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2 B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB CONTENTS Corporate Information 2 Executive Directors and Senior Management s Profi le 4 Report of the Directors 9 Directors of Subsidiaries 16 Consolidated Income Statement 17 Consolidated Statement of Comprehensive Income 18 Consolidated Statement of Financial Position 19 Consolidated Statement of Changes in Equity 20 Consolidated Statement of Cash Flows 21 Notes to the Financial Statements 22 Unaudited Supplementary Financial Information 191 Independent Auditor s Report 233 Lists of Branches 235 DAH SING BANK, LIMITED ANNUAL REPORT

3 CORPORATE INFORMATION DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB D DAH SING BANK, LIMITED BOARD OF DIRECTORS Executive Directors David Shou-Yeh Wong Chairman Hon-Hing Wong (Derek Wong) Vice Chairman Harold Tsu-Hing Wong Vice Chairman Gary Pak-Ling Wang Managing Director and Chief Executive Nicholas John Mayhew Deputy Chief Executive Eddie Shing-Tat Lau Alternate Chief Executive Phoebe Mei-Chun Wong Alternate Chief Executive Independent Non-Executive Directors Robert Tsai-To Sze Andrew Kwan-Yuen Leung Lon Dounn Seng-Lee Chan Yuen-Tin Ng FCIS, FCS COMPANY SECRETARY Doris Wai-Nar Wong FCIS, FCS 2

4 CORPORATE INFORMATION B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB SENIOR MANAGEMENT Hau-Tak Li (Gary Li) Alternate Chief Executive, Chief Credit Officer and Head of Group Risk Division Edmund Yue-Yeung Poon Chief Operating Officer Clement Poon General Manager and Group Financial Controller Florence Siu-Wai Lee General Manager and Group Head of Human Resources Eddie Yiu-Fai Kong Chief Executive Officer and Director of Banco Comercial de Macau,S.A. Vincent Ho-Wing Yau Chief Executive Officer and Director of Dah Sing Bank (China) Limited AUDITORS PricewaterhouseCoopers Certified Public Accountants in Hong Kong DSBAHKHH REGISTERED OFFICE 36th Floor, Dah Sing Financial Centre 108 Gloucester Road, Hong Kong Tel: Fax: S.W.I.F.T.: DSBAHKHH Website: DAH SING BANK, LIMITED ANNUAL REPORT

5 EXECUTIVE DIRECTORS AND SENIOR MANAGEMENT S PROFILE DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB D EXECUTIVE DIRECTORS Mr. David Shou-Yeh Wong Chairman (1976) 45 Mr. Wong, aged 75, was appointed as the Chairman of the Bank in He is currently the Chairman of Dah Sing Financial Holdings Limited ( DSFH ), Dah Sing Banking Group Limited ( DSBG ), Banco Comercial de Macau, S.A., Dah Sing Life Assurance Company Limited ( DSLA ), Dah Sing Insurance Company (1976) Limited, Macau Insurance Company Limited, Macau Life Insurance Company Limited and various other companies. He serves as a member of the Nomination and Remuneration Committee of both DSFH and DSBG. Mr. Wong is the Honorary President of Guangdong Chamber of Foreign Investors and a Vice President of The Hong Kong Institute of Bankers. Mr. Wong has over 45 years of experience in banking and finance. He is the father of Mr. Harold Tsu-Hing Wong, the Managing Director and Chief Executive of DSBG, Group General Manager of DSFH, Vice Chairman of the Bank and DSLA, and an Executive Director of the Group s other key operating banking and fellow insurance subsidiaries. Mr. Hon-Hing Wong (Derek Wong) Vice Chairman % 35 Mr. Wong, aged 63, joined the Bank in 1977 and has served and managed various departments before appointed as a Director in 1989 and was promoted as its Managing Director in 2000 and Vice Chairman in April He was appointed as the Managing Director of Dah Sing Banking Group Limited ( DSBG ) in 2004 and promoted as Vice Chairman in April He was appointed as Director of Dah Sing Financial Holdings Limited ( DSFH ) in 1993 and promoted as its Managing Director in January He ceased to be a member of the Nomination and Remuneration Committee of both DSBG and DSFH in September Mr. Wong is the Chairman of Dah Sing Bank (China) Limited and a director of various major subsidiaries of the Group. He is a Director of Great Wall Life Insurance Company Limited, and a Non-Executive Director and Vice Chairman of Bank of Chongqing Co., Ltd. (listed in Hong Kong) in which the Group has a 14.66% equity interest. Mr. Wong is an Associate of The Institute of Bankers (U.K.) and a Founder Member of The Hong Kong Institute of Bankers and The International Retail Banking Council of the U.K.. Mr. Wong has over 35 years of experience in banking. 4

