and liquidity management solutions. globally since 2003).
in the oil and gas support services sector.
Prot before tax therefore fell 34% to The number of new working capital advisory We remained the top equity house in
SGD 1.98 billion. mandates doubled, helping clients better Singapore, participating in over 89% of
manage their working capital and minimise equity funds raised, including 91.5% of initial
Key highlights funding costs. public offerings (IPOs). As the leading REIT
house in Southeast Asia, we were involved
We place the customer at the centre of all we Our efforts were recognised as we garnered in more than one-third of offerings and
do, and are committed to helping our large several marquee awards including Best lead-managed the three largest REIT IPOs
corporate and SME clients with their nancial Overall Bank for Cash Management in Asia in Southeast Asia. We were also involved as
needs. Our relationship teams, organised by Pacic from Global Finance, Best Transaction the joint global coordinator in Hong Kongs
industry segments, are able to understand Bank in Asia Pacic from The Banker and Best largest IPO since 2014, Postal Savings Bank
our customers business and risks better. Our in Cash Management from CFO Innovation. of Chinas USD 7.4 billion initial offering.

42 | DBS Annual Report 2016

Project nance SGD 1.8 billion privatisation of its SGX-listed
Project Finance International magazine named China Merchants Holdings Pacic, which
DBS the Asia Pacic Bank of the Year 2016, operates toll roads.
acknowledging the traction we have had in
supporting companies looking for advice, In addition, DBS played a leading role
and in arranging funding, in Asia Pacics in helping Chongqing enterprises access
project and infrastructure nance market. offshore capital markets via the third China-
We acted as nancial adviser for deals Singapore government project launched in 2017 focus areas
such as the Adaro Power - Sembcorp Chongqing last year. We completed the rst
consortium bid for a power plant in offshore RMB bond under this project for Continue to drive digital
Indonesia and as mandated lead arranger Chongqing Grain Group, which was also innovation to transform
on major projects such as the Tangguh LNG the largest corporate offshore RMB bond the customer experience
expansion project in Indonesia, the new offering in 2016. Accelerate our cash
Victoria International Container Terminal management business and
in Australia, a portfolio of hydro projects Customer-centric be the preferred bank for
in China, and Singapores largest waste- corporates and SMEs for their
digital initiatives cash management and working
to-energy incineration plant, TuasOne. Over the course of the year, we embarked
capital needs
on several customer-centred innovation
Focus on growth markets
Expanding our Institutional programmes, where we experimented with
including growing our SME
Investor and Western MNC new technology and developed new product
franchise in these markets
initiatives and process improvements. We
customer base Deepen wallet share with
piloted a trade analytics programme to screen
Our strategy to grow our institutional large corporates across Asia
for red ags on trade nance transactions
investor and Western multinational (WMNC)
and detect anomalies in transaction
businesses has reaped rewards as these
behaviour. We were also the rst Asian bank
customers valued our credentials as a
to eliminate physical tokens for corporate
strong regional bank and our insights in
Internet banking transactions, making
the Asian markets.
banking simpler for corporate treasurers
and small business owners.
We saw signicant uplift in revenue for the
institutional investor segment. The client base
We continued to leverage technology to
doubled from 2013 and we saw double-digit
acquire new customers, simplify the way
growth in deposits, treasury products and
they transact and enhance the customer
cash management.
experience. In Singapore, more than six out
of 10 SME accounts with us were opened
2016 also saw signicant growth in cash, online versus ve in the previous year.
trade and treasury and markets business SMEs can obtain bank guarantees online
with WMNCs, as our international centres within three days, compared to a week
were able to work seamlessly with our core previously. Via a pilot with Tally Solutions,
Asian markets to add value to these clients. one of Indias largest enterprise resource
planning companies, SMEs in India can access
Capturing China DBS payments solution directly from their
outbound business enterprise resource planning software.
Chinese companies were on a buying spree
in 2016. We were able to capture some DBS is playing a leading role in industry
of these opportunities by leveraging our initiatives to create new standards across
strong pan-Asian presence, comprehensive corporate banking, so that we can cater to
suite of products and healthy balance sheet clients future needs. These include SWIFTs
to support Chinese corporates as a total Global Payments Initiative, which aims
solutions partner. to create the next era of correspondent
banking and international payments. DBS is
We provided nancing for and acted as also actively engaged in industry initiatives
nancial adviser in deals such as motor vehicle including the National Trade Platform
distributor Dah Chong Hongs acquisition of being developed in Singapore, the Unied
global exporter Li & Fungs Asian distribution Payments Interface in India, and the Faster
business and China Merchants Groups Payments Systems in Hong Kong.

Institutional Banking | 43
Consumer Banking/
Wealth Management

mobile banking platform. Total remittance

(SGD m) 2016 2015 % volumes grew 33% to over SGD 7 billion
as we extended our remittance corridors to
Australia, China and the US.
Total income 4,279 3,547 21
Retail 2,598 2,131 22
A strong area of performance was mortgage
Wealth Management 1,681 1,416 19
loans. Leveraging our strong SGD balance
sheet, we led the market in offering
Expenses 2,384 2,261 5 customer-centric propositions which gave
home buyers greater transparency and less
Prot before allowances 1,895 1,286 47 volatility in their mortgage loan repayment,
which resulted in portfolio growth four times
Allowances 129 116 11 faster than the market. The solutions offered
include a unique interest rate cap Managed
Mortgage Programme which blends xed and
Prot before tax 1,766 1,170 51
oating rates and the Fixed Deposit Home
Loan Rate Programme pegged to our SGD
xed deposit rate.
Financial performance Strong growth in Singapore
Our credit cards business also delivered
Consumer Banking Group/Wealth In Singapore, we maintained our market
a strong performance, with a record high
Management (CBG) delivered another year leading position in customer deposits,
market share in billings and receivables.
of solid performance, with total income housing loans, bancassurance and cards.
We also maintained our market position for
rising 21% to SGD 4.28 billion, despite a We have 51% market share for retail savings
the highest share of net receivables. These
challenging business environment across a accounts and over 28% of market share
results were driven by our continued focus on
number of markets. Prot before tax reached for housing loans. We lead the market in
data analytics and contextual marketing that
a new high of SGD 1.77 billion, up 51%. bancassurance with a market share of 32%
guided our marketing activities and helped to
Expenses were tightly managed and grew and we continue to be the largest credit
maximise the effectiveness of our campaigns.
5%, a signicantly slower pace than income and debit cards issuer in the market, with
growth, resulting in an improved cost-income close to ve million cards in circulation.
ratio of 56% compared to 64% a year ago. Healthy growth
For the rst time in Singapore, an innovative in other markets
CBGs performance was broad-based. Strong solution, Manulife IncomeGuard+, allowed
growth in customer deposits, mortgage loans eligible customers to purchase a life insurance Outside of Singapore, 2016 was an inection
and cards resulted in a 26% increase in net product via digital banking, without the need year for Indonesia and Taiwan, with both
interest income. Non-interest income from to ll in any physical forms. of these businesses turning protable on
investment and bancassurance products the back of broad-based momentum across
grew 17% as we continued to focus on Notwithstanding our leading position, we products and segments. We also saw good
delivering seamless solutions for customers continued to invest in digital capabilities and traction in China, with double-digit income
investment and protection needs. 2016 was improved our product suite and processes to growth and improving operating efciency.
a milestone year for DBS in bancassurance create better customer journeys. Everything
as we successfully commenced our 15-year that we design and build ultimately begins Across the region, despite a challenging
strategic partnership with Manulife in four and ends with our customers in mind. In environment, income from investment
key markets. Through this collaboration, 2016, we upped the ante in the innovation products recorded broad-based growth
more than 30 new products were launched to space with the launch of our mobile app, across asset classes and segments. While
address the insurance needs of our customers. DBS digibank in Singapore. the business faced margin compression due
to competitive pricing, customer activities
Our wealth business also delivered solid More customers are engaging with us online remained resilient and engagement deepened
growth, with income and assets under and via mobile. The number of customers through constant product innovation.
management (AUM) increasing 19% and using our Internet and mobile banking
14% respectively. Our total wealth AUM platforms has increased, reaching more In Taiwan, our renancing and top-up
stands at SGD 166 billion, putting us among than 2.6 million and 1.4 million respectively. mortgage offerings were well received by
the top ve wealth managers in Asia. Credit card and loan applications can our wealth customers. In the fourth quarter
now be executed through our revamped of 2016, we launched the HomeAdvisor

44 | DBS Annual Report 2016

mobile app, which provided home buyers Signicant strides We have also implemented analytics-driven
with a one-stop service for property searches, tools to allow our relationship managers
affordability calculations, valuations and
in our wealth business to get a comprehensive view of customer
engaging DBS for assistance. In Indonesia, proles, investment holdings and other
With growing afuence in Asia, we identied
our mortgage loan portfolio tripled, albeit relevant information on one integrated
building a leading regional wealth franchise
from a relatively small base, as we continued mobile platform, enabling them to engage
as a key priority a number of years ago. Since
to improve our proposition, customer journey in a much more personalised conversation
then, our wealth franchise has grown from
and home sales advisor effectiveness. and tailor nancial advice accordingly.
strength to strength, and today accounts for
about 15% of total group income. The strong
In India, we launched digibank, the Our investment in data analytics has enabled
momentum is due to a number of factors.
countrys rst mobile-only bank. This us to serve our customers better. As we move
Instead of a one-size-ts-all strategy for all
was a revolutionary offering as it brought forward on this journey, we are condent
together an entire suite of ground-breaking wealth clients, we have tailored offerings for that our continued focus in this eld will
technology from biometrics to articial priority banking, high net-worth and ultra strengthen our businesses and enhance our
intelligence to enable customers to enjoy high net-worth clients. customer interactions.
a whole new way of banking. We have
done away with onerous form-lling and This year marks the fth anniversary of our
cumbersome processes digibank is a Treasures Private Client business, which caters
completely paperless, signatureless and to high net-worth individuals with investible
branchless bank. We have since acquired assets of SGD 1.55 million, and is still the
over 840,000 customers since the launch fastest growing segment.
in April 2016, which is a testament to the
strength of our innovative offering. Our wealth continuum allows us to deliver
a seamless experience and work with clients 2017 focus areas
Taking the lessons and key success factors at every stage of their wealth cycle.
gleaned from our experience in India, we Integrate ANZ retail and wealth
have soft-launched digibank in Indonesia In Asia, where many wealth clients are also business across ve markets
in November. entrepreneurs, our strong regional corporate Accelerate digitalisation and
and commercial banking franchise allows us further enhance end-to-end
With India and Indonesia being large to provide them with regional connectivity customer journey
geographies, in the past, DBS would not and advice benecial to their business. As an Embed iWealth 2.0 to
have been able to penetrate the mass Asian bank, we have a deep understanding of fundamentally enhance wealth
retail segment in both markets without an Asia, which continues to be a growth region. digital assets and capabilities
extensive and expensive brick-and-mortar Drive digibank in India
network. Digibank changed that paradigm, We have also made a number of key and Indonesia
allowing us to bank a whole new segment enhancements to our wealth platform,
purely on mobile, and at a fraction of the cost DBS iWealth. The enhanced platform
of running a comparable traditional bank. provides customers with all-in-one access
via a single platform to conduct their banking
In October, we announced the acquisition transactions, manage their wealth and also
of ANZs wealth management and retail trade on the go a rst in Singapore. DBS
businesses in ve markets. A strategically iWealth is also available on mobile and
and nancially attractive opportunity, this empowers clients with quick and intuitive
transaction brings earnings accretion and access to services, product information
signicant cost synergies, and cements our and research.
position as a leading wealth manager in Asia.
Leveraging data analytics
By adding a large customer franchise to
DBS in Indonesia and Taiwan, the acquisition Over 2016, we leveraged data analytics
will facilitate our efforts to scale up our to signicantly enhance our customer
wealth and digital strategy in these markets. engagement, empower our staff and
In Indonesia, DBS will gain about 410,000 reduce our risk exposure. We rolled out a
customers, effectively increasing our base contextual marketing programme, starting
there by six times. In Taiwan, DBS will add with Singapore, where we leveraged data to
around 530,000 customers, expanding our reach our customers with relevant messages
base by 2.5 times. at the most suitable time and place. This
personalisation and outreach at scale is
now being rolled out region-wide.

Consumer Banking/Wealth Management | 45

Neighbours first,
bankers second
As a key institution in
Singapore, POSB has served
Singaporeans from all walks
of life since its founding in
1877. They include the young,
families, seniors and the
community at large.

From creating a nationwide

savings movement to playing
a key role in the development
of Singapore, our aim as
Singapores oldest and most
loved bank is to always
remain at the forefront
of providing pioneering
financial solutions that
cater to the evolving needs
of Singaporeans.

Other than bringing value

to Singaporeans, POSB has
also continuously entrenched
itself as the Peoples Bank
by widening its reach in
the community through
various initiatives.
For children and families

We announced the successful trial run Savers programme was the first project
of a global first the POSB Smart Buddy by a bank to be showcased on IMDA
programme. The programme creates a Lab on Wheels, a bus-based interactive
contactless payments ecosystem within programme that aims to ignite passion
the school environment to help cultivate in technology among the young through
sensible savings and spending habits engaging and experiential activities.
among young students in an interactive,
engaging manner. Our accompanying Through this collaboration, we hope to
mobile app allows parents to remotely promote financial literacy and further
manage their childrens spending and spread the culture of saving among the
savings, while empowering students young, while incorporating elements
to monitor their own finances. of technology and robotics.

POSB also partnered the Info- Close to 7,500 participants joined us at

communications Media Development the eighth edition of the POSB PAssion
Authority of Singapore (IMDA) to Run for Kids. A total of SGD 1 million
launch an e-savings programme that was raised for the POSB PAssion Kids
uses robotics to engage primary school Fund, bringing the total amount raised
students. With support from students of to date to SGD 5.74 million. The fund has
Nanyang Polytechnic, the POSB eYoung benefitted over 245,000 children to date.

46 | DBS Annual Report 2016

For seniors

As part of the POSB Active Neighbours As an organisation that banks most of respect and provide reassurance. Over
programme, we have been hiring Singapore, we recognise the need to 1,000 frontline staff have been trained.
seniors and training them to assist invest in our communities and services
others at our branches, with the aim to prepare ourselves for the future Through various programmes done in
of promoting more active lifestyles for challenges of an ageing population. We partnership with North East CDC, IMDA
older Singaporeans. Today, we have have put in place dementia training for and non-profit womens education centre
over 80 Active Neighbours across our our branch staff and equipped them WINGS, we have reached out to seniors
branches, where they also actively share with knowledge on how to engage with in the community to educate them on
the convenience of digital banking. customers who display signs of dementia. financial literacy, self-service banking
They are trained to take extra care and and digital skills. These programmes
exercise patience with customers who benefitted over 800 seniors in the
may have dementia, and to always show past year.

For the community

In Singapore, we believe in contributing POSB VTMs are also able to dispense contributions towards nation building
towards an inclusive society where Internet banking security tokens as well under the POSB Save-As-You-Serve
everyone can access our services. While as debit cards instantly. initiative.
we ramp up our digital offerings, we
understand our customers need to In the lead-up to the nations 51st We continue to offer our customers
continue to access our physical locations birthday, we announced the return greater value through our innovative
and have provided new and innovative of the iconic POSB Save-As-You-Earn products, services and deals. In October
ways for them to do so. In August 2016, (SAYE) programme. First launched in 2016, we launched a bank and earn
we piloted POSB Video Teller Machines 1974, the POSB SAYE programme was programme which rewards our customers
(VTMs), the first of its kind in Singapore. introduced to encourage Singaporeans based on their banking relationships with
POSB VTMs are able to provide round- to cultivate a habit of setting aside a us. Since most of our customers already
the-clock branch banking services to portion of their salary as savings. Those conduct regular banking transactions
customers, with the option of face-to- who did so were rewarded with bonus with us, this means that they can enjoy
face assistance from bank tellers via live- interest on their savings. The bonus monthly cashbacks with POSB Cashback
video streaming. In addition to providing interest and additional benefits were Bonus without doing a lot more.
services such as balance enquiries, change also offered exclusively to full-time
of particulars and statement requests, national servicemen to recognise their

POSB | 47

Contents Governance framework To stimulate fresh thinking, external

experts are regularly invited to the annual
We have a clearly dened governance Board strategy offsite and to conduct
48 Governance framework framework that promotes transparency, Directors training sessions
1. Leadership
fairness and accountability.
2. Controls
3. Culture Independence
The Board believes that corporate governance
4. Accountability to shareholders
principles should be embedded in our corporate Independent
culture. Our corporate culture is anchored on 11% Non-Executive
64 Remuneration report (a) competent leadership, (b) effective Directors
internal controls, (c) a strong risk culture (including
22% Chairman)
70 Summary of disclosures and (d) accountability to shareholders. Our
internal controls cover nancial, operational, Non-
67% Independent
compliance and technology, as well as risk & Non-
management policies and systems. Executive
Compliance and approval
For the nancial year ended 31 December 2016,
We work closely with our regulators to Executive
we have complied:
ensure that our internal governance standards Director/CEO
meet their increasing expectations. We
with the Banking (Corporate
are committed to the highest standards
Governance) Regulations 2005
of corporate governance, and have been Gender diversity
(Banking Regulations), and
recognised for it. We have won SIAS
Corporate Governance Award in the Big Cap
in all material aspects with the principles Male
category four years in a row (2013 to 2016). Directors
laid down by the Guidelines on Corporate
We are ranked rst runner-up in the Singapore 22% Female
Governance for Financial Holding
Governance and Transparency Index (SGTI) Directors
Companies, Banks, Direct Insurers, Reinsurers
2016, moving up two spots from the year
and Captive Insurers which are incorporated
before. The SGTI 2016 has been updated
in Singapore issued on 3 April 2013,
based on guidelines from the Code and G20/ 78%
which comprises the Code of Corporate
OECD Principles of Corporate Governance.
Governance 2012 (Code) and supplementary
guidelines and policies added by the
Monetary Authority of Singapore (MAS)
(collectively referred to as the Guidelines) DBS corporate
to cater to the diverse and complex risks governance framework
undertaken by nancial institutions. Directors length of service
Competent leadership No. of years (Y)
We provide a summary disclosure on our
compliance with the Guidelines on pages Effective internal controls 2 2 2 2
70 to 73 of this Annual Report.
Strong risk culture 1

Where to nd key information Accountability to shareholders

on each Director? 4Y 5Y 6Y 7Y 8Y
In this Annual Report:
Pages 58 to 59 Directors Key features of our Board
independence status, appointment Separation of the role of Chairman and
dates, meeting attendance and Chief Executive Ofcer (CEO) Age group of our Directors
remuneration details Other than the CEO, none of the other
Pages 194 to 198 Directors Directors is a former or current employee
length of directorship, academic of DBSH or its subsidiaries
2 2
and professional qualications and Chairpersons of the Board and all Board
present and past directorships committees are Independent Directors
Remuneration of Non-Executive Directors 1 1
At our website (www.dbs.com): (including the Chairman) does not include
Directors biodata any variable component

50-54 55-59 60-64 65-69 > 70

48 | DBS Annual Report 2016

1 Leadership balance of power, accountability and sits on all Board committees. He performs
independence in decision-making. a key role as an ambassador for DBS in our
dealings with various stakeholders as well
Board composition The CEO heads the Group Executive as in ensuring effective communication
The Board has adopted a diversity policy,
Committee and the Group Management with our shareholders. Mr Peter Seah
which recognises the importance of having an
Committee. He oversees the execution of regularly represents DBS in ofcial external
appropriate balance of industry knowledge,
DBS strategy and is responsible for engagements, and he also sets aside time to
skills, experience, professional qualications,
managing the day-to-day operations. The attend DBS internal events upon the invitation
gender and nationalities to build an effective
Chairman is responsible for leading the of management.
and cohesive board. In particular, the Board has
Board and maintaining our corporate
set an objective of having female representation.
governance standards. The Chairman The Nominating Committee held an ad-hoc
provides clear leadership with respect to meeting to discuss Mr Peter Seahs ability
Board members have a broad range of
DBS long-term growth and strategy. He to commit time to the Board and to DBS
experience and deep industry expertise. We
guides the Board through its decision-making generally prior to his appointment as chairman
have a good balance between continuity and
process and also ensures that the Board of Singapore Airlines Limited. Before he took
fresh perspectives on the Board. We have a
operates effectively as a team. on the role as deputy chairman of Singapore
high proportion of Independent Non-Executive
Airlines Limited, Mr Peter Seah had stepped
Directors (six out of nine directors). The size
The Chairman oversees, guides and down from the boards of CapitaLand Limited
and composition of the Board is appropriate
advises the CEO and senior management. and STATS ChipPAC Ltd. He has since also
given the current size and geographic footprint
The Chairman maintains open lines of stepped down from the board of StarHub
of DBS operations.
communication with senior management, Ltd. The Nominating Committee (other than
and acts as a sounding board on strategic Mr Peter Seah who recused himself from the
Role of the Chairman and operational matters. decision) agreed that he has sufcient time
and the CEO and bandwidth to discharge his obligations to
There is a very positive and constructive Time commitment DBS. The Board (other than Mr Peter Seah who
working relationship between our Chairman recused himself from the decision) considered
(Mr Peter Seah) and CEO (Mr Piyush Gupta).
of the Chairmans role the matter and agreed with the Nominating
The role of the Chairman of DBSH requires
Our leadership model ensures an appropriate Committees view.
signicant time commitment. Mr Peter Seah

Role of the Board Mr Peter Seahs role Securities Investors Association

(Singapore) (SIAS) Investors
in our board committees Choice Awards 2016
Directs DBS in conduct
of its affairs Corporate Governance Award
Ensures that corporate Chairman Board Diversity Award (Merit)
responsibility and ethical Board Executive Committee Most Transparent Company
standards underpin the Compensation and Management Financials category
conduct of DBS business Development Committee Golden Circle Award
Provides sound leadership Nominating Committee
to CEO and management Singapore Governance and
Sets the strategic vision, Member Transparency Index 2016
direction and long-term Audit Committee (AC) First runner-up
goals of DBS Board Risk Management
Ensures that adequate Committee (BRMC) Singapore Corporate
resources are available Awards 2016
to meet these objectives There are separate chairpersons
for the Board committees, which Best Annual Report (Silver)
Bears ultimate responsibility oversee the internal controls and
for DBS: risk management functions, namely
Governance the AC (Mr Danny Teoh) and the
Corporate Governance Asia
Strategy BRMC (Ms Euleen Goh) respectively Asian Excellence Awards 2016
Risk management Chairpersons of the AC and Best Corporate Social
BRMC are Non-Executive and Responsibility (CSR)
Financial performance Independent Directors
Best Environmental Responsibility
Best Investor Relations, Singapore

Corporate governance | 49
Boards key areas of focus Establish a framework for risks to be Develop succession plans for the Board
Review DBS strategic and business plans assessed and managed and CEO
Monitor the responsibilities delegated Review management performance Consider sustainability issues (including
to the Board committees to ensure proper Determine DBS values and standards environmental and social factors) as part
and effective oversight and control of (including ethical standards) and ensure of DBS strategy
DBS activities that obligations to its stakeholders are
understood and met

Board meetings and activities At every meeting Frequent and effective

We have a highly engaged Board with diverse The Chairman promotes open and frank engagement with the Board
perspectives. Board and Board committee debates by all Directors at Board meetings The Board is regularly updated on the
meetings are held regularly to discuss key The Board members come well prepared performance and prospects of DBS
topics such as strategic, governance and and engage in robust discussions on key Outside of Board meetings, Board
operational issues. matters pertaining to the Group approvals for matters in the ordinary course
If there are any situations where there of business can be obtained through the
is a conict of interest, the Director in circulation of written resolutions
Before meeting
question will recuse him or herself from the Ad-hoc meetings are held when necessary.
To facilitate meaningful participation, all
discussions and abstain from participating There was no ad-hoc Board meeting
Board and Board committee meetings are
in any Board decision held in 2016
planned and scheduled well in advance in
Chairperson of each Board committee The CFO provides the Board with
consultation with the Directors
provides a thorough update on signicant detailed nancial performance reports
The Chairman oversees the setting of the
matters discussed at the Board committee on a monthly basis
agenda of Board meetings in consultation
meetings which are typically scheduled Directors have direct access to senior
with the CEO to ensure that there is
before the quarterly Board meeting management and may request from
sufcient information and time to address
The CEO gives a complete and management any additional information
all agenda items
comprehensive update on the Groups to make informed and timely decisions
The agenda of the Board meetings is
business and operations as well as a macro Throughout the year, the Directors also
carefully thought out and well-managed.
perspective on industry trends have various opportunities to interact
At the same time, the agenda allows for
and developments with members of the Group Management
exibility when it is needed
The Chief Financial Ofcer (CFO) presents Committee (for instance at Board
Directors are provided with complete
the nancial performance and signicant hosted dinners)
information related to agenda items in
nancial highlights Directors have ongoing interactions across
a timely manner. For example,
Certain business heads provide an update various levels, functions and countries
management provides Board members
on their areas of business within DBS. This allows Directors
with detailed reports on the Groups
As members of the Group Executive to have a better understanding of the
nancial and franchise performance prior
Committee are present at all Board business and operations of DBS. In
to the Board meeting
meetings, Directors have the opportunity addition, some Directors also sit on the
All materials for Board and Board
to discuss specic areas with them and Boards of the overseas subsidiaries in the
committee meetings are uploaded onto
give constructive challenge to ideas Group; this arrangement gives the Board
a secure portal which can be readily
In compliance with the Banking Act, access to rst hand insight on the activities
accessed on tablet devices provided to
exposures of DBS Bank Ltd to the individual of these subsidiaries
the Board members
Directors and their respective related Directors have separate and independent
When exigencies prevent a Director
concerns are tabled access to the Group Secretary at all times.
from attending a Board or Board
The Board holds a private session The Group Secretary attends all Board
committee meeting in person, that
for Directors meetings and generally assists Directors in
Director can participate by telephone
External professionals or in-house subject the discharge of their duties. The Group
or video-conference
matter experts are also invited to present Secretary facilitates communication
Directors have the discretion to engage
key topics identied by the Board as well between the Board, its committees and
external advisers
as updates on corporate governance, risk management. The Group Secretary helps
management, capital, tax, accounting, with the induction of new Directors. The
listing and other regulations, which may appointment and removal of the Group
have an impact on DBS affairs Secretary require the approval of the Board

50 | DBS Annual Report 2016

How the board spent its time in 2016 All NC members are subject to an annual Highlights of the NCs activities are as follows:
independence assessment as prescribed by
the Guidelines and the Banking Regulations. Selection criteria and nomination
The assessment takes into account the process for Directors
NC members business relationships with The NC leads and has put in place a formal
5% 5% the Group, relationships with members of and transparent process for the appointment
10% management, relationships with DBSHs and re-appointment of Directors to the Board.
substantial shareholder as well as the NC
members length of service. The NC oversees a rigorous process for the
appointment of Directors. Directors are
Key responsibilities of the NC selected not just for their experience and
Review regularly the composition of the competencies but also for their t with DBS.
Board and Board committees The NC regularly reviews the composition of
Identify, review and recommend Board the Board and Board committees. The NC
15% appointments for approval by the Board, utilises a skills matrix, which takes into account
20% taking into account the experience, each Directors skills and experience, to identify
expertise, knowledge and skills of the the stafng needs of each Board committee.
candidate and the needs of the Board
Conduct an evaluation of the performance Before a new Director is appointed, suitable
of the Board, the Board committees and candidates are identied from various
Strategy the Directors on an annual basis sources. Thereafter, the NC conducts an
Feedback from the board committees Determine independence of proposed assessment to:
Governance and existing Directors, and assess if each
Business and operations updates, market proposed and/or existing Director is a t (i) review the candidate (including
and competitive landscape review and proper person and is qualied for the qualications, attributes, capabilities, skills,
Financial performance and signicant ofce of Director age, past experience) to determine whether
nancial updates Exercise oversight of the induction the candidate is t and proper in accordance
Directors training programme and continuous development with the MAS t and proper guidelines; and
Board networking and engagement programme for Board members
Review and recommend to the Board (ii) ascertain whether the candidate is
the re-appointment of any Non- independent from DBSHs substantial
Executive Director having regard to their shareholder and/or from management and
performance, commitment and ability to business relationships with DBS.
Board committees contribute to the Board as well as his or
her skillset The NC then interviews the short listed
Make an annual assessment of whether candidates and makes its recommendations
Delegation by the Board each Director has sufcient time to to the Board. Upon the appointment of
to the Board committees discharge his or her responsibilities, a new Director, the NC will recommend
To discharge its stewardship and duciary taking into consideration multiple to the Board his or her appointment to
obligations more effectively, the Board board representations and other the appropriate Board committee(s) after
has delegated authority to various Board principal commitments matching the Directors skillset to the needs
committees to enable them to oversee Review the Boards succession plans for of each Board committee.
certain specic responsibilities based on Directors, in particular, the Chairman
clearly dened terms of reference. Any and the CEO
change to the terms of reference for any Board performance
Review key staff appointments including
Board committee requires Board approval. The NC makes an assessment at least once
the CFO and the Chief Risk Ofcer
a year to determine whether the Board and
Board committees are performing effectively
5 Board committees and identies steps for improvement.
Constituted in accordance with In accordance with the requirements
Banking Regulations of the Guidelines and Banking Board evaluation process
Comprises Directors only Regulations, a majority (three out of The NC uses a Board evaluation framework
ve members of the NC including the to track and analyse Board performance,
Terms of reference NC Chairperson) are Non-Executive which includes an appraisal of Directors.
Sets out the: and Independent Directors (INED). The Board evaluation process promotes
Responsibilities of the Board committee The NC members who are not Board effectiveness by identifying areas
Conduct of meetings including quorum INEDs are Mr Ho Tian Yee and for improvement. A well conducted Board
Voting requirements Mrs Ow Foong Pheng, who are evaluation is vital in helping the Board, Board
Qualications for Board committee non-executive directors. Mr Ho committees and each individual Director to
membership and Mrs Ow are considered perform to their maximum capability.
non-independent by virtue of a
substantial shareholder relationship. The Board engages an independent external
Nominating Committee (NC) evaluator to facilitate the Board evaluation
Mr Ho and Mrs Ow do not have
The NC is chaired by Mr Peter Seah and its
any business or management approximately once every three years. The
members are Ms Euleen Goh, Mr Ho Tian Yee,
relationship with DBS. Board believes that an independent external
Mrs Ow Foong Pheng and Mr Danny Teoh.

Corporate governance | 51
Board committee Composition Members

Nominating Committee Five members: All Non-Executive Directors (NED) Mr Peter Seah (Chairperson)
(NC) Three out of ve members including NC Chairperson Ms Euleen Goh
are Non-Executive and Independent Directors (INED) Mr Ho Tian Yee
Mrs Ow Foong Pheng
Mr Danny Teoh

Board Executive Committee Three members Mr Peter Seah (Chairperson)

(EXCO) Two out of three members including EXCO Mr Piyush Gupta
Chairperson are INEDs Ms Euleen Goh

Audit Committee Five members: All NEDs Mr Danny Teoh

(AC) Four out of ve members including AC Chairperson (Chairperson)
are INEDs Mr Peter Seah
Mr Nihal Kaviratne
Mrs Ow Foong Pheng
Mr Andre Sekulic

Board Risk Management Six members: Ms Euleen Goh

Committee Five out of six members including BRMC Chairperson (Chairperson)
(BRMC) are INEDs Mr Peter Seah
Dr Bart Broadman
Mr Ho Tian Yee
Mr Nihal Kaviratne
Mr Danny Teoh

Compensation & Management Four members: Mr Peter Seah (Chairperson)

Development Committee All INEDs including CMDC Chairperson Dr Bart Broadman
(CMDC) Ms Euleen Goh
Mr Andre Sekulic

evaluator aids the Board by providing an The NC is responsible for implementing and Annual review of
independent perspective on the Boards monitoring the diversity policy. Directors independence
performance. It also helps benchmark the The NC reviews and determines annually
Boards performance against peer boards The make-up of our Board reects diversity whether each Director is independent.
and shares best practices. of gender, nationality, skills and knowledge. Independence is assessed to comply with
Such diversity will provide a wider range of the stringent standards required of nancial
Annual Board evaluation in 2016 perspectives, skills and experience, which institutions prescribed under the Banking
The NC considered the results and action will allow Board members to better identify Regulations.
items from the 2015 Board evaluation possible risks, raise challenging questions and
and decided to use the same evaluation contribute to problem-solving. This will, in turn, In making its determination, the NC
questionnaire for 2016. enable the Board to better guide and advise considers whether a Director is:
management from this broader perspective and independent from management and
Each Director was asked to complete the contribute to more effective decision-making to business relationships;
questionnaire and submit it directly to the assist DBS in achieving its strategic objectives. independent from any substantial
Group Secretary who collated the responses shareholder; and
and produced a summary report for the NC. As women represent half of our customer independent based on length of service
The NC analysed the report and submitted base, the Board believes that it is important
its ndings to the Board. to have adequate female representation on The Independent Directors are Dr Bart
the Board. Our commitment to diversity has Broadman, Ms Euleen Goh, Mr Nihal
Each Director participated actively, giving garnered recognition. DBS won the Board Kaviratne, Mr Peter Seah, Mr Andre Sekulic
honest feedback on issues such as Board Diversity Award at the SIAS Investors Choice and Mr Danny Teoh.
composition, succession planning and the Awards in 2014 and 2015, and received the
quality of information provided to the Board. Board Diversity Award (Merit) in 2016. Ms Euleen Goh, Mr Nihal Kaviratne, Mr Peter
Seah and Mr Danny Teoh are on the boards
The Board discussed the ndings of the The NC gives due regard to the benets of of companies that have a banking relationship
evaluation and agreed to follow-up on all aspects of diversity, including but not with DBS, and are also directors of companies
certain items. limited to those described above, and strives in which DBSHs substantial shareholder,
to ensure that the Board is appropriately Temasek Holdings (Private) Limited (Temasek)
Board diversity balanced to support the long-term success of has investments (collectively, Temasek portfolio
We believe that one of the ways to enhance DBS. All Board appointments are based on companies). The NC considers these Directors
corporate governance is through having merit, taking into account the contributions (i) independent of business relationships as
an effective and diverse board of directors. the candidates can bring to the Board to the revenues arising from such relationships
enhance its effectiveness.

