Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. DBS Bank accepts no liability whatsoever with respect to the use of this document or its contents.

Yield Enhancement Products

Teo Kang Heng

Global Financial Markets

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Disclaimer: This document does not constitute an offer, an invitation or a recommendation to enter into any transaction. DBS Bank Ltd (“DBS”) is acting as principal and not as the reader’s adviser or in a fiduciary capacity in respect of this proposed transaction or any other transaction unless otherwise specifically agreed in writing, and accepts no liability whatsoever with respect to the use of this document or its contents. This document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. The information herein is published for information only and is not to be taken in substitution for the exercise of judgement by the reader, who should obtain separate legal or financial advice. Before entering into any transaction or making a commitment to purchase any product mentioned in this document, the reader should take steps to ensure that the reader understands the transaction and has made an independent assessment of the appropriateness of the transaction in the light of the reader’s own objectives and circumstances. In particular, the reader may wish to seek advice from a financial adviser or make such independent investigations as the reader considers necessary or appropriate for such purposes. If the reader chooses not to do so, the reader should consider carefully whether any product mentioned in this document is suitable for him. DBS, its related companies, their directors and/or employees may have positions in, and may effect transactions in the underlying product(s) mentioned in this document. DBS may have alliances or other contractual agreements with the provider(s) of the underlying product(s) to market or sell its product(s). Where DBS’ related company is the product provider, such related company may be receiving fees from investors. In addition, DBS, its related companies, their directors and/or employees may also perform or seek to perform broking, investment banking and other financial services for these product providers.

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Agenda

Investment Parameters Products SOR Forecast

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Investment Parameters

Risk Parameters: Higher Risk = Higher Return

Type of Risk (Interest rate, equity, FX…) Amount of investment in each category of Risk Principal Protection Guaranteed Return Rate of return Tenure - short term or long term

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Yield Enhancement Products

Short Term Products FX Based: Fixed Deposit Currency Linked Investment (CLI) Digital Range Deposit (DRD) – Principal Protected

Credit Based: Credit Linked Note FTD Credit Linked Note

Equity Based: Equity Linked Note

Longer Term Products Principal Protected- Rainbow Equity Linked Note Callable Daily Range Accrual Deposit

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Fixed DepositAssumption:

Client has excess funds in SGD to place out.

1 Month Deposit: 0.35% p.a.

2 Month Deposit: 0.50% p.a.

3 Month Deposit: 0.52% p.a.

6 Month Deposit: 0.60% p.a.

1 Year Deposit: 1.00% p.a.

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Currency Linked Investment (CLI)

Description This deposit offers higher interest rate than a regular fixed deposit but the principal

returned may be in either the original currency or an alternate currency on maturity date.

Minimum tenor 1 month

How it works Customer deposits SGD 1,000,000 Fixed Deposit with the Bank Customer selects alternate currency; conversion price (strike); tenor Normal 3 months SGD deposit rate : 0.52%p.a (92 days) Spot USD/SGD : 1.4200 at inception Conversion Price : 1 USD = 1.4000 SGD CLI SGD 3 months deposit : 3.8000%p.a.

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Currency Linked Investment (CLI)

Conversion ConditionOn Fixing date (two business days prior to maturity of deposit):

At 2 p.m. Singapore time, if the spot USD/SGD is above 1.4000, customer will receive SGD 1,009,578.08(P + I).

If spot USD/SGD is at or below 1.4000, conversion takes place at 1.4000. Thus, customer gets USD 721,127.20 (P + I).

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Currency Linked Investment (CLI)

Benefits Higher interest rates than a standard term deposit regardless of the currency

returned on maturity (3.80%p.a. vs. 0.52%p.a.). Customer decides on the currency pairs, tenors and FX conversion rates.

Risks Deposit repayment will be in the weaker of the currency pair. Potential capital losses in base currency term but partly cushioned by the

higher interest rates. Early redemption of deposit may affect the Principal amount of the deposit.

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At Expiry Digital Range Deposit

Description

A Principal protected deposit that allows customers to earn higher than normal fixed deposit interest provided that the pre-determined FX rate do not trade out of the pre-determined range at expiry date of the deposit.