6 EXECUTIVE DIRECTORS AND SENIOR MANAGEMENT S PROFILE B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB EXECUTIVE DIRECTORS (Continued) Mr. Harold Tsu-Hing Wong Vice Chairman Mr. Wong, aged 46, joined the Bank in 2000, and was appointed as an Executive Director in 2005 and a Vice Chairman in March He was appointed as an Executive Director of Dah Sing Banking Group Limited ( DSBG ) in 2004 and promoted as the Managing Director and Chief Executive in April He is also a Vice Chairman of Dah Sing Life Assurance Company Limited, and a Director of Dah Sing Bank (China) Limited and Banco Comercial de Macau, S.A.. Mr. Wong was appointed as a member of The EFAC Financial Infrastructure Sub- Committee, a sub-committee under the Exchange Fund Advisory Committee ( EFAC ) of the Hong Kong Monetary Authority, in October He is a qualified solicitor in England and Wales and in Hong Kong. Mr. Wong is a son of Mr. David Shou-Yeh Wong, the Chairman of the Boards of Dah Sing Financial Holdings Limited and DSBG. Mr. Gary Pak-Ling Wang Managing Director and Chief Executive Mr. Wang, aged 55, joined the Bank as the Group Financial Controller in 1995 and was promoted as a Director in 1997, responsible for the overall financial management and control, operations and IT functions of the Group for a number of years. He was promoted as the Managing Director and Chief Executive of the Bank in May Mr. Wang was appointed as an Executive Director of Dah Sing Banking Group Limited in He is also a Director of Dah Sing Financial Holdings Limited, Banco Comercial de Macau, S.A., Dah Sing Bank (China) Limited and Dah Sing Life Assurance Company Limited. Mr. Wang is a qualified accountant, a Fellow of The Association of Chartered Certified Accountants of the U.K. and a member of the Hong Kong Institute of Certified Public Accountants. Mr. Wang has over 25 years of experience in financial management and banking. DAH SING BANK, LIMITED ANNUAL REPORT

7 EXECUTIVE DIRECTORS AND SENIOR MANAGEMENT S PROFILE DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB D EXECUTIVE DIRECTORS (Continued) Mr. Nicholas John Mayhew Executive Director and Deputy Chief Executive Mr. Mayhew, aged 48, joined the Bank in 1998, and was appointed as an Executive Director in 2007 and as the Deputy Chief Executive in August He is currently an Executive Director of Dah Sing Financial Holdings Limited, Dah Sing Life Assurance Company Limited, Macau Insurance Company Limited, Macau Life Insurance Company Limited and Dah Sing Bank (China) Limited. He serves as Head of Treasury and Corporate Finance of the Bank, responsible for its treasury and corporate finance activities. Mr. Mayhew has over 25 years of experience in financial services both in the U.K. and Hong Kong. Mr. Eddie Shing-Tat Lau Executive Director and Alternate Chief Executive Mr. Lau, aged 53, joined the Bank in 1992, and was appointed as an Executive Director in May 2012 and an Alternate Chief Executive in May He is currently the Head of Commercial Banking Division, responsible for overseeing and supervising commercial banking business. Besides, he is a committee member of SME Standing Committee of The Chinese Manufacturers Association of Hong Kong in and an Executive Committee member of the Federation of Hong Kong Industries Group 18. Mr. Lau has over 25 years of experience in commercial banking. Ms. Phoebe Mei-Chun Wong Executive Director and Alternate Chief Executive Ms. Wong, aged 49, joined the Bank as the Head of Retail Banking business in February 2012, responsible for the development and management of overall retail banking, bancassurance, retail brokerage, wealth management businesses, private banking and vehicle financing. She was appointed as an Executive Director in May 2012 and an Alternate Chief Executive in May Ms. Wong has over 25 years of experience in retail and personal banking business with other banks operating in Hong Kong, including Standard Chartered Bank and CITIC Bank International. 6