52 | DBS Annual Report 2016

are not material; and (ii) independent of key disclosure duties and statutory obligations. as well as size and complexity of the
Temasek as their appointments on the boards The Group encourages rst-time Directors to companies in which s/he is a board member.
of Temasek portfolio companies are non- attend the Singapore Institute of Directors Additionally, each Director is required to
executive in nature and they are not involved Listed Companies Directorships programme. complete a self-assessment of his/her time
in the day-to-day conduct of the businesses commitments on annual basis. While the
of the Temasek portfolio companies. In Continuous development programme Board has not set a maximum number of
addition, none of these Directors sits on any for all Directors listed company board representations a
of the boards of the Temasek portfolio The NC oversees the continuous development Director may hold, all Directors appreciate
companies as a representative of Temasek programme. It monitors the frequency and the high level of commitment required
and they do not take instructions from quality of the training sessions, which are as a Director. All Directors have met the
Temasek in acting as director. conducted either by external professionals requirements under the NCs guidelines.
or management. The NC selects topics which The Board is satised that each Director has
Mr Ho Tian Yee, who is the Chairman of are relevant to the Groups activities. Board committed sufcient time to DBS and has
Fullerton Fund Management Company. Ltd members also contribute by highlighting contributed meaningfully to DBS.
(Fullerton), was appointed as interim CEO areas of interests and possible topics. In 2016,
of Fullerton in November 2016 after its then there were 3 training sessions: (i) a brieng The meeting attendance records of all
CEO left. As Fullerton is a wholly-owned on cyber security, (ii) a talk on the technology Directors as well as their list of directorships
subsidiary of Temasek, Mr Ho Tian Yee is mega-trends and the future of Fintech, and are fully disclosed in our Annual Report.
considered not independent of Temasek while (iii) a training session on risk stress testing.
he is acting as the interim CEO of Fullerton. Alternate Directors
However, he is considered independent of Terms of appointment of Directors DBS has no alternate directors on its Board.
management and business relationships The NC reviews and recommends to the Board
with the Company. The NC will re-assess the tenure of each Non-Executive Director.
the independence status of Mr Ho when he Board Executive Committee
ceases to be interim CEO of Fullerton. Each Non-Executive Director is appointed for (EXCO)
a three-year term. Prior to the end of each The EXCO is chaired by Mr Peter Seah
Mrs Ow Foong Pheng, who is the Permanent three-year term, the NC considers whether and its members are Ms Euleen Goh and
Secretary for the Ministry of National to re-appoint the Non-Executive Director for Mr Piyush Gupta.
Development, Singapore, is considered not an additional term. Each member of the NC
independent of Temasek as the Singapore recuses him/herself from deliberations on
government is its ultimate owner. However, his/her re-appointment.
Mrs Ow Foong Pheng is considered In accordance with the requirements
independent of management and business of the Guidelines and Banking
relationships with the Company. Rotation and re-election of Directors Regulations, a majority (two out of
The NC reviews and recommends to the three members of the EXCO including
Dr Bart Broadman, who was appointed on Board the rotation and re-election of the EXCO Chairperson) are Non-
17 December 2008, would have served on the Directors at the AGM. Executive and Independent Directors.
Board for nine years by 17 December 2017 and
would be deemed non-independent under the One-third of Directors who are longest-
Banking Regulations if he continues serving as serving are required to retire from ofce
every year at the AGM. Based on this Key responsibilities of the EXCO
a DBS director beyond the nine years.
rotation process, each Director is required to Review and provide recommendations
submit himself or herself for re-election by on matters that would require Board
Ms Euleen Goh, who was appointed on
shareholders at least once every three years. approval, including:
1 December 2008, would have served on the
acquisitions and divestments exceeding
Board as a non-executive independent director
Where an incumbent Director is required certain material limits
for nine years by 1 December 2017 and would
to retire from ofce, the NC reviews the delegation of authority stipulated by the
be deemed non-independent under the
composition of the Board and decides Group Approving Authority
Banking Regulations if she continues serving
whether to recommend that Director for weak credit cases
as a DBS director beyond the nine years.
re-election taking into account factors such Approve certain matters specically
as the Directors attendance, participation, delegated by the Board such as acquisitions
Directors training contribution and competing time commitments. and divestments up to a certain material
The NC exercises oversight on the training Dr Bart Broadman, Mr Ho Tian Yee and Mrs limit, credit transactions, investments,
of Directors including induction for new Ow Foong Pheng will be retiring by rotation capital expenditure and expenses that
Directors and continuous development at the AGM to be held on 27 April 2017 (2017 exceed the limits that can be authorised
programme for all Directors. AGM). At the recommendation of the NC and by the CEO
as approved by the Board, they will be seeking
Induction for new Directors re-election as Director at the 2017 AGM. Highlights of the EXCOs activities are
Upon appointment, a new Director receives as follows:
a letter of appointment and a guidebook
on Directors duties, responsibilities, and Directors time commitment
The NC conducts a review of the time Key matters reviewed
disclosure obligations as a Director of a
nancial institution. The new Director commitment of each Director on an by EXCO in 2016
goes through a comprehensive induction ongoing basis. The EXCO assists the Board to enhance the
programme. The new Director is introduced to business strategies and strengthen core
the Groups senior management and briefed The NC has implemented guidelines and competencies of DBS. The EXCO meets
on the Groups activities (business, operations a process to assess each Directors ability to frequently (11 meetings in 2016) and is
and governance practices, among others). The commit time to DBS affairs. The guidelines able to offer greater responsiveness in the
new Director also receives briengs on his/her consider the number of other board and decision-making process of DBS.
committee memberships a Director holds,

Corporate governance | 53
In 2016, the EXCO reviewed proposed possible improprieties in matters of nancial Related party transactions
divestments and investments, and matters reporting or other matters and to ensure Review all material related party
related to capital planning and expenditure that arrangements are also in place for such transactions (including interested person
as well as corporate actions. It also reviewed concerns to be raised and independently transactions) and keep the Board informed
weak credit cases every quarter. investigated and for appropriate follow-up of such transactions, and the ndings and
action to be taken conclusions from its review
Approve changes to the Group
Audit Committee (AC) Disclosure Policy Highlights of the ACs activities are as follows:
The AC is chaired by Mr Danny Teoh and
its members are Mr Nihal Kaviratne, Mr
Internal audit Oversight of nancial reporting
Peter Seah, Mrs Ow Foong Pheng and Mr
Review the adequacy and effectiveness of
Andre Sekulic. and other key matters
the Groups internal audit function (Group
The AC performed quarterly reviews of
Audit) and processes, as well as ensure that
Mr Teoh possesses an accounting qualication consolidated nancial statements and made
Group Audit is adequately resourced and
and was formerly the managing partner of recommendations to the Board for approval.
set up to carry out its functions, including
KPMG, Singapore. All members of the AC The CEO and CFO provided the AC with
approving its budget
are Non-Executive Directors, and have recent a letter of representation attesting to the
Oversee Group Audit
and relevant accounting or related nancial integrity of the quarterly nancial statements.
Review Group Audits plans, the scope
management expertise or experience.
and results of audits, and effectiveness
The AC reviewed the Groups audited
of Group Audit
consolidated nancial statements and
Key responsibilities of the AC Approve the hiring, removal, resignation,
discussed with management and the external
evaluation and compensation of Head of
auditor the signicant matters which involved
Financial reporting Group Audit
management judgment (see Table 1 below).
Monitor the nancial reporting process
and ensure the integrity of the Groups External auditor
The AC is of the view that the Groups
consolidated nancial statements Determine the criteria for selecting,
consolidated nancial statements for 2016 are
Review the Groups consolidated nancial monitoring and assessing the external
fairly presented in conformity with relevant
statements and any announcements relating auditor. Make recommendations to the
Singapore Financial Reporting Standards in all
to the Groups nancial performance prior Board on the proposals to shareholders
material aspects.
to submission to the Board on the appointment, re-appointment
Review the signicant nancial reporting and removal of the external auditor and
The Board has also received communication
issues and judgements so as to ensure approve the remuneration and terms of
from the external auditor that it has nothing
the integrity of the consolidated nancial engagement of the external auditor
to report with reference to any nancial
statements of the Group Review the scope and results of the external
or non-nancial information in the Annual
Ensure that the consolidated nancial audits and the independence and objectivity
Report as dened in Singapore Standard of
statements of the Group are prepared of the external auditor, and ensure that the
Auditing 720.
in accordance with Singapore Financial external auditor promptly communicates to
Reporting Standards the AC any information regarding internal
The AC reviewed and approved the annual
control weaknesses or deciencies, and
audit plan and the legal and compliance plans.
that signicant ndings and observations
In accordance with the regarding weaknesses are promptly rectied
The AC performed quarterly reviews of
requirements of the Guidelines and Review the assistance given by
reports from Group Audit, Group Legal
Banking Regulations, a majority management to the external auditor
and Compliance. Key risks concerning legal
(four out of the ve members
of the AC including the AC
Chairperson) are Non-Executive
and Independent Directors (INED).
Table 1
The only AC member who is not an Signicant matters How the AC reviewed these matters
INED is Mrs Ow Foong Pheng, who
is a Non-Executive Director. Mrs Ow Allowance for loans and The AC reviewed the signicant non-performing and weak
is considered non-independent by advances credit exposures periodically and considered managements
virtue of a substantial shareholder judgments, assumptions and methodologies used in
relationship, but she does not the determination of the level of specic and general
have any business or management allowances required.
relationship with DBS.
Goodwill impairment The AC reviewed the methodology and key assumptions,
assessment including the macroeconomic outlook and other key
drivers of cash ow projections, used in the determination
Internal controls
of the value-in-use of cash generating units. It also
Review the adequacy and effectiveness
assessed the sensitivities of the forecasts to reasonably
of internal controls, such as nancial,
possible changes in the valuation parameters.
operational, compliance and information
technology controls, as well as accounting
policies and systems Valuation matters The AC reviewed the quarterly movements in valuation
Review the policy and arrangements by reserves and the fair value of level 3 nancial instruments
which DBS staff and any other persons for reasonableness and considered the continued
may, in condence, raise concerns about appropriateness of the Groups valuation methodology in
light of industry developments.

54 | DBS Annual Report 2016

or compliance matters, and actions taken The AC reviewed the non-audit services Discuss large risk events and subsequent
(including policy and training), are tabled to provided by the external auditor during the remedial action plans
the AC, which updates the Board as necessary. nancial year and the associated fees. The Monitor market developments, such as
AC is satised that the independence and macro-economic, credit, industry,
The AC has the authority to investigate any objectivity of the external auditor has not country risk and stress tests related to
matter within its terms of reference, and has been impaired by the provision of those these developments
full access to and cooperation by management. services. The external auditor has provided Approve the Groups overall and specic
a conrmation of their independence to the risk governance frameworks
Oversight of Group Audit AC. At the recommendation of the AC and as Have direct oversight of the Chief
The AC has direct oversight of Group Audit. approved by the Board, the re-appointment Risk Ofcer
Please refer to the section on Internal of the external auditor is subject to the Review (in parallel with the AC) the
Controls for details on Group Audits key shareholders approval at the 2017 AGM. adequacy and effectiveness of the Groups
responsibilities and processes. internal control framework
Keeping updated on Approve risk models which are used for
The AC assessed the effectiveness of Group capital computation and monitor the
relevant information
Audit in compliance with Paragraph 12.4(c) of performance of previously approved models
The AC members are regularly kept updated
the Code. The AC is of the view that Group Oversee an independent group-wide risk
on changes to accounting standards and
Audit has performed well. It understands the management system and adequacy of
issues related to nancial reporting through
risks that the Group faces and has aligned its resources to monitor risks
quarterly meetings with Group Finance,
work to review these risks. Exercise oversight of the Internal Capital
Group Audit, and internal audit bulletins.
Adequacy Assessment Process (ICAAP)
There is at least one scheduled private including approval of stress scenarios and
session annually for the Head of Group Audit
Board Risk Management commensurate results for capital, risk-
to meet the AC. The chair of the AC meets Committee (BRMC) weighted assets, prot and loss and liquidity
the Head of Group Audit regularly to discuss The BRMC is chaired by Ms Euleen Goh and Approve the Business Continuity
its plan, current work, key ndings and other its members are Dr Bart Broadman, Mr Ho Management attestation and Group-wide
signicant matters. Tian Yee, Mr Nihal Kaviratne, Mr Peter Seah Recovery Plan
and Mr Danny Teoh.
Highlights of the BRMCs activities are
Reviewing independence and All BRMC members are appropriately as follows:
objectivity of external auditor qualied to discharge their responsibilities,
The AC makes recommendations to the Board and have the relevant technical nancial Reviewing the risk landscape
for the appointment, re-appointment and expertise in risk disciplines or businesses. The risk dashboard informs DBS of all major
dismissal of the external auditor including
risk positions and risk developments. During
the remuneration and terms of engagement.
discussions, the BRMC monitored the global
Upon Board approval, the re-appointment of
economic environment and, in particular,
the external auditor is subject to shareholder Five out of six members (including
paid close attention to developments which
approval at the AGM. the BRMC Chairperson) are
could have material consequences for the
Non-Executive and Independent
key Asian countries where DBS operates.
The AC has unfettered access to the external Directors (INED)
The BRMC also provided guidance, where
auditor. During the nancial year, separate The number of INEDs exceeds the
appropriate, to management. The BRMC
sessions were held for the AC to meet with requirements of the Guidelines and
considered vulnerabilities such as the global
the external auditor without the presence of the Banking Regulations
economic outlook, political landscape, liquidity
management at each AC meeting to discuss The only BRMC member who is not
tightening, risk of rising interest rates and
matters that might have to be raised privately. an INED is Mr Ho Tian Yee, who is
currency volatility as well as the outlook on
a Non-Executive Director. Mr Ho
commodity prices, all of which could impact
The Group has complied with Rule 712 is considered non-independent by
DBS strategy and portfolios in these countries.
and Rule 715 of the SGX Listing Rules in virtue of a substantial shareholder
relation to its external auditor. The total relationship, but he does not have
Through the course of 2016, the BRMC
fees due to the Groups external auditor, any business or management
discussed the ndings and the impact arising
PricewaterhouseCoopers LLP (PwC), for the relationship with DBS
from scenario analyses and portfolio reviews
nancial year ended 31 December 2016, and
conducted on certain countries and specic
the breakdown of the fees for audit and non-
sectors. For example:
audit services respectively are set out as follows: Key responsibilities of the BRMC
Guide the development of and recommend the downward trend in global economic
for Board approval the risk appetite for growth forecast and the effect of Brexit
Fees relating to various types of risk and exercise oversight China hard landing and consequences from
PwC services for on how this is operationalised into state-owned enterprise restructuring
individual risk appetite limits
2016 SGD m possibility of US interest rate hike and the
Monitor risk exposures and prole contagion effect on emerging markets
against risk limits and risk strategy in weakening of RMB and its effect on our
For Audit and Audit- 7.7 accordance with approved risk appetite clients RMB derivatives portfolio
Related Services and/or guidelines headwind faced in real estate such as both
Review the risk dashboard to keep track of retail and industrial properties in Singapore
For Non-Audit Services 1.7 major risk positions and risk developments weak demand in the shipping sector
Monitor the quarterly portfolio reviews of and challenges faced by the contracting
Total 9.4 total exposures as well as large exposures services sector
and asset quality

Corporate governance | 55
The BRMC also reviewed managements Key responsibilities of the CMDC The CMDC reviews and recommends
assessment of the impact of a prolonged Oversee the governance of DBS a framework to the Board for determining
period of low commodity prices (such as remuneration policy (including design, the remuneration of Non-Executive Directors,
oil, coal, steel and non-ferrous metals) on implementation and ongoing review) including the Chairman.
our commodity customers and portfolios and the annual bonus pool (Board
which included the oil and gas support endorsement also required) in accordance The remuneration of Non-Executive
services segment. It was kept informed of with the corporate governance practices Directors, including the Chairman, has
the utilisation of market risk limits for as stipulated under the Guidelines and been benchmarked against global and local
commercial banking as well as the trading the Banking Regulations nancial institutions. Non-Executive Directors
books and the liquidity risk prole of the Oversee the remuneration of senior will receive 70% of their fees in cash and the
Group. In its review of key operational risk executives, including reviewing and remaining 30% in share awards. The share
proles and among other updates, the BRMC approving the remuneration of the awards are not subject to a vesting period,
was advised on the nancial crime and cyber Executive Director/CEO but are subject to a selling moratorium
security environment and efforts made to Oversee DBS principles and framework whereby each Non-Executive Director is
address these risks. of compensation to ensure alignment required to hold the equivalent of one years
with prudent risk-taking principles basic retainer fees for his or her tenure as a
The scenario analyses are in addition to (deferral mechanism is adequate as a risk Director and for one year after the date he
the review of various stress testing results management process) in order to build a or she steps down. The fair value of share
required by the regulators and under ICAAP. sustainable business in the long term grants to the Non-Executive Directors are
The BRMC also approved and monitored Ensure alignment between reward and the based on the volume-weighted average price
the performance of various risk models. Group Talent Management initiatives with of the ordinary shares of DBSH over the 10
The BRMC received regular updates on risk particular focus on attraction and retention trading days immediately following the AGM.
appetite and economic capital utilisation. It of talent including current and future The actual number of ordinary shares to be
spent some time during 2016 to deliberate leaders of DBS awarded are rounded down to the nearest
on the calibration of economic capital Oversee management development and share, and any residual balance will be paid in
allocation to the various units and across succession planning for management cash. Other than these share awards, the Non-
the different types of risk. The BRMC Oversee plans to deepen core Executive Directors did not receive and are not
was apprised of regulatory feedback and competencies, bench strength and entitled to receive any other share incentives
developments such as approaches for risk leadership capabilities of management or securities pursuant to any of DBSHs share
models and capital computation, Basel 3.5 Oversee talent development and plans during the nancial year.
and Qualitative Impact Studies results. talent pipeline
There is no change to the annual fee
Please refer to the section on Risk Highlights of the CMDCs activities are structure for the Board for 2016 from the
Management in this Annual Report for
as follows: fee structure in 2015. As per previous years,
more information on the BRMCs activities.
remuneration of Non-Executive Directors
does not include any variable component.
Group remuneration policy
Compensation and Management Table 2 at page 57 sets out the proposed
and annual variable pay pool
Development Committee annual fee structure for the Non-Executive
(CMDC) Please refer to the section on Remuneration Directors for 2016. Shareholders are entitled
The CMDC is chaired by Mr Peter Seah and its Report for details on remuneration of the CEO to vote on the remuneration of Non-Executive
members are Dr Bart Broadman, Ms Euleen and on DBS remuneration strategy. Directors at the 2017 AGM.
Goh and Mr Andre Sekulic.
The CMDC reviews and approves DBS In 2016 there was one employee of DBS
The CMDC has direct access to senior remuneration policy and the annual Bank Ltd, Ms Lesley Teoh, who is an
management and works closely with the variable pay pool which are also endorsed immediate family member (daughter) of a
BRMC and the AC when performing its role. at the Board level. Director, Mr Danny Teoh. Ms Lesley Teohs
Dr Bart Broadman, Ms Euleen Goh and Mr remuneration for 2016 falls within the band
Peter Seah are also members of the BRMC The CMDC provides oversight of the of SGD 50,000 to 100,000. Mr Teoh is not
while Mr Peter Seah and Mr Andre Sekulic remuneration of the CEO, senior executives involved in the determination of his family
are members of the AC. As a result of their and control functions in line with the members remuneration. Apart from Ms
membership in other Board committees, the Financial Stability Boards guidelines. The Lesley Teoh, none of the Groups employees
members of the CMDC are able to make CMDC also reviews cases where total was an immediate family member of a
strategic remuneration decisions in remuneration exceeds a pre-dened Director in 2016.
an informed and holistic manner. threshold, or where a deferral mechanism is
implemented as a risk control process.

Remuneration of
All CMDC members (including the
Non-Executive Directors
CMDC Chairperson) are Non-Executive
and Independent Directors (INED). Please refer to pages 58 to 59 of this Annual
The number of INEDs exceeds the Report for details of remuneration of each
requirements of the Guidelines and Non-Executive Director (including the
Banking Regulations. Chairman) for 2016.

56 | DBS Annual Report 2016

Group Approving Authority The Boards responsibilities are well dened Dividend policy
An integral part of our corporate governance in the GAA. The Board is the decision-making Risk strategy and risk appetite
framework is the Group Approving body for matters with signicant impact
Authority (GAA). to DBS as a whole; these include matters The Board approves the GAA and any change
with strategic, nancial or reputational to it. The GAA ensures that appropriate
implications or consequences. The specic controls and decision-making are consistently
Scope of delegation matters that require board approval under applied throughout DBS. The GAA covers
of authority in the GAA the GAA includes: internal authority only, and does not override
any specic provisions arising from statutory,
Groups annual and interim regulatory, exchange listing requirements, or
Board nancial statements the DBSH Constitution. It is applied group-wide.
Acquisitions and divestments exceeding
certain material limits The GAA is regularly reviewed and updated
Groups annual budget to accommodate changes in the scope and
Capital expenditures and expenses activities of DBS business and operations.
exceeding certain material limits
Capital-related matters including capital
Board Annual Board strategy offsite
Chairman CEO adequacy objectives, capital structure,
committees Each year, the Board and our senior executives
capital issuance and redemption
attend a four-day strategy offsite held in one
of our markets. In 2016, the Board strategy
offsite was held in India.
Table 2
Annual fee structure for 2016 SGD Main objectives of our 2016 annual
Board strategy offsite
Opportunity for the Board to focus on
Basic annual retainer fees DBS long-term strategy apart from
the regular agenda at the quarterly
Board 80,000 Board meetings
Dynamic and in-depth strategic discussion
to promote deeper understanding of our
Additional Chairman fees for: business environment and our operations,
and rene our strategy
Board 1,350,000 Engagements with our stakeholders in
host country
Audit Committee 75,000
Customers, including CEOs and CFOs
Board Risk Management Committee 75,000 of our corporate clients in India
Staff in local franchise, including the
Compensation and Management Development Committee 65,000 new technology hub in Hyderabad

Executive Committee 75,000 Strategic discussions

Long-term strategy including progress
Nominating Committee 35,000 review, renements based on external
developments and competitive analysis,
as well as validation against risk appetite
Additional committee member fees for: and capital availability
Digitalisation of the bank across the
Audit Committee 45,000 business units, support units and
technology, including the value created
Strategy for our India business, including
Board Risk Management Committee 45,000
strategic partnerships with target
Compensation and Management Development Committee 35,000 Outlook and insights on India, including
political and economic developments
Executive Committee 45,000

Nominating Committee 20,000

Corporate governance | 57
Key information on each Director

Director Meetings attendance record Total Directors

independence status (1 January to 31 December 2016) remuneration for 2016 (SGD)
BOD (1) NC (2) EXCO (3) AC (4) BRMC (5) CMDC (6) AGM Directors Share-based Others (c)
fees (a) remuneration (b)
No. of meetings held in 2016 (SGD) (SGD) (SGD)
5 5 11 4 4 4 1

Mr Peter Seah, 70
Total: 1,840,212
Non-Executive and Independent Chairman
5 5 11 4 4 4 1
Chairman since 1 May 10
Board member since 16 Nov 09 1,252,300 536,700 51,212
Last re-elected on 23 Apr 15

Dr Bart Broadman, 55 Total: 209,500

Non-Executive and Independent Director
5 3 4 1
Board member since 17 Dec 08
Last re-elected on 28 Apr 14 146,650 62,850

Ms Euleen Goh, 61 Total: 344,778

Non-Executive and Independent Director
5 5 11 4 4 1
Board member since 1 Dec 08
Last re-elected on 28 Apr 16 237,300 101,700 5,778

Mr Ho Tian Yee, 64 Total: 192,500

Non-Executive and Non-Independent Director
5 5 4 1
Board member since 29 Apr 11
Last re-elected on 28 Apr 14 134,750 57,750

Mr Nihal Kaviratne, 72 Total: 249,500

Non-Executive and Independent Director
5 4 4 1
Board member since 29 Apr 11
Last re-appointment on 28 Apr 16 174,650 74,850

Mr Andre Sekulic, 66 Total: 266,500

Non-Executive and Independent Director
5 4 4 1
Board member since 26 Apr 12
Last re-elected on 23 Apr 15 186,550 79,950

Mr Danny Teoh, 61 Total: 279,000

Non-Executive and Independent Director
5 4 4 3 1
Board member since 1 Oct 10
Last re-elected on 28 Apr 16 195,300 83,700

Ms Ow Foong Pheng, 53 Total: 206,500 (d)

Non-Executive and Non-Independent Director
5 5 4 1
Board member since 26 Apr 12
Last re-elected on 23 Apr 15 206,500

58 | DBS Annual Report 2016

Director Meetings attendance record Total Directors
independence status (1 January to 31 December 2016) remuneration for 2016 (SGD)
BOD (1) NC (2) EXCO (3) AC (4) BRMC (5) CMDC (6) AGM Directors Share-based Others (c)
fees (a) remuneration (b)
No. of meetings held in 2016 (SGD) (SGD) (SGD)
5 5 11 4 4 4 1

Mr Piyush Gupta, 57
Executive Director/CEO Please refer to the Remuneration Report
5 5# 11 4# 4# 4# 1 on page 69 of this Annual Report for
Board member since 9 Nov 09 details on the CEOs compensation
Last re-elected on 28 Apr 16

Appointment Dates
# Mr Gupta attended these meetings at the invitation of the respective committees

(1) Board of Directors (BOD)

(2) Nominating Committee (NC)
(3) Board Executive Committee (EXCO)
(4) Audit Committee (AC)
(5) Board Risk Management Committee (BRMC)
(6) Compensation and Management Development Committee (CMDC)

(a) Fees payable in cash, in 2017, for being a Director in 2016. This is 70% of each Directors total remuneration and is subject to shareholder approval
at the 2017 AGM
(b) This is 30% of each Directors total remuneration and shall be granted in the form of DBSHs ordinary shares. The actual number of DBSHs
ordinary shares to be awarded will be rounded down to the nearest share, and any residual balance will be paid in cash. This is subject
to shareholder approval at the 2017 AGM
(c) Represents non-cash component and comprises (i) for Mr Peter Seah: car and driver, and (ii) for Ms Euleen Goh: carpark charges
(d) Directors remuneration payable to Mrs Ow Foong Pheng will be paid fully in cash to a government agency, the Directorship & Consultancy
Appointments Council

(Note: Directors are also paid attendance fees for Board and Board committee meetings, as well as for attending the AGM and the annual Board offsite)

2 Controls The Board notes that the internal controls Internal controls framework
and risk management systems provide Our internal controls framework covers
reasonable, but not absolute, assurance that nancial, operational, compliance and
Boards commentary on the Group will not be affected by any event information technology controls, as well
adequacy and effectiveness that could be reasonably foreseen as it strives as risk management policies and systems.
of internal controls to achieve its business objectives. In this The Board, supported by the AC and BRMC,
The Board has received assurance from the regard, the Board also notes that no system oversees the Groups system of internal
CEO and CFO that, as at 31 December 2016: can provide absolute assurance against the controls and risk management. DBS has
occurrence of material errors, poor judgment three lines of defence when it comes to
(a) the Groups nancial records have been in decision-making, human error, fraud or risk taking where each line of defence has
properly maintained, and the nancial other irregularities. a clear responsibility.
statements give a true and fair view of
DBS Groups operations and nances; and
Board CEO Senior Management
(b) the Groups risk management and internal Provides oversight of the 3 lines of defence
control systems were adequate and
effective to address nancial, operational, First line Second line Third line
compliance and information technology of defence of defence of defence
risks which the Group considers relevant
and material to its operations.
Responsibility Strategy, Policy and Independent
performance and monitoring assurance
Based on the internal controls established and risk management
maintained by the Group, work performed
by internal and external auditors, reviews Function Business units, Corporate Group audit
performed by management and various Board countries and oversight and
Committees as well as the said CEO and CFO support units control functions
assurance, the Board, with the concurrence
of the AC, is of the opinion that the Groups Key activities Identication and Framework, Independent
internal controls and risk management management of risk risk oversight challenge
systems were adequate and effective as in the businesses and reporting and review of
at 31 December 2016 to address nancial, adequacy and
operational, compliance risks and information effectiveness
technology risks which the Group considers of processes
relevant and material to its operations. and controls

Corporate governance | 59
Working closely with the support units, our Charter, which is approved by the AC. Group Group Audit apprises the regulators and
business units are our rst line of defence Audit reports functionally to the Chairperson external auditors of all relevant audit matters.
for risk. This includes identication and of the AC and administratively to the CEO. It works closely with the external auditor to
management of risks inherent in their coordinate audit efforts.
businesses/countries and ensuring that we Group Audits responsibilities include:
remain within approved boundaries of our
Quality assurance
risk appetite and policies. (i) Evaluating the reliability, adequacy
and effectiveness of the Groups risk and key developments
Corporate oversight and control functions management and internal controls In line with leading practices, Group Audit
such as Risk Management Group (RMG), systems, including whether there is prompt has a quality assurance and improvement
Group Legal and Compliance and parts and accurate recording of transactions and programme (QAIP) that covers all aspects
of Group Technology and Group Finance proper safeguarding of assets; of its audit activity and conforms to the
form the second line of defence. They are International Standards for the Professional
responsible for design and maintenance of (ii) Providing an objective and independent Practice of Internal Auditing. As part of our
the internal control frameworks covering assessment of the Groups credit QAIP programme, external quality assessment
nancial, operational, compliance and portfolio quality, the execution of reviews are carried out at least once every
information technology controls as well as approved credit portfolio strategies ve years by qualied professionals from
risk management policies and systems. In and control standards relating to credit an external organisation. Internal quality
addition, RMG is responsible for identifying management processes; assurance reviews were conducted quarterly by
individual and portfolio risk, approving independent assessor KPMG in 2015 and 2016.
transactions and trades and ensuring (iii) Reviewing whether DBS complies with
that they are within approved limits, and laws and regulations and adheres to Group Audit has leveraged extensively on
monitoring and reporting on the portfolio. established policies; and the use of data, technology and automation
These are done in view of current and future to provide greater insights and timely
potential developments, and evaluated (iv) Reviewing whether management is warnings on emerging risks. In 2016, Group
through stress testing. taking appropriate steps to address Audit operationalised its Future of Auditing
control deciencies roadmap through the industrialisation of
Group Audit forms the third line of defence. computer-assisted auditing techniques and
It provides an independent assessment Group Audit adopts a risk-based approach in the continuous auditing (CA) approach the
and assurance on the reliability, adequacy its auditing activities. An annual audit plan is application of automated audit test scripts
and effectiveness of our system of internal developed using a structured risk and control to perform control and risk assessments
controls, risk management procedures, assessment framework through which the automatically on a frequent basis. To date,
governance framework and processes. inherent risk and control effectiveness of each Group Audit has amassed signicant number
auditable entity in DBS Group is assessed. of CA test scripts to be used across functional
The assessment also covers risks arising from and location audits. These automated test
Assessing the effectiveness scripts have been made available to key
new lines of business or new products. Audit
of internal controls projects are planned based on the results of business and support units for them to
DBS has a risk management process that the assessment, with priority given to auditing conduct self-assessments as part of a
requires all units to perform a half-yearly Risk higher risk areas and as required by regulators. group-wide effort to integrate risk and control
and Control Self Assessment (RCSA) to assess governance across the three lines of defence.
the effectiveness of their internal controls. In Group Audit has unfettered access to the AC,
addition, all units of the Group are required the Board and management, as well as the Group Audit has closely collaborated with
to submit quarterly attestations on their right to seek information and explanation. Singapores A*Star Institute of Infocomm
controls relating to the nancial reporting Group Audit has an organisational and Research (I2R) in developing predictive
process, and annual attestations on their strategic alignment to the Group. The head models to anticipate emerging risks in areas
compliance with the overall internal controls of Group Audit has a seat in the Group such as branch risk proling, rogue trading
framework. Based on the RCSA and the Management Committee, and attends all analytics, and credit early warning through
quarterly and annual attestations, the CEO the business reviews and strategic planning network effects. Group Audits trading
and CFO provide an annual attestation to the forums. In each of the ve key locations analytics model, based on machine learning
AC relating to adequacy and effectiveness of outside Singapore, the country head of audit techniques, has won two awards in 2016:
DBS risk management and internal control also sits in the country management team. (a) the engineering award by the Institute of
systems. Group Audit performs regular Engineers Singapore (IES) and (b) the ASEAN
independent reviews to provide assurance Group Audit adheres to the Code of Conduct Outstanding Engineering Achievements Award.
on the adequacy and effectiveness of DBS and the Code of Ethics established by the
internal controls on risk management, control Institute of Internal Auditors (IIA). It is also Group Audit has further invested in its
and governance processes. The overall guided by the Mission Statement in the Audit training programme to upskill auditors in key
adequacy and effectiveness of DBS internal Charter and has aligned its practices with areas, such as data analytics, coding, and
controls framework is reviewed by the AC the latest International Professional Practices communication in order to move in tandem
and BRMC. Framework released in July 2015 by IIA. with DBS digitalisation strategy. Auditors
Group Audits effectiveness is measured with IT skillsets are being enhanced through
Group audit reference to the IIAs Ten Core Principles for Group Audits 2-year iTransformation initiative
the professional practice of internal auditing. launched in 2015, aimed at transforming
business auditors into integrated auditors, to
Key responsibilities take on more IT application audits. IT auditors
Audit reports containing identied issues
and processes and corrective action plans are reported to will focus in depth on three key areas: Digital
Group Audit is independent of the activities Banking, IT Infrastructure and Cyber Security.
the AC and senior management. Progress of
it audits. Its objectives, scope of authority
the corrective action plans is monitored and
and responsibilities are dened in the Audit
past due action plans are included in regular
reports to the senior management and the AC.