How it works:

Spot AUD/SGD : 1.2280 Range: Upper Barrier 1.2500 ( spot + 0.0220)

Lower Barrier 1.1900 (spot – 0.0380) Tenor: 6 months (184 days) Normal 6 month deposit rate : 0.60% p.a. DRD yield: 3.20%

At 2pm SGD time, expiry date:

a) If spot AUD/SGD is in the range, Customer gets principal plus 3.20% p.a. interestb) If spot AUD/SGD is out of the range, Customer gets back only the principal.

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On Expiry Digital Range Deposit

Benefits Potentially higher interest rates than a standard term deposit if range is intact 100% principal protected Client decides on the currency pairs, tenors and FX range

Risks Minimal / (opportunity costs) if exchange rate breaches Range on expiry Early redemption of deposit is not permitted

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Credit Linked Note

Description Credit Linked Note allows investors with risk appetite for good quality investment

grade financial credits and looking to benefit from current wide CDS spread on these names.

How It Works: 100% redemption of Note amount at maturity (applies only if held to maturity and no

Credit Event on the underlying reference obligation. Tenor : 1.5 years Ref Entity : Standard Chartered PLC Interest : 2.75% p.a. payable quarterly Settlement date : T + 5 days Credit Event : Bankruptcy

Failure to Pay

Restructuring

Non payment of Dividend/Coupon

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Credit Linked Note

Benefits Higher yield pick up over cash market Exposure to good quality investment grade credits. Able to access risks of different markets and currencies Accessing short term yield pick up on desired tenure

Risks Potential loss of principal and coupons on default in the underlying reference

entity. Credit risk of the underlying reference entity. Credit risk of the note issuer – DBS Bank rating Aa2/A+ from Moodys/S&P Correlation risk of issuer and underlying reference obligation.

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FTD Credit Linked Note

Description FTD Credit Linked Note allows investors with risk appetite for a basket of good

quality investment grade financial credits and looking to hold for medium term.

How It Works: 100% redemption of Note amount at maturity (applies only if held to maturity and no

Credit Event on any underlying reference obligations.) Tenor : 3 years

Ref. Entities : ICIC Bank (S&P rating BBB-)Hyundai Motor Co (S&P rating BBB-)Capital Land Ltd (S&P rating BBB+)Bank of East Asia (S&P rating A-)PCCW-HKT Telephone Ltd (S&P rating BBB)

Interest : 6.15% p.a. payable quarterly

Credit Event : Bankruptcy (on any of the ref. Failure to Pay obligations) Restructuring

Non payment of Dividend/Coupon

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FTD Credit Linked Note

Benefits Yield from FTD CLN is higher than a single name CLN

For example, FTD is 2.4 times (6.15%) the spread on the widest single name in the basket (2.60%)

Exposure to good quality investment grade credits. Able to access risks of different markets and currencies Accessing short term yield pick up on desired tenure

Risks Potential loss of principal and coupons on default in the underlying reference

entity. Credit risk of the underlying reference entity. Credit risk of the note issuer – DBS Bank rating Aa2/A+ from Moodys/S&P Correlation risk of issuer and underlying reference obligation.

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Equity Linked Note

Description An equity-linked product that may offer a higher return than traditional Fixed

income investment but with the downside risk that noteholders might receive equivalent amount of shares if the Final Share Price on the Determination Date is below the Strike Price

How it works (Assume 3 months placement, 90% strike) Capital Land Properties Ltd : Payout 14.00% p.a. Singapore Airlines Ltd : Payout 4.70% p.a. Sembcorp Industries : Payout 3.50% p.a.

On expiry date, if price of underlying counter is > the strike price, customer receives P+I.

On expiry date, if price of underlying counter is <= the strike price, customer receives underlying shares (P+I will be converted to shares at the strike price).

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Equity Linked Note

Benefits Qualifying Debt Security subject to 10% tax rate. Flexibility in choice of reference share counter, tenor and currency

denomination. If conversion occurs, the customer receives the underlying shares at target

conversion price (Strike price)

Risks If converted, the customer receives shares that are valued at lower than the

market price. Unable to take advantage of potential gains below strike price.

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Rainbow Equity Linked Note

Description:A principal protected product that provides a higher rate of return than a fixed deposit and it is depended on the performance of the selected shares.