8 EXECUTIVE DIRECTORS AND SENIOR MANAGEMENT S PROFILE B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB SENIOR MANAGEMENT Mr. Hau-Tak Li (Gary Li) Alternate Chief Executive, Chief Credit Officer and Head of Group Risk Division Mr. Li, aged 55, joined the Bank in He has been the Chief Credit Officer since September 2009 and assumed the role of Head of Group Risk Division since February He was appointed as an Alternate Chief Executive of the Bank in May Mr. Li graduated from the University of Hong Kong with a Bachelor of Science degree and the Chinese University of Hong Kong with a Master of Business Administration degree. He is a member of the Chartered Professional Accountants of Canada. Mr. Li has over 25 years of experience in banking. Mr. Edmund Yue-Yeung Poon Chief Operating Officer Mr. Poon, aged 56, joined as the Chief Operating Officer of the Bank in July 2013, and is responsible for overseeing operations and IT functions of the Group. He graduated from the University of Waterloo in Canada with a Bachelor Degree of Mathematics and a Master of Mathematics (Computer Science) Degree. Mr. Poon has 30 years of extensive experience in operations, IT and project management mainly covering retail and corporate banking. He has the experience in managing both operations and IT functions of banking in Hong Kong in a senior capacity for many years. Mr. Clement Poon General Manager and Group Financial Controller Mr. Poon, aged 46, joined the Bank in January 2003 as the Head of Financial Accounting Department and was appointed as a General Manager and the Group Financial Controller of the Bank in December He graduated from The Hong Kong Polytechnic University and attained a Degree of Bachelor of Arts in Accountancy. He is a Fellow of The Association of Chartered Certified Accountants of the U.K. and an Associate of the Hong Kong Institute of Certified Public Accountants. Mr. Poon has over 20 years of experience in accounting and financial management in the banking industry. DAH SING BANK, LIMITED ANNUAL REPORT

9 EXECUTIVE DIRECTORS AND SENIOR MANAGEMENT S PROFILE DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB D SENIOR MANAGEMENT (Continued) Ms. Florence Siu-Wai Lee General Manager and Group Head of Human Resources Ms. Lee, aged 51, joined the Bank in 2000 and has been the General Manager and Group Head of Human Resources since 2005, responsible for human resources strategies and management of the Bank. She graduated from the Chinese University of Hong Kong with a Bachelor of Arts degree and obtained from The University of Hull, U.K., a Master degree in Business Administration. Ms. Lee has over 25 years of experience in human resources. Mr. Eddie Yiu-Fai Kong Chief Executive Officer and Director of Banco Comercial de Macau, S.A Mr. Kong, aged 53, joined the Bank and was appointed as the Chief Executive Officer and Director of Banco Comercial de Macau, S.A. (incorporated in Macau) in July Mr. Kong has over 27 years of experience in banking and finance business with other banks in Hong Kong including Daiwa Bank, Standard Chartered Bank, and had focused on corporate and institutional banking business management for the last 12 years in DBS Bank (Hong Kong) Limited before joining the Bank. Mr. Vincent Ho-Wing Yau Chief Executive Officer and Director of Dah Sing Bank (China) Limited Mr. Yau, aged 53, joined the Bank and was appointed as the Alternate Chief Executive Officer and Head of Business Development of Dah Sing Bank (China) Limited ( DSB China ), a key operating subsidiary of the Bank, in September He was appointed as an Executive Director of DSB China in December 2014 and the Chief Executive Officer of DSB China in February Mr. Yau has 29 years of experience in the banking industry in China and Hong Kong, and had assumed various senior executive positions in Standard Chartered Bank before joining the Bank. 8