60 | DBS Annual Report 2016

Group Audit has also piloted the agile auditing
approach in selected audits, aimed at enhancing Table 3 Aggregate value of
transparency, increasing collaboration and all interested person
prioritising focus areas with auditees, while transactions in 2016
maintaining audit independence.
(excluding transactions
Name of interested person less than SGD 100,000)
Signicant incident protocol
DBS has a signicant incident protocol that
sets out processes and procedures for the Aetos Holdings Pte Ltd Group 43,586,069
escalation of incidents according to the level Ascendas-Singbridge Pte Ltd Group 1,742,400
of severity. In this way, appropriate levels CapitaLand Limited Group 360,000
of management are made aware of such Certis CISCO Security Pte Ltd Group 20,841,416
incidents and can take action accordingly. Mapletree Investments Pte Ltd Group 388,800
There are also well-dened procedures for SATS Ltd Group 797,272
the escalation, investigation and follow Sembcorp Industries Ltd Group 4,549,848
up of any reported wrong-doing by a DBS Singapore Telecommunications Limited Group 60,720,933
employee, customer, vendor or third party. SMRT Corporation Ltd Group 1,417,565
StarHub Ltd Group 988,692
Temasek Management Services Pte Ltd Group 133,500
Dealings in securities
In conformance with the black-out policies
Total Interested Person Transactions (SGD) 135,526,495
prescribed under SGX Listing Rules, the
Directors and employees are prohibited from
trading in DBS securities one month before they are in possession of material non-public All new Directors are briefed on all relevant
the release of the full-year results and two information. DBS has put in place a personal provisions that affect them. If necessary,
weeks before the release of the rst, second investment policy which prohibits employees existing credit facilities to related parties are
and third quarter results. In addition, business with access to price-sensitive information adjusted prior to a Directors appointment,
units and subsidiaries engaging in proprietary in the course of their duties from trading in and all credit facilities to related parties
trading are restricted from trading in DBS securities in which they possess such price- are continually monitored. DBS has robust
securities during the black-out period. Group sensitive information. Such employees are also procedures to manage potential conict of
Secretariat informs all Directors and employees required to seek pre-clearance before making interest between a Director and DBS. Checks
of each black-out period ahead of time. any personal trades in securities, and may are conducted before DBS enters into credit
only trade through the Groups stockbroking or other transactions with related parties to
In addition, Group Management Committee subsidiaries and bank channels for securities ensure compliance with regulations.
members are only allowed to trade in DBS listed in Singapore and Hong Kong. The
securities within specic window periods (15 personal investment policy discourages As required under the SGX Listing Rules,
market days immediately following the expiry employees from engaging in short-term please refer to Table 3 for details of interested
of each black-out period) subject to pre- speculative trading, and states that investment person transactions in 2016. These interested
clearance. Group Management Committee decisions should be geared towards long-term person transactions are for the purpose of
members are also required to obtain pre- investment. carrying out day-to-day operations such as
approval from the CEO before any sale of leasing of premises, telecommunication/
DBS securities. Similarly, the CEO is required Related party transactions data services, IT systems and related services,
to seek pre-approval from the Chairman DBS has embedded procedures to comply logistics as well as security services.
before any sale of DBS securities. As part of with all regulations governing related party
our commitment to good governance and transactions, including those in the Banking
the principles of share ownership by senior
Material contracts
Act, MAS directives and the SGX Listing Since the end of the previous nancial year,
management, the CEO is expected to build Rules. The Banking Act and MAS directives no material contracts involving the interest of
up and hold at least the equivalent of three impose limits on credit exposures by DBS to any Director or controlling shareholder of DBS
times his annual base salary as shareholding certain related entities and persons, while has been entered into by DBS or any of its
over time. Directors and ofcers are prohibited the SGX Listing Rules cover interested person subsidiary companies, and no such contract
at all times from trading in DBS securities if transactions in general. subsisted as at 31 December 2016, save as
disclosed via SGXNET.

3 Culture organisation. In addition to having in place Risk ownership: Please refer to page 59 of
comprehensive policies, we conduct a robust this Annual Report for details on our three
We believe that effective safeguards against self-assessment on the Groups risk culture lines of defence
undesired business conduct have to go Aligning strategies and incentives via Having established escalation protocols:
beyond a tick-the-box mentality. In DBS, balanced scorecard: Please refer to the We designed a notication protocol that
other than relying on published codes of section Our 2016 Priorities on page 38 makes it mandatory for staff to report
conduct, we also advocate the following of this Annual Report for more information signicant incidents. This means that the
organisational safeguards to maintain a strong Respecting voice of control functions: organisation is prepared to receive bad
risk and governance culture. We believe that respect for the voice of news and take necessary remedial actions
the control functions is a key safeguard. without shooting the messengers
Tone from the top: The tone set by the We ensure that control functions are well Encouraging constructive challenges at all
Board and senior management is vital; it integrated into our organisational structure levels: More fundamentally, we inculcate
is equivalent to the moral compass of the so that they can properly discharge their a culture that encourages constructive
responsibilities challenges and debate, where all views are

Corporate governance | 61
evaluated for decision-making. We also protection for those staff for Whistle-blowing policy
operate a culture where we actively engage these disclosures
the Board for their views early
Reinforcing cultural alignment: Finally, All employees of DBS are required to read DBS Speak Up service
we conscientiously reinforce our cultural and acknowledge the Code of Conduct on DBS Speak Up is a hotline service run by an
norms by rewarding right behaviours and an annual basis. Members of the public may independent external party that gives employees
censuring wrong ones access the Code of Conduct on DBS website, of the Group the opportunity to speak up on
as well as write in via an electronic feedback misconduct and/or wrong-doing by a DBS
form on the website. employee, customer, vendor or third party.
The DBS Code of Conduct
(Code of Conduct): The Code of Conduct encourages employees DBS Speak Up service includes:
Sets out the principles and standards of A dedicated hotline number, website, email
of DBS to report their concerns to DBS
behaviour that are expected of employees address, fax number and postal address
dedicated, independent investigation team
of the Group (including part-time and for reporting of suspected incidents of
within Group Compliance which handles
temporary employees) when dealing with misconduct and wrongdoing
whistle-blowing cases according to a well
customers, business associates, regulators Specialist call centre operators with
dened protocol. Alternatively, in case of
and colleagues. The principles covered in knowledge of individual organisations
actual or potential conict of interest or fear
the Code of Conduct include professional Expert forensic investigators to analyse reports
of retribution, employees of DBS may write
integrity, condentiality, conicts of Timely reporting of incidents to dedicated
in condence to Human Resources, Group
interests, fair dealings with customers and representatives within an organisation
Audit, or even the CEO or Chairman. In
whistle-blowing Recommendations on corrective action
addition, employees of DBS have the option
Denes the procedures for employees
of using the DBS Speak Up service.
of DBS to report incidents and provides

4 Accountability to companies, an improvement from a ranking

of 14th a year ago. DBS efforts to improve
our shareholders The Board provides shareholders with
disclosure continued to be recognised at the
quarterly and annual nancial reports.
In presenting these statements, the 2016 SIAS Investors Choice Awards where
Shareholder rights Board aims to give shareholders a it won the Golden Circle Award for the
DBS promotes fair and equitable treatment of Most Transparent Company for the second
balanced assessment of the Groups
all shareholders. All shareholders enjoy specic consecutive year.
nancial performance and position.
rights under the Singapore Companies Act
The Board also ensures timely and full
and the Companys Constitution.
disclosure of material corporate Conduct of shareholder
These rights include, among others, the right
developments to shareholders. meetings
to participate in prot distributions and the The AGM provides shareholders with the
right to attend and vote at general meetings. opportunity to share their views and to
Ordinary shareholders are entitled to attend and investors to submit their feedback and raise meet the Board, including the chairpersons of
vote at the AGM by person or proxy. Pursuant any questions. the Board committees and certain members
to the introduction of the new multiple proxies of senior management. Our external auditor is
regime under the Singapore Companies During the year, management held 600 debt available to answer shareholders queries.
(Amendment) Act 2014, indirect investors who and equity investor meetings. Management
hold DBSH shares through a nominee company participated in 14 local and overseas At the AGM, DBS nancial performance for
or custodian bank or through a CPF agent bank investor conferences and non-deal road the preceding year is presented to shareholders.
may attend and vote at the AGM. shows. These meetings provide a forum for
management to explain DBS strategy and At general meetings, the Chairman plays
DBS respects the equal information rights nancial performance. Management also uses a pivotal role in fostering constructive
of all shareholders and is committed to meetings with investors and analysts to solicit dialogue between shareholders, Board
the practice of fair, transparent and timely their perceptions of DBS. members and management. DBS encourages
disclosure. All price-sensitive information is and values shareholder participation at
publicly released prior to any sessions with DBS has a disclosure policy to ensure that all its general meetings.
individual investors or analysts. disclosures of material information are timely,
complete and accurate. The policy sets out In accordance with the recommendations
how material information should be managed contained in the Code and the Guidelines,
Communication with resolutions requiring shareholder approval
to prevent selective disclosure. Our Group
shareholders are tabled separately for adoption at the
Disclosure Committee (GDC) assists the CEO
Our investor relations activities promote Companys general meetings unless they are
and CFO in implementing DBS disclosure
regular, effective and fair communication closely related and are more appropriately
policy. The GDCs objectives are to: (a)
with shareholders. Brieng sessions for the tabled together.
periodically review DBS disclosure policy and
media and analysts are conducted when
update it as needed, (b) ensure that all material
quarterly results are released. All press Since 2015, the minutes of our AGM and
disclosures are appropriate, complete and
statements and quarterly nancial statements Extraordinary General Meeting (EGM)
accurate, and (c) ensure selective or inadvertent
are published on our website and the SGX may be accessed via our website. We have
disclosure of material information is avoided.
website. A dedicated investor relations team disclosed the names of the Directors and
supports the CEO and the CFO in maintaining senior executives who attended the 2016
At the IR Magazine Awards and Conference
a close and active dialogue with investors. AGM as well as detailed records of the
Southeast Asia 2016, DBS was featured
The DBS website provides contact details for proceedings including the questions raised by
and ranked 11th among the Global Top 50
the meeting attendees.

62 | DBS Annual Report 2016

Electronic poll voting process proxy verication process which has device. Upon vote submission, the
been agreed upon with the scrutineers. shareholder will receive a vote response
To enhance shareholder participation, acknowledgment on the device.
DBS puts all resolutions at general At the DBS AGM/EGM, mobile devices
meetings to vote by electronic poll are used for poll voting. When The results of the electronic poll voting
and announces the results by showing shareholders register their attendance are announced immediately after each
the number of votes cast for and at the meeting, they are handed the resolution has been put to a vote,
against each resolution and the mobile device with details of their and the number of votes cast for and
respective percentage. shareholding registered to the device. against and the respective percentage
The shareholder is able to view his or are displayed in real-time at the AGM/
DBS appoints an independent external her name and shareholding details EGM. DBS maintains an audit trail of
party as scrutineers for the electronic which are clearly displayed on all votes cast at the AGM/EGM. The
poll voting process. Prior to the the device. outcome of the AGM/EGM (including
commencement of the AGM/EGM, the detailed results of the poll vote for
scrutineers would review the proxies When the Chairman opens the poll on each resolution) is promptly disclosed
and the proxy process. DBS also has a a resolution, the shareholder presses on SGXNET after the meetings, on the
the relevant voting button on the same day of the AGM/EGM.

Corporate governance | 63

We believe that our long-term success depends in

large measure on the contributions of our employees.
Our remuneration framework is designed to be
consistent with market best practices while driving
business strategy and creating long-term shareholder
value. Remuneration policies and practices as set
out in the following report are governed by a set of
sound principles which are in compliance with various
regulatory requirements.

1 Objectives of DBS remuneration strategy

DBS remuneration policy, which is applicable to DBS Bank and all our subsidiaries and overseas ofces, seeks to ensure that we are able to attract,
motivate and retain employees to deliver long-term shareholder returns taking into consideration risk management principles and standards set out
by the Financial Stability Board (FSB) and the Code.

When formulating our remuneration strategy, consideration was given to aligning our remuneration approach with DBS PRIDE! values in order to
drive desired behaviours and achieve the objectives set out in our balanced scorecard.

The following shows the three main thrusts of our remuneration strategy and how they are implemented within DBS:

Main thrusts How

Pay for performance Instill and drive a pay-for-performance culture

measured against the Ensure close linkage between total compensation and our annual and long-term business
objectives as measured through the balanced scorecard
balanced scorecard Calibrate mix of xed and variable pay to drive sustainable performance and alignment to
DBS PRIDE! values, taking into account both the what and how of achieving KPIs

Provide market Benchmark our total compensation against other organisations of similar size and standing
competitive pay in the markets we operate in
Drive performance differentiation by benchmarking total compensation for top performing
employees against the upper quartile or higher in each market

Guard against Focus on achieving risk-adjusted returns that are consistent with our prudent risk and capital
excessive risk-taking management, as well as emphasis on long-term sustainable outcomes
Design payout structure to align incentive payments with the long-term performance of the
company through deferral and clawback arrangements

2 Summary of current total compensation elements

An employees total compensation is made up of the following elements:

Total compensation Fixed pay Variable pay Variable pay

Salary + Cash bonus + Long-term incentive

64 | DBS Annual Report 2016

The table below provides a breakdown of total compensation elements, their purpose and link to our compensation strategy, and the policy
governing their execution.

Elements What Why and linkages to strategy How

Fixed pay Salary Attract and retain talent by ensuring Set at an appropriate level taking into account
our xed pay is competitive vis-a-vis market dynamics, skills, experience, responsibilities,
comparable institutions competencies and performance of the employee
Paid in cash monthly
Typically reviewed annually

Variable pay Cash Provide a portion of total compensation Based on overall Group, business or support unit
bonus and that is performance-linked and individual performance
long-term Focus employees on the achievement Measured against a balanced scorecard which is
incentive of objectives which are aligned to agreed to at the start of the year
value creation for our shareholders and Awards in excess of a certain threshold are subject to
multiple stakeholders a tiered deferral rate that ranges from 20% to 60%
Align to time horizon of risk Deferred remuneration is paid in restricted shares
and comprises two elements: the main award and
the retention award (constituting 20% of the shares
given in the main award and designed to retain talent
and compensate staff for the time value of deferral)
Deferred awards vest over four years
Paid cash bonus, unvested and vested deferred
share awards are subject to clawback from
employees whose bonus exceeds a certain threshold

3 Determination of variable pay pool

The variable pay pool is derived from a combination of a bottom-up and top-down approach. It is underpinned by our aim to drive a pay-for-
performance culture which is aligned to our risk framework.

Determining total variable pool A function of net prot before tax Modulated by our performance against
benchmarked against market and balanced scorecard
calibrated against the following prisms: Comprises nancial and non-nancial
Risk adjustment through review metrics encompassing employees,
of Returns on Risk-Adjusted customers, shareholders, risks and
Capital (RoRAC) compliance objectives
Distribution of earnings between Evaluated by CMDC, with pool
employees and shareholders subsequently endorsed by the Board

Allocating pool to business units Pool allocation takes into account the Inputs from control functions such as
relative performance of each unit Audit, Compliance and Risk are sought.
Measured through each units Country heads are also consulted in the
balanced scorecard and evaluated allocation process
by the CEO

Determining individual award Unit heads cascade their allocated pool Individual variable pay determined based
to their teams and individuals on individual performance
Performance measurement through Linked to achievement of quantitative
balanced scorecard as well as qualitative objectives as set
out in individuals key performance
indicators (KPIs)

Control functions (Risk, Finance, Compliance and Audit) are measured independently from the business units they support to prevent any conicts
of interests. The remuneration of the Chief Risk Ofcer (CRO) and Group Head of Audit are endorsed by the Chairman of BRMC and AC
respectively and subsequently approved by the Board.

Sales employees are incentivised to promote the development of mutually benecial long-term relationships with their customers, rather than a sole
focus on short term gains. Non-nancial metrics such as customer satisfaction and compliance with fair dealing principles are incorporated into their KPIs.

Remuneration report | 65
4 Long-term share incentives

Plan objectives Award types

Foster a culture that aligns employees interests with shareholders Annual Deferred Remuneration
Enable employees to share in the banks performance DBSH Share Plan (Share Plan) for Vice President & above
Talent retention DBSH Employee Share Plan (ESP) for Assistant Vice
President & below
Awards as part of talent retention (Special Award)

Award elements
Long-term share incentives are delivered in the form of restricted share awards (Share Awards) which comprise two elements:
Long-term incentive Main Award + Retention Award*
* Constitutes 20% of Main Award under the Annual Deferred Remuneration

Malus of unvested awards & Clawback

Vesting schedule of vested awards

Main Award Malus and/or Clawback will be triggered by

33% vest two years after grant date Material violation of risk limits
Another 33% vest three years after grant date Material losses due to negligent risk-taking or inappropriate
Remaining 34% vest four years after grant date individual behaviour
Material restatement of DBS nancials due to inaccurate
Retention Award performance measures
100% vest four years after grant date Misconduct or fraud

Prior to 2016 Performance Year, only unvested awards are subject to

malus. Starting from 2016 Performance Year onwards, unvested and/
or vested awards are subject to malus/clawback. Such awards may be
clawed back during the seven years period from the date of grant.

Details of the Share Plan appear on pages 183 to 184 of the Annual Report.

5 Senior management and material risk takers

The balance between xed and variable elements of total compensation changes according to performance, rank and function. This is in line with the
FSB principle of ensuring that employee incentives remain focused on prudent risk-taking and effective control, depending on the employees role.

It is aimed at incentivising employees whose decisions can have a material impact on DBS to adopt appropriate risk behaviours. These employees
include senior management, key personnel at business units and senior control staff. We dene this group of staff based on their roles, quantum of
their variable remuneration and the ratio of their variable to xed pay.

In 2015/2016, an external management consulting rm, Oliver Wyman, was engaged to provide an independent review of the Groups compensation
system and processes to ensure compliance with the FSB Principles for Sound Compensation Practices. Oliver Wyman and its consultants are
independent and not related to us or any of our Directors.

66 | DBS Annual Report 2016

Summary of 2016 Remuneration Outcomes
At DBS, performance and remuneration are tracked against a balanced scorecard, which measures progress in a number of areas that are important to
our stakeholders, namely shareholders, customers, employees, regulators and the community. The scorecard comprises many qualitative dimensions
including the quality of our results, the effectiveness of our risk management and compliance efforts as well as the progress on our strategic initiatives.

Reecting the lower balanced scorecard rating in 2016, the total and deferred compensation for senior management and material risk takers is lower
than the year before. The aggregate total remuneration for our Senior Management (including the CEO) in 2016 amounts to SGD 58.2 million,
down from SGD 66.8 million in 2015. Although the Code and the Guidelines recommend that at least the top ve key executives remuneration
be disclosed within bands of SGD 250,000 and in aggregate, the Board believes that such disclosure would be disadvantageous to our business
interests, given the highly competitive conditions in the banking industry where poaching of executives is commonplace.

The deferred compensation for senior management was down by 18% whilst that of material risk takers was down 2%.

Breakdown of long-term remuneration awards

Category SM MRTs

Change in deferred remuneration awarded in current nancial year (1) -18(-20) (4)% -2 (-4) (4)%

Change in amount of outstanding deferred remuneration from previous 21(3) (20) (4)% 22 (3) (22) (4)%
nancial year (2)

Outstanding deferred remuneration (breakdown):

Shares & share-linked instruments 100% 100%
Other forms of remuneration
Total 100% 100%

Outstanding deferred remuneration (performance adjustments):

Of which exposed to ex-post adjustments 100% 100%
Reductions in current year due to ex-post adjustments (explicit)
Reductions in current year due to ex-post adjustments (implicit) (2)

Outstanding retained remuneration (performance adjustments):

Of which exposed to ex-post adjustments
Reductions in current year due to ex-post adjustments (explicit)
Reductions in current year due-to ex-post adjustments (implicit)

Headcount 19 270

(1) Value of DBSH ordinary shares (including retention shares) granted in respect of performance year 2016 vs. value of DBSH ordinary shares
(including retention shares) granted in respect of performance year 2015. Share price taken at date of grant
(2) [No. of unvested DBSH ordinary shares as at 31 Dec 16 x share price as at 30 Dec 16] / [No. of unvested DBSH ordinary shares as at 31 Dec 15 x
share price as at 31 Dec 15]
(3) The increase is mainly due to the difference in share prices as at 30 Dec 2016 and 31 Dec 2015 and the higher number of shares granted in 2016
relative to shares vested in 2016
(4) Figures in parentheses show the change in deferred remuneration awarded if the same population of staff that fulls the denition of SM and
MRTs for both performance year 2016 and 2015 is used

Examples of explicit ex-post adjustments include malus, clawbacks or similar reversal or downward revaluations of awards.
Examples of implicit ex-post adjustments include uctuations in the value of DBSH ordinary shares or performance units.

Retained remuneration refers to shares or share-linked instruments that are subject to a retention period under a share retention policy.

Remuneration report | 67
The following charts show the mix of xed and variable pay for both groups for performance year 2016.

Senior Management Material risk takers

22% 20%

42% 40%


Fixed Pay
We do not provide any other forms of xed and variable Variable pay-cash
remuneration aside from those disclosed in this section Variable pay-deferred shares (including retention shares)

Senior Management (SM) is dened as the CEO and members of Material risk takers (MRTs) are dened as employees whose duties
the Group Management Committee who have the authority and require them to take on material risk on our behalf in the course of
responsibility for the Groups overall direction and executing to strategy. their work. These can be either individual employees or a group of
employees who may not pose a risk to DBS nancial soundness on
an individual basis, but may present a material risk collectively.

Guaranteed bonuses, sign-on bonuses and severance payments

Category SM MRTs

Number of guaranteed bonuses 0 0

Number of sign-on bonuses 1 4

Number of severance payments 0 0

Total amounts of above payments made during the Financial Year (SGD 000) 2,159*

* Due to data condentiality, the total amount of payments for SM and MRTs have been aggregated for reporting

Other Provisions
We do not allow accelerated payment of deferred remuneration except in cases such as death in service or where legally required.
There are no provisions for:
Special executive retirement plans;
Golden parachutes or special executive severance packages; and/or
Guaranteed bonuses beyond one year

68 | DBS Annual Report 2016

Chief Executive Ofcer
Since becoming CEO in November 2009, Piyush Gupta has grown DBS into a leading bank with multiple growth engines. This has built resiliency into
the franchise, enabling DBS to withstand a slowdown in any single line of business and still turn in a sustainable performance.

In 2016, DBS delivered a strong operating performance with total income and net prot before allowances rising to new highs despite challenging
economic conditions. This enabled the bank to absorb higher allowances due to stresses in the oil & gas support services sector and still maintain net
prot at SGD 4.24 billion.

DBS continued to position itself well against the coming digital onslaught, shaping a culture of innovation within the bank, re-inventing systems
and processes and reimagining banking. The traction it is making on these fronts is showing up in expanded customer reach and acquisition, and
improved productivity and efciency. In 2016, DBS successfully launched digibank, Indias rst mobile-only bank, in a game-changing initiative that
allowed it to break into the retail banking segment of a large geography without the need for expensive physical infrastructure. DBS is heartened that
its efforts towards digital transformation have been recognised, having bagged a number of prestigious accolades including Worlds Best Digital
Bank by Euromoney in the course of the year.

Notwithstanding the above, Mr Guptas remuneration was adjusted down, reecting the lower balanced scorecard rating in 2016.

Breakdown of remuneration for performance year 2016 (1 January 31 December)

Salary Cash Share

remuneration bonus (1) Plan (2) Others (3) Total (4)

Mr Piyush Gupta 1,200,000 3,117,000 4,063,000 61,132 8,441,132

(1) The amount has been accrued in 2016 nancial statements

(2) At DBS, dividends on unvested shares do not accrue to employees. For better comparability with other listed companies, this gure excludes
the estimated value of retention shares amounting to SGD 812,600, which serve as a retention tool and compensate staff for the time value of
deferral. This is also similar in nature to practices in those companies which provide accrual of dividends for deferred awards
(3) Represents non-cash component and comprises club, car and driver
(4) Refers to current year performance remuneration includes xed pay in current year, cash bonus received in following year and DBSH ordinary
shares granted in following year

Remuneration report | 69
of disclosures

Express disclosure requirements in the Guidelines

on Corporate Governance for Financial Holding
Companies, Banks, Direct Insurers, Reinsurers and
Captive Insurers which are incorporated in Singapore
(which comprises the Code of Corporate Governance
2012), and the applicable disclosures pursuant to
the Corporate Governance Disclosure Guide issued
by the Singapore Exchange on 29 January 2015.

Page reference in
Principle and guidelines DBS Annual Report 2016

Guideline 1.3 Pages 51 to 57

Delegation of authority, by the Board to any Board committee, to make decisions on
certain Board matters

Guideline 1.4 Pages 58 to 59

The number of meetings of the Board and Board committees held in the year, as well
as the attendance of every Board member at these meetings

Guideline 1.5 Page 57

The type of material transactions that require Board approval under guidelines

Guideline 1.6 Page 53

The induction, orientation and training provided to new and existing Directors

Guideline 1.16 Page 53

An assessment of how these programmes meet the requirements as set out by the NC
to equip the Board and the respective Board committees with relevant knowledge and
skills in order to perform their roles effectively

Guideline 2.1 Pages 52 to 53

Compliance with the guideline on proportion of independent Directors on the Board

Guideline 2.3 Pages 52 to 53

The Board should identify in the Companys Annual Report each Director it considers
to be independent. Where the Board considers a Director to be independent in spite
of the existence of a relationship as stated in the Code that would otherwise deem
a Director not to be independent, the nature of the Directors relationship and the
reasons for considering him as independent should be disclosed

Guideline 2.4 Not applicable

Where the Board considers an independent Director, who has served on the Board
for more than nine years from the date of his rst appointment, to be independent,
the reasons for considering him as independent should be disclosed

70 | DBS Annual Report 2016

Page reference in
Principle and guidelines DBS Annual Report 2016

Guideline 2.6 Pages 48, 49, 51 and 52

(a) The Boards policy with regard to diversity in identifying Director nominees
(b) Whether current composition of the Board provides diversity on skills, experience,
gender and knowledge of the Company, and elaborate with numerical data
where appropriate
(c) Steps that the Board has taken to achieve the balance and diversity necessary
to maximise its effectiveness

Guideline 2.13 Pages 53 to 54

Names of the members of the EXCO and the key terms of reference of the EXCO,
explaining its role and the authority delegated to it by the Board

Guideline 3.1 Not applicable

Relationship between the Chairman and the CEO where they are immediate
family members

Guideline 4.1 Page 51

Names of the members of the NC and the key terms of reference of the NC,
explaining its role and the authority delegated to it by the Board

Guideline 4.4 Page 53

(a) The maximum number of listed company Board representations which
Directors may hold should be disclosed
(b) Reasons for not determining maximum number of listed company
Board representations
(c) Specic considerations in deciding on the capacity of Directors

Guideline 4.6 Pages 51 to 53

Process for the selection, appointment and re-appointment of new Directors
to the Board, including the search and nomination process

Guideline 4.7 Pages 52, 58 and 59

Key information regarding Directors, including which Directors are executive,
non-executive or considered by the NC to be independent

Guideline 4.13 Not applicable

Resignation or dismissal of key appointment holders

Guideline 4.14 Page 53

Deviation and explanation for the deviation from the internal guidelines
on time commitment referred to in Guidelines 4.4 and 4.10

Guideline 5.1 Pages 51 to 52

The Board should state in the Companys Annual Report how assessment of the Board,
its Board committees and each Director has been conducted. If an external facilitator
has been used, the Board should disclose in the Companys Annual Report whether the
external facilitator has any other connection with the Company or any of its Directors.
This assessment process should be disclosed in the Companys Annual Report

Guideline 6.1 Pages 50, 53, 55, 56 and 59

Types of information which the Company provides to independent Directors to enable
them to understand its business, the business and nancial environment as well as the
risks faced by the Company, and how frequent is such information provided.

Summary of disclosures | 71
Page reference in
Principle and guidelines DBS Annual Report 2016

Guideline 7.1 Page 56

Names of the members of the Remuneration Committee (RC) and the key terms of
reference of the RC, explaining its role and the authority delegated to it by the Board

Guideline 7.3 Page 66

Names and rms of the remuneration consultants (if any) should be disclosed in the
annual remuneration report, including a statement on whether the remuneration
consultants have any relationships with the Company

Principle 9 Pages 64 to 68
Clear disclosure of remuneration policies, level and mix of remuneration, and
procedure for setting remuneration

Guideline 9.1 For the CEO and management:

Remuneration of Directors, the CEO and at least the top ve key management Page 67
personnel (who are not also Directors or the CEO) of the Company. The annual For the Companys other Directors:
remuneration report should include the aggregate amount of any termination, Page 58
retirement and post-employment benets that may be granted to Directors, the CEO
and the top ve key management personnel (who are not Directors or the CEO)

Guideline 9.2 For the CEO:

Fully disclose the remuneration of each individual Director and the CEO on a named Page 69
basis. There will be a breakdown (in percentage or dollar terms) of each Directors and For the Companys other Directors:
the CEOs remuneration earned through base/xed salary, variable or performance- Page 58
related income/bonuses, benets in kind, stock options granted, share-based incentives
and awards, and other long-term incentives

Guideline 9.3 Page 67

Name and disclose the remuneration of at least the top ve key management
personnel (who are not Directors or the CEO) in bands of SGD 250,000. There will be
a breakdown (in percentage or dollar terms) of each key management personnels
remuneration earned through base/xed salary, variable or performance-related
income/bonuses, benets in kind, stock options granted, share-based incentives and
awards, and other long-term incentives. In addition, the Company should disclose in
aggregate the total remuneration paid to the top ve key management personnel
(who are not Directors or the CEO). As best practice, companies are also encouraged to
fully disclose the remuneration of the said top ve key management personnel

Guideline 9.4 Page 56

Details of the remuneration of employees who are immediate family members of
a Director or the CEO, and whose remuneration exceeds SGD 50,000 during the year.
This will be done on a named basis with clear indication of the employees relationship
with the relevant Director or the CEO. Disclosure of remuneration should be in
incremental bands of SGD 50,000

Guideline 9.5 Pages 66, 183 and 184

Details and important terms of employee share schemes

Guideline 9.6 Pages 64 to 69

For greater transparency, companies should disclose more information on the link
between remuneration paid to the executive Directors and key management personnel,
and performance. The annual remuneration report should set out a description of
performance conditions to which entitlement to short-term and long-term incentive
schemes are subject, an explanation on why such performance conditions were chosen,
and a statement of whether such performance conditions are met

72 | DBS Annual Report 2016

Page reference in
Principle and guidelines DBS Annual Report 2016

Guideline 11.3 Pages 59 to 60

The Board should comment on the adequacy and effectiveness of the internal controls,
including nancial, operational, compliance and information technology controls, and
risk management systems. The commentary should include information needed by
stakeholders to make an informed assessment of the Companys internal control and
risk management systems. The Board should also comment on whether it has received
assurance from the CEO and the CFO: (a) that the nancial records have been properly
maintained and the nancial statements give true and fair view of the Companys
operations and nances; and (b) regarding the effectiveness of the Companys risk
management and internal control systems

Guideline 11.14 Pages 55 to 56

Names of the members of the Board risk committee and the key terms of reference
of the Board risk committee, explaining its role and the authority delegated to it
by the Board

Guideline 12.1 Pages 54 to 55

Names of the members of the AC and the key terms of reference of the AC, explaining
its role and the authority delegated to it by the Board

Guideline 12.6 Page 55

Aggregate amount of fees paid to the external auditors for that nancial year,
and breakdown of fees paid in total for audit and non-audit services respectively,
or an appropriate negative statement

Guideline 12.7 Page 62

The existence of a whistle-blowing policy should be disclosed in the Companys
Annual Report

Guideline 12.8 Pages 54 to 55

Summary of the ACs activities and measures taken to keep abreast of changes to
accounting standards and issues which have a direct impact on nancial statements

Guideline 13.1 Pages 54, 55, 59, 60 and 61

Whether the Company has an internal audit function

Guideline 15.4 Pages 62 to 63

The steps the Board has taken to solicit and understand the views of the shareholders
e.g. through analyst briengs, investor roadshows or Investors Day briengs

Guideline 15.5 Not applicable

Where dividends are not paid, companies should disclose their reasons

Guideline 17.4 Page 61

Material related party transactions

Summary of disclosures | 73

Top and emerging risks

We understand that top and emerging risks can

affect our business activities, nancial results,
reputation and our strategic priorities. That is
why we proactively identify, control, mitigate,
monitor and report these risks as part of our risk
management process. We begin our identication
process by reviewing internal risk data and industry
research, after which senior management assesses
our key focus areas, as well as the risk outlook
for the banking industry as a whole. After further
deliberation by the Board and management
risk committees, our top and emerging risks
are prioritised and monitored. Our action plans
are periodically updated and this information is
disseminated to the relevant risk committees.

