Published April 8, 2009

AGM WATCH
Dividends likely to be among questions for DBS

Focus may also fall on pay and proposed scrip dividend scheme

By SIOW LI SEN
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DBS Group Holdings' shareholders today will have quite a few matters to discuss at their company's annual general meeting (AGM), including the worry over how much dividends will be cut amid the recession.

Mr Stanley: His health may come up for discussion at the AGM

Also likely to be scrutinised are directors' pay, the health of chief executive Richard Stanley and the proposed scrip dividend scheme.

The bank is holding its 10th AGM at 2pm in DBS Building Tower One.

For 2008, DBS posted a net profit of $1.9 billion, down 15 per cent, and paid out 65 cents in dividend per share. For 2007, the dividend was 68 cents a share.

With Singapore in the grip of its worst recession, earnings will be hit and the need to conserve cash will probably result in dividends being cut.

Morgan Stanley analyst Matthew Wilson last month said that he expected DBS dividends in 2009 and 2010 to be cut by 26 per cent and 22 per cent, from previous estimates, to 40 cents per share.

Some worried investors are seeking answer on the extent of expected dividend cut.

DBS has introduced a scrip dividend scheme, to be voted by shareholders today, as another way of preserving cash.

The bank has said the scheme would give shareholders a choice to receive ordinary shares instead of cash. But DBS directors will reserve the right to determine when the scheme will apply.

Shareholder Denis Distant likes the idea of taking scrip instead of cash but said that the bank should not withdraw the scheme once it's on the table. 'They shouldn't stop it, one year give, one year stop,' he suggested.

As to Mr Stanley's health, DBS chairman Koh Boon Hwee is expected to give shareholders an update.

Mr Stanley has been on medical leave since he was diagnosed with leukaemia in January 2009.

Mr Stanley joined the bank on May 1, 2008 and was paid up to $5 million for eight months' work last year.

Some observers wonder if Mr Stanley's illness might make it uncomfortable for them to raise the issue of pay.

Mr Distant noted that a CEO's pay is not up for voting by shareholders at an AGM, unlike directors' fees which are small by comparison.

'CEO remuneration doesn't come up, in fact you have to comb through the annual report to see the big fat remuneration,' he said. 'Directors' fees are a small amount and they come to us for approval.'