10 REPORT OF THE DIRECTORS B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB The Directors submit their report together with the audited financial statements for the year ended 31 December PRINCIPAL ACTIVITIES 29 The principal activities of Dah Sing Bank, Limited (the Bank ) are the provision of banking, financial and other related services. The principal activities of the subsidiaries are shown in Note 29 to the financial statements. RESULTS AND APPROPRIATIONS The results of the Bank and its subsidiaries (the Group ) for the year ended 31 December 2015 are set out in the consolidated income statement on page ,600, The Directors declared an interim dividend of HK$1.80 per share, totalling HK$111,600,000.00, which was paid on 22 September ,200, The Directors recommend the payment of a final dividend of HK$6.10 per share, totalling HK$378,200, SHARE CAPITAL 40 Movements in the share capital of the Bank during the year are shown in Note 40 to the financial statements. RESERVES 41 Movements in the reserves of the Group during the year are set out in Note 41 to the financial statements. DONATIONS 2,174, During the year, the Group made charitable and other donations amounting to HK$2,174, FIXED ASSETS 30 Movements in the fixed assets of the Group and of the Bank during the year are shown in Note 30 to the financial statements. DAH SING BANK, LIMITED ANNUAL REPORT

11 REPORT OF THE DIRECTORS DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB D DIRECTORS The Directors of the Bank during the year and up to the date of this report are: David Shou-Yeh Wong Chairman Hon-Hing Wong (Derek Wong) Vice Chairman Harold Tsu-Hing Wong Vice-Chairman * Robert Tsai-To Sze* * Andrew Kwan-Yuen Leung* * Lon Dounn* * Seng-Lee Chan* * Yuen-Tin Ng* Gary Pak-Ling Wang Managing Director and Chief Executive Nicholas John Mayhew Executive Director and Deputy Chief Executive Eddie Shing-Tat Lau Executive Director and Alternate Chief Executive Phoebe Mei-Chun Wong Executive Director and Alternate Chief Executive * * Independent Non-Executive Directors There being no provision in the Bank s Articles of Association for retirement by rotation, all Directors continue in office. 10

12 REPORT OF THE DIRECTORS B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DIRECTORS OF SUBSIDIARIES A list of the names of all the directors who have served on the boards of the subsidiaries of the Bank during the year and up to the date of this Report of the Directors is provided in the Directors of Subsidiaries section which follows this Report of the Directors. DIRECTORS INTERESTS IN SHARE OPTION SCHEMES (9) (i) (ii) Pursuant to the Share Option Schemes (the Schemes ) as approved by the shareholders of Dah Sing Financial Holdings Limited ( DSFH ) and Dah Sing Banking Group Limited ( DSBG ), the Bank s ultimate and immediate holding companies respectively, eligible participants may be granted options at a consideration of HK$1 per option to subscribe for shares of DSFH or DSBG. The exercise price per option share is varied by tranches of grant, which is concluded on the basis no less exacting than the requirement set out in Rule 17.03(9) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the Listing Rules ) being determined as no less than the highest of (i) the closing price of the relevant shares traded on The Stock Exchange of Hong Kong Limited (the SEHK ) on the date of grant; and (ii) the average closing price of the relevant shares traded on the SEHK for the 5 business days immediately preceding the date of grant. For options granted before the commencement of the Companies Ordinance (Cap. 622) on 3 March 2014, the nominal value of the shares in the capital of DSFH and DSBG had been taken into account in determining the exercise price per option share. (The Companies Ordinance (Cap. 622) adopts a mandatory system of no nominal value for all Hong Kong incorporated companies having a share capital and abolishes the concept of nominal value for all shares. With effect from 3 March 2014, the shares of DSFH and DSBG have no nominal value.) The options granted can be exercised in varying amounts between the first and fifth anniversaries from the date of grant in general. The following were arrangements which subsisted at the end of the year or at any time during the year which enabled the Directors of the Bank to acquire benefits by means of the acquisition of shares in its holding companies. DAH SING BANK, LIMITED ANNUAL REPORT