Credit risk and portfolio amounted to SGD 14 billion and remains

Focus areas for 2016 resilient. The majority was granted to
management investment grade-equivalent borrowers, which
1. Credit risk and portfolio include global trading houses, international
DBS faced a challenging operating
management oil companies and national oil companies.
environment in 2016 with headwinds from
2. Digitalisation - Cyber security This exposure was typically in short-term and
low oil prices and a slowdown in the Chinese
3. Regulatory compliance trade-related facilities.
economy. Challenges were seen in the
and reporting
segments of oil and gas support services and
4. Application development Our exposure to the oil and gas support
SME portfolios. We also faced pressure in
and insourcing services segment amounted to SGD 8 billion,
5. Digitalisation - Ecosystem sections of our commodity exposures such
of which SGD 2 billion was to state-owned/
partners, vendors and as steel and coal. In addition, our North Asia
government linked shipyards. Of the
outsourcing service providers portfolio was impacted by the depreciation
remaining SGD 6 billion, about half have
6. Risk and control construct of the RMB. Despite these headwinds, our
been more affected by the decline in oil
7. Data management portfolios, especially in Singapore and China,
prices. We took allowances for three large
and protection continued to be resilient reecting the
exposures in 2016, of which two were in the
8. Resiliency and capacity inherent strength of our franchise.
offshore contracting business. This led us to
(including crisis management) re-evaluate our contract services portfolio
9. Liquidity and capital Commodity prices have been under pressure
and enhance the guidelines.
management since 2014. This has affected our oil and gas
10. Large programme initiatives support services portfolio. Our exposure to the
We expect the oil and gas support services
whole oil and gas complex comprising not
Of the above, there were three sector to remain under some pressure due
only producers and traders but also processors
particularly challenging areas: to structural overcapacity and low charter
and support services has remained around
(i) Credit risk and portfolio rates. While oil prices have rebounded off
SGD 22 billion, of which SGD 18 billion was
management, (ii) Regulatory the lows, the slow recovery in prices indicates
in the form of loans. Our exposure to the
compliance and (iii) Cyber security that capital expenditure by major oil and gas
producer, trader and processor segments
and data protection. companies will remain constrained. Major oil
companies have also driven down costs by re-

74 | DBS Annual Report 2016

negotiating contracts across the exploration From a geographical perspective, in Greater Although Chinas foreign exchange reserves
and production segments. We are closely China, our customers reduced their RMB have declined, they remain large enough to
monitoring this portfolio and working with positions substantially as they matured or smoothen exchange rate volatility and serve
our borrowers to re-prole their loans in line through an early unwinding. The remaining as a cushion against external shocks. We also
with the lower cashows. contracts, with maturities up to the third believe that the government has sufcient
quarter of 2017, are now quite small. For monetary and scal levers to weather an
Our exposure to commodities other than customers that have opted to unwind their economic downturn. There is no material
oil and gas was SGD 21 billion, of which RMB contracts, term loans have been offered change in our assessment of China. We will
SGD 17 billion was in the form of loans. This to term out such liabilities where the credit continue to keep a close watch on policy
portfolio, which is mostly in short-term and risk is justied. We have taken specic development and actions.
trade-related facilities, was spread over 400 allowances of SGD 173 million pertaining to
borrowers. Close attention has been paid customers with RMB derivative exposures. Regulatory compliance
to the structure and collateral of individual
trades. We have conducted several portfolio In China, our customer and trade loans fell The key areas which required attention in
reviews and remain generally comfortable from SGD 37 billion at the end of 2015 to 2016 were anti-money laundering efforts,
with our exposure. While there continues to SGD 34 billion. The drop was due largely to sales process (client suitability) in RMB
be some stress in the steel and coal sectors, the trade loans, which now accounted for derivatives and cross-border taxation.
we expect credit losses to be manageable. half of the exposure, or SGD 17 billion, and
were mostly backed by letters of credit issued The Monetary Authority of Singapore (MAS)
The shipping industry continues to be by top-tier nancial institutions. The bulk of took action against us for breaches of money
challenging. However, we draw comfort that the remaining SGD 17 billion of non-trade laundering regulations attributable to events
majority of our borrowers have adequate exposure was to well-rated large corporates. in 2013 and 2014. The issues giving rise
nancial resources to withstand the protracted Our exposure to SMEs also declined as we to the breaches centred on onboarding,
industry downturn. We remain highly selective continued to tighten our lending criteria. In transaction monitoring and suspicious activity
of new exposures and continue to focus on the property sector, we are focused on the reporting have been rectied. In 2017, we
credits with strong track records and sound top local and international names. will be focusing on greater enhancements
nancial proles. to our anti-money laundering capabilities
The banking sector in India continued to including front ofce controls and training,
The residential housing market in Singapore be impacted by stressed assets. The recent enhancements to transaction monitoring and
has remained subdued with property prices demonetisation has also impacted short- leading or participating in efforts to share
continuing to ease and transaction volumes term growth momentum. Downside risks more information on criminal behaviour with
remaining low. The outlook for commercial remain for borrowers in weaker sectors law enforcement and our regulators.
and industrial properties in Singapore such as infrastructure and engineering
has also weakened because of the slower procurement and construction, as well as We were subjected to regulatory actions
macroeconomic environment. At the same commodities such as steel as they continue in Taiwan for lapses in sales processes
time, the sharp rise in housing prices in Hong to face challenges such as stalled projects, on derivatives. Actions are under way to
Kong and some cities in China has been an overcapacity, a downturn in commodity implement enhancements aligned to the
area of concern as it has heightened the risk prices and the dumping of goods from Taiwan regulators expectations. We operate,
of a sharp price correction. Because of this, other countries. While recent government globally, a standardised process for classifying
we have stress tested our portfolio rigorously. initiatives, such as arbitration claims, the product risk and matching this to client risk
We remain vigilant to any signs of market Bankruptcy Code and the Insolvency Act, before a product is sold to a particular client.
weakness and will continue to exercise are positive for our borrowers, our portfolio The data is reported to the Fair Dealing
prudence when underwriting new loans. in India continues to be challenged due Committee, which submits a quarterly report
Overall, we remain comfortable with our to industry and macroeconomic issues as to our Board Audit Committee. The Fair
exposure to the property sector. well as slow progress in de-leveraging. We Dealing Committee will, from time to time,
have tightened our Target Market and Risk instruct any relevant global enhancements
Across the region as a whole, there was no Acceptance Criteria (1) and continue to actively which are appropriate in connection with
growth in exposure to the SME portfolio monitor the portfolio, paying particular derivatives sales.
during the year, although growth levels varied attention to identifying warning signals at an
between individual country portfolios. Credit earlier stage. As part of the Organisation for Economic
quality was impacted by a combination of Co-operation and Development (OECD) Base
macroeconomic conditions and country or From a country transfer risk perspective, Erosion and Prot Shifting (BEPS) and its local
sector-specic issues, such as (i) the impact our operations are concentrated in a few adoption by tax regulators, DBS is required to
of RMB derivatives affecting clients in Hong countries. In 2016, we paid closer attention provide additional documentation in respect of
Kong, China and Taiwan, and (ii) ongoing to China as its economy slowed and the Country-by-Country Reporting and Transfer
strains in the oil and gas support services momentum of capital outows picked up Pricing documentation. In addition, BEPS
sector in Singapore. The SME portfolios are as interest rate differentials moved in favour has heightened the focus on cross-border
subject to regular reviews, stress tests and ad of USD assets. Policy actions have been tax issues in general. DBS has implemented
hoc scenario assessments, with the results introduced to manage the capital outows. relevant tax policies and procedures in
subsequently used to optimise lending criteria. response to this. We aim to apply both

(1) We use Target Market (TM) to dene industry and geographical target markets and identify acceptable business/industry segments.
Risk Acceptance Criteria (RAC) is used as a client screening tool to guide credit extension and how much risk is acceptable or tolerable.

CRO statement | 75
the letter and the spirit of tax laws in the defence in depth, combined with employee
jurisdictions in which to operate and support education and industry collaboration; and
the work by OECD and others to promote we keep abreast of techniques and threats
transparency. As local tax regulators start as they evolve in order to develop the
to adopt the BEPS action points, we would appropriate countermeasures.
expect an increasing amount of tax audits
focussing on cross border tax arrangements. Data protection and governance are
Our top focus areas
cornerstones for customers trust in the
banking sector, and are also critical enabling in 2017 are similar
Cyber security
factors for innovation in a digital economy. to 2016s, with the
and data protection In 2016, we had a data related incident in top three remaining
Hong Kong which was reported in media,
As cyber-attacks against public and private stemming from reports which we submitted
unchanged, as follows:
infrastructures grow worldwide, cyber to the authorities. It remains our belief that
security has become increasingly important 1. Credit risk and portfolio
it is important to supply information which
for both governments and regulators across management
facilitates prosecutions of criminal activity.
the globe. DBS takes an approach which 2. Cyber security
We will be putting more focus in 2017 on
converges the management of physical, 3. Regulatory compliance
controls to detect or prevent loss of data,
cyber and data-related risks into a central as well as improving our policy framework For more details on our principal risks
Chief Information Security Ofcer, who also around data management. and risk management approach, please
oversees the nancial crime risk management refer to pages 77 to 102.
programme. We take an overall approach of

76 | DBS Annual Report 2016

Risk management
In 2016, we continue to implement most of the recommendations from the Enhanced Disclosure
Task Force (EDTF) to improve bank risk disclosures (1). We have also implemented the temporary
and permanent disclosure recommendations (2) that are applicable to DBS from the EDTFs
November 2015 report, Impact of expected credit loss (ECL) approaches on bank risk disclosures.
For an overview of the recommendations and where we have incorporated the relevant disclosures, please refer to Appendix on page 98.

The table below gives an overview of the locations of our risk disclosures.

Other locations Pillar 3 quantitative

Risk management section in Annual Report disclosures (3)
Risk 1 Risk overview 78 Capital management 103 1 Introduction
overview 2 Risk-taking and our 78 and planning 3 Capital adequacy
business segments 6 Exposures and
risk- weighted
assets (RWA)

Risk 3 Risk governance 79 Corporate governance report 48

governance 80

Risk 4.1 Risk thresholds and 80 Remuneration report 64

Appetite economic capital usage
4.2 Stress testing 81

Credit risk 5.1 Credit risk management 82 Note 14 Financial assets and 137 7.1 Credit risk assessed
at DBS liabilities subject to using Internal Ratings-
5.2 Credit risk mitigants 84 netting agreement Based Approach
5.3 Internal credit risk models 84 Note 41.1 Maximum exposure 164 7.2 Credit risk assessed using
5.4 Credit risk in 2016 87 to credit risk standardised approach
Note 41.2 Loans and advances 165 7.3 Credit risk mitigation
to customers 7.4 Counterparty credit
Note 41.3 Credit quality of 169 risk- related exposures
government securities 8 Equity exposures
and treasury bills and under IRBA
bank and corporate 9 Securitisation exposures
debt securities 10.1 Credit exposures
Note 41.4 Credit risk by 169 10.2 Major credit exposures by
geography geography and industry
and industry 10.3 Loans and advances to
customers (by performing/
10.4 Movements in specic and
general allowances

Market risk 6.1 Market risk management at 89 10.6 Interest rate risk in the
DBS banking book
6.2 Market risk in 2016 90 10.7 Equity exposures in the
banking book

Liquidity risk 7.1 Liquidity risk management 91 Note 42.1 Contractual maturity 171 10.5 Total assets by residual
at DBS prole of assets contractual maturity
7.2 Liquidity risk in 2016 93 and liabilities
7.3 Liquid assets 94
7.4 Regulatory requirements 94

Operational 8.1 Operational risk 95

risk management at DBS
8.2 Operational risk in 2016 96

Reputational 9.1 Reputational risk 97

risk management at DBS
9.2 Reputational risk in 2016 97

(1) See Enhancing the Risk Disclosure of Banks published by the Financial Stability Board in October 2012
(2) The additional considerations under the existing EDTF recommendations fall into the following three categories:
Permanent: Disclosures made in the pre-transition period, which should continue following the adoption of the ECL framework
Temporary: Disclosures made in the pre-transition period, which should cease following the adoption of the ECL framework
Post ECL Adoption Permanent: Disclosures to be made following the adoption of an ECL framework only
(3) Please refer to http://www.dbs.com/investor/index.html for DBS Pillar 3 Quantitative Disclosures
Risk management | 77
The sections marked by a grey line in the left margin form part of the Groups
audited nancial statements

1 Risk overview Market risk (page 89) Reputational risk (page 97)
A risk arising from adverse changes in interest A risk that arises if our shareholder value
rates, foreign exchange rates, equity prices, (including earnings and capital) is adversely
Business and strategic risk credit spreads and commodity prices, as well affected by any negative stakeholder
An overarching risk arising from adverse as related factors. perception of DBS image. This inuences our
business and economic changes materially ability to establish new relationships or services,
affecting DBS long-term objectives. This continue servicing existing relationships, and
risk is managed separately under other Liquidity risk (page 91)
A risk that arises if DBS is unable to meet our have continued access to sources of funding.
governance processes. Reputational risk usually occurs when the other
obligations when they are due.
risks are poorly managed.
Please refer to page 28 for our material matters.
Operational risk (page 95)
Credit risk (page 82) A risk arising from inadequate internal
A risk arising from borrowers or processes, people or systems, as well as
counterparties failing to meet their debt external events. This includes legal risk, and
or contractual obligations. excludes strategic and reputational risk.

2 Risk-taking and our markets and industry segments to effectively The chart below provides an overview of the
assess our risks. risks arising from our business segments. The
business segments asset size of each business segment reects
As a commercial bank, DBS allocates more its contribution to the balance sheet, and the
Because we focus on Asias markets, we are economic capital to our Institutional Banking risk-weighted assets (RWA) refer to the amount
exposed to concentration risks within the and Consumer Banking business segments, of risk incurred.
region. We manage these risks by engaging as compared to Treasury. A buffer is also
in industry diversication and overseeing maintained for other risks as well, including Please refer to Note 44 to the nancial
individual exposures. In addition, DBS uses the country risk, operational risk, reputational risk statements on page 174 for more information
specialist knowledge we have of our regional about DBS business segments.
and model risk.

Wealth Institutional
Management Banking Treasury Others (a) Total

Assets (b) 96,405 231,929 102,701 45,418 476,453

Risk-weighted assets 34,609 171,280 51,776 20,953 278,618

% of RWA

Credit risk 84% 94% 40% 71% 81%

Market risk 0% 0% 56% 24% 12%

Operational risk 16% 6% 4% 5% 7%

(a) Encompasses assets/RWA from capital and balance sheet management, funding and liquidity activities, DBS Vickers Group and The Islamic Bank
of Asia Limited
(b) Before goodwill and intangibles

78 | DBS Annual Report 2016

3 Risk governance
The Board oversees DBS affairs and provides sound leadership for the CEO and management. Authorised by the Board, various Board committees
oversee specic responsibilities based on clearly dened terms of reference.

Under our risk management frameworks, the Board, through the Board Risk Management Committee (BRMC), sets our Risk Appetite, oversees the
establishment of enterprise-wide risk management policies and processes, and sets risk limits to guide DBS risk-taking.

Group Board Group Management Group Management

Board of Directors

Board Executive Committee Group CEO

Board Audit Committee Group Executive Committee Location Board/Board Committees

Nominating Committee Group Management Committee

Compensation and Management Group Asset and Liability Committee Location Management Committees
Development Committee
Group Capital Committee Location Risk Committees
Board Risk Management Committee
Group Disclosure Committee Business Control Committees

Fair Dealing Committee

Group Human Capital Committee

Risk Executive Committee

Product Approval Committee

Group Credit Risk Models Committee

Group Credit Policy Committee

Group Scenario and Stress

Testing Committee

Group Credit Risk Committee

Group Market and Liquidity

Risk Committee

Group Operational Risk Committee

Note: The lines reect possible escalation protocols and are not reporting lines per se

Risk management | 79
The BRMC oversees the identication, monitoring, management and reporting of credit, market, liquidity, operational and reputational risks.
To facilitate the BRMCs risk oversight, the following risk management committees have been established.

Risk management committees

Risk Executive Committee (Risk ExCo) As the overall executive body regarding risk matters, the Risk ExCo
oversees DBS risk management as a whole.

Product Approval Committee (PAC) The PAC oversees new product approvals, which are vital for
mitigating risk within DBS.

Group Credit Risk Models Committee (GCRMC) Each committee reports to the Risk ExCo, and the committees as
a whole serve as an executive forum to discuss and implement DBS
Group Credit Policy Committee (GCPC) risk management.

Group Scenario and Stress Testing Committee (GSSTC) Key responsibilities:

Assess and approve risk-taking activities
Group Credit Risk Committee (GCRC) Oversee DBS risk management infrastructure, which includes
frameworks, decision criteria, authorities, people, policies,
Group Market and Liquidity Risk Committee (GMLRC) standards, processes, information and systems
Approve risk policies such as model governance standards,
Group Operational Risk Committee (GORC) stress testing scenarios, and the evaluation and endorsement
of risk models
Identify specic concentrations of risk
Recommend scenarios and the resulting macroeconomic variable
projections used for enterprise-wide stress tests

The members in these committees comprise representatives from

the Risk Management Group (RMG) as well as key business and
support units.

Most of the above committees are supported by local risk committees in all major locations, where appropriate. These local risk committees
oversee the local risk positions for all businesses and support units, ensuring that they keep within the limits set by the group risk committees.
They also approve location-specic risk policies.

The Chief Risk Ofcer (CRO), who is a member of the Group Executive Committee and reports to the Chairman of the BRMC and the CEO,
oversees the risk management function. The CRO is independent of business lines and is actively involved in key decision-making processes.
He often engages with regulators to discuss risk matters, enabling a more holistic risk management perspective.

Working closely with the risk and business committees, the CRO is responsible for the following:
Management of DBS risks, including systems and processes to identify, approve, measure, monitor, control and report risks
Engagement with senior management about material matters regarding all risk types
Development of risk controls and mitigation processes
Ensuring DBS risk management is effective, and the Risk Appetite established by the Board is adhered to

4 Risk Appetite
DBS Risk Appetite is set by the Board and governed by the Risk Appetite Policy a key part of our risk culture. A strong organisational risk
culture is imperative for DBS to move forward, and this includes an effective incentive framework (please refer to the Remuneration Report
section on page 64).

4.1 Risk thresholds and economic capital usage

Our Risk Appetite takes into account a spectrum of risk types, and it is implemented using thresholds, policies, processes and controls.

Threshold structures are essential in making DBS Risk Appetite an intrinsic part of our businesses, because they help to keep all our risks within
acceptable levels. Portfolio risk limits for the quantiable risk types reach all parts of DBS from the top down, and these are implemented using
formal frameworks. As for the non-quantiable risk types, these are controlled using qualitative principles.

To ensure that the thresholds pertaining to our Risk Appetite are completely risk-sensitive, we have adopted economic capital (EC) as our primary
risk metric. EC is also a core component in our Internal Capital Adequacy Assessment Process (ICAAP).

The following chart provides a broad overview of how our Risk Appetite permeates throughout DBS. Please refer to Sections 5 through 9 for more
information about each risk type.

80 | DBS Annual Report 2016

Risk Executive Committee

Capital allocation

Credit risk Market risk Operational risk Liquidity risk Reputational risk

Obligor Trading book Currency

Industry (product desk) Location
Country Banking book
(transfer risk) (business segment)

Manage Manage market risk Manage through Maintain Manage through

concentration risk by by using limits policies and standards counterbalancing policies and standards
using triggers capacity to meet the
and limits liquidity risk exposure

Obligor economic Expected Shortfall limits

capital triggers Business group
Corporate Business unit
Banks Entity
Industry economic
capital triggers
Financial institutions

Country (transfer risk)


4.2 Stress testing

Stress testing is an integral part of our risk management process, and includes both sensitivity analysis and scenario analysis.

This element alerts senior management of our potential vulnerability to exceptional but plausible adverse events. As such, stress testing enables
us to assess capital adequacy, identify potentially risky portfolio segments and inherent systematic risks. This then allows us to develop the right
contingency plans, exit strategies and mitigating actions beforehand.

Stress testing is conducted at least once annually, and additional stress tests are carried out in response to microeconomic and macroeconomic
conditions. Every stress test is documented.

The capital planning process according to our ICAAP seeks to align our expected business trajectory to our Risk Appetite. This is done by
comparing the projected demand for capital to the projected supply of capital in stress scenarios.

Risk management | 81
5 Credit risk The usage of credit ratings and lending Concentration risk management
limits are an integral part of DBS credit risk Our risk management processes, which are
The most signicant measurable risk DBS management process, and we use an array aligned with our Risk Appetite, ensure that
faces - credit risk arises from our daily of rating models for our corporate and retail an acceptable level of risk diversication is
activities in our various businesses. These portfolios. Most of these models are built maintained across DBS.
activities include lending to retail, corporate internally using DBS loss data, and the limits
and institutional customers; trading are driven by DBS Risk Appetite Statement For credit risk, we use EC as our measurement
endeavours such as foreign exchange, and the TMRAC. tool, since it combines the individual risk factors
derivatives and debt securities; and the of probability of default (PD), loss given default
settlement of transactions. Wholesale borrowers are assessed individually (LGD) and exposure at default (EAD), as well
using both judgmental credit models and as portfolio concentration factors. Granular EC
Please refer to Note 41.1 to the nancial statistical credit models. They are further thresholds are set to ensure that the allocated
statements on page 164 for details on DBS reviewed and evaluated by experienced credit EC stays within our Risk Appetite.
maximum exposure to credit risk. risk managers who consider relevant credit
risk factors in the nal determination of the Thresholds regarding major industry groups
5.1 Credit risk management borrowers risk. For some portfolios within the and single counterparty exposures are
at DBS SME segment, DBS also uses a programme- monitored regularly, and notional limits for
DBS approach to credit risk management based approach to achieve a balanced country exposures are set as well. Governance
comprises the following building blocks: management of risks and rewards. Retail processes are in place to ensure that our
exposures are assessed using credit scoring exposures are regularly monitored with these
models, credit bureau records, and internally thresholds in mind, and appropriate action is
Policies and externally available customer behaviour taken when the thresholds are breached.
records. These are supplemented by our Risk
Risk methodologies Acceptance Criteria. DBS continually examines how we can
enhance the scope of our thresholds to effect
After the credit exposures are assessed, credit better risk management.
Processes, systems and reports extensions are proposed by the business
unit, and these are approved by the credit
risk function after taking into account Country risk
Policies Country risk refers to the risk of loss due to
The dimensions of credit risk and the scope of independent credit assessments and the
business strategies set by senior management. events in a specic country (or a group of
its application are dened in the Group Credit countries). This includes political, exchange
Risk Management Policy. Senior management Please refer to Section 5.3 on page 84 to read rate, economic, sovereign and transfer risks.
sets the overall direction and policy for more about our internal credit risk models.
managing credit risk at the enterprise level. DBS manages country risk through the Group
Pre-settlement credit risk for derivatives Credit Risk Management Policy and CCRP,
The Group Core Credit Risk Policies arising from a counterparty potentially and the said risk is part of our concentration
established for Consumer Banking/Wealth defaulting on its obligations is quantied by risk management. The way we manage
Management and Institutional Banking a mark-to-market evaluation, as well as any transfer risk at DBS is set out in our Country
(herein referred to as CCRPs) set forth the potential exposure in the future. This is used Risk Management Standard. This includes
principles by which DBS conducts its credit to calculate DBS regulatory capital under an internal transfer risk and sovereign risk
risk management and control activities. the Current Exposure Method (CEM), and is rating system, where assessments are made
These policies, supplemented by a number included under DBS overall credit limits to independently of business decisions. Our
of operational policies and standards, counterparties for internal risk management. transfer risk limits are set in accordance with
ensure consistency in identifying, assessing, DBS Risk Appetite Policy.
underwriting, measuring, reporting and Issuer default risk that may also arise
controlling credit risk across DBS, and provide from derivatives and securities are Limits for strategic and non-strategic
guidance in the formulation of business- generally measured based on jump-to- countries are set based on country-specic
specic and/or location-specic credit risk default computations. strategic business considerations as well as
policies and standards. the acceptable potential loss according to
DBS actively monitors and manages our our Risk Appetite. Senior management and
The operational policies and standards are exposure to counterparties in over-the- credit management actively evaluate what the
established to provide greater details on the counter (OTC) derivative trades to protect our right transfer risk exposures for DBS should
implementation of the credit principles within balance sheet in the event of a counterparty be, taking into account the risks and rewards,
the Group CCRPs and are adapted to reect default. Counterparty risk exposures that as well as whether they are in line with our
different credit environments and portfolio may be adversely affected by market risk strategic intent. Limits for all other countries are
risk proles. The CCRPs are considered and events are identied, reviewed and acted set using a model-based approach.
approved by GCPC. upon by management, and highlighted to
the appropriate risk committees. Specic All country limits are subject to approval
Risk methodologies wrong-way risk arises when the exposure to by the BRMC.
Credit risk is managed by thoroughly a counterparty positively correlates with the
understanding our customers the probability of defaulting due to the nature
businesses they are in, as well as the of the transactions. DBS has a policy to
economies in which they operate. guide the handling of specic wrong-way risk
transactions, and its risk measurement metric
takes into account the higher risks associated
with such transactions.

82 | DBS Annual Report 2016

Stress testing
DBS engages in various types of credit stress testing, and these are driven either by regulators or our own internal requirements and management.

Our credit stress tests are performed at total portfolio or sub-portfolio level, and are generally meant to assess the impact of changing economic
conditions on asset quality, earnings performance, capital adequacy and liquidity. DBS stress testing programme is comprehensive, and covers all
major functions and areas of business.

DBS typically performs the following types of credit stress testing at a minimum and others as necessary:

Pillar 1 credit Pillar 2 credit Industry-wide Sensitivity and

stress testing stress testing stress testing scenario analyses

DBS conducts Pillar 1 credit DBS conducts Pillar 2 credit DBS participates in the annual DBS conducts multiple
stress testing regularly as stress testing annually as industry-wide stress test (IWST) independent sensitivity analyses
required by regulators. Under part of the ICAAP. Under conducted by the Monetary and credit portfolio reviews
Pillar 1 credit stress testing, Pillar 2 credit stress testing, Authority of Singapore (MAS) based on various scenarios.
DBS assesses the impact of a DBS assesses the impact of to facilitate our ongoing The intent of these analyses
mild stress scenario (at least stress scenarios with different assessment of nancial stability. and reviews is to identify
two consecutive quarters of levels of severity, taking into Under the IWST, DBS is required vulnerabilities, which is vital
zero GDP growth) on Internal account asset quality, earnings to assess the impact of adverse for developing and executing
Ratings-Based (IRB) estimates performance, and internal and scenarios, as dened by the mitigating action.
(i.e. PD, LGD and EAD) and the regulatory capital. The results of regulator, on asset quality,
impact on regulatory capital. the credit stress tests become earnings performance and
The purpose of the Pillar 1 input for the capital planning capital adequacy.
credit stress test is to assess the process under the ICAAP. The
robustness of internal credit risk purpose of the Pillar 2 credit
models and the cushion above stress testing is to examine
minimum regulatory capital. the possible events or market
changes that could adversely
affect DBS.

Processes, systems and reports affecting credit risk proles is key to our and policy exceptions are appropriately
DBS constantly invests in systems to support risk philosophy of effective credit risk management. endorsed, compliance with credit standards
monitoring and reporting for our Institutional is carried out, and covenants established by
Banking and Consumer Banking/Wealth In addition, risk reporting on credit trends, management and regulators are monitored.
Management businesses. which may include industry analysis, early
warning alerts and signicant weak credits, Independent risk management functions
The end-to-end credit process is continually is submitted to the various credit committees, that report to the CRO are jointly responsible
being reviewed and improved through various allowing key strategies and action plans to for developing and maintaining a robust
front-to-back initiatives involving the business be formulated and evaluated. Credit control credit stress testing programme. These units
units, the operations unit, the RMG and other functions also ensure that any credit risk taken oversee the implementation of credit stress
key stakeholders. Day-to-day monitoring of complies with group-wide credit policies tests as well as the analysis of the results, of
credit exposures, portfolio performance and and guidelines. These functions ensure that which management, various risk committees
external environmental factors potentially approved limits are activated, credit excesses and regulators are informed.

Classication grade Description

Performing assets

Pass Indicates that the timely repayment of the outstanding credit facilities is not in doubt.

Special mention Indicates that the borrower exhibits potential weaknesses that, if not corrected in a timely manner, may
adversely affect future repayments and warrant close attention by DBS.

Classied or NPA

Substandard Indicates that the borrower exhibits denable weaknesses in its business, cash ow or nancial position
that may jeopardise repayment on existing terms. These credit facilities may be non-defaulting.

Doubtful Indicates that the borrower exhibits severe weaknesses such that the prospect of full recovery of the
outstanding credit facilities is questionable and the prospect of a loss is high, but the exact amount
remains undeterminable.

Loss Indicates that the amount of recovery is assessed to be insignicant.

Risk management | 83
Non-performing assets The breakdown of our NPA by loan grading where due to domestic capital markets
and industry and the related amounts of and business conditions, the bank may be
DBS credit facilities are classied as specic allowances can be found in Note
Performing assets or Non-performing 41.2 to the nancial statements on page 165. required to accept less highly rated or liquid
assets (NPA), in accordance with the A breakdown of past due loans can also be government bonds and currencies. Reverse
MAS Notice to Banks No. 612 Credit Files, found in the same note. repo-transactions are generally limited to
Grading and Provisioning (MAS Notice 612). large institutions with reasonably good credit
When required, we will take possession of standing. The bank takes haircuts against the
These guidelines require credit portfolios to all collateral and dispose of them as soon as underlying collateral of these transactions that
be categorised into one of the following ve practicable. Realised proceeds are used to commensurate with collateral quality to ensure
categories, according to our assessment of reduce outstanding indebtedness. credit risks are adequately mitigated.
a borrowers ability to repay a credit facility
A breakdown of collateral held for NPA is In times of difculty, we will review
from its normal sources of income.
shown in Note 41.2 to the nancial statements
on page 168.
the customers specic situation and
The link between the MAS categories shown circumstances to assist them in restructuring
below and DBS internal ratings is shown in their repayment liabilities. However, should
Section 5.3.2 on page 85. Repossessed collateral is classied in the
balance sheet as other assets. The amounts the need arise, disposal and recovery
of such other assets for 2016 and 2015 were processes are in place to dispose of collateral
A default is considered to have occurred with
not material. held by DBS. We also maintain a panel
regard to a particular borrower when either or
of agents and solicitors that helps us to
both of the following events have taken place:
dispose of non-liquid assets and specialised
5.2 Credit risk mitigants equipment quickly.
Subjective default: Borrower is considered
to be unlikely to pay its credit obligations
in full, without DBS taking action such as
Collateral received Collateral posted
Where possible, DBS takes collateral as DBS is required to post additional collateral
realising security (if held)
a secondary recourse to the borrower. in the event of a rating downgrade. As
Technical default: Borrower is more than
This includes cash, marketable securities, at 31 December 2016, for a three-notch
90 days past due on any credit obligation
properties, trade receivables, inventory and downgrade of its Standard & Poors Ratings
to DBS
equipment, and other physical and/or nancial Services and Moodys Investors Services
collateral. We may also take xed and oating ratings, DBS Bank will have to post additional
This is consistent with the guidance provided
charges on the assets of borrowers. collateral amounting to SGD 44 million
under the MAS Notice to Banks No. 637
Notice on Risk Based Capital Adequacy (2015: SGD 57 million).
Policies are in place to determine the eligibility
Requirements for Banks incorporated in
of collateral for credit risk mitigation. These
Singapore (MAS Notice 637). Other risk mitigants
include requiring specic collateral to meet
minimum operational requirements in order DBS uses guarantees as credit risk mitigants.
Credit facilities are classied as restructured Internal thresholds for considering the
to be considered as effective risk mitigants.
assets when we grant non-commercial eligibility of guarantors for credit risk
DBS collateral is generally diversied and
concessions to a borrower because it is in mitigation are in place.
valued periodically. Properties constitute
a worse nancial position or is unable to
the bulk of our collateral, while marketable
meet the original repayment schedule. A
restructured credit facility is classied into the
securities and cash are immaterial. 5.3 Internal credit risk models
DBS adopts rating systems for the different
appropriate non-performing grade based on
For derivatives, repurchase agreements asset classes under the Internal Ratings-Based
the assessment of the borrowers nancial
(repo) and other repo-style transactions Approach (IRBA).
condition and its ability to repay according to
with nancial market counterparties,
the restructured terms.
collateral arrangements are typically covered There is a robust governance process for the
under market-standard documentation, development, independent validation and
Such credit facilities are not returned to the
such as Master Repurchase Agreements approval of any credit risk model. The models
performing status until there are reasonable
and International Swaps and Derivatives go through a rigorous review process before
grounds to conclude that the borrower will
Association (ISDA) Agreements. The collateral they are endorsed by the GCRMC and the
be able to service all future principal and
received is mark-to-market on a frequency DBS Risk ExCo. They must also be approved by
interest payments on the credit facility in
and the counterparties mutually agreed upon. the BRMC before being used. The key risk
accordance with the restructured terms. Apart
This is governed by internal guidelines with measures generated by the internal credit risk
from what has been described, we do not
respect to the eligibility of the collateral. In rating models to quantify regulatory capital
grant concessions to borrowers in the normal
the event of a default, the credit risk exposure include PD, LGD and EAD. For portfolios
course of business. Any restructuring of credit
is reduced by master-netting arrangements under the Foundation IRBA, the supervisory
facilities are reviewed on a case-by-case basis
where DBS is allowed to offset what we owe LGD estimates are applied. For retail portfolios
and conducted only on commercial terms.
a counterparty against what is due from that under the Advanced IRBA, internal estimates
counterparty in a netting-eligible jurisdiction. are used. In addition, the ratings from the
In addition, it is not within DBS business
credit models act as the basis for underwriting
model to acquire debts that have been Please refer to Note 14 to the nancial credit risk, monitoring portfolio performance
restructured at inception (e.g. distressed debts). statements on page 137 for further
information on nancial assets and liabilities
and determining business strategies.
Please refer to Note 2.11 to the nancial subject to netting agreement but not offset
statements on page 129 for our accounting on the balance sheet. The performance of the rating systems is
policies regarding specic and general monitored regularly and informed to the
allowances for credit losses. Collateral held against derivatives generally GCRMC and the BRMC to ensure their
consists of cash in major currencies and highly ongoing effectiveness. This serves to highlight
In general, specic allowances are rated government or quasi-government bonds. material deterioration in the rating systems
recognised for defaulting credit exposures Exceptions may arise in certain countries, for management attention.
rated substandard and below.