How it works: 100% Principal protected (applies only if held to maturity or redeemed by the

Bank). Maximum Period : 3.5 years. Fixed Interest : 1.00% p.a. (Year 1)

1.20% p.a. (Year 2)

1.40% p.a. (Year 3) Interest at Maturity : 80% x (Average Return + 5%),

subject to min. 0.50% Performance of 5 shares : Singapore Telecommunication Limited

Overseas-Chinese Banking Corporation Limited United Overseas Bank Limited Keppel Corporation Limited

Sembcorp Marine Limited Interest payout : Annually; Deposit Maturity Date

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Rainbow Equity Linked Note

Benefits Qualifying Debt Security subject to 10% tax rate. Flexibility in choice of reference share counter, tenor and currency of

denomination. Principal Protected Structure

Risks If lower than range, customer will have no interest for the period. Early redemption not advised.

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Callable Daily Range Accrual Deposit

Description: A simple Principal Protected product that provides a potentially greater rate of return

compared to a normal deposit.

How It Works: 100% Principal protected (applies only if held to maturity or redeemed by the Bank). Max Period : 3 Years. Interest : Payable Quarterly. Callable : Quarterly. Interest : 3.10% * N1/N2 where Range : 0% < if 3M SGD SOR < 4.00% ( Year 1 )

0% < if 3M SGD SOR < 4.25% ( Year 2 ) 0% < if 3M SGD SOR < 4.50% (Year 3 )

“N1” means in relation to a Coupon period, the number of calendar days in respect of which the 3M SGD SOR trades above the relevant lower barrier and below the relevant Upper Barrier set out.

“N2” means the total number of calendar days in the Coupon Period corresponding to the relevant N1

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Callable Range Accrual Deposit

Description:A callable principal protected product that provides a higher rate of return than a fixed deposit with a step up coupon.

How it works: 100% Principal protected (applies only if held to maturity or redeemed by the

Bank). Maximum Period : 5 years. Interest : 3.90% p.a. (Year 1)

4.15% p.a. (Year 2)4.40% p.a. (Year 3)

4.65% p.a. (Year 4)4.90%p.a. (Year 5)

Range : 0% < if 3M SGD SOR < 4.00% ( Year 1 ) 0% < if 3M SGD SOR < 4.25% ( Year 2 ) 0% < if 3M SGD SOR < 4.50% (Year 3 ) 0% < if 3M SGD SOR < 4.75% ( Year 4 )

0% < if 3M SGD SOR < 5.00% ( Year 5 ) Interest payout : Coupon x N1/N2; Quarterly Callable : Quarterly

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Callable Range Accrual Deposit

“N1” means in relation to a Coupon period, the number of calendar days in respect of which the 3M SGD SOR trades above the relevant lower barrier and below the relevant Upper Barrier set out.

“N2” means the total number of calendar days in the Coupon Period corresponding to the relevant N1.

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Benefits 100% principal protected (applies only when called or held to maturity). Possibility of early termination. Earn higher interest if 3 months SGD SOR stays within the range

Risks Possibility of early call back if rates moves lower which would affect the yield of

reinvestment of deposit. Early termination of deposit by client might negatively affect the principal

amount of the deposit. No interest paid should 3 months SGD SOR move out of the range.

Callable Range Accrual Deposit

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DBS Interest Rate Forecasts

EndFed

Funds3m

LIBOR3m

SORSGD IRS

3YSGD IRS

5Y

28 Aug 2008 2.00 2.81 1.25 2.55 2.96

           

3Q08 2.00 2.60 1.36 3.66 4.17

4Q08 2.50 3.00 1.57 3.76 4.18

           

1Q09 3.25 3.65 1.99 4.22 4.70

2Q09 4.00 4.30 2.36 3.99 4.43

3Q09 4.25 4.80 2.72 3.99 4.41

4Q09 4.25 4.80 2.69 3.81 4.29

1Q10 4.50 4.80 2.69 3.81 4.29

2Q10 4.50 4.80 2.69 3.81 4.29

Disclaimer: The information contained in this document is intended only for use during the presentation and should not be disseminated or distributed to parties outside the presentation. DBS Bank accepts no liability whatsoever with respect to the use of this document or its contents.

Thank You.