13 REPORT OF THE DIRECTORS DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB D DIRECTORS INTERESTS IN SHARE OPTION SCHEMES (Continued) Directors interests in the Schemes during the year are described below: (a) (a) Dah Sing Financial Holdings Limited Share Option Schemes (the Old DSFH Scheme and the New DSFH Scheme ) The share option scheme of Dah Sing Financial Holdings Limited ( DSFH ), the Bank s ultimate holding company, adopted on 28 April 2005 (the Old DSFH Scheme ) had expired on 28 April On 27 May 2015, the shareholders of DSFH approved the adoption of a new share option scheme (the New DSFH Scheme ). No further options can be offered under the Old DSFH Scheme after its expiration but the provisions of the Old DSFH Scheme remain in full force and effect to the extent necessary to give effect to exercise of all options granted prior to the expiration of the Old DSFH Scheme but not yet exercised at the time of expiration. During the year, Mr. Harold Tsu-Hing Wong, Director of the Bank, had outstanding options granted under the Old DSFH Scheme. During the year, no options were granted to Directors of the Bank under the Old DSFH Scheme (before its expiration) or the New DSFH Scheme (since its commencement) and none of the Directors had acquired shares in DSFH by exercising options granted under the Old DSFH Scheme or the New DSFH Scheme. 12

14 REPORT OF THE DIRECTORS B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DIRECTORS INTERESTS IN SHARE OPTION SCHEMES (Continued) (b) (b) Dah Sing Banking Group Limited Share Option Schemes (the Old DSBG Scheme and the New DSBG Scheme ) The shareholders of Dah Sing Banking Group Limited ( DSBG ), the Bank s immediate holding company, approved the adoption 27 of a new share option scheme (the New DSBG Scheme ) and, at the same time, the termination of the Share Option Scheme adopted by DSBG on 12 June 2004 (the Old DSBG Scheme ) at the annual general meeting of DSBG held on 27 May No further options can be offered under the Old DSBG Scheme after its termination but the provisions of the Old DSBG Scheme remain in full force and effect to the extent necessary to give effect to exercise of all options granted prior to the termination of the Old DSBG Scheme but not yet exercised at the time of termination. During the year, Mr. Harold Tsu-Hing Wong, Mr. Gary Pak-Ling Wang, Mr. Nicholas John Mayhew, Mr. Eddie Shing-Tat Lau and Ms. Phoebe Mei-Chun Wong, Directors of the Bank, had outstanding options granted under the Old DSBG Scheme. During the year, no options were granted to Directors of the Bank under the New DSBG Scheme. Save for Ms. Phoebe Mei- Chun Wong who had acquired shares in DSBG by exercising options granted under the Old DSBG Scheme, no other Directors had acquired shares in DSBG by exercising options granted under the Old DSBG Scheme or the New DSBG Scheme. Apart from the above, at no time during the year was the Bank, its subsidiaries, its fellow subsidiaries or its holding companies a party to any arrangement to enable the Directors of the Bank to acquire benefits by means of the acquisition of shares in, or debentures of, the Bank or any other body corporate. DAH SING BANK, LIMITED ANNUAL REPORT