84 | DBS Annual Report 2016

An independent risk unit conducts formal used to update the risk level of each loan on The risk ratings derived are benchmarked
validations for the respective rating systems a monthly basis, reecting the broad usage of against external credit risk ratings to ensure
annually. The validation processes are also risk models in portfolio quality reviews. that the internal rating systems are well-aligned
independently reviewed by Group Audit. and appropriately calibrated.
5.3.2 Wholesale
5.3.1 Retail exposure models Large corporate credits are assessed using
exposure models approved models. They are also reviewed by
Retail portfolios are categorised into the Wholesale exposures are assessed under the
following asset classes under the Advanced designated credit approvers. Credit factors
Foundation IRBA and include sovereign, bank,
IRBA: residential mortgages, qualifying revolving considered in the risk assessment process
corporate and specialised lending exposures.
retail exposures and other retail exposures. include the counterpartys nancial standing
and specic non-quantitative factors such
The risk ratings for the wholesale exposures
Within each asset class, exposures are as industry risk, access to funding, market
(other than securitisation exposures) have
managed on a portfolio basis. Each account standing and management strength.
been mapped to corresponding external
is assigned to a risk pool, considering factors rating equivalents.
such as borrower characteristics and collateral The counterparty risk rating assigned to SMEs
type. Loss estimates are based on historical is primarily based on the counterpartys
Sovereign exposures are risk-rated using
default and realised losses within a dened nancial position and strength. Credit ratings
internal risk-rating models and guidelines that
period. The denition of default is applied at under the IRBA portfolios are, at a minimum,
are in line with the IRBA portfolios. Factors
the level of a particular facility, rather than at reviewed on an annual basis unless credit
relevant to country-specic macroeconomic
the level of the obligor. conditions require more frequent assessment.
risk, political risk, social risk and liquidity risk
The counterparty risk-rating process is
are reviewed objectively in the sovereign
Business-specic credit risk elements such reinforced by the facility risk-rating system,
rating models to assess the sovereign credit
as underwriting criteria, scoring models, which considers other exposure risk mitigants,
risk in a disciplined and systematic way.
approving authorities and asset quality and such as collateral and third-party guarantees.
business strategy reviews, as well as systems, Bank exposures are assessed using a bank-
processes and techniques to monitor portfolio A description of the internal ratings used
rating model covering various credit risk factors
performance, are in place. Credit risk models and corresponding external ratings and
such as capital levels and liquidity, asset quality,
for secured and unsecured portfolios are also MAS classication for the various portfolios
earnings, management and market sensitivity.
is as follows:

Grade (ACRR) Description of rating grade rating MAS classication

PD Grade 1 Taking into account the impact of relevant economic, social AAA Pass Performing
or geopolitical conditions, the borrowers capacity to meet its assets
nancial commitment is exceptional.

PD Grade 2 Taking into account the impact of the relevant economic, social AA+, AA, AA Pass
or geopolitical conditions, the borrowers capacity to meet its
nancial commitment is excellent.

PD Grade 3 More susceptible to adverse economic, social, geopolitical A+, A, A- Pass

conditions and other circumstances. The borrowers capacity to
meet its nancial commitment is strong.

PD Grade 4A/4B Adequate protection against adverse economic, social or BBB+/BBB Pass
geopolitical conditions or changing circumstances. More likely
to lead to a weakened capacity for the borrower to meet its
nancial commitment.

PD Grade 5 Relatively worse off than a borrower rated 4B but exhibits BBB- Pass
adequate protection parameters.

PD Grade 6A/6B Satisfactory capacity for the borrower to meet its nancial BB+/BB Pass
commitment but this may become inadequate due to adverse
business, nancial, economic, social or geopolitical conditions
and changing circumstances.

PD Grade 7A/7B Marginal capacity for the borrower to meet its nancial BB- Pass
commitment but this may become inadequate or uncertain due
to adverse business, nancial, economic, social or geopolitical
conditions and changing circumstances.

Risk management | 85
Grade (ACRR) Description of rating grade rating MAS classication

PD Grade 8A Sub-marginal capacity for the borrower to meet its nancial B+ Pass
commitment. Adverse business, nancial or economic
conditions will likely impair its capacity or willingness to meet
its nancial commitment.

PD Grade Low capacity for the borrower to meet its nancial B/B- Special
8B/8C(a) commitment. Adverse business, nancial or economic mention
conditions will likely impair its capacity or willingness to meet
its nancial commitment.

PD Grade 9 Borrower is vulnerable to non-payment and is dependent upon CCC-C Substandard Non-
favourable business, nancial and economic conditions to meet (non- performing
its nancial commitment. Likely to have little capacity to meet defaulting) assets
its nancial commitment under adverse conditions.

PD Grade 10 A borrower rated 10 and above is in default (as dened D Substandard

and above under MAS Notice 637). and below

(a) For companies scored by the HK SME Scoring Model, in addition to the ACRR, there is a further test to evaluate whether the borrower meets
the criteria of Special mention. If it does not, the ACRR can remain as 8B/8C but is not classied as Special mention

5.3.3 Specialised Where DBS provides an underwriting IRBA-transitioning retail

commitment, any securitisation exposure that and wholesale exposures
lending exposures
arises will be held in the trading book to be IRBA-exempt retail exposures
Specialised lending IRBA portfolios include
traded or sold down in accordance with our IRBA-exempt wholesale exposures
income-producing real estate, project
internal policy and risk limits. In addition,
nance, object nance, hotel nance and
DBS does not provide implicit support for any Any identied transitioning retail and
commodities nance. These adopt the
transactions we structure or have invested in. wholesale exposures are expected to go
supervisory slotting criteria specied under
Annex 7v of MAS Notice 637, which are used through the Advanced IRBA and Foundation
We invest in our clients securitisation IRBA respectively, subject to certication
to determine the risk weights to calculate
transactions from time to time. These may by MAS. In the meantime, the SA will have
credit risk-weighted exposures.
include securitisation transactions arranged been applied. The portfolios under the SA are
by us or other parties. We may also act as subject to our overall governance framework
5.3.4 Securitisation exposures a liquidity facility provider, working capital and credit risk management practices. DBS
DBS is not active in securitisation activities facility provider or swap counterparty. will continue to monitor the size and risk
that are motivated by credit risk transfer or Such exposures require the approval of the prole of these portfolios, and will enhance
other strategic considerations. As a result, independent risk function, and are subject to the relevant risk measurement processes if
we do not securitise our own assets, nor regular risk reviews after they take place. We these risk exposures become material.
do we acquire assets with the view of also have processes in place to monitor the
securitising them. credit risk of our securitisation exposures. DBS uses external ratings for credit exposures
under the SA where relevant, and we only
We arrange securitisation transactions for
our clients for fees. These transactions do not
5.3.5 Credit exposures falling accept ratings from Standard & Poors,
outside internal credit Moodys and Fitch in such cases. DBS follows
involve special-purpose entities we control.
the process prescribed in MAS Notice 637 to
For transactions that are not underwritten, risk models map the ratings to the relevant risk weights.
no securitisation exposures are assumed DBS applies the standardised approach (SA)
as a direct consequence of arranging the for portfolios that are individually immaterial
transactions. Any decision to invest in any in terms of both size and risk prole, as well
of such arranged transactions is subject to as for identied transitioning portfolios.
independent risk assessment. These portfolios include:

86 | DBS Annual Report 2016

Geographical Concentration (SGD bn)

250 9% 9%
14% 16%
150 18% Singapore
Hong Kong
100 Rest of Greater China
South and Southeast Asia
48% 47% Rest of the World
Above refers to gross loans and advances to
customers based on country of incorporation

2016 2015

Industry Concentration (SGD bn)

300 287
10% Manufacturing
250 Building and construction
6% 8%
5% Housing loans
200 9% General commerce
15% Transportation, storage
150 and communications
Financial institutions, investment
21% 21% and holding companies
100 Professionals and private individuals
(excluding housing loans)
50 19% 19%
Above refers to gross loans and advances to
10% 11% customers based on MAS Industry Code
2016 2015

5.4 Credit risk in 2016 portfolio is well distributed and fairly stable Collateral received
across various industries, with Building and The tables below provide breakdowns by
construction and General commerce being the loan-to-value (LTV) bands for the borrowings
Concentration risk largest contributors in the wholesale portfolio. secured by properties from the various
DBS geographic distribution of customer
market segments.
loans has remained stable for the past year. Please refer to Note 41.4 to the nancial
statements on page 169 for DBS breakdown
of credit risk concentration. Residential mortgage loans
Our gross loans and advances to customers
continue to be predominantly in our home The LTV ratio is calculated using mortgage
market of Singapore, accounting for 48% Non-performing assets loans including undrawn commitments
of the portfolio. While the portfolios for In absolute terms, our total NPA increased divided by the collateral value. Property
Singapore and the rest of the world grew, by 74% from the previous year to SGD valuations are determined by using a
our Greater China (including Hong Kong) 4,856 million in 2016, due to higher NPA combination of professional appraisals and
portfolio declined in 2016. resulting from headwinds impacting our housing price indices.
oil and gas support services portfolio and
This reected the changing business RMB derivatives. This has contributed to an New loans are capped at LTV limits of up to
environment in Greater China as trade increase in our NPL ratio from 0.9% in the 80% since 2010. The increase in Singapores
volumes continued to drop, and our proactive previous year to 1.4% in 2016. exposures with LTV between 81% and
management of this risk resulted in tightening 100% was contributed by the downward
credit lending to SME customers. Our Please refer to page 32 in CFO Statement for adjustments of property prices since 2013.
more information.

Risk management | 87
Percentage of residential mortgage loans (breakdown by LTV band and geography)
As at 31 December 2016
LTV band Singapore Hong Kong Rest of Greater China South and Southeast Asia

Up to 50% 23.0% 96.5% 36.4% 31.6%

51% to 80% 61.8% 3.4% 45.1% 67.9%

81% to 100% 15.2% 0.1% 18.3%

Partially 0.0% 0.0% 0.2%
collateralised 0.0%

As at 31 December 2015
LTV band Singapore Hong Kong Rest of Greater China South and Southeast Asia

Up to 50% 25.1% 96.3% 38.8% 35.2%

51% to 80% 60.7% 3.6% 44.7% 64.8%

81% to 100% 14.2% 0.1% 16.5% 0.0%

Partially 0.0% 0.0% 0.0% 0.0%


Loans and advances to corporates secured by property

These loans are extended for the purpose of acquisition and/or development of real estate, as well as for general working capital. 90% of our
loans are fully collateralised, as compared to 86% in 2015. Majority of these loans have LTV <80%. Our property loans are mainly concentrated in
Singapore and Hong Kong, which together accounted for 84% of total property loans.

The LTV ratio is calculated as loans and advances divided by the value of property, including other tangible collaterals that secure the same facility.
The latter include cash, marketable securities, bank guarantees, vessels, and aircrafts. Where collateral assets are shared by multiple loans and
advances, the collateral value is pro-rated across the loans and advances secured by the collateral.

Percentage of loans and advances to corporates secured by property (breakdown by LTV band and geography)
As at 31 December 2016
LTV band Singapore Hong Kong Rest of South and Rest of the World
Greater China Southeast Asia

Up to 50% 51.2% 50.0% 63.8% 32.8% 22.8%

51% to 80% 37.9% 22.4% 15.0% 33.3% 75.3%
81% to 100% 6.7% 7.0% 9.9% 6.8% 0.0%
Partially 4.2% 20.6% 11.3% 27.1% 1.9%

As at 31 December 2015
LTV band Singapore Hong Kong Rest of South and Rest of the World
Greater China Southeast Asia

Up to 50% 53.7% 47.5% 52.4% 10.3% 50.8%

51% to 80% 35.7% 17.5% 19.6% 27.0% 47.5%
81% to 100% 5.9% 7.6% 7.8% 8.5% 0.0%
Partially 4.6% 27.4% 20.2% 54.2% 1.7%

88 | DBS Annual Report 2016

Loans and advances to banks (iii) strategic stakes in entities and (iv) structural For back-testing, VaR at the 99% level of
In line with market convention, loans and foreign exchange risk arising mainly from our condence and over a one-day holding period
advances to banks are typically unsecured. strategic investments, which are denominated is used. We adopt the standardised approach
DBS manages the risk of such exposures by in currencies other than the SGD. to compute market risk regulatory capital
keeping tight control of the exposure tenor, under MAS Notice 637 for the trading book
and monitoring the credit quality of the 6.1 Market risk management positions. As such, VaR back-testing does not
bank counterparties. impact our regulatory capital for market risk.
at DBS
DBS approach to market risk management
VaR models allow us to estimate the aggregate
Derivatives counterparty comprises the following building blocks:
portfolio market risk potential loss due to a
credit risk by markets and range of market risk factors and instruments.
settlement methods Policies However, there are limitations to VaR models;
DBS continues to manage our derivatives for example, past changes in market risk factors
counterparty risk exposures with netting may not provide accurate predictions of future
and collateral arrangements, thereby Risk methodologies market movements, and the risk arising from
protecting our balance sheet in the event of adverse market events may be understated.
counterparty defaulting. Processes, systems and reports
To monitor DBS vulnerability to unexpected
A breakdown of our derivatives counterparty but plausible extreme market risk-related
credit risk by markets (OTC versus exchange- Policies events, we conduct multiple market risk stress
traded) and settlement methods (cleared The Market Risk Management Policy sets tests regularly. These cover trading and non-
through a central counterparty versus settled our overall approach towards market trading portfolios and follow a combination
bilaterally) can be found below. risk management, while the Market Risk of historical and hypothetical scenarios
Management Standard establishes the basic depicting risk-factor movement.
requirements for the said management
Notional OTC and within DBS.
exchange-traded products ES is the key risk metric used to manage our
assets and liabilities. As an exception, credit
The Market Risk Management Guide spread risk arising from loans and receivables
complements the Market Risk Management is managed under the credit risk management
As at Standard by providing more details regarding framework. We also manage banking book
In notional terms, 31 Dec specic subject matters. Both the Market interest rate risk arising from mismatches in the
SGD m 2016 Risk Management Standard and Market Risk interest rate proles of assets, liabilities and
Management Guide facilitate the identication, capital instruments (and associated hedges),
measurement, control, monitoring and which includes basis risk arising from different
OTC derivatives cleared 751,315
reporting of market risk in a consistent interest rate benchmarks, interest rate re-
through a central
manner. They also set out the overall approach, pricing risk, yield curve risk and embedded
standards and controls governing market risk optionality. Behavioural assumptions are
stress testing across DBS. applied when managing the interest rate risk
OTC derivatives settled 1,301,713
of banking book deposits with indeterminate
bilaterally The criteria for determining the positions to maturities. DBS measures interest rate risk in
be included in the trading book are stipulated the banking book on a weekly basis.
Total OTC derivatives 2,053,028 in the Trading Book Policy Statement.
Credit derivatives are used in the trading
Exchange-traded 17,515 Risk methodologies book with single name or index underlying
derivatives Value-at-Risk (VaR) is a method that instruments to support DBS business strategy
computes the potential losses of risk positions to build a regional xed income franchise. We
Total derivatives 2,070,543 as a result of market movement over a actively monitor our counterparty credit risk in
(only with external parties) specied time horizon and according to a credit derivative contracts.
given level of condence.
More than 90% of the gross notional
Please refer to Note 37 to the nancial value of our credit derivative positions
statements on page 156 for a breakdown of Our VaR model is based on historical
the derivatives positions held by DBS. simulation with a one-day holding period. as at 31 December 2016 was to 19
We use Expected Shortfall (ES), which is the established names, which we maintain
average of potential loss beyond a given level collateral agreements with.
of condence, to monitor and limit market risk
6 Market risk exposures. The market risk economic capital Processes, systems and reports
that is allocated by the BRMC is linked to ES by Robust internal control processes and systems
Our exposure to market risk is categorised into: a multiplier. ES is supplemented by risk control have been designed and implemented to
metrics such as sensitivities to risk factors and support our market risk management approach.
Trading portfolios: Arising from positions loss triggers for management action. DBS reviews these control processes and
taken for (i) market-making, (ii) client-facilitation systems regularly, and these reviews allow senior
and (iii) beneting from market opportunities. DBS conducts back-testing to verify the management to assess their effectiveness.
predictiveness of the VaR model. Back-testing
Non-trading portfolios: Arising from compares VaR calculated for positions at the The RMG Market and Liquidity Risk unit
(i) positions taken to manage the interest close of each business day with the prot and an independent market risk management
rate risk of our Institutional Banking and loss (P&L) that actually arises in those positions function reporting to the CRO monitors,
Consumer Banking assets and liabilities, (ii) on the following business day. The back- controls and analyses DBS market risk daily.
equity investments comprising of investments testing P&L excludes fees and commissions, The unit comprises risk control, risk analytics,
held for yield and/or long-term capital gains, and revenues from intra-day trading. production and reporting teams.
Risk management | 89
6.2 Market risk in 2016
DBS ES considers the market risks of both the trading and banking books. Our ES (based on a 97.5% level of condence) is tabulated below.
The period-end, average, high and low ES are shown.

1 Jan 2016 to 31 Dec 2016

SGD m As at 31 Dec 2016 Average High Low

Total 89 98 112 84

1 Jan 2015 to 31 Dec 2015

SGD m As at 31 Dec 2015 Average High Low

Total 101 117 147 75

DBS major market risk driver is interest rate risk in the trading and banking books. The average ES for 2016 was lower than 2015 mainly due to
drop-off of volatile rates scenarios for ES calculation and updates to models used to measure interest rate risks in banking book. The following
table shows the period-end, average, high and low diversied ES and ES by risk class for Treasurys trading portfolios. The ES reported below are
based on a 97.5% level of condence.

1 Jan 2016 to 31 Dec 2016

SGD m As at 31 Dec 2016 Average High Low

Diversied 26 21 31 14

Interest Rates 16 18 27 14

Foreign Exchange 10 12 18 7

Equity 1 2 3 1

Credit Spread 18 11 19 6

Commodity # # 1 #

1 Jan 2015 to 31 Dec 2015

SGD m As at 31 Dec 2015 Average High Low

Diversied 16 20 32 15

Interest Rates 17 15 21 9

Foreign Exchange 11 8 19 3

Equity 3 3 5 2

Credit Spread 8 16 23 7

Commodity # 1 2 #

# Amount under SGD 500,000

90 | DBS Annual Report 2016

At DBS, the main risk factors driving Treasurys trading portfolios in 2016 were interest rates, foreign exchange and credit spreads. Treasurys
trading portfolios average diversied ES remained relatively at compared to 2015.

Treasurys trading portfolios experienced ve back-testing exceptions in 2016. The exceptions occurred in January, February, March, September
and December. The four exceptions for the period from January to September were mainly due to (i) pronounced volatilities in SGD interest rates
and SGD swap spreads; and (ii) basis risks in onshore/offshore Chinese foreign exchange and interest rate. The exception in December was due
to valuation adjustments carried out at the month end.








Backtesting prot and loss VaR at 99% condence interval

The key market risk drivers of our non-trading portfolios are SGD and USD interest rate positions. The economic value impact of changes in interest
rates was simulated under various assumptions for the non-trading portfolio. The economic value changes were negative SGD 156 million and
SGD 239 million (2015: negative SGD 250 million and SGD 425 million) based on interest rate changes of 100 basis points and 200 basis points
respectively. The negative economic value impact declined in December 2016 mainly due to a renement of the behavioural assumptions for
current account balances.

7 Liquidity risk
DBS liquidity risk arises from our obligations to honour withdrawals of deposits, repayments of borrowed funds at maturity, and our commitments to
extend loans to our customers. We seek to manage our liquidity in a manner that ensures that our liquidity obligations will continue to be honoured
under normal as well as adverse circumstances.

7.1 Liquidity risk management at DBS

Liquidity management and funding strategy

DBS strives to develop a diversied funding base with access to funding sources across retail and wholesale channels. Our funding strategy is
anchored on strengthening our core deposit franchise as the foundation of the Groups long-term funding advantage.

Customer deposits grew by SGD 27 billion in 2016, contributing to 93% of total funding sources. Current and savings deposits, which are favourable
for the liquidity coverage ratio, were the main drivers of growth with an increase of SGD 18 billion. Within wholesale funding, senior medium term
notes were gradually replaced with covered bonds which are more cost effective.

Funding Sources (SGD bn) Wholesale Funding Breakdown (SGD bn)

40 38
400 375 Customer 4% Covered
358 deposits 35 bonds
350 17%
Wholesale 30 28 3% Other debt
300 funding securities
25 8%
250 19% Negotiable
20 8% 50% certicates of
200 93% 89% deposits
150 15
42% Commercial
100 10 papers

50 5 26% Senior medium

23% term notes
7% 11%

2016 2015 2016 2015

Risk management | 91
DBS aims to ensure continuous access to the investor base for capital and senior wholesale funding to support our commercial banking activities.
We look for cost efciencies over the long term and market extensively, focusing on SGD, USD, EUR, AUD and HKD as our key issuance currencies.
Capital instruments are primarily issued from DBS Group Holdings Ltd (DBSH) while covered bonds originate from DBS Bank Ltd. Senior notes are
issued from both DBSH and the Bank as required, although DBSH is currently the only active issuer of public senior benchmarks.

The marquee issuance for 2016 was the 3.60% coupon USD Alternative Tier 1 (AT1) by DBSH. This was the lowest coupon paid by any issuer for
a USD AT1 under Basel III, and has been recognised in annual awards by industry publications, including The Asset (Best Asian Bank Capital Bond),
GlobalCapital (Best Asian Financial Bond), IFR Asia (Best Asian Investment Grade Bond) and FinanceAsia (Best Singapore Deal). In addition, IFR
Asia has recognised our issuance and investor engagement activity by selecting DBS as its Issuer of the Year.

The diagrams below show our asset funding structure as at 31 December 2016.

Liabilities and equity Assets

Total equity 10% 9% Others

Other liabilities 8% Loan and advances
1% to customers
Subordinated term debts 6%
Bank and corporate securities
Other debt securities
Due from banks
Deposits and balances 63%
from customers Loan/ Government securities
deposit and T-bills
Due to banks
ratio 87% Cash and balances
with central banks

3% 6%

Please refer to Note 30 to the nancial statements on page 148 for more details of our wholesale funding sources and Note 42.1 on page 171 for the
contractual maturity prole of our assets and liabilities.

With increasing diversication of funding sources, optimising the mismatch in fund deployment against sources with respect to pricing, size, currency
and tenor remains challenging. To this end, where practicable and transferable without loss in value, we make appropriate use of the swap markets
for different currencies, commensurate with the liquidity of each, in the conversion and deployment of surplus funds across locations.

As these swaps typically mature earlier than loans, we are exposed to potential cash ow mismatches arising from the risk that counterparties may
not roll over maturing swaps with us to support the continual funding of loans. We mitigate this risk by setting triggers on the number of swaps
transacted with the market and making conservative assumptions on the cash ow behaviour of swaps under our cash ow maturity gap analysis
(see Section 7.2 on page 93).

Overseas locations are encouraged but not required to centralise the majority of their borrowing and deployment of funds with our head ofce,
taking into account the relevant regulatory restrictions while maintaining a commensurate level of presence and participation in the local funding
markets. Intra-group funding transactions are priced with reference to the prevailing market rates and parameters set within the Group Funds
Transfer Pricing policy.

During our annual budget and planning process, each overseas location conducts an in-depth review of its projected loan and deposit growth
as well as its net funding and liquidity prole for the next year. The consolidated Group funding and liquidity proles are reviewed and revised as
necessary by senior management. Each overseas location is required to provide justication if head ofce funding support is required.

The Group Assets and Liabilities Committee and respective Location Assets and Liabilities Committee regularly review our balance sheet
composition, the growth in loans and deposits, our utilisation of wholesale funding, the momentum of our business activities, market competition,
the economic outlook, market conditions and other factors that may affect liquidity in the continual renement of DBS funding strategy.

Approach to liquidity risk management

DBS approach to liquidity risk management comprises the following building blocks:

Policies Risk methodologies Processes, systems and reports

The Group Liquidity Risk Management Policy sets our overall approach towards liquidity risk management and describes the range of strategies DBS
employs to manage our liquidity.

These strategies include maintaining an adequate counterbalancing capacity to address potential cash ow shortfalls and having diversied sources
of liquidity.

92 | DBS Annual Report 2016

DBS counterbalancing capacity includes liquid assets, the capacity to borrow from the money markets (including the issuance of commercial papers
and covered bonds), and forms of managerial interventions that improve liquidity. In the event of a potential or actual crisis, we have in place a set of
liquidity contingency and recovery plans to ensure that we maintain adequate liquidity.

The Group Liquidity Risk Management Policy is supported by Standards that establish the detailed requirements for liquidity risk identication,
measurement, reporting and control within DBS. The set of Policies, Standards and supporting Guides communicate these baseline requirements to
ensure consistent application throughout DBS.

Risk methodologies
The primary measure used to manage liquidity within the tolerance dened by the Board is cash ow maturity mismatch analysis.

This form of analysis is performed on a regular basis under normal and adverse scenarios. It assesses the adequacy of our counterbalancing capacity
to fund or mitigate any cash ow shortfalls that may occur as forecasted in the cash ow movements across successive time bands. To ensure that
liquidity is managed in line with our Risk Appetite, core parameters such as the types of scenarios, the survival period and the minimum level of
liquid assets, are pre-specied for monitoring and control on a group-wide basis. Any occurrences of forecasted shortfalls that cannot be covered by
our counterbalancing capacity will be escalated to the relevant committees for evaluation and action.

Liquidity stress testing is performed regularly using cash ow maturity mismatch analysis, and covers adverse scenarios involving shocks that are
general market and/or name-specic in nature. Stress tests assess our vulnerability when liability run-offs increase, asset rollovers increase and/or
liquid asset buffers decrease. In addition, ad hoc stress tests are performed as part of our recovery planning and ICAAP exercises.

Liquidity risk control measures such as liquidity-related ratios and balance sheet analysis are complementary tools for cash ow maturity mismatch
analysis, and they are performed regularly to obtain deeper insights and ner control over our liquidity prole across different locations. The liquidity
risk control measures also include concentration measures regarding top depositors, wholesale borrowing and swapped funds ratios.

Processes, systems and reports

Robust internal control processes and systems support our overall approach in identifying, measuring, aggregating, controlling and monitoring
liquidity risk across DBS.

Following enhancements on the in-house data platform made in the past two years, internal liquidity risk reporting was centralised in 2016,
improving Group oversight of our liquidity positions across key locations and currencies.

The RMG Market and Liquidity Risk unit manages the day-to-day liquidity risk monitoring, control reporting and analysis.

7.2 Liquidity risk in 2016

DBS actively monitors and manages our liquidity prole through cash ow maturity mismatch analysis.

In forecasting cash ow under the analysis, behavioural proling is necessary in cases where a product has indeterminate maturity or the contractual
maturity does not realistically reect the expected cash ow.

Two examples are maturity-indeterminate savings and current account deposits, which are generally viewed as sources of stable funding for
commercial banks. In fact, they consistently exhibit stability even under historical periods of stress. A conservative view is adopted in the behavioural
proling of assets, liabilities and off-balance sheet commitments that have exhibited cash ow patterns that differ signicantly from the contractual
maturity prole shown under Note 42.1 of our nancial statements on page 171.

The table below shows our behavioural net and cumulative maturity mismatch between assets and liabilities over a one-year period, in a normal
scenario without incorporating growth projections. DBS liquidity was observed to remain adequate in the maturity mismatch analysis. Loan growth
in 2016 was supported largely by deposit growth, and diversied stable funding sources, which include covered bonds.

Less than 1 week to 1 to 3 3 to 6 6 months to

SGD m (a) 7 days 1 month months months 1 year

As at 31 Dec 2016 14,298 (1,763) (7,108) 3,576 9,901

Net liquidity mismatch

Cumulative mismatch 14,298 12,535 5,427 9,003 18,904

As at 31 Dec 2015 (b) 27,457 (102) (9,456) 8,298 2,825

Net liquidity mismatch

Cumulative mismatch 27,457 27,355 17,899 26,197 29,022

(a) Positive indicates a position of liquidity surplus. Negative indicates a liquidity shortfall that has to be funded
(b) As the behavioural assumptions used to determine the maturity mismatch between assets and liabilities are updated from time to time,
the liquidity mismatches may not be directly comparable across past balance sheet dates

Risk management | 93
7.3 Liquid assets
Liquid assets are assets that are readily available and can be easily monetised to meet obligations and expenses under times of stress.

Such assets are internally dened under the governance of the relevant oversight committees, taking into account asset class, issuer type and credit
rating, among other criteria, before they are reected as available funds through cash ow maturity mismatch analysis. DBS Treasury function
expects to be able to operationally monetise our pool of liquid assets to meet liquidity shortfalls when the need arises. These liquid assets must be
unencumbered and free of any legal, regulatory, contractual or other restrictions.

In practice, liquid assets are maintained in key locations and currencies to ensure that operating entities in such locations possess a degree of self-
sufciency to support business needs and guard against contingencies. The main portion of our liquid assets is centrally maintained in Singapore to
support liquidity needs in smaller overseas subsidiaries and branches. Internally, DBS sets a requirement to maintain its pool of liquid assets above
a minimum level as a source of contingent funds, taking into account projected stress shortfalls under its cash ow maturity mismatch analysis and
other factors.

The table below shows DBS encumbered and unencumbered liquid assets by instrument and counterparty against other assets in the same category
under the balance sheet. The gures are based on the carrying amount at the balance sheet date.

Liquid assets Others [d] Total

Encumbered Unencumbered Total Average (c)

SGD m [1] [2] [1] + [2]

As at 31 Dec 2016 6,708 9,797 16,505 15,458 10,335 26,840

Cash and balances
with central banks (a)

Due from banks (b) 8,425 8,425 7,486 21,593 30,018

Government securities 2,810 29,451 32,261 35,052 1,140 33,401

and treasury bills

Banks and corporate 414 31,793 32,207 29,978 13,210 45,417


Total 9,932 79,466 89,398 87,974 46,278 135,676

(a) Unencumbered balances with central banks comprise holdings that are unrestricted and available overnight. The encumbered portion
represents the mandatory balances held with central banks, which includes a minimum cash balance (MCB) amount that may be available
for use under a liquidity stress situation. The Others portion include term placements with central banks
(b) Liquid assets comprise nostro accounts and eligible certicates of deposits
(c) Total liquid assets reected on an average basis over the four quarters in 2016
(d) Others refer to assets that are not recognised as part of the available pool of liquid assets for liquidity management under stress due to
(but not limited to) inadequate or non-rated credit quality, operational challenges in monetisation (e.g. holdings in physical scrips), and
other considerations

In addition to the above table, collateral received in reverse repo-transactions amounting to SGD 5,649 million were recognised for liquidity
management under stress. It can be observed from the table that our funding strategy in the normal course of business does not rely on
collateralised wholesale funding. Instead, liquid assets are usually maintained only as a source of contingent funding.

7.4 Regulatory requirements

Under MAS Notice to Banks No. 649 Minimum Liquid Assets (MLA) and Liquidity Coverage Ratio (LCR) (MAS Notice 649), DBS, as a domestic
bank incorporated and headquartered in Singapore, is required to comply with the LCR standards. For the full year of 2016, Group LCR was
maintained well above the minimum LCR requirements under MAS Notice 649. Based on our internal assessment and participation in the
Quantitative Impact Studies by the Basel Committee on Banking Supervision, DBS is well-positioned to meet the minimum standards of the Basel
III Net Stable Funding Ratio (NSFR), which will be implemented by 1 January 2018.

94 | DBS Annual Report 2016

8 Operational risk based on certain established thresholds. Key Money laundering, nancing of
risk indicators with pre-dened escalation terrorism and sanctions risks
Operational risk includes processing errors, triggers are employed to facilitate risk There are minimum standards for our
fraudulent acts, inappropriate behaviour of monitoring in a forward-looking manner. business and support units to mitigate and
staff, vendor misperformance, system failure manage our actual and/or potential exposure
and natural disasters. Operational risk is Additional methodologies are in place to to money laundering, terrorist nancing,
inherent in our businesses and activities. address subject-specic risks, including, but sanctions, corruption, or other illicit nancial
not limited to, the following: activities. Accountabilities have also been
DBS objective is to keep operational risk at established for the protection of DBS assets
appropriate levels, taking into account the Technology risk and reputation, as well as the interests of our
markets we operate in, the characteristics of Information Technology (IT) risk is managed customers and shareholders.
the businesses as well as our economic and through an enterprise technology risk
regulatory environment. approach. This covers risk governance, New product and outsourcing risks
communication, monitoring, assessment, Each new product, service or outsourcing
8.1 Operational risk mitigation and acceptance, and is supported initiative is subject to a risk review and sign-
management at DBS by a set of IT policies and standards, control off process, where relevant risks are identied
DBS approach to operational risk processes and risk mitigation programmes. and assessed by departments independent
management comprises the following of the risk-taking unit proposing the product
building blocks: We have also established policies and or service. Variations of existing products or
standards to manage and address cyber services and outsourcing initiatives are also
security risk. To enhance the management subject to a similar process.
Policies of this risk, we have appointed a Chief
Information Security Ofcer who is
Other mitigation programmes
responsible for our cyber security risk
Risk methodologies management strategy and programme.
To manage business disruptions effectively,
business continuity management is vital as
part of DBS risk mitigation programme.
Processes, systems and reports Compliance risk
Compliance risk refers to the risk of DBS A robust crisis management and business
Policies not being able to successfully conduct continuity management programme is in
The Group Operational Risk Management our business because of any failure to place within essential business services for
(ORM) Policy sets our overall approach for comply with laws, regulatory requirements, unforeseen events. Planning for business
managing operational risk in a structured, industry codes or standards of business resilience includes the identication of key
systematic and consistent manner. and professional conduct applicable to the business processes via Business Impact Analysis
nancial sector. as well as the documentation and maintenance
There are policies, standards, tools and of our Business Continuity Plan (BCP).
programmes in place to govern ORM This includes, in particular, laws and
practices across DBS. These include regulations applicable to the licensing and DBS BCP aims to minimise the impact of
corporate operational risk policies and conducting of banking or other nancial business interruption stemming from severe
standards that are owned by the respective businesses, nancial crime such as anti- loss scenarios, and provide a reasonable level
corporate oversight and control functions. money laundering and countering the of service until normal business operations
The key policies address risk areas relating nancing of terrorism, fraud and bribery/ are resumed. Within the crisis management
to technology, compliance, fraud, money corruption. We maintain a compliance structure, we have in place an incident
laundering, nancing of terrorism and programme designed to identify, assess, management process. This covers the
sanctions, new product and outsourcing. measure, mitigate and report on such risks situation from the point it begins and the crisis
through a combination of policy and relevant is declared to when the relevant committees
systems and controls. or teams are activated to manage the crisis.
Risk methodologies
DBS adopts the standardised approach to DBS also provides relevant training and Exercises are conducted annually, simulating
compute operational risk regulatory capital. implements assurance processes. We different scenarios to test our BCPs and
strongly believe in the need to promote a crisis management protocol. These scenarios
To manage and control operational risk, we strong compliance culture as well, and this include technology issues affecting essential
use various tools, including risk and control is developed through the leadership of our banking services across DBS, natural disasters
self-assessment, operational risk event Board and senior management. with wide geographical impact, safety-at-risk
management and key risk indicator monitoring. incidents (e.g. terrorism) and other events
Risk and control self-assessment is used by leading to signicant business disruption.
each business or support unit to identify key
Fraud risk
DBS has established minimum standards for The effectiveness of these exercises, as well
operational risk and assess how effective the as DBS business continuity readiness, our
our business and support units to prevent,
internal controls are. When control issues are alignment to regulatory guidelines and our
detect, investigate and remediate fraud and
identied, the units develop action plans and disclosure of residual risks, are communicated
related events. This is based on the Fraud
track the resolution of the issues. and veried with the BRMC on an annual basis.
Management Programme, through which
standards are implemented at the unit and
Operational risk events are classied in To mitigate losses from specic unexpected
geographical levels. These standards aim to
accordance with Basel standards. Such events, and signicant event risks, DBS purchases
provide end-to-end management for fraud
including any signicant incidents that may group-wide insurance policies under the
and related issues within DBS.
impact DBS reputation, must be reported

Risk management | 95
Group Insurance Programme from third- management processes and tools, including management, assess key operational risk
party insurers. DBS has acquired insurance operational risk event reporting, risk and issues with the units to determine the impact
policies relating to crime and professional control self-assessment, key risk indicators, across DBS, and report and/or escalate
indemnity; director and ofcer liability; the tracking of issues or action plans and key operational risks to relevant senior
property damage and business interruption; operational risk reporting. management and Board-level committees
general liability; and terrorism. with recommendations on appropriate risk
All units are responsible for the day-to-day mitigation strategies.
management of operational risk in their
Processes, systems and reports
products, processes, systems and activities, 8.2 Operational risk in 2016
Robust internal control processes and systems
in accordance with the various frameworks Total operational risk losses in 2016 was
are integral to identifying, monitoring,
and policies. The RMG Operational Risk SGD 20 million which represented 0.18% of
managing and reporting operational risk.
unit and other corporate oversight and our total operating income. The losses may
control functions oversee and monitor be categorised into the following seven Basel
DBS has implemented a web-based system
the effectiveness of operational risk risk event categories:
that supports multiple operational risk

2016 2015

Basel risk event types SGD m % SGD m %

External fraud 12.86 63% 2.97 38%

Clients, products and business practices (CPBP) 4.83 24% 0.28 4%

Execution, delivery and process management (EDPM) 2.31 12% 4.28 56%

Internal fraud 0.28 1% 0.14 2%

Damage to physical assets 0.04 0% 0 0%

Business disruption and system failures 0.01 0% 0.03 0%

Employment practices and workplace safety 0 0% 0 0%

Total (1) 20.33 100% 7.70 (2) 100%

(1) Reportable operational risk events are those with net loss greater than SGD 10,000 and are reported based on the date of detection
(2) Adjusted to account for material recoveries under external fraud and provision adjustment under EDPM

External fraud and CPBP accounted for 87% of the Groups operational risk losses in 2016. The increase in losses for external fraud was attributable
largely to an isolated incident. The operational risk losses for CPBP comprised mainly settlement of a lawsuit by a client for a processing error and a
regulatory penalty imposed by MAS for breaches of money laundering regulations attributable to events in 2013 and 2014.

Operational risk losses under EDPM have declined with fewer processing errors compared to the year before.

96 | DBS Annual Report 2016

9 Reputational risk such risks are articulated in the respective business alliances, vendors, trade unions,
risk policies. These are reinforced by the media, the general public, the Board and
DBS views reputational risk as an outcome of sound corporate values that reect ethical senior management, and DBS employees.
any failure to manage risks in our day-to-day behaviours and practices throughout DBS.
activities/decisions, and from changes in the We recognise that creating a sense of
operating environment. These risks include: At DBS, we have policies in place to protect shared value through engagement with key
the consistency of our brand, and to safeguard stakeholder groups is imperative for our
Financial risk (credit, market and our corporate identity and reputation. brand and reputation.
liquidity risks)
For more information on how we engage our
Inherent risk (operational and business/ Risk methodologies stakeholders, please refer to page 30.
strategic risks) Under the various risk policies, we have
established a number of mechanisms for
9.1 Reputational risk ongoing risk monitoring. Processes, systems and reports
Our units are responsible for the day-to-
management at DBS day management of reputational risk, and
DBS approach to reputational risk These mechanisms take the form of risk
limits, key risk indicators and other operating ensure that processes and procedures are
management comprises the following in place to identify, assess and respond to
building blocks: metrics, and includes the periodic risk and
control self-assessment process. Apart this risk. Events affecting DBS reputational
from observations from internal sources, risk are also included in our reporting of risk
alerts from external parties/stakeholders proles to senior management and Board-
Policies level committees.
also serve as an important source to
detect potential reputational risk events.
Risk methodologies In addition, there are policies relating to 9.2 Reputational risk in 2016
media communications, social media and DBS priority is to prevent the occurrence of
Processes, systems and reports corporate social responsibility to protect DBS a reputational risk event, instead of taking
reputation. There are also escalation and mitigating action when it occurs. There were
response mechanisms in place for managing no signicant reputational risk incidents
Policies reputational risk. endangering the DBS franchise in 2016.
DBS adopts a four-step approach for However, there were some media reports on
reputational risk management, which is to While the respective risk policies address our credit exposure to the oil and gas industry
prevent, detect, escalate and respond to the individual risk types, the Reputational and anti-money laundering lapses in 2013 and
reputational risk events. Risk Policy focuses specically on our 2014. We will continue to uphold and enhance
stakeholders perception of how well DBS our reputation through sound corporate values
As reputational risk is a consequence from manages its reputational risks. Stakeholders and robust policies and processes.
the failure to manage other risk types, the include customers, government agencies
denitions and principles for managing and regulators, investors, rating agencies,

Risk management | 97

Where have we disclosed this?

(in Risk management section
General recommendations unless otherwise stated)

1 Present all related risk information together in any particular report. Refer to the table on page 77

2 Dene the banks risk terminology and risk measures and present key Sections 1, 5.1, 6.1, 7.1, 8.1
parameter values used.

Permanent considerations regarding the impact of expected credit

loss approaches:

Describe how the bank interprets and applies the key concepts within Refer to Note 1 below
an ECL approach.

Disclose the credit loss modelling techniques developed to implement Refer to Note 1 below
the ECL approach.

3 Describe and discuss top and emerging risks, incorporating relevant Refer to CRO statement
information in the banks external reports on a timely basis.

Temporary considerations regarding the impact of expected credit

loss approaches:

Provide disclosures describing how the concepts applied and modelling Refer to Note 1 below
techniques under the current impairment approaches compare with the new
ECL approach to highlight factors that may drive changes in ECL that may not
have been relevant in current impairment approaches.

4 Once the applicable rules are nalised, outline plans to meet each new key Section 7.4
regulatory ratio, e.g. the net stable funding ratio, liquidity coverage ratio and Refer to Capital management and planning section
leverage ratio, and, once the applicable rules are in force, provide such key ratios.

Temporary considerations regarding the impact of expected credit

loss approaches:

Banks should consider describing the intended implementation strategy Refer to Note 1 below
including the current timeline for the implementation.

Disclose how the risk management organisation, processes and key functions Refer to Note 1 below
have been organised to run the ECL methodology.

Risk governance and risk management strategies/business model

5 Summarise prominently the banks risk management organisation, processes Section 3

and key functions.

6 Provide a description of the banks risk culture, and how procedures and Section 4
strategies are applied to support that culture. Refer to Corporate Governance section

7 Describe the key risks arising from the banks business models and activities, Sections 1, 2 and 4
the banks Risk Appetite in the context of its business models and how the
bank manages such risks.

8 Describe the usage of stress testing within the banks risk governance and Sections 4.2, 5.1, 6.1, 7.1
capital frameworks. Stress testing disclosures should provide a narrative
overview of the banks internal stress testing process and governance.

Temporary considerations regarding the impact of expected credit

loss approaches:

Describe the relationship, if any, between the stress testing programs and Not applicable
the implementation of ECL accounting requirements.

98 | DBS Annual Report 2016

Where have we disclosed this?
(in Risk management section
General recommendations unless otherwise stated)

Capital adequacy and risk-weighted assets

9 Provide minimum Pillar 1 capital requirements, including capital surcharges Refer to Capital management and planning section
for G-SIBs and the application of counter-cyclical and capital conservation and Pillar 3 disclosures published on DBS website
buffers or the minimum internal ratio established by management.

10 Summarise information contained in the composition of capital templates Refer to Pillar 3 disclosures published on DBS website
adopted by the Basel Committee to provide an overview of the main
components of capital, including capital instruments and regulatory
adjustments. A reconciliation of the accounting balance sheet to the
regulatory balance sheet should be disclosed.

11 Present a ow statement of movements since the prior reporting date in Refer to Capital management and planning section
regulatory capital, including changes in common equity tier 1, tier 1 and
tier 2 capital.

12 Qualitatively and quantitatively discuss capital planning within a more general Refer to Capital management and planning section
discussion of managements strategic planning, including a description of
managements view of the required or targeted level of capital and how this
will be established.

Temporary considerations regarding the impact of expected credit

loss approaches:

Banks should consider explaining how ECL requirements are anticipated to Not applicable
have an impact on capital planning (particularly in meeting capital adequacy (regulatory requirements have not yet been
requirements), including any strategic changes expected by management, to fully determined)
the extent that the impact is material. If regulatory requirements are unclear or
not yet fully determined, the effects of such uncertainty should be discussed.

13 Provide granular information to explain how risk-weighted assets (RWAs) Section 2

relate to business activities and related risks.

14 Present a table showing the capital requirements for each method used Refer to Pillar 3 disclosures published on the
for calculating RWAs for credit risk, including counterparty credit risk, for DBS website
each Basel asset class as well as for major portfolios within those classes.
For market risk and operational risk, present a table showing the capital
requirements for each method used for calculation.

15 Tabulate credit risk in the banking book showing the average PD and LGD Refer to Pillar 3 disclosures published on the
as well as the EAD, total RWAs and the RWA density for Basel asset classes DBS website
and major portfolios within classes at a suitable level of granularity, based on
internal ratings grades.

16 Present a ow statement that reconciles movements in RWAs for the period To be implemented under revised Pillar 3 disclosures,
for each RWA risk type. effective from 1 January 2018

17 Provide a narrative putting Basel Pillar 3 back-testing requirements into Section 6.1, 6.2
context, including how the bank has assessed model performance and
validated its models against default and loss.


18 Describe how the bank manages its potential liquidity needs and provide a Sections 7.1, 7.3
quantitative analysis of the components of the liquidity reserve held to meet
these needs, ideally by providing averages as well as period-end balances.

Risk management | 99
Where have we disclosed this?
(in Risk management section
General recommendations unless otherwise stated)


19 Summarise encumbered and unencumbered assets in a tabular format Section 7.3

by balance sheet categories, including collateral received that can
be rehypothecated or otherwise redeployed. This is to facilitate an
understanding of available and unrestricted assets to support potential
funding and collateral needs.

20 Tabulate consolidated total assets, liabilities and off-balance sheet Section 7.2
commitments by retaining contractual maturity at the balance sheet Financial statements Note 42.1
date. Present separately (i) senior unsecured borrowing (ii) senior secured
borrowing (separately for covered bonds and repos) and (iii) subordinated
borrowing. Banks should provide a narrative discussion of managements
approach in determining the behavioural characteristics of nancial assets
and liabilities.

21 Discuss the banks funding strategy, including key sources and any funding Section 7.1
concentrations, to enable effective insight into available funding sources,
our reliance on wholesale funding, any geographical or currency risks and
changes in those sources over time.

22 Provide information that facilitates the users understanding of the links Sections 6.1
between line items in the balance sheet and the income statement with
positions included in the traded market risk disclosures [using the banks
primary risk management measures such as Value at Risk (VaR)] and non-
traded market risk disclosures such as risk factor sensitivities, economic value
and earnings scenarios and/or sensitivities.

23 Provide further qualitative and quantitative breakdowns of signicant Sections 6.1, 6.2
trading and non-trading market risk factors that may be relevant to the
banks portfolios beyond interest rate, foreign exchange, commodity and
equity measures.

24 Provide qualitative and quantitative disclosures that describe signicant Sections 6.1, 6.2
market risk measurement model limitations, assumptions, validation
procedures, usage of proxies, changes in risk measures and models through
time, reasons for back-testing exceptions, and how these results are used to
enhance the parameters of the model.

25 Provide a description of the primary risk management techniques employed Sections 6.1, 6.2
by the bank to measure and assess the risk of loss beyond reported risk
measures and parameters, such as VaR, earnings or economic value scenario
results, through methods such as stress tests, expected shortfall, economic
capital, scenario analysis, stressed VaR or other alternative approaches. The
disclosure should discuss how market liquidity horizons are considered and
applied within such measures.

100 | DBS Annual Report 2016

Where have we disclosed this?
(in Risk management section
General recommendations unless otherwise stated)

Credit risk

26 Provide information that facilitates the users understanding of the banks Section 5.4
credit risk prole, including any signicant credit risk concentrations. Financial statements Note 41.4

Temporary considerations regarding the impact of expected credit

loss approaches:

Banks should consider whether existing segmentation for disclosure Not applicable
purposes is sufciently granular to appropriately understand credit risk (quantitative assessment not yet available)
through an ECL approach.

Once practical and when disclosures are reliable, provide users with a
quantitative assessment of the potential impact of applying an ECL approach.

Permanent considerations regarding the impact of expected credit

loss approaches:

Where it aids understanding of credit risk exposures, provide disclosure Not applicable
of vintage.

27 Describe the policies for identifying impaired or non-performing loans, Sections 5.1
including how the bank denes impaired or non-performing, restructured
and returned-to-performing (cured) loans, as well as explanations for loan
forbearance policies.

28 Provide reconciliation for the opening and closing balances of non- Sections 5.1, 5.4
performing or impaired loans in the period and the allowance for loan losses. Financial statements Note 41.2
Disclosures should include an explanation of the effects of loan acquisitions
on ratio trends, and qualitative and quantitative information about
restructured loans.

29 Provide a quantitative and qualitative analysis of the banks counterparty credit Section 5.1, 5.4
risk, which arises from its derivatives transactions.

30 Provide qualitative information about credit risk mitigation and collateral held for Section 5.2, 5.4
all sources of credit risk, as well as quantitative information where meaningful.

Other risks

31 Describe other risk types based on managements classications and Section 1, 8.1, 9
discuss how each one is identied, governed, measured and managed.
In addition to risks such as operational risk, reputational risk, fraud risk
and legal risk, it may be relevant to include topical risks such as business
continuity, regulatory compliance, technology, and outsourcing.

32 Discuss publicly known risk events related to other risks, including Section 8.2
operational, regulatory, compliance and legal risks, where material or
potentially material loss events have occurred. Such disclosures should
concentrate on the effect on the business, the lessons learned and the
resulting changes to risk processes already implemented or in progress.

Risk management | 101

Note 1: New impairment signicant increase in credit risk. The ECL conditions. Additional considerations that
will be that which is expected over the are assessed to have been inadequately
methodology remaining lifetime of the asset; addressed in model estimates will be
A nancial asset which has been credit- addressed through the application of a
In 2018, Financial Reporting Standard (FRS)
impaired with objective evidence of default management overlay.
109 will take effect. This new accounting
is classied under Stage 3. The assessed ECL
standard will govern how Singapore reporting
for Stage 3 nancial asset is not expected Transfer criteria
entities classify and measure nancial
to be materially different from the existing In accordance with FRS 109, nancial assets
instruments; take impairment (or allowance)
specic allowances taken. are considered to be Stage 2 where their
charges; and account for hedges.
credit risk prole is assessed to have increased
Further guidance has also been specied signicantly since initial recognition, such
Current impairment approach by the Basel Committee in its December that it is appropriate to recognise lifetime
At present, for impairment assessment, 2015 report, Guidance on credit risk and ECL. The analysis underpinning this
DBS complies with the provisions of MAS accounting for expected credit losses. assessment is multi-factor in nature, and
Notice 612 where banks maintain, in
management will consider a range of
addition to specic allowances, a prudent
Implementation Plan qualitative and quantitative parameters.
level of general allowances of at least 1%
A steering committee, chaired by the CFO,
of uncollateralised exposures. This is an
has been established to oversee the FRS 109 These would include, for the wholesale
intended departure from the incurred loss
implementation, including the development portfolio is the change in probability of
provisioning approach prescribed under
of the ECL model. The steering committee default derived from the internal credit
FRS 39, and possible changes to the current
is supported by an implementation working risk rating for each obligor. For the retail
regulatory specications will determine how
group consisting of subject matter experts portfolio, days past due will be considered,
FRS 109s Expected Credit Loss (ECL) model
from Finance, Risk Management, Business and supplemented with additional mechanisms
is eventually implemented. In the meantime,
Technology which will collectively manage key linked to the probability of default.
the Group has made further progress in its
workstreams covering, among others, nancial
preparations, leveraging existing credit rating
reporting, systems, processes and controls, Impact assessment
systems, models, processes and tools.
as well as constituent engagement. Periodic DBS intends to quantify the potential
progress updates are being provided to the impact of FRS 109 once it is practicable to
FRS 109 impairment Audit Committee. provide reliable estimates and when there
methodology is full clarity on the possible changes to the
Under FRS 109, impairment charges will Credit risk modelling techniques current regulatory specications. This is
be determined using an ECL model, which Portfolio-specic adjustments will be made expected to be available in the annual report
classies nancial assets into three categories to the Banks existing credit rating systems, and nancial statements for the year ending
or stages, each of which is associated with models, processes and tools, to meet the 31 December 2017. Until then, DBS is
an ECL requirement that is reective of the requirements of FRS 109. In particular, for also unable to denitively determine
assessed credit risk prole: the wholesale portfolios, credit risk cycles for any consequential effects that FRS 109
A nancial asset is classied under Stage signicant industries and geographies will be implementation could have on regulatory
1 if it was not credit-impaired upon used as inputs to convert through-the-cycle capital requirements. In this regard, we note
origination and there has not been a loss estimates measures into the point-in-time that the Basel Committee is also considering
signicant increase in its credit risk since. equivalents and in determining the forward- how the new ECL requirements would
Under this stage, the ECL of a nancial looking estimates. impact existing regulatory capital rules.
asset will be that which is expected to
result from defaults occurring over the In determining ECL, management will At this juncture, our view remains that any
next 12 months; evaluate a range of possible outcomes, taking such changes are unlikely to result in material
A nancial asset is classied under Stage into account past events, current conditions additional allowance charges for DBS at the
2 if it was not credit-impaired upon and assessments of future economic point of adoption.
origination but has since suffered a

102 | DBS Annual Report 2016

Capital management
and planning

Objective targets. The ICAAP has a three-year horizon Refer to Note 32 to the nancial statements for
and covers various scenarios, including stress details on the movement of share capital
and treasury shares during the year.
The Board is responsible for setting our capital scenarios of differing scope and severity.
management objective, which is to maintain
a strong capital position consistent with Capital capacity is allocated on two Additional Tier 1 capital
dimensions: by business line and by entity. DBS Group Holdings Ltd, on 7 September 2016,
regulatory requirements under the Monetary
Capital allocations by business line are set as issued USD 750 million 3.60% Non-Cumulative
Authority of Singapores Notice to Banks No.
part of the budget process and monitored Non-Convertible Perpetual Capital Securities
637 Notice on Risk Based Capital Adequacy
during the year. Return on regulatory capital First Callable in 2021.
Requirements for Banks Incorporated in
Singapore (MAS Notice 637) and the is one of several metrics used to measure
expectations of various stakeholders, e.g. business performance. Capital allocations Tier 2 capital
customers, investors and rating agencies. by entity seek to optimise the distribution DBS Group Holdings Ltd, on 11 January 2016,
The Board articulates this objective in the form of capital resources across entities, purchased SGD 134.25 million of the
of capital targets. This objective is pursued taking into account the capital adequacy SGD 1,000 million DBS Bank Ltd. 3.30%
while delivering returns to shareholders and requirements imposed on each subsidiary in Subordinated Notes due 2022 Callable
ensuring that adequate capital resources are its respective jurisdiction. Capital is allocated in 2017.
available for business growth and investment to ensure that each subsidiary is able to DBS Group Holdings Ltd, on 11 January 2016,
opportunities as well as adverse situations, comply with regulatory requirements as it purchased SGD 491.75 million of the
taking into consideration our strategic plans executes its business strategy in line with SGD 1,000 million DBS Bank Ltd. 3.10%
and risk appetite. Our dividend policy is to pay our strategy. During the course of the year, Subordinated Notes due 2023 Callable
sustainable dividends over time, consistent these subsidiaries did not experience any in 2018.
with our capital management objective, impediments to the distribution of dividends. DBS Group Holdings Ltd, on 20 January 2016,
long-term growth prospects and the need issued SGD 250 million 3.80% Subordinated
to maintain prudent capital levels in view of Capital structure Notes due 2028 Callable in 2023.
the uncertain impact of regulatory change. DBS Group Holdings Ltd, on 8 March 2016,
In line with our dividend policy, the Board has We manage our capital structure in line with issued JPY 10,000 million 0.918%
recommended a nal dividend of SGD 0.30 our capital management objective and seek Subordinated Notes due 2026.
per ordinary share, to which the Scrip Dividend to optimise the cost and exibility offered by DBS Group Holdings Ltd, on 19 April 2016,
Scheme will be applicable, bringing the total various capital resources. In order to achieve issued HKD 1,500 million 3.24%
ordinary dividend for the year to SGD 0.60. this, we assess the need and the opportunity Subordinated Notes due 2026 Callable
to raise or retire capital. The following capital in 2021.
transactions were undertaken during the year. DBS Bank Ltd., on 15 July 2016, redeemed
Process the outstanding SGD 500 million 4.47%
Subordinated Notes due 2021 Callable
Our capital management objective is Common Equity Tier 1 capital with Step-up in 2016.
implemented via a capital management DBS Group Holdings Ltd, on 20 June 2016,
DBS Bank Ltd., on 15 July 2016, redeemed
and planning process that is overseen by issued 16,700,472 ordinary shares
the outstanding USD 900 million Floating
the Capital Committee. The Chief Financial pursuant to the Scrip Dividend Scheme in
Rate Subordinated Notes due 2021 Callable
Ofcer chairs the Capital Committee. The respect of the nal dividend for the year
with Step-up in 2016.
Capital Committee receives regular updates ended 31 December 2015. This added
on our current and projected capital position. SGD 249 million to ordinary share capital. Refer to Notes 31, 33 and 35 to the nancial
A key tool for capital planning is the annual DBS Group Holdings Ltd, on 29 September statements as well as the Pillar 3 Disclosures
Internal Capital Adequacy Assessment 2016, issued 17,480,864 ordinary shares (http://www.dbs.com/investor/capital-disclosures.
html) for the terms of the capital instruments
Process (ICAAP) through which we assess our pursuant to the Scrip Dividend Scheme in that are included in Eligible Total Capital.
forecast capital supply and demand relative respect of the interim dividend for the year
to regulatory requirements and our capital ended 31 December 2016. This added
SGD 259 million to ordinary share capital.

Capital management and planning | 103

The table below analyses the movement in Common Equity Tier 1, Additional Tier 1 and Tier 2 capital
during the year.

Statement of changes in regulatory capital for the year ended 31 December 2016
In $ millions

Common Equity Tier 1 capital

Opening amount 37,068

Issue of shares pursuant to Scrip Dividend Scheme 508

Purchase of treasury shares (60)
Prot for the year (attributable to shareholders) 4,238
Dividends paid to shareholders(1) (1,545)
Cost of share-based payments 109
Movements in other comprehensive income, including available-for-sale revaluation reserves (24)
Transitional arrangements and others (878)

Closing amount 39,416

Common Equity Tier 1 capital 39,416

Additional Tier 1 capital

Opening amount

Issuance of Additional Tier 1 capital instruments 1,009

Movements in Additional Tier 1 capital instruments issued by fully-consolidated subsidiaries that meet criteria for inclusion (189)
Transitional arrangements and others 673

Closing amount 1,493

Tier 1 capital 40,909

Tier 2 capital
Opening amount 5,045

Issuance of Tier 2 capital instruments 645

Movements in Tier 2 capital instruments issued by fully-consolidated subsidiaries that meet criteria for inclusion (1,427)
Movement in provisions eligible as Tier 2 capital (145)

Closing amount 4,118

Total capital 45,027

(1) Includes distributions paid on captial securities classied as equity.

104 | DBS Annual Report 2016

Capital adequacy ratios
As at 31 December 2016, our Basel III fully phased-in Common Equity Tier 1 capital adequacy ratio (CAR), calculated by dividing Common Equity
Tier 1 capital after all regulatory adjustments applicable from 1 January 2018 by the prevailing risk-weighted assets, was 13.3%. This ratio
comfortably exceeds the eventual minimum CET1 CAR requirement under MAS Notice 637 of 9.0% (including capital conservation buffer but
excluding countercyclical capital buffer) effective from 1 January 2019. On a transitional basis, our Common Equity Tier 1 CAR, Tier 1 CAR and
Total CAR, were well above the Monetary Authority of Singapores minimum requirements (including applicable capital conservation buffer and
countercyclical capital buffer) of 7.2%, 8.7% and 10.7% respectively. The table below sets out our capital resources and capital adequacy ratios.

We are also well-positioned to comply with forthcoming leverage ratio requirements. Our consolidated leverage ratio stood at 7.7%, well above
the minimum 3.0% envisaged by the Basel Committee.

Refer to Five-Year Summary for the historical trend of Tier 1 and Total CAR. Refer to http://www.dbs.com/investor/index.html for the Groups
Pillar 3 Disclosures which set out details on the Groups risk-weighted assets.

In $ millions 2016 2015

Share capital 10,899 10,391

Disclosed reserves and others 31,930 29,269
Total regulatory adjustments to Common Equity Tier 1 capital (3,413) (2,219)
Regulatory adjustments due to insufcient Additional Tier 1 capital (373)
Common Equity Tier 1 capital 39,416 37,068

Additional Tier 1 capital instruments(1) 3,761 2,941

Total regulatory adjustments to Additional Tier 1 capital (2,268) (2,941)
Tier 1 capital 40,909 37,068

Provisions eligible as Tier 2 capital 1,263 1,408

Tier 2 capital instruments(1) 2,857 3,639
Total regulatory adjustments to Tier 2 capital (2) (2)
Total capital 45,027 42,113

Risk-Weighted Assets (RWA)

Credit RWA 226,014 216,380
Market RWA 34,037 40,212
Operational RWA 18,567 17,437
Total RWA 278,618 274,029

Capital Adequacy Ratio (CAR) (%)

Basel III fully phased-in Common Equity Tier 1(2) 13.3 12.4
Common Equity Tier 1 14.1 13.5
Tier 1 14.7 13.5
Total 16.2 15.4

Minimum CAR including Buffer Requirements (%)(3)

Common Equity Tier 1 7.2 6.5
Effective Tier 1 8.7 8.0
Effective Total 10.7 10.0

Of which: Buffer Requirements (%)

Capital Conservation Buffer 0.625
Countercyclical Buffer 0.1

(1) As part of the Basel III transitional arrangements, regulatory capital recognition of outstanding Additional Tier 1 and Tier 2 capital instruments
that no longer meet the minimum criteria is gradually being phased out. Fixing the base at the nominal amount of such instruments outstanding
on 1 January 2013, their recognition was capped at 90% in 2013, with this cap decreasing by 10 percentage points in each subsequent year. To
the extent a capital instrument is redeemed or amortised after 1 January 2013, the nominal amount serving as the base is not reduced.
(2) Calculated by dividing Common Equity Tier 1 capital after all regulatory adjustments (e.g., for goodwill and capital investments exceeding certain
thresholds) applicable from 1 January 2018 by RWA as at each reporting date.
(3) Includes minimum Common Equity Tier 1, Tier 1 and Total CAR of 6.5%, 8.0% and 10.0% respectively.

Capital management and planning | 105

The chart below analyses the drivers of the movement in Common Equity Tier 1 CAR during the year.

Group Common Equity Tier 1 CAR

1.6% -0.6%
0.2% -0.3%
-0.5% 0.3% -0.1% 14.1% -0.8%
13.5% 13.3%

Dec 2015 Net prot Dividends Issue of Transitional Credit Market Operational Dec 2016 Basel III Dec 2016
CET1 attributable paid to shares arrangements RWA RWA RWA CET1 phase-in Basel III fully
(Transitional) to (1)
shareholders pursuant and others (Transitional) phased-in
shareholders to Scrip CET1 (2)

(1) Includes distributions paid on captial securities classied as equity.
(2) Calculated by dividing Common Equity Tier 1 capital after all regulatory adjustments (e.g., for goodwill and capital investments exceeding
certain thresholds) applicable from 1 January 2018 by RWA as at each reporting date.

The following table sets out the RWA and capital adequacy ratios as at 31 December 2016 of our signicant banking subsidiaries calculated in
accordance with the regulatory requirements applicable in the country of incorporation.

CAR (%)

Total RWA Common Equity

As at 31 December 2016 ($ m) Tier 1 Tier 1 Total

DBS Bank (Hong Kong) Limited 38,107 15.6 16.2 18.3

DBS Bank (China) Limited 16,852 12.9 12.9 15.9

106 | DBS Annual Report 2016

Regulatory change
The Monetary Authority of Singapore has revised MAS Notice 637 to incorporate the Basel III capital standards into Singapore regulations. These
took effect from 1 January 2013 and are phased in over time. The transitional arrangements for minimum capital adequacy ratio requirements are
summarised in the table below.

From 1 January 2016 2017 2018 2019

Minimum CAR %
Common Equity Tier 1 (a) 6.5 6.5 6.5 6.5
Capital Conservation Buffer (CCB) (b) 0.625 1.25 1.875 2.5
Common Equity Tier 1 including CCB (a) + (b) 7.125 7.75 8.375 9.0
Tier 1 including CCB 8.625 9.25 9.875 10.5
Total including CCB 10.625 11.25 11.875 12.5

Maximum Countercyclical Buffer (1) 0.625 1.25 1.875 2.5

(1) The countercyclical buffer is not an ongoing requirement, and is only applied as and when specied by the relevant banking supervisors.
The applicable magnitude will be a weighted average of the country-specic countercyclical buffer requirements that are required by national
authorities in jurisdictions to which a bank has private sector credit exposures. The Basel Committee expects jurisdictions to implement the
countercyclical buffer during periods of excessive credit growth. Of the jurisdictions where we have material private sector credit exposures,
Hong Kong has applied a countercyclical buffer of 0.625% for 2016, which will increase to 1.25% from 1 January 2017.

The MAS has designated DBS Bank as a domestic systemically important bank (D-SIB). Under the MAS framework for identifying and supervising
D-SIBs, the higher loss absorbency requirement for locally-incorporated D-SIBs is met by the foregoing minimum ratios being two percentage points
higher than those established by the Basel Committee. The Basel Committee has developed an indicator-based methodology for identifying global
systemically important banks (G-SIBs) on which higher loss absorbency requirements will be imposed. While we are not a G-SIB, we are required to
disclose the 12 indicators which are published on the Group website (http://www.dbs.com/investor/index.html).

In addition to the changes implemented in 2013, there are changes to the regulatory capital adequacy framework that will be adopted in the near
future. These are, inter alia, changes in the standardised approach for measuring counterparty credit risk exposures and the revised market risk
framework, which are not expected to increase our risk-weighted assets signicantly. The Basel Committee is considering further rule changes but
these are yet to be nalised. We continue to assess the impact of the outstanding regulatory reforms and, if necessary, will manage exposures within
our strategy, to help mitigate that impact.

The MAS has published a series of consultation papers on proposed enhancements to the resolution regime for nancial institutions in Singapore.
The proposed enhancements include a statutory bail-in regime that is only applied to unsecured subordinated liabilities issued or contracted after the
implementation of the statutory bail-in regime. This reects, inter alia, that Singapore-incorporated banks are well-capitalised and already subject to
capital standards that are stricter than Basel III capital standards.

Capital management and planning | 107


We seek to create The Board has overall responsibility for sustainability at DBS and considers environmental,
social and governance (ESG) matters in the development of the Groups strategy.
long-term value for
For more information on corporate governance, please refer to page 48.
our stakeholders in a
sustainable way. We ESG matters that are material to value creation are integrated into our balanced scorecard, which
is used to set objectives, drive behaviours, measure performance and determine remuneration.
believe that generating
prots responsibly For more information, please refer to page 28.

goes hand in hand We manage sustainability matters using the following lenses:
with creating social
impact. This aligns with Responsible Banking
our corporate value of
We seek to conduct our business in a fair and responsible manner by ensuring
being purpose-driven that we only offer products and services that are suitable for our customers
and our desire to make (otherwise known as fair dealing). We take a proactive stance to protect our
customers information from cyber attacks and illicit usage. We have zero tolerance
a difference beyond for nancial crime, including bribery and corruption. We are committed to
advancing responsible nancing and nancial inclusion as part of our role
banking to touch real in promoting sustainable development.
people, real businesses
and real lives.
Responsible Corporate Citizenship
This report has been prepared in accordance
with the Global Reporting Initiative (GRI)
G4 Sustainability Reporting Guidelines.
As a good corporate citizen, we are conscious about managing our direct
Please refer to Appendix on page 116 for environmental footprint and seek to inuence our supply chain towards
the GRI Index. sustainable practices.

Creating Social Impact

We recognise that not all returns stem from nancial gains. We seek to create
social impact by championing social entrepreneurship in Asia and through our
staff volunteerism movement, People of Purpose.