15 REPORT OF THE DIRECTORS DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB D DIRECTORS SERVICE CONTRACTS The Directors do not have any service contracts with the Bank. DIRECTORS MATERIAL INTERESTS IN TRANSACTIONS, ARRANGEMENTS OR CONTRACTS THAT ARE SIGNIFICANT IN RELATION TO THE BANK S BUSINESS No transactions, arrangements or contracts of significance in relation to the Bank s business to which the Bank, its subsidiaries, its fellow subsidiaries or its holding companies was a party and in which a Director of the Bank or an entity connected with a Director had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year. PERMITTED INDEMNITY PROVISION A permitted indemnity provision (as defined in the Hong Kong Companies Ordinance) for the benefit of the Directors of the Bank is currently in force and was in force throughout the financial year ended 31 December MANAGEMENT CONTRACTS No contracts concerning the management and administration of the whole or any substantial part of the business of the Bank were entered into or existed during the year. CONNECTED TRANSACTIONS Details of transactions with related parties of the Group for the year ended 31 December 2015 have been set out in Note 44 to the financial statements. 14

16 REPORT OF THE DIRECTORS B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB STATEMENT OF COMPLIANCE A In preparing the financial statements for the year ended 31 December 2015, the Bank has fully complied with the requirements set out in the Banking (Disclosure) Rules issued by the Hong Kong Monetary Authority under section 60A of the Hong Kong Banking Ordinance. The Bank has fully complied with such disclosure requirements. AUDITORS The financial statements have been audited by PricewaterhouseCoopers who will retire and, being eligible, offer themselves for re-appointment at the forthcoming Annual General Meeting of the Bank. On behalf of the Board David Shou-Yeh Wong Chairman Hong Kong, 22 March 2016 DAH SING BANK, LIMITED ANNUAL REPORT

17 DIRECTORS OF SUBSIDIARIES DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB D The names of the directors who have served on the boards of the subsidiaries of the Bank during the year ended 31 December 2015 and up to 22 March 2016, being the date of the Report of the Directors of the Bank for the year, are set out below: (in alphabetical order) * * WOOCO NOMINEES LIMITED * * CHAN Sou-Chao (Kenneth CHAN) CHIU Yuk-Fai Alick KONG Yiu-Fai (Eddie KONG) LAU Shing-Tat Eddie LI Hau-Tak (Gary LI) LI Koon-Sing (Patrick LI) * MA Wai-Kin Thomas * Nicholas John MAYHEW NG Yuen-Tin POON Clement POON Wing-Fai Jimmy SZE Tsai-To Robert TSANG Yuk-Fong Elly WANG Pak-Ling Gary WONG Hon-Hing (Derek WONG) WONG Mei-Chun Phoebe WONG Shou-Yeh David WONG Tsu-Hing Harold WOOCO NOMINEES LIMITED * YAU Ho-Wing Vincent YUEN Yat-To (Henry YUEN) ZHANG Fu * * / * Those who have resigned/ceased as a Director of the relevant subsidiary(ies) of the Bank. 16

18 CONSOLIDATED INCOME STATEMENT B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB For the year ended 31 December 2015 Note Interest income 5,053,627 4,932,721 Interest expense (1,716,730) (1,940,224) Net interest income 7 3,336,897 2,992,497 Fee and commission income 1,129,685 1,061,287 Fee and commission expense (220,048) (229,567) Net fee and commission income 8 909, ,720 Net trading income 9 196, ,421 Other operating income 10 61,631 59,586 Operating income 4,504,738 4,098,224 Operating expenses 11 (2,250,608) (2,150,366) Operating profit before impairment losses 2,254,130 1,947,858 Loan impairment losses and other credit provisions 13 (496,352) (472,962) Operating profit before gains and losses on certain investments and fixed assets 1,757,778 1,474,896 Net loss on disposal of other fixed assets (1,434) (2,579) Net gain on fair value adjustment of investment properties 10,268 41,127 Net gain on disposal of investments in securities 14 16,568 17,036 Loss on deemed disposal of investment in an associate 17 (47,617) Share of results of an associate 665, ,299 Share of results of jointly controlled entities 21,945 20,657 Profit before taxation 2,423,450 2,153,436 Taxation 15 (308,530) (226,179) Profit for the year attributable to shareholders of the Bank 2,114,920 1,927,257 Dividends Interim dividend paid ,600 Proposed final dividend , The notes on pages 22 to 190 are an integral part of these consolidated financial statements. DAH SING BANK, LIMITED ANNUAL REPORT