Employer of Choice

Continued investment in our people is a key priority for us. We are committed
to providing an inclusive work environment where every employee can develop
professionally and personally.

As society continues to increase its expectation for businesses to deliver solutions sustainable
for our planet, we see opportunities to offer banking solutions that can help meet those
expectations. We are encouraged by how the advancement of technology, including ntech,
opens up viable banking solutions for new areas such as nancial inclusion and green nancing.
We are exploring these opportunities, which at the same time allow us to do more for the
communities we operate in.

108 | DBS Annual Report 2016

Responsible banking sanctions and anti-bribery/ corruption identify and assess potential ESG risks as part
matters, training, transaction screening and of the credit evaluation process.
periodic testing.
Fair dealing Our ESG risk assessment approach is centred
It is important that our customers trust the
on the need to ensure that material ESG
products and services we provide.
Communication issues are considered for all new borrowing
We are committed to: and training in 2016 customers, new credit applications and
periodic reviews. Where appropriate, specic
Being responsive to our customers
sector guidelines or approach for ESG-
needs and requests  All our employees are required to
sensitive industries are established to provide
Selling products and services that complete training on anti-money
further guidance on ESG risks unique to that
are suitable for them laundering on an annual basis
industry. These include requirements for
Ensuring our sales staff are trained
additional levels of review by relevant industry
to deal with customers fairly  All new joiners are required to
specialists. These are established taking
Communicating with our customers complete mandatory anti-bribery
into consideration our strategy and level of
in a clear and transparent manner. and corruption training
exposures to a sector and presently cover
eight sectors namely agriculture, chemicals,
Staff remuneration is based on a balanced  All employees are required to
energy, infrastructure, mining and metals,
scorecard approach, which ensures alignment read and acknowledge our Code
waste management, forestry and defence.
between the interests of our staff and of Conduct (see page 62), which
customers. A signicant proportion of the contains our stance on anti-
If any company is suspected to have, or
remuneration depends on staffs ability to corruption, on an annual basis.
there are credible allegations that it is,
demonstrate understanding of the customers
involved in undesirable ESG practices, we will
needs, recommend suitable products,
promptly engage the company concerned.
provide adequate disclosures and conduct
If the company is not willing to take steps
the advisory and sales process professionally.
We made signicant enhancements in 2016, to adequately manage and mitigate the
In 2016, we made improvements to the
in particular upgrading our system platforms identied ESG risks or it is found to be
way that we track individual staffs sales
in overseas locations, focusing on incremental in deliberate breach, we are prepared to
performance and the way that supervisors
risk from digital banking, and deploying turn down the transaction or re-assess the
are held accountable for such performance.
technology in alerts management for fraud banking relationship.
and money laundering. We will continue to
All our employees receive annual training
focus on improving policies, systems and The Responsible Financing Standard,
on compliance and fair dealing, in addition
operations in 2017. These will ensure that we which includes general ESG guidance for all
to training on our product suite. They also
are closely tracking regulatory developments, sectors, and the relevant sector guidelines,
undergo product knowledge and skills tests
and are benchmarked well against international are subject to regular review and will be
regularly. We place great emphasis on the
standards. We will also focus on enhancing enhanced over time.
oversight of our sales staff and hold their
metrics to support the Board and senior
supervisors accountable for their coaching,
management in understanding the effectiveness
monitoring and supervision.
of the nancial crime programme.
As part of the industrys push
In the interest of improving our products For more information, see Regulatory towards sustainable development,
and services, we avail various channels for compliance on page 75 and Compliance risk the Association of Banks in
customers to provide valuable feedback. on page 95. Singapore (ABS) released a
set of industry guidelines to
For more information, see CRO statement enhance the implementation of
on page 75. See also page 39 for our customer Responsible nancing
satisfaction measures. We recognise that our lending practices responsible nancing in October
have a signicant impact on society, and 2015. Developed in consultation
are committed to promoting sustainable with banks, including DBS,
Customer privacy the guidelines underscore the
development. To this end, when granting
and cyber security loans, we assess how our customers address sectors commitment to advancing
Cyber security continues to be one of the responsible nancing in a more
material risks, including their exposure to
top 10 focus areas on our risk management structured and transparent
environmental and social risks where relevant.
agenda for 2016. For more information manner. The guidelines will help
on our overall management approach on achieve systematic environmental
This requirement is outlined in our Core Credit
cyber security, see Cyber security and data and social criteria integration into
Risk Policy, which was expanded in 2016 to
protection on page 76 and Technology banks lending decision-making
incorporate the principles and approach for
Risk on page 95. as well as provide higher levels of
managing ESG issues in our lending practices
and capital market activities. The policy is transparency and accountability.
Combating nancial crime supplemented by a new Responsible Financing DBS is committed to fully
Our nancial crime risk mitigation controls Standard which sets out our overarching implementing the ABS guidelines
include a policy framework, subject matter approach to responsible nancing and provides by 2017.
expertise on anti-money laundering/ more structured and detailed guidance to

Sustainability | 109
Financial inclusion we benchmark ourselves against external
Spotlight on the environmental certications to ensure that we
agricultural sector Being the Peoples Bank
incorporate sustainable designs and practices
In Singapore, living our heritage as the
into our ofces and branches.
In Southeast Asia, severe trans- Peoples Bank, we continue to bring
boundary haze pollution caused affordable banking services to the heartlands.
We maintained the Building and Construction
by land and forest res from We have a large segment of customers that
Authority Green Mark certication for all our
agricultural land clearance has we provide subsidised banking services to.
Singapore ofce buildings, with DBS Asia
adversely impacted the environment, Fees are waived for many, including the
Central upgrading its certication to Platinum
economy and people. As a result, the young, seniors, national servicemen and
(ofce outt category) through improved
agricultural sector has come under people under public assistance schemes. We
energy and water consumption efciencies,
increased scrutiny. also waive fees for ex-offenders to help ease
sustainable management and operations,
their reintegration into society. DBS is also the
and indoor environmental quality. We also
We will not consciously nance key bank for migrant workers in Singapore.
maintained the WasteWi$e certicate
companies in the agricultural sector
Read more about our POSB initiatives on Excellence level for all our Hong Kong ofce
that we know are deliberately
page 46. buildings. In Taiwan, we were the rst foreign
violating local or national regulations
bank to achieve the ISO 50001 certication for
or engaged in unlawful activities that
We further seek to leverage technology energy management and we have continued
involve land clearance by burning;
adversely affect high-conservation to improve access to nancial services to to uphold this through efcient energy use.
value forests; involve new planting all of our customers, including those with
on peatland; or violate rights of special needs. We believe in empowering the For our branch network in Singapore, DBS
workers or local communities. community to make sound nancial decisions was the rst bank to achieve the Green
to improve their lives, by enhancing their Mark certication. Endorsed by the National
We conduct ESG risk assessment nancial literacy. Environment Agency, the award recognises
on all existing and new borrowing efforts to achieve a sustainable built
customers in the agricultural sector. In 2016, we rolled out Indias rst mobile- environment by incorporating best practices
We understand that some customers only digibank, which enables us to bring high in environmental design and construction,
are more advanced than others in quality, affordable nancial services to the and by the adoption of green building
adopting good practices to mitigate masses, at reduced transaction costs. technologies. We have gone beyond the
ESG risks. Where there are identied Green Mark criteria with some branches
gaps, we monitor our customers Responsible achieving higher lighting efciency and
commitments to addressing them on installing air-conditioning systems with the
an ongoing basis. We recognise that corporate citizenship highest Green Mark ratings, contributing
responsible nancing is a journey to as much as 50% reduction in carbon
and seek to support companies that Managing our emissions. Overall, the bank has received
are able to demonstrate commitment environmental footprint the certication for over 20 branches, with
or are taking positive steps to Our most direct environmental impact two receiving a Gold Plus Green Mark
mitigate material environmental stems from the carbon emissions from our Award. We target to achieve the Green
and social risks associated with their ofce buildings and branches through the Mark Certication for at least 20 more
business activities. consumption of purchased electricity. Hence, branches in 2017.

Table 1 Environmental data by region

2016 2015 2014

(baseline) 6
Carbon Carbon Carbon
emissions Carbon Weight emissions Carbon Weight emissions
from emissions of paper from emissions of paper from
Energy purchased from air recycled Energy purchased from air recycled purchased
consumption electricity travel (tonnes) consumption electricity travel (tonnes) electricity
(mWh) (tCO 2 e) (1) (tCO 2 e) (3)
(mWh) (tCO 2 e) (1) (tCO 2 e) (3)
(tCO 2 e) (1)

Singapore 45,965 19,912 4,139 239 45,514 19,717 4,469 221 19,509

Hong Kong 11,278 8,871 1,100 171 11,911 9,369 1,255 195 9,422

Rest of 13,252 9,550 Not 40 15,120 11,384 Not 36 11,247

Greater China (4) available (2) available (2)

South and 7,117 6,974 Not 6 6,657 6,735 Not 10 6,714

Southeast Asia (5) available (2) available (2)

Total 77,612 45,307 5,239 456 79,202 47,205 5,724 462 46,892

(1) Based on relevant grid emission factor conversion for each country
(2) We plan to track carbon emissions from air travel across the markets with effect from 2017
(3) Based on weight of paper at recycling points. Comparative gures have been restated to include recycled condential waste in Singapore
(4) Rest of Greater China includes Mainland China and Taiwan
(5) South and Southeast Asia includes India and Indonesia
(6) 2014 is the baseline year when we start tracking our carbon emissions

110 | DBS Annual Report 2016

Despite an increase in our physical footprint with vendors who either resell, salvage Sustainable sourcing
with the new DBS Academy in Singapore and reusable parts or otherwise dispose of them We seek to inuence our supply chain
offshore tech hub in Hyderabad, DBS ofces through a recycling company. towards sustainable practices through the DBS
and branches across six markets consumed Sustainable Sourcing framework. Central to
78,000 mWh of energy in 2016 reducing the framework are DBS Sustainable Sourcing
carbon emissions by 4% and resulting in Environmental conservation Principles (SSP), which outline our expectations
estimated cost savings of SGD 1.2 million initiatives at DBS of all suppliers, regardless of value or volume
compared to 2015. of purchase, in four key areas human rights,
 Upgrade to energy-efcient health and safety, environment sustainability,
Across Singapore and Hong Kong, we reduced business integrity and ethics.
air travel, cutting carbon emissions by 8% indoor air-conditioning system
from 2015. This reects our efforts to reduce across the region
In Singapore, due diligence is done at the
business travel and encourage alternatives to new supplier registration stage, as well as
face-to-face business meetings such as video  Install three-tick water efciency
labelled kitchen tap ttings at at regular intervals as part of our ongoing
conferencing and online collaboration tools. supplier management process. In 2016, we
Total air mileage fell from 31.9 million in 2015 each branch, reducing our water
consumption by 50% met the target of 100% SSP sign-up for new
to 29.2 million in 2016. suppliers. We plan to roll out similar due
 Over 90% of indoor lighting is diligence processes across the region.
On waste management, we collected
456 tonnes of paper waste for recycling tted with LED and high frequency
uorescent xtures, making them In addition to the SSP, we conduct
from properties across the six markets. This sustainability risk materiality assessment
reects our continual efforts, particularly 35% more energy-efcient
to identify spend categories with high ESG
in Singapore, to reduce paper consumption risks. The assessment takes into account the
and encourage responsible waste disposal.  Support ght against climate
change by observing Earth Hour suppliers manufacturing process, service
Initiatives include placement of eye-catching delivery, business volume and industry-
Pokemon-themed recycling bins at branches specic guidelines, and is reviewed every two
and more strategic placement of paper  Reduce ofce copier paper
consumption in Singapore from years to ensure relevance. For competitive
recycling bins across oors at ofces. tenders in high-risk categories, up to 10% of
150,000 to 126,000 reams in
2016 and converting all paper the supplier selection criteria are attributed
IT waste management remains a priority as to sustainability considerations. This reects
we continue with our digital transformation. procurement to Green Label
certied by end 2016 our position that, all else being equal, we
As part of our strategic cost management will always award our business to more
programme, we sold more than 4,000 sustainable products and services.
(2015: 8,000) decommissioned desktops and
notebooks to a recycling vendor at the end of DBS will continue to work with our suppliers
their four- or ve-year replacement cycle. We and stakeholders to ne-tune the DBS
continued to recycle corporate mobile phones Sustainable Sourcing framework and drive
improvement in our supply chain.

Sustainability | 111
Creating Social Value We are committed to developing SEs across Asia in the following ways.

Championing social
Promoting the development 2016 highlights
DBS has a long history of supporting SMEs
of the SE sector
SEs lack recognition and public awareness More than 2,500 SEs
across Asia, and has been a strong advocate of
of their work and the social impact they reached through local forums
entrepreneurship and innovation. It is therefore
create. We strive to generate awareness and and workshops
natural for us to leverage these strengths to
advocacy for SEs in our key markets through More than 1,000 entries received
support social enterprises (SEs) in delivering
digital outreach and signature events. for DBS-NUS Social Venture
innovative solutions to build a better and more
Challenge and DBS Foundation
sustainable future for the region.
The Asia For Good website was created to Grant Programme
connect more people to SEs and encourage Over 300 SEs featured on
DBS Foundation (DBSF) was launched
socially conscious living. Asia For Good website
in February 2014 with a SGD 50 million
fund to champion social entrepreneurship
and make an even greater impact in
addressing Asias evolving social needs.

Nurturing innovative and 2016 highlights

impactful SEs through funding,
mentorship and volunteerism 63 SEs placed in capacity
Across our six core markets, DBSF identies building programmes
innovative and high potential SEs and More than 400 SEs attended
supports them on their growth journey. SE Summit, boot camps and
Social Enterprises are businesses that research briengs
have a social mission at their core and Our SE Grant programme provides much More than 5,500 hours of
use sustainable commercial models to needed capital to support SEs. The grants skilled volunteerism
achieve their social mission. enable SEs in various stages of growth to Awarded SGD 1 million
test prototypes built around their innovative (2015: SGD 1 million) in grants to 12
To nd out more, go to: (2015: 16) SEs to encourage them
ideas, improve existing processes, add critical
capabilities or scale their existing business. to deploy social innovations in
areas such as healthcare, education
We also provide capacity building programmes and environmental sustainability
and access to holistic support customised to
SEs needs such as executive mentoring and
skilled staff volunteerism.

Embedding SEs into DBS culture 2016 highlights

and operations
We demonstrate commitment to SEs by As at 31 December 2016,
providing customised banking solutions and we had 459 (2015: 398)
engaging them as DBS procurement vendors. customers under the SE Banking
Package and SGD 1.72 million
First launched in Singapore in 2008, the (2015: SGD 1.74 million) of
SE Banking Package allows SEs to open committed unsecured SE
corporate accounts with no minimum deposit business loans
or monthly balance requirements, and offers
waivers of transaction fees for banking
services such as telegraphic transfers and
IDEAL. The package also offers unsecured
business loans below the commercial rate.

For more information, refer to page 19 Supporting social innovators.

112 | DBS Annual Report 2016

People of Purpose One unique feature of DBS volunteer Our workforce mix remains stable. The new
People of Purpose is an in-house activities is that many of these were not hire rate across the age groups is a reection
volunteerism movement to rally employees centrally organised. Instead, they were of voluntary attrition as well as the changing
to use their skills and time for the good of designed, owned and executed by the nearly nature of entry level jobs due to digitalisation.
the community. In 2016, employees from 300 volunteer leaders across the bank.
Singapore, Hong Kong, China, Taiwan, India Our engagement and retention rates were
and Indonesia volunteered more than 37,000 better than the industry average. 81% of our
hours to serve the elderly, children and
Employer of Choice employees were engaged based on the 2016
persons with disabilities as well as to create My Voice Survey, an employee engagement
Our ability to attract, retain and develop survey conducted by Aon Hewitt. We saw an
positive change for the environment.
the best talent is essential for our improvement in our voluntary attrition rate
continued success. from 13% in 2015 to 12% in 2016, primarily
The programmes we supported include
horticulture therapy for the elderly organised driven by an improved employer value
Refer to page 39 for more information on
by our Hong Kong employees, active ageing our employee KPIs. proposition and a muted economic outlook.
and dementia prevention workshops run Our efforts to build a great workplace have
by Singapore volunteers, outdoor activities paid off and we continue to be an employer
Hiring and employee of choice for employees across gender and
conducted by the Taiwan team for persons
with disabilities, the packing and delivery of
engagement age groups.
Our total headcount remains stable, with
daily necessities to disadvantaged families
selective hiring primarily in Singapore and We won over 50 HR awards in 2016, a
by staff in China, mangrove planting
India. In Singapore we hired UX designers, testament to our high employee engagement.
carried out by DBS India along the coastline
coders, software engineers and data analysts We were named Aon Best Employer Asia
of Mumbai, and DBS Indonesias waste
in line with our digital agenda. In India, Pacic for inspiring strong commitment and
management project contributing to the
we recruited for DBS Asia Hub 2, our rst superior performance from employees, driving
nations recycling efforts. Volunteers also
offshore tech hub in Hyderabad. business results through effective people
offered their skills and knowledge to help SEs
in nancial and tax matters, digital marketing practices, and managing our business in ways
and business development. that build long-term success and sustainability.

Table 2 Total number and rates of new employee hires and voluntary attrition
by age group, gender and region (1)

2016 2015

No. of New No. of Voluntary No. of New No. of Voluntary

Head- Workforce New Hire Voluntary Attrition Head- Workforce New Hire Voluntary Attrition
count (2) Mix Hires (2) Rate (3) Attrition Rate (4) count (2) Mix Hires (2) Rate (3) Attrition Rate (4)

By age group

<=30 5,931 27% 2,023 34% 1,000 23% 6,350 29% 2,967 47% 1,282 25%
>30 & <=50 14,048 63% 1,909 14% 1,460 9% 13,641 62% 2,009 15% 1,395 10%
>50 2,215 10% 91 4% 87 4% 2,026 9% 79 4% 86 4%

By gender

Female 12,349 56% 1,823 15% 1,308 11% 12,424 56% 2,621 21% 1,444 12%
Male 9,845 44% 2,200 22% 1,239 13% 9,593 44% 2,434 25% 1,319 15%

By region

Singapore 10,381 47% 1,438 14% 1,000 10% 10,299 47% 2,015 20% 1,099 11%
Hong Kong 4,350 20% 783 18% 617 14% 4,527 20% 997 22% 668 15%
Rest of
China (5) 3,609 16% 738 20% 575 16% 3,870 18% 1,202 31% 621 17%
South and
Asia (6) 3,587 16% 1,027 29% 342 11% 3,067 14% 791 26% 357 13%
Rest of the
World (7) 267 1% 37 14% 13 5% 254 1% 50 20% 18 8%

Total 22,194 100% 4,023 18% 2,547 12% 22,017 100% 5,055 23% 2,763 13%

(1) The table excludes involuntary termination as well as contract, temporary and agency staff attrition
(2) Headcount and new hires include permanent, contract and temporary staff, and exclude agency staff
(3) New hire rate is computed based on number of new hires divided by headcount at the end of the year
(4) Voluntary attrition rate is computed based on number of voluntary attrition divided by monthly average headcount for permanent employees only
(5) Rest of Greater China includes Mainland China and Taiwan
(6) South and Southeast Asia includes India, Indonesia, Malaysia, Vietnam and the Philippines
(7) Rest of the World includes South Korea, Japan, Dubai, United States of America and United Kingdom

Sustainability | 113
Learning and talent development
At DBS, we have an integrated approach to developing talent with equal opportunities for all. Our talent development initiatives are built upon
the triple-E framework experience, exposure and education.

DBS triple-E framework for talent development

Experience Exposure Education

Objective To broaden our peoples skillsets To enable our people to expand To develop a learning organisation,
across business and geographies, their horizons by learning from peers balancing the needs of today with
and enable them to take on larger and seniors through networking, future proong for tomorrow.
roles as they grow with us. mentoring and coaching.

Initiatives We support internal mobility, More than 5,500 employees The DBS Academy is our in-house
job rotations, cross-functional engaged in innovation programmes centre that provides a progressive,
projects and other experiential and gained exposure to digital integrated and career-based learning
learning opportunities across DBS. culture, agile methodology and curriculum for staff. The academy
Our internal mobility programme other digital working concepts offers a well-rounded curriculum,
allows employees to move within through human-centred design spanning leadership development,
departments and across businesses workshops and hackathons. functional up-skilling and digital.
or geographies. This empowers By immersing themselves in the New courses are introduced
them to gain greater lateral process of learning by doing, each year, such as agile project
exposure or acquire different they learn best practices and management and human-centred
skillsets and experience. put ideas into action. design. We blend formal training
with informal methods, such as
communities-based learning.

Key In 2016, 30% of positions were Training days per permanent DBS invested SGD 26 million on
performance lled via internal transfer. employee fell from 6.4 to 5.2. staff development in 2016. Our
indicators While formal training hours fell, learning centres in Singapore,
there was an increase in our Indonesia and Taiwan set a new
employee engagement through benchmark for innovative learning
immersion programmes. Employees spaces in the region.
participated in customer and
employee journeys, picking up
skills such as human-centred design
and agile project management.

To build our talent pipeline, we have talent development programmes catering to various career aspirations and abilities. They include the
management associate programme, the strategic talent assignment and rotation programme to groom high-potential employees in the early
stages of their career. Talent at senior management levels have one-on-one interactions with Group Management Committee leaders to learn
from them and seek advice on career advancement. Managing directors are invited to attend board meetings to gain exposure and insight into
decision-making at top-leadership level.

Table 3 Average hours of training (1) per year per employee by gender, and by employee category (2)

2016 2015

Total days of training (in thousand) 107 129

Average days of training

Per permanent employee 5.2 6.4

By gender

Female 5.1 6.2

Male 5.5 6.7

By employee category

SVP to MD 4.0 5.2

Analyst to VP 5.6 6.8
Senior Ofcer and below 4.4 5.9

(1) Excludes informal learning methods such as communities-based learning; and exposure opportunities such as immersion programmes including
customer and employee journeys
(2) Employee categories refer to Senior Vice President (SVP) to Managing Director (MD), Analyst to Vice President (VP), and Senior Ofcer
and below

114 | DBS Annual Report 2016

Diversity and equal opportunity
We view the diversity of our people as a source of strength. We seek to create an environment that allows all our employees to thrive because
the diversity of experiences, knowledge and approaches they bring are necessary to drive performance and innovation. We have an inclusive
work environment encompassing gender diversity and a multi-cultural and multi-generational workforce.

We run diversity campaigns to underscore our commitment to an inclusive culture. In 2016, we launched Celebrating The Woman In Me,
a series of events that focused on gender diversity; and TEAM Challenge, a regional initiative to encourage employees to collaborate as
multi-generational teams and appreciate the benets of diversity.

Our workforce mix by age group and gender remains stable. 56% of our workforce and more than one-third of senior management positions
(SVP to MD) are held by women. In 2016, we were named among the top 10 companies in Asia for female nancial services professionals in
eFinancialCareers Ideal Employer ranking and Aon Best Employer for Women in Hong Kong, Indonesia and Taiwan.

Table 4 Breakdown of permanent employees by employee category1 according to gender and age group

2016 2015

SVP Analyst Senior Ofcer SVP Analyst Senior Ofcer

to MD to VP and below Total to MD to VP and below Total

Headcount 1,607 15,095 5,074 21,776 1,415 14,289 5,798 21,502(3)

Breakdown by gender

Female 38% 53% 71% 56% 37% 53% 70% 57%

Male 62% 47% 29% 44% 63% 47% 30% 43%

Breakdown by age group

<=30 0% 24% 43% 27% 0% 24% 47% 29%

>30 & <=50 74% 68% 48% 63% 73% 68% 46% 62%
>50 26% 8% 9% 10% 27% 8% 7% 9%

(1) Employee categories refer to Senior Vice President (SVP) to Managing Director (MD), Analyst to Vice President (VP),
and Senior Ofcer and below
(2) Total headcount 22,194 less contract and temporary staff 418 = 21,776 permanent staff
(3) Total headcount 22,017 less contract and temporary staff 515 = 21,502 permanent staff

Sustainability | 115
Global reporting
initiative (GRI) index

General standard disclosures

disclosures Disclosure requirements Where have we disclosed this?
Strategy and analysis
G4-1 Statement from the most senior Refer to page 8 Letter from the Chairman and CEO.
Organisational prole
G4-3 Name of the organisation DBS Group Holdings Ltd
G4-4 Primary brands, products and services Refer to page 22 Business model How we create value.
G4-5 Location of headquarters 12 Marina Boulevard
Marina Bay Financial Centre Tower 3
Singapore 018982
G4-6 Countries of operation Refer to page 2 Who we are.
G4-7 Nature of ownership and legal form Public limited company listed on the Singapore Exchange.
G4-8 Markets served Refer to page 2 Who we are.
G4-9 Scale of the organisation Refer to page 2 Who we are.
G4-10 Employee prole Refer to page 119 Table 1 and Table 2.

Read more about our employee initiatives on page 113.

G4-11 Collective bargaining agreements Our house union in Singapore, the DBS Staff Union, is an afliate of the National Trades
Union Congress (NTUC). 2,036 (2015: 2,278) of our employees are eligible for collective
bargaining under the Memorandum of Understanding between DBS and NTUC. We do
not have house unions in other markets.
G4-12 Supply chain Refer to Page 111 Sustainable sourcing.
G4-13 Signicant changes during the There were no signicant changes to our organisational prole during the
reporting period reporting period.
G4-14 Precautionary approach or principle DBS does not explicitly refer to the precautionary approach or principle in its risk
management framework. We seek to contribute to society by generating prots
responsibly, which ties in with our corporate value of being purpose-driven.

Refer to page 108 Sustainability.

G4-15 Externally developed sustainability Refer to inside cover About this report.
initiatives subscribed to or endorsed
We have applied the GRI G4 Sustainability Reporting Guidelines in the preparation of
our Annual Report.
G4-16 Memberships of associations Our key memberships include Institute of International Finance and The Association of
Banks in Singapore (Vice Chairman Bank).
Identied material aspects and boundaries
G4-17 List of entities included in consolidated Refer to Subsidiaries and consolidated structured entities on page 143 and
nancial statements Associates on page 144.
G4-18 Process for dening report content Our Annual Report is prepared in accordance with the International Integrated
Reporting <IR> Framework.

Under <IR>, our disclosures primarily focus on matters that substantively affect our
ability to create long-term value.

Refer to page 28 for our material matters identication process.

In addition, through internal evaluation and our stakeholder interactions, we have

identied additional GRI aspects where our operations may impact the environment or
society. These are outlined below (see G4-19).

116 | DBS Annual Report 2016

General standard disclosures

disclosures Disclosure requirements Where have we disclosed this?
G4-19 List of GRI aspects applicable We impact environmental, social and economic conditions directly through our business
to DBS conduct and indirectly through our customers, suppliers and other stakeholders.

In this context, the GRI aspects applicable to DBS are as follows:

GRI aspect Related matter material for our value
creation, where applicable*
Economic performance Challenging macro-economic environment
Customer privacy Cyber security
Compliance Evolving regulatory landscape
Anti-corruption Combating nancial crime
Product service and labelling Fair dealing
Product responsibility Responsible nancing
Employment Talent management and retention
Training and education Talent management and retention
Diversity and equal opportunity Talent management and retention
Local communities Financial inclusion
Emissions Climate change
Efuents and waste Climate change
Supplier environmental assessment Climate change
Supplier assessment for labour practices Not applicable
Supplier human rights assessment Not applicable
Supplier assessment for impact on society Not applicable
*Refer to page 28 Material Matters
G4-20 Aspect boundary for each GRI aspect All GRI aspects identied are applicable to all subsidiaries and branches within the
within DBS DBS Group.
G4-21 Aspect boundary for each GRI aspect We consider all GRI aspects applicable to DBS to be relevant to all stakeholder groups
outside DBS identied on page 30 What our stakeholders are telling us.
G4-22 Effect of any restatements Restatements of information, where applicable, are noted within the relevant data sets.
of information
G4-23 Signicant changes in scope There are signicant changes in scope and aspect boundaries.
and aspect boundaries
Stakeholder engagement
G4-24 List of stakeholder groups engaged
G4-25 Basis for identication and selection
of stakeholders with whom to engage
Refer to page 30 What our stakeholders are telling us.
G4-26 Approach to stakeholder engagement
G4-27 Key topics and concerns raised by
Report prole
G4-28 Reporting period This report covers the period 1 January to 31 December 2016.
G4-29 Date of most recent previous report 31 December 2015
G4-30 Reporting cycle Annual
G4-31 Contact point for the report For any questions regarding this report or its contents, please contact Investor
Relations at investor@dbs.com.
G4-32 In accordance option and GRI Index DBS has chosen the in accordance - core option to focus on the matters most
material to our stakeholders.

This Appendix is the GRI Content Index.

G4-33 External assurance for the report This report has not been externally assured. DBS will consider external assurance
in the future.
G4-34 Governance structure Refer to page 48 Corporate governance.
Ethics and integrity
G4-35 Description of values, principles, Refer to page 61 Culture.
standards and norms of behaviour
See also values-led culture on page 23.

Global reporting initiative (GRI) index | 117

Specic standard disclosures

DMA and
indicators Standard disclosure title Where have we disclosed this?
Category: Economic
GRI aspect: Economic performance
G4-DMA Generic disclosures on management approach Refer to page 32 CFO Statement.

See also page 108 Sustainability on our community

investment strategy.
G4-EC1 Direct economic value generated and distributed Refer to Consolidated income statement on page 121. Further
breakdown of income and expenses by geography can be found in
Geographical segment reportingon page 176.

See also How we distribute value created on page 27.

Category: Environmental
GRI aspect: Emissions
G4-DMA Generic disclosures on management approach Refer to page 110 Managing our environmental footprint.
G4-EN16 Energy indirect greenhouse gas (GHG) emissions (Scope 2) Our Scope 2 GHG emissions relate to carbon emissions from
purchased electricity. Refer to page 110 Managing our environmental
footprint Table 1.
GRI aspect: Efuents and waste
G4-DMA Generic disclosures on management approach
Refer to page 110 Managing our environmental footprint Table 1.
G4-EN23 Total weight of waste by type and disposal method
GRI aspect: Supplier environmental assessment
G4-DMA Generic disclosures on management approach
G4-EN32 Percentage of new suppliers that were screened using Refer to page 111 Sustainable sourcing.
environmental criteria
Category: Social
Sub-category: Labour practices and decent work
GRI aspect: Employment
G4-DMA Generic disclosures on management approach Refer to page 113 Employer of Choice.
G4-LA1 Total number and rates of new employee hires and Refer to page 113 Employer of Choice Table 2.
employee turnover by age group, gender and region
GRI aspect: Training and education
G4-DMA Generic disclosures on management approach Refer to page 113 Employer of Choice.
G4-LA9 Average hours of training per year per employee by Refer to page 114 Employer of Choice Table 3.
gender, and by employee category
G4-LA11 Percentage of employees receiving regular performance All our permanent employees received regular performance and
and career development reviews, by gender and by career development reviews in 2015 and 2016.
employee category
GRI aspect: Diversity and equal opportunity
G4-DMA Generic disclosures on management approach Refer to page 49 Board composition and page 115 Diversity and
equal opportunity.
G4-LA12 Composition of governance bodies and breakdown of Refer to page 48 Key features of our Board
employees per employee category according to gender,
age group, minority group membership, and other See also page 115 Employer of Choice Table 4.
indicators of diversity
GRI aspect: Supplier assessment for labour practices
G4-DMA Generic disclosures on management approach
G4-LA14 Percentage of new suppliers that were screened using Refer to page 111 Sustainable sourcing.
human rights criteria
Sub-category: Human rights
GRI aspect: Supplier human rights assessment
G4-DMA Generic disclosures on management approach
G4-HR10 Percentage of new suppliers that were screened using Refer to page 111 Sustainable sourcing.
human rights criteria

118 | DBS Annual Report 2016

Specic standard disclosures

DMA and
indicators Standard disclosure title Where have we disclosed this?
Sub-category: Society
GRI aspect: Local communities
FS14 Initiatives to improve access to nancial services for
disadvantaged people (people with disabilities or
Refer to page 110 Financial inclusion - Being the Peoples Bank.
impairment and people facing language, cultural,
age or gender barriers)
GRI aspect: Anti-corruption
G4-DMA Generic disclosures on management approach
G4-SO4 Communication and training on anti-corruption policies Refer to page 109 Combating nancial crime.
and procedures
GRI aspect: Supplier assessment for impact on society
G4-DMA Generic disclosures on management approach
G4-SO9 Percentage of new suppliers that were screened using Refer to page 111 Sustainable sourcing.
criteria for impact on society
Sub-category: Product responsibility
GRI aspect: Product and service labelling
G4-DMA Generic disclosures on management approach Refer to page 109 Fair dealing.
G4-PR5 Results of surveys measuring customer satisfaction Refer to page 39 Customer KPIs.
GRI aspect: Customer privacy
G4-DMA Generic disclosures on management approach
G4-PR8 Total number of substantiated complaints regarding Refer to page 109 Customer privacy and cyber security.
breaches of customer privacy and losses of customer data
GRI aspect: Compliance
G4-DMA Generic disclosures on management approach
Refer to page 109 Combating nancial crime.
G4-PR9 Monetary value of signicant nes for non-compliance
with laws and regulations concerning the provision and See also page 96 Operational risk in 2016.
use of products and services
GRI aspect: Product portfolio
G4-DMA Generic disclosures on management approach
FS6 % of the portfolio for business lines by specic region, Refer to page 109 Responsible nancing.
size and by sector

Workforce Mix
Table 1 Total number of employees by contract type and gender
2016 2015
Female Male Total Female Male Total
Type of contract
Permanent 12,163 9,613 21,776 12,179 9,323 21,502
Of which:
Full time 12,088 9,611 21,699 12,098 9,320 21,418
Part time 75 2 77 81 3 84
Contract/Temporary (1) 186 232 418 245 270 515
Total 12,349 9,845 22,194 12,424 9,593 22,017

(1) Headcount on DBS payroll

Table 2 Total number of employees by region and gender

2016 2015
Female Male Total Female Male Total
Singapore 6,226 4,155 10,381 6,227 4,072 10,299
Hong Kong 2,272 2,078 4,350 2,322 2,205 4,527
Rest of Greater China (1) 2,359 1,250 3,609 2,492 1,378 3,870
South and Southeast Asia (2) 1,386 2,201 3,587 1,277 1,790 3,067
Rest of the World (3) 106 161 267 106 148 254
Total 12,349 9,845 22,194 12,424 9,593 22,017

(1) Rest of Greater China includes Mainland China and Taiwan

(2) South and Southeast Asia includes India, Indonesia, Malaysia, Vietnam and the Philippines
(3) Rest of the World includes South Korea, Japan, Dubai, United States of America, United Kingdom and Australia

Global reporting initiative (GRI) index | 119


DBS Group Holdings Ltd Balance Sheet: Liabilities

147 Deposits and Balances from Customers
and its Subsidiaries 148 Other Liabilities
Other Debt Securities
149 Subordinated Term Debts
121 Consolidated Income Statement
122 Consolidated Statement of Comprehensive Income
123 Balance Sheets Balance Sheet: Share Capital and Reserves
124 Consolidated Statement of Changes in Equity 151 Share Capital
125 Consolidated Cash Flow Statement 152 Other Equity Instruments
Other Reserves and Revenue Reserves
155 Non-controlling Interests
Notes to the Financial Statements
126 Domicile and Activities
Summary of Signicant Accounting Policies Off-Balance Sheet Information
133 Critical Accounting Estimates 156 Contingent Liabilities and Commitments
Financial Derivatives
Income Statement
134 Net Interest Income Additional Information
Net Fee and Commission Income 159 Share-based Compensation Plans
Net Trading Income 160 Related Party Transactions
Net Income from Investment Securities 161 Fair Value of Financial Instruments
Other Income 164 Credit Risk
Employee Benets 171 Liquidity Risk
135 Other Expenses 174 Capital Management
Allowances for Credit and Other Losses Segment Reporting
136 Income Tax Expense 176 Subsequent Event
137 Earnings Per Ordinary Share
DBS Bank Ltd
Balance Sheet: Assets
137 Classication of Financial Instruments 177 Income Statement
140 Cash and Balances with Central Banks 178 Statement of Comprehensive Income
Government Securities and Treasury Bills 179 Balance Sheet
Bank and Corporate Securities 180 Notes to the Supplementary Financial Statements
141 Loans and Advances to Customers
142 Financial Assets Transferred 183 Directors Statement
Other Assets 187 Independent Auditors Report
143 Deferred Tax Assets/Liabilities
Subsidiaries and Consolidated Structured Entities
144 Associates
145 Unconsolidated Structured Entities
146 Properties and Other Fixed Assets
147 Goodwill and Intangibles

120 | DBS Annual Report 2016

DBS Group Holdings Ltd and its Subsidiaries

income statement
for the year ended 31 December 2016

In $ millions Note 2016 2015

Interest income 9,748 9,644

Interest expense 2,443 2,544
Net interest income 4 7,305 7,100
Net fee and commission income 5 2,331 2,144
Net trading income 6 1,357 1,204
Net income from investment securities 7 330 339
Other income 8 166 150
Non-interest income 4,184 3,837
Total income 11,489 10,937
Employee benets 9 2,725 2,651
Other expenses 10 2,247 2,249
Total expenses 4,972 4,900
Prot before allowances 6,517 6,037
Allowances for credit and other losses 11 1,434 743
Prot before tax 5,083 5,294
Income tax expense 12 723 727
Net prot 4,360 4,567

Attributable to:
Shareholders 4,238 4,454
Non-controlling interests 122 113
4,360 4,567

Basic and diluted earnings per ordinary share ($) 13 1.66 1.77

(The notes on pages 126 to 176 as well as the Risk management section on pages 77 to 102 form part of these nancial statements)

Financial statements | 121

DBS Group Holdings Ltd and its Subsidiaries

Consolidated statement of
comprehensive income
for the year ended 31 December 2016

In $ millions 2016 2015

Net prot 4,360 4,567

Other comprehensive income (a) :

Foreign currency translation differences for foreign operations 27 29
Share of other comprehensive income of associates (6) 2
Available-for-sale nancial assets and others
Net valuation taken to equity 129 (218)
Transferred to income statement (187) 61
Tax on items taken directly to or transferred from equity 12 7
Other comprehensive income, net of tax (25) (119)
Total comprehensive income 4,335 4,448

Attributable to:
Shareholders 4,214 4,327
Non-controlling interests 121 121
4,335 4,448

(a) Items recorded in Other comprehensive income above will be reclassied to the income statement when specic conditions are met (e.g. when
foreign operations or available-for-sale nancial assets are disposed of)

(The notes on pages 126 to 176 as well as the Risk management section on pages 77 to 102 form part of these nancial statements)

122 | DBS Annual Report 2016

DBS Group Holdings Ltd and its Subsidiaries

as at 31 December 2016

The Group The Company

In $ millions Note 2016 2015 2016 2015

Cash and balances with central banks 15 26,840 18,829
Government securities and treasury bills 16 33,401 34,501
Due from banks 30,018 38,285 18 10
Derivatives 37 25,757 23,631 29 46
Bank and corporate securities 17 45,417 40,073
Loans and advances to customers 18 301,516 283,289
Other assets 20 11,042 11,562
Associates 23 890 1,000
Subsidiaries 22 22,285 19,547
Properties and other xed assets 26 1,572 1,547
Goodwill and intangibles 27 5,117 5,117
Total assets 481,570 457,834 22,332 19,603
Due to banks 15,915 18,251
Deposits and balances from customers 28 347,446 320,134
Derivatives 37 24,497 22,145 22
Other liabilities 29 15,895 12,404 50 24
Other debt securities 30 27,745 38,078 2,400 1,884
Subordinated term debts 31 3,102 4,026 645
Total liabilities 434,600 415,038 3,117 1,908
Net assets 46,970 42,796 19,215 17,695
Share capital 32 10,670 10,114 10,690 10,144
Other equity instruments 33 1,812 803 1,812 803
Other reserves 34 4,322 6,705 168 168
Revenue reserves 34 27,805 22,752 6,545 6,580
Shareholders funds 44,609 40,374 19,215 17,695
Non-controlling interests 35 2,361 2,422
Total equity 46,970 42,796 19,215 17,695

(The notes on pages 126 to 176 as well as the Risk management section on pages 77 to 102 form part of these nancial statements)

Financial statements | 123

DBS Group Holdings Ltd and its Subsidiaries

Consolidated statement of
changes in equity
for the year ended 31 December 2016

Total Non-
Share Other equity Other Revenue Shareholders controlling Total
In $ millions capital instruments reserves reserves funds interests equity

Balance at 1 January 10,114 803 6,705 22,752 40,374 2,422 42,796
Cost of share-based payments 109 109 109
Draw-down of reserves upon vesting of
performance shares 108 (108)
Issue of shares pursuant to Scrip Dividend Scheme 508 508 508
Purchase of treasury shares (60) (60) (60)
Issue of perpetual capital securities 1,009 1,009 1,009
Transfers (2,360) 2,360
Dividends paid to shareholders (a) (1,545) (1,545) (1,545)
Dividends paid to non-controlling interests (124) (124)
Change in non-controlling interests (58) (58)
Total comprehensive income (24) 4,238 4,214 121 4,335
Balance at 31 December 10,670 1,812 4,322 27,805 44,609 2,361 46,970

Balance at 1 January 10,171 803 6,894 19,840 37,708 2,498 40,206
Issue of shares upon exercise of share options 4 4 4
Cost of share-based payments 103 103 103
Reclassication of reserves upon exercise of
share options 1 (1)
Draw-down of reserves upon vesting of
performance shares 86 (86)
Issue of shares pursuant to Scrip Dividend Scheme 110 110 110
Purchase of treasury shares (258) (258) (258)
Dividends paid to shareholders (a) (1,542) (1,542) (1,542)
Dividends paid to non-controlling interests (125) (125)
Acquisition of non-controlling interests (78) (78) (72) (150)
Total comprehensive income (127) 4,454 4,327 121 4,448
Balance at 31 December 10,114 803 6,705 22,752 40,374 2,422 42,796

(a) Includes distributions paid on capital securities classied as equity

(The notes on pages 126 to 176 as well as the Risk management section on pages 77 to 102 form part of these nancial statements)

124 | DBS Annual Report 2016

DBS Group Holdings Ltd and its Subsidiaries

cash ow statement
for the year ended 31 December 2016

In $ millions 2016 2015

Cash ows from operating activities

Net prot 4,360 4,567

Adjustments for non-cash items:

Allowances for credit and other losses 1,434 743
Depreciation of properties and other xed assets 275 251
Share of prots or losses of associates 47 (14)
Net gain on disposal (net of write-off) of properties and other xed assets (47) (82)
Net income from investment securities (330) (339)
Cost of share-based payments 109 103
Interest expense on subordinated term debts 107 116
Income tax expense 723 727
Prot before changes in operating assets and liabilities 6,678 6,072

Increase/(Decrease) in:
Due to banks (2,354) 1,858
Deposits and balances from customers 25,659 (1,592)
Other liabilities 4,282 1,624
Other debt securities and borrowings (10,426) 5,958

(Increase)/Decrease in:
Restricted balances with central banks 17 960
Government securities and treasury bills 1,616 (4,350)
Due from banks 8,243 4,361
Bank and corporate securities (5,265) (1,911)
Loans and advances to customers (17,363) (4,076)
Other assets (841) (5,192)
Tax paid (809) (730)
Net cash generated from operating activities (1) 9,437 2,982
Cash ows from investing activities
Dividends from associates 36 32
Proceeds from disposal of interest in associates 3
Acquisition of interest in associate (21)
Proceeds from disposal of properties and other xed assets 76 140
Purchase of properties and other xed assets (321) (334)
Acquisition of non-controlling interests (150)
Net cash used in investing activities (2) (206) (333)
Cash ows from nancing activities
Issue of subordinated term debts 630
Interest paid on subordinated term debts (114) (108)
Redemption/purchase of subordinated term debts (1,586) (743)
Increase in share capital 4
Purchase of treasury shares (60) (258)
Issue of perpetual capital securities 1,009
Dividends paid to shareholders of the Company, net of scrip dividends (a) (1,037) (1,432)
Change in non-controlling interests (58)
Dividends paid to non-controlling interests (124) (125)
Net cash used in nancing activities (3) (1,340) (2,662)
Exchange translation adjustments (4) 163 240
Net change in cash and cash equivalents (1)+(2)+(3)+(4) 8,054 227
Cash and cash equivalents at 1 January 12,078 11,851
Cash and cash equivalents at 31 December (Note 15) 20,132 12,078

(a) Includes distributions paid on capital securities classied as equity

(The notes on pages 126 to 176 as well as the Risk management section on pages 77 to 102 form part of these nancial statements)
Financial statements | 125
DBS Group Holdings Ltd and its Subsidiaries

Notes to the
nancial statements
for the year ended 31 December 2016

These Notes are integral to the nancial statements. IFRS with effect from 1 January 2018. The implementation of FRS 109s
credit impairment requirements will be dependent on any changes that
The consolidated nancial statements for the year ended 31 December could be made to the current regulatory specications and the Group
2016 were authorised for issue by the Directors on 15 February 2017. will continue to monitor developments on this front.

2.2 Signicant estimates and judgement

1 Domicile and Activities
The preparation of nancial statements requires management to
The Company, DBS Group Holdings Ltd, is incorporated and domiciled exercise judgement, use estimates and make assumptions in the
in the Republic of Singapore and has its registered ofce at 12 Marina application of policies and in reporting the amounts in the nancial
Boulevard, Marina Bay Financial Centre Tower Three, Singapore 018982. statements. Although these estimates are based on managements best
knowledge of current events and actions, actual results may differ from
The Company is listed on the Singapore Exchange. these estimates. Critical accounting estimates and assumptions used
that are signicant to the nancial statements, and areas involving a
The Company is an investment holding, treasury and funding vehicle higher degree of judgement and complexity, are disclosed in Note 3.
for the group. Its main subsidiary is DBS Bank Ltd (the Bank), which
is wholly owned and engaged in a range of commercial banking and 2.3 New or amended FRS and Interpretations
nancial services, principally in Asia. effective for 2016 year-end
The nancial statements relate to the Company and its subsidiaries On 1 January 2016, the Group adopted the following revised FRS that
(the Group) and the Groups interests in associates. are issued by the ASC and relevant for the Group. The adoption has
no signicant impact on the Groups nancial statements.

2 Summary of Signicant Amendments to FRS 1: Disclosure initiatives

Accounting Policies Amendments to FRS 27: Equity Method in Separate
Financial Statements
2.1 Basis of preparation Amendments to FRS 111: Accounting for Acquisitions of Interests
in Joint Operations
Compliance with Singapore Financial Reporting Improvements to FRSs (issued in November 2014)
Standards (FRS)
The nancial statements of the Company and the consolidated nancial 2.4 New or amended FRS and Interpretations
statements of the Group are prepared in accordance with Singapore effective for future periods
Financial Reporting Standards (FRS) and related Interpretations
promulgated by the Accounting Standards Council (ASC). In accordance The signicant new or amended FRS and Interpretations that are
with Section 201(18) of the Companies Act (the Act), the requirements applicable to the Group in future reporting periods, and which have
of FRS 39 Financial Instruments: Recognition and Measurement in not been early-adopted, include:
respect of loan loss provisioning are modied by the requirements
of Notice to Banks No. 612 Credit Files, Grading and Provisioning FRS 115 Revenue from Contracts with Customers (effective 1 January
(MAS Notice 612) issued by the Monetary Authority of Singapore. 2018) replaces the existing revenue recognition guidance and
As permitted by Section 201(10)(b) of the Act, the Companys income establishes a comprehensive framework for determining whether,
statement has not been included in these nancial statements. how much and when revenue is recognised.

The nancial statements are presented in Singapore dollars and FRS 116 Leases (effective 1 January 2019) replaces the existing lease
rounded to the nearest million, unless otherwise stated. accounting guidance and requires almost all leases to be recognised
on the balance sheet. It also changes the way in which lease
expenses are presented in the income statement.
Differences between International Financial
Reporting Standards (IFRS) and FRS FRS109 Financial Instruments (effective 1 January 2018)
Other than the above modication to FRS related to MAS Notice 612,
there are no signicant differences between IFRS and FRS in terms of FRS 109: Financial Instruments
their application to the Group. The consolidated nancial statements and FRS 109 replaces the existing guidance in FRS 39 Financial Instruments:
the notes thereon satisfy all necessary disclosures under IFRS and FRS. Recognition and Measurement. It includes revised guidance on the
classication and measurement of nancial instruments; requires a
The Group notes the intention, as announced by the ASC on 29 May more timely recognition of expected credit losses arising from the
2014, for Singapore-incorporated companies listed on the Singapore impairment of nancial assets; and introduces revised requirements
Exchange to apply a new nancial reporting framework identical to for general hedge accounting.

126 | DBS Annual Report 2016

It is currently not yet practical to reliably estimate the nancial impact 2.5 Group Accounting
of FRS 109 on the Groups nancial statements.

Classication and measurement Subsidiaries are entities (including structured entities) over which the
FRS 109 will replace the classication and measurement model in FRS Group has control. The Group controls an entity when it is exposed to,
39 with a new model that categorises nancial assets based on the or has rights to, variable returns from its involvement with the entity and
business model within which the assets are managed, and whether the has the ability to affect those returns through its power over the entity.
contractual cash ows from the nancial assets solely represent the
payment of principal and interest. Subsidiaries are consolidated from the date control is transferred to the
Group to the date control ceases.
The Group expects that the current measurement approach for most
of its nancial assets will remain unchanged. The Group is evaluating The acquisition method is used to account for business combinations.
the impact on (a) a portfolio of nancial assets that contains embedded Refer to Note 2.13 for the Groups accounting policy on goodwill.
derivatives, which may subsequently be measured at fair value through
prot or loss (FVPL), as well as (b) a portfolio of quoted available- All intra-group transactions and balances are eliminated on consolidation.
for-sale (AFS) debt securities that are held to collect contractual cash
ows, which may subsequently be measured at amortised cost.
Subsequent changes in fair value from non-trading equity instruments Associates are entities over which the Group has signicant inuence,
can be taken through prot or loss or other comprehensive income but no control where the Group generally holds a shareholding
(FVOCI), as elected. of between and including 20% and 50% of the voting rights.
Investments in associates are accounted for using the equity method.

Impairment 2.6 Foreign currency treatment

Under FRS 109, expected credit losses (ECL) will be assessed using
an approach which classies nancial assets into three categories or
stages, each of which is associated with an ECL requirement that is Functional and presentation currency
reective of the assessed credit risk prole in each instance. Items in the nancial statements are measured using the functional
currency of each entity in the Group, this being the currency of the
A nancial asset is classied under Stage 1 if it was not credit-impaired primary economic environment in which the entity operates. The
upon origination and there has not been a signicant increase in its Groups nancial statements are presented in Singapore dollars,
credit risk since. A provision for 12-month ECL is required. which is the functional currency of the Company.
A nancial asset is classied under Stage 2 if it was not credit-
impaired upon origination but has since suffered a signicant Foreign currency transactions and balances
increase in credit risk. A provision for life-time ECL is required. Transactions in foreign currencies are measured using the exchange
rate at the date of the transaction.
A nancial asset which has been credit-impaired with objective
evidence of default is classied under Stage 3. The assessed ECL
Monetary assets and liabilities denominated in foreign currencies are
is expected to be unchanged from the existing specic allowances
translated into the functional currency of the entity undertaking the
taken for such assets.
transaction at the exchange rates at the balance sheet date. Foreign
exchange differences arising from this translation are recognised in
ECL are probability-weighted amounts determined by evaluating
the income statement within Net trading income.
a range of possible outcomes and taking into account past events,
current conditions and assessments of future economic conditions,
Non-monetary assets and liabilities measured at cost in a foreign currency
and will necessarily involve the use of management judgement.
are translated using the exchange rates at the date of the transaction.

Hedge accounting Non-monetary assets and liabilities measured at fair values in foreign
FRS 109 will introduce a more principles-based approach to assess hedge currencies are translated using the exchange rates at the date when the
effectiveness. The Group expects that all its existing hedges that are fair values are determined, which is generally the balance sheet date.
designated in effective hedging relationships will continue to qualify
for hedge accounting under FRS 109. Unrealised foreign exchange differences arising from non-monetary
nancial assets and liabilities classied as fair value through prot or
A) General Accounting Policies loss are recognised in the income statement as trading income. For
non-monetary nancial assets such as equity investments classied as
A summary of the most signicant group accounting policies is available-for-sale, unrealised foreign exchange differences are recorded
described further below starting with those relating to the entire in other comprehensive income and accumulated in equity until the
nancial statements followed by those relating to the income assets are disposed of or become impaired, upon which they are
statement, the balance sheet and other specic topics. This does reclassied to the income statement.
not reect the relative importance of these policies to the Group.

Financial statements | 127

Subsidiaries and branches For a service that is provided over a period of time, fee and commission
The results and nancial position of subsidiaries and branches whose income is recognised over the period during which the related service is
functional currency is not Singapore dollars (foreign operations) provided or credit risk is undertaken. Such fees include the income from
are translated into Singapore dollars in the following manner: issuance of nancial guarantees and bancassurance xed service fees.

Assets and liabilities are translated at the exchange rates at the Fee and commission income is recorded net of expenses directly
balance sheet date; related to it. These expenses typically include brokerage fees paid,
card-related expenses and sales commissions, but do not include
Income and expenses in the income statement are translated at
expenses for services delivered over a period (such as service contracts)
exchange rates prevailing at each month-end, approximating the
and other expenses that are not specically related to fee and
exchange rates at the dates of the transactions; and
commission income transactions.
All resulting exchange differences are recognised in other
comprehensive income and accumulated under capital reserves
Dividend income
in equity. When a foreign operation is partially or fully disposed
Dividend income is recognised when the right to receive payment
of, or when share capital is repaid, such exchange differences are
is established. This is generally the ex-dividend date for listed equity
recognised in the income statement as part of the gain or loss when
securities, and the date when shareholders approve the dividend
share capital is repaid.
for unlisted equity securities. Dividend income arising from held-for-
For acquisitions prior to 1 January 2005, the foreign exchange rates trading nancial assets is recognised in Net trading income, while
at the respective dates of acquisition were used. Please refer to Note those arising from available-for-sale nancial assets is recognised
27 for an overview of goodwill recorded. Goodwill and fair value in Net income from investment securities.
adjustments arising on the acquisition of a foreign operation on or
after 1 January 2005 are treated as assets and liabilities of the foreign Allowances for credit and other losses
operation and translated at the closing rate. Please refer to Note 2.11 for the accounting policy on impairment
of nancial assets.
2.7 Segment reporting
C) Balance Sheet
Operating segments are reported in a manner consistent with the
internal reporting provided to management. 2.9 Financial assets
In preparing the segment information, amounts for each business
segment are shown after the allocation of certain centralised costs, Initial recognition
funding income and the application of transfer pricing, where Purchases and sales of all nancial assets, even if their classication
appropriate. Transactions between segments are recorded within and measurement are subsequently changed, are recognised on the
the segment as if they are third party transactions and are eliminated date that the Group enters into the contractual arrangements with
on consolidation. counterparties. When the Group acts as a trustee or in a duciary
capacity for assets it does not directly control or benet from, the
Please refer to Note 44 for further details on business and geographical assets and the corresponding income belonging to a customer are
segment reporting. excluded from the nancial statements.

Financial assets are initially recognised at fair value, which is generally

B) Income Statement
the transaction price.

2.8 Income recognition

Classication and subsequent measurement
The Group classies and measures nancial assets based on their
Interest income and interest expense nature and the purpose for which they are acquired. This generally
Interest income and interest expense as presented in Note 4 arise from corresponds to the business models in which they are applied and
all interest-bearing nancial assets and nancial liabilities regardless of how management monitors performance, as follows:
their classication and measurement, with the exception of the Groups
structured investment deposits which are carried at fair value through Non-derivative nancial assets that are managed mainly for longer-
prot or loss. Interest expense on such structured investment deposits term holding and collection of payments are classied as loans and
is presented together with other fair value changes in trading income. receivables. These assets have xed or determinable payments, are
not quoted in an active market and are mainly in the Consumer
Interest income and interest expense are recognised on a time- Banking/Wealth Management and Institutional Banking
proportionate basis using the effective interest method. The calculation segments. Loans and receivables are carried at amortised cost
includes signicant fees and transaction costs that are integral to the using the effective interest method.
effective interest rate, as well as premiums or discounts.
Non-derivative nancial assets that are managed on a fair value
basis, which are mainly in the Treasury segment, are classied
Fee and commission income as nancial assets at fair value through prot or loss. Such
The Group earns fee and commission income from a diverse range assets include instruments held for the purpose of short-term selling
of products and services provided to its customers. and market-making (held for trading), or designated under
the fair value option if doing so eliminates or signicantly reduces
Fee and commission income is generally recognised on the completion measurement or recognition inconsistencies that would otherwise
of a transaction. Such fees include underwriting fees, brokerage fees, arise, or if the nancial asset contains an embedded derivative that
bancassurance sales commission and variable service fees and fees would otherwise need to be separately recorded (designated
related to completion of corporate nance transactions. at fair value through prot or loss).

128 | DBS Annual Report 2016

Realised or unrealised gains or losses on such nancial assets, except Offsetting
interest income, are taken to Net trading income in the income Financial assets and liabilities are presented net when there is a legally
statement in the period they arise. enforceable right to offset the recognised amounts and there is an
Derivatives (including derivatives embedded in other contracts but intention to settle them on a net basis, or realise the asset and settle
separated for accounting purposes) are also categorised as held the liability simultaneously.
for trading unless they are designated as hedging instruments
in accordance with Note 2.19. Derivatives are classied as assets Derecognition
when the fair value is positive and as liabilities when the fair value Financial assets are derecognised when the rights to receive cash ows
is negative. Changes in the fair value of derivatives other than those from the nancial assets have expired or when they have been transferred
designated as hedging instruments in cash ow or net investment together with substantially all the risks and rewards of ownership.
hedges are included in Net trading income.
Non-derivative nancial assets that the Group intends to hold to The Group enters into certain transactions where it transfers nancial
maturity are classied as held to maturity. These are Singapore assets recognised on its balance sheet but retains either all or a portion
Government securities that the Group holds for satisfying regulatory of the risks and rewards of the transferred nancial assets. In such
liquidity requirements and are held within the Others segment. These cases, the transferred nancial assets are not derecognised from the
assets are carried at amortised cost using the effective interest method. balance sheet. Such transactions include repurchase transactions
described in Note 2.12. They also include transactions where control
The Group also holds other non-derivative nancial assets for the over the nancial asset is retained, for example, by a simultaneous
purpose of investment or satisfying regulatory liquidity requirements. transaction (such as options) with the same counterparty to which
Such assets are held for an indenite period and may be sold in the asset is transferred. These are mainly transacted in the Treasury
response to needs for liquidity or changes in interest rates, credit segment. In such cases, the Group continues to recognise the asset to
spreads, exchange rates or equity prices. Financial assets in this the extent of its continuing involvement which is the extent to which
category are held in all business segments as well as the liquidity it is exposed to changes in the value of the transferred asset.
management unit in the Others segment. These assets are
classied as available-for-sale and initially and subsequently Please refer to Note 19 for disclosures on transferred nancial assets.
measured at fair value.
Unrealised gains or losses arising from changes in fair value are 2.10 Cash and cash equivalents
recognised in other comprehensive income and accumulated in
available-for-sale revaluation reserves. When sold or impaired, For the purposes of the cash ow statement, cash and cash equivalents
the accumulated fair value adjustments in the available-for-sale comprise cash on hand and non-restricted balances with central banks
revaluation reserves are reclassied to the income statement. which are readily convertible into cash.
Unquoted equity investments classied as available-for-sale for
which fair values cannot be reliably determined are carried at cost, 2.11 Impairment of nancial assets
less impairment (if any).
The Group assesses at each balance sheet date whether there is evidence
Where the classication and measurement of nancial assets do not that a nancial asset or a group of nancial assets is impaired.
reect the management of the nancial assets (or nancial liabilities),
the Group may apply hedge accounting where permissible and relevant
to better reect the management of the nancial assets. Please refer to (a) Financial assets classied as loans and
Note 2.19 for details on hedging and hedge accounting. receivables and held to maturity
Please refer to Note 14 for further details on the types of nancial The Group carries out regular and systematic reviews of all credit
assets classied and measured as above. facilities extended to customers.

The criteria that the Group uses to determine whether there is evidence
of an impairment loss include:
When the purpose for holding a nancial asset changes, or when FRS
otherwise requires it, non-derivative nancial assets are reclassied
Signicant nancial difculty of the issuer or obligor, including breach
accordingly. Financial assets may be classied out of the fair value
of covenants and/or nancial conditions.
through prot or loss or available-for-sale categories only in particular
circumstances as prescribed by FRS 39. In 2008 and 2009, the Group A breach of contract, such as a default or delinquency in interest
reclassied certain nancial assets between categories as a result or principal payments.
of a change in its holding intention. The reclassications did not
Granting of a concession to the borrower, for economic or legal
have a material impact on the income statement and statement of
reasons relating to the borrowers nancial difculty, that the
comprehensive income for the current year.
Group would not otherwise consider.
High probability of bankruptcy or other nancial reorganisation
Determination of fair value of the borrower.
The fair value of nancial assets is the price that would be received
if the asset is sold in an orderly transaction between market
participants at the measurement date. Fair value is generally Specic allowances for credit losses
estimated by discounting the future contractual cash ows at the A specic allowance for credit losses is recognised if there is evidence
current market interest rate that is available to the Group for similar that the Group will be unable to collect all amounts due under a claim
nancial instruments. Where applicable, a valuation reserve or pricing according to the original contractual terms or the equivalent value. A
adjustment is applied to arrive at the fair value. The determination of claim means a loan, debt security or a commitment such as nancial
fair value is considered a signicant accounting policy for the Group guarantees and letters of credit.
and further details are disclosed in Note 40.

Financial statements | 129

A specic allowance for credit losses is recorded as a reduction in the either as Due to banks or Deposits and balances from customers.
carrying value of a claim on the balance sheet. For an off-balance The securities sold under repos are treated as pledged assets and
sheet item such as a commitment, a specic allowance for credit loss remain on the balance sheet at amortised cost or fair value depending
is recorded as provision for loss in respect of off-balance sheet credit on their classication.
exposures within Other liabilities.
Reverse repurchase agreements (Reverse repos) are treated as
Specic allowances for credit losses are evaluated either individually collateralised lending. The amount lent is reected as a nancial asset
or collectively for a portfolio. as Cash and balances with central banks, Due from banks
or Loans and advances to customers.
Specic allowance for an individual credit exposure is made when
existing facts, conditions or valuations indicate that the Group is Amounts paid and received in excess of the amounts borrowed and
not likely to collect the principal and interest due contractually on lent on the repos and reverse repos are amortised as interest expense
the claim. An allowance is reversed only when there has been an and interest income respectively using the effective interest method.
identiable event that has led to an improvement in the collectability
of the claim. The amount of specic allowance also takes into account 2.13 Goodwill
the collateral value, which may be discounted to reect the impact
of a forced sale or untimely liquidation. Goodwill arising from business combinations generally represents
the excess of the acquisition cost over the fair value of identiable
Overdue unsecured consumer loans which are homogenous in assets acquired and liabilities and contingent liabilities assumed on
nature, such as credit card receivables, are pooled according to their the acquisition date. Goodwill is stated at cost less impairment losses
delinquency behaviour and evaluated for impairment collectively as a and is tested at least annually for impairment.
group, taking into account the historical loss experience of such loans.
At the acquisition date, any goodwill acquired is allocated to each of
When a loan is uncollectible, it is written off against the related the cash-generating units (CGU) or group of CGUs expected to benet
allowance for loan impairment. Such loans are written off after all from the combinations synergies.
the recovery procedures have been exhausted and the amount of the
loss has been determined. Recoveries in full or in part of amounts An impairment loss is recognised when the carrying amount of a CGU,
previously written off are credited to the income statement in or group of CGUs, including the goodwill, exceeds the applicable
Allowances for credit and other losses. recoverable amount. The recoverable amount of a CGU or CGU group
is the higher of the CGUs or CGU groups fair value less cost to sell
General allowances for credit losses and its value-in-use. An impairment loss on goodwill is recognised in
Apart from specic allowances, the Group also recognises general the income statement and cannot be reversed in subsequent periods.
allowances for credit losses. The Group maintains a level of allowances
that is deemed sufcient to absorb the estimated credit losses inherent 2.14 Properties and other xed assets
in its loan portfolio (including off-balance sheet credit exposures). The
Group maintains general allowances of at least 1% of credit exposures Properties (including investment properties) and other xed assets are
arising from both on and off-balance sheet items (against which stated at cost less accumulated depreciation and impairment losses.
specic allowances have not been made), adjusted for collateral held.
This is in accordance with the transitional arrangements under MAS Depreciation is calculated using the straight-line method over the
Notice 612. estimated useful lives of the assets.

Generally, the useful lives are as follows:

(b) Financial assets classied as available-
for-sale Buildings 50 years or over the remaining lease
period, whichever is shorter.
The Group assesses at each balance sheet date whether there is
evidence that an available-for-sale nancial asset is impaired. Leasehold land 100 years or over the remaining lease
period, whichever is shorter. Leasehold
In the case of an equity investment, a signicant or prolonged decline land where the unexpired lease period is
in the fair value of the security below its cost is a factor in determining more than 100 years is not depreciated.
whether the asset is impaired.
Computer software 3 5 years
When there is evidence of an impairment of an available-for-sale nancial
asset, the cumulative loss measured as the difference between the Ofce equipment, 5 10 years
acquisition cost and the current fair value, less any impairment loss on furniture and ttings
that nancial asset previously recognised in the income statement
is reclassied from the revaluation reserve within equity to the income Please refer to Note 26 for the details of properties and other xed
statement as Allowances for credit and other losses. assets and their movements during the year.

For equity investments, impairment losses are not reversed until they are
disposed of. For impaired debt instruments that subsequently recover in 2.15 Financial liabilities
value, the impairment losses are reversed through the income statement
if there has been an identiable event that led to the recovery. Initial recognition, classication and
subsequent measurement
2.12 Repurchase agreements Financial liabilities are initially recognised at fair value. The Group
generally classies and measures its nancial liabilities in accordance
Repurchase agreements (Repos) are treated as collateralised with the purpose for which the nancial liabilities are incurred and
borrowings. The amount borrowed is reected as a nancial liability managed. Accordingly:

130 | DBS Annual Report 2016

Financial liabilities are classied as nancial liabilities at fair Off-balance sheet credit exposures are managed for credit risk in the
value through prot or loss if they are incurred for the purpose same manner as nancial assets.
of repurchasing in the near term (held for trading), and this
may include debt securities issued and short positions in securities Please refer to Note 2.11 on the Groups accounting policies on
for the purpose of ongoing market-making or trading. Financial allowances for credit losses.
liabilities at fair value through prot or loss can also be designated
by management on initial recognition (designated at fair value 2.17 Provisions and other liabilities
through prot or loss) if doing so eliminates or signicantly
reduces measurement or recognition inconsistencies that would Provisions for other liabilities of uncertain timing and amounts are
otherwise arise, or if the nancial liability contains an embedded recognised when:
derivative that would otherwise need to be separately recorded.
Financial liabilities in this classication are usually within the the Group has a present legal or constructive obligation as a result
Treasury segment. of past events;
Realised or unrealised gains or losses on nancial liabilities held it is probable that an outow of resources embodying economic
for trading and nancial liabilities designated under the fair value benets will be required to settle the obligation; and
option, except interest expense, are taken to Net trading income
in the income statement in the period they arise. Interest expense a reliable estimate of the amount of the obligation can be made.
on structured investment deposits at fair value through prot
or loss is also presented together with other fair value changes The amount recognised as a provision is the best estimate