19 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB D For the year ended 31 December Profit for the year 2,114,920 1,927,257 Other comprehensive income for the year Items that will not be reclassified subsequently to the consolidated income statement: Premises Reserves arising from reclassification of premises to investment properties 1,393 36,533 Items that may be reclassified to the consolidated income statement: Investments in securities Fair value gains on available-for-sale securities recognised in equity 57, ,976 Fair value (gain)/loss realised and transferred to income statement upon: Disposal of available-for-sale securities (16,568) (21,692) Disposal of investments in securities included in the loans and receivables category which were previously reclassified from the available-for-sale category 3,756 Deferred income tax on movements in investment revaluation reserve 6,365 (33,934) 47, ,106 Exchange differences arising on translation of the financial statements of foreign entities (209,767) (108,599) Other comprehensive (loss)/income for the year, net of tax (161,315) 135,040 Total comprehensive income for the year, net of tax 1,953,605 2,062, The notes on pages 22 to 190 are an integral part of these consolidated financial statements. 18

20 CONSOLIDATED STATEMENT OF FINANCIAL POSITION B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB As at 31 December 2015 Note ASSETS Cash and balances with banks 19 17,505,032 14,838,111 Placements with banks 7,497,860 5,324,811 Trading securities 20 8,572,394 6,850,362 Financial assets designated at fair value through profit or loss 20 16,498 9,821 Derivative financial instruments 21 1,079, ,829 Advances and other accounts ,415, ,858,861 Available-for-sale securities 23 24,187,845 23,351,747 Held-to-maturity securities 24 10,476,296 10,832,940 Investment in an associate 26 4,099,217 3,746,918 Investments in jointly controlled entities 27 71,119 65,694 Goodwill , ,690 Intangible assets 28 59,805 61,844 Premises and other fixed assets 30 2,871,587 2,728,208 Investment properties , ,166 Deferred income tax assets 37 83,473 80,591 Total assets 196,677, ,063,593 LIABILITIES Deposits from banks 1,550,911 1,572,467 Derivative financial instruments 21 1,458,432 1,146,825 Trading liabilities 33 6,270,630 5,597,614 Deposits from customers ,092, ,234,437 Certificates of deposit issued 35 6,231,837 6,109,777 Subordinated notes 36 5,319,894 5,432,378 Other accounts and accruals 2,608,112 2,645,717 Current income tax liabilities 201, ,392 Deferred income tax liabilities 37 37,543 55,056 Total liabilities 174,770, ,000,663 EQUITY Share capital 40 6,200,000 6,200,000 Other reserves (including retained earnings) 41 15,706,896 13,862,930 Total equity 21,906,896 20,062,930 Total equity and liabilities 196,677, ,063, Approved and authorised for issue by the Board of Directors on 22 March David Shou-Yeh Wong Director Harold Tsu-Hing Wong Director Hon-Hing Wong Director Gary Pak-Ling Wang Managing Director The notes on pages 22 to 190 are an integral part of these consolidated financial statements. DAH SING BANK, LIMITED ANNUAL REPORT

21 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB D For the year ended 31 December 2015 Attributable to the shareholders of the Bank Share Other Retained Total capital reserves earnings equity Balance at 1 January ,200,000 1,362,855 12,500,075 20,062,930 Total comprehensive income for the year (161,315) 2,114,920 1,953,605 Provision for equity-settled share-based compensation 1,961 1, interim dividend (111,600) (111,600) Balance at 31 December ,200,000 1,203,501 14,503,395 21,906, Year ended 31 December Proposed final dividend included in retained earnings 378,200 Attributable to the shareholders of the Bank Share Other Retained Total capital reserves earnings equity Balance at 1 January ,000,000 1,224,061 10,822,818 17,046,879 Total comprehensive income for the year 135,040 1,927,257 2,062,297 Issue of ordinary shares 1,200,000 1,200,000 Provision for equity-settled share-based compensation 3,754 3, final dividend (250,000) (250,000) Balance at 31 December ,200,000 1,362,855 12,500,075 20,062, The notes on pages 22 to 190 are an integral part of these consolidated financial statements. 20

22 CONSOLIDATED STATEMENT OF CASH FLOWS B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB For the year ended 31 December 2015 Note Cash flows from operating activities Net cash from operating activities 42(a) 2,079,708 6,442,760 Cash flows from investing activities Purchase of premises, investment properties and other fixed assets (493,198) (1,242,556) Proceeds from disposal of premises, investment properties and other fixed assets Net cash used in investing activities (493,175) (1,242,378) Cash flows from financing activities Issue of subordinated notes 1,731,250 Interest paid on subordinated notes and debt securities issued (278,573) (246,560) Debt securities redeemed (775,285) Issue of ordinary shares 1,200,000 Dividends paid on ordinary shares (111,600) (250,000) Net cash (used in)/from financing activities (390,173) 1,659,405 Net increase in cash and cash equivalents 1,196,360 6,859,787 Cash and cash equivalents at beginning of the year 16,080,566 9,305,124 Effect of foreign exchange rate changes (127,472) (84,345) Cash and cash equivalents at end of the year 42(b) 17,149,454 16,080, The notes on pages 22 to 190 are an integral part of these consolidated financial statements. DAH SING BANK, LIMITED ANNUAL REPORT

23 DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB D GENERAL INFORMATION Dah Sing Bank, Limited (the Bank ) and its subsidiaries (together the Group ) provide retail banking, commercial banking and related financial services in Hong Kong, Macau, and the People s Republic of China The Bank is a financial institution incorporated in Hong Kong. The address of its registered office is 36th Floor, Dah Sing Financial Centre, 108 Gloucester Road, Wanchai, Hong Kong. The ultimate holding company is Dah Sing Financial Holdings Limited ( DSFH ), a listed company in Hong Kong These consolidated financial statements are presented in thousands of Hong Kong dollars (HK$ 000), unless otherwise stated. These consolidated financial statements have been approved for issue by the Board of Directors on 22 March SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the reporting years presented, unless otherwise stated Basis of preparation The consolidated financial statements of the Group have been prepared in accordance with all applicable Hong Kong Financial Reporting Standards ( HKFRSs is a collective term which includes all applicable individual Hong Kong Financial Reporting Standards, Hong Kong Accounting Standards ( HKASs ) and Interpretations) issued by the Hong Kong Institute of Certified Public Accountants ( HKICPA ), accounting principles generally accepted in Hong Kong and the requirements of the Hong Kong Companies Ordinance. These consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of investment properties, available-for-sale financial assets, financial assets and financial liabilities held for trading, and financial assets and financial liabilities (including derivative instruments) designated at fair value through profit or loss, which are carried at fair value. 22

24 B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.1 Basis of preparation (Continued) The preparation of financial statements in conformity with HKFRSs requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in applying the Group s accounting policies. Changes in assumptions may have a significant impact on the financial statements in the period the assumptions changed. Management believes that the underlying assumptions are appropriate and that the Group s financial statements therefore present the financial position and results fairly. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 4. ( ) 622 (a) New Hong Kong Companies Ordinance (Cap.622) The requirements of Part 9 Accounts and Audit of the new Hong Kong Companies Ordinance (Cap. 622) ( NCO ) come into operation during the financial year, as a result, there are changes to presentation and disclosures of certain information in the consolidated financial statements. ( ) (b) New and amended standards adopted by the Group The following amendments to standards have been adopted by the Group for the first time for the financial year beginning on or after 1 January 2015: Amendments from annual improvements to HKFRSs Cycle, on HKFRS 8, Operating segments, HKAS 16, Property, plant and equipment and HKAS 38, Intangible assets and HKAS 24, Related party disclosures Amendments from annual improvements to HKFRSs Cycle, on HKFRS 3, Business combinations, HKFRS 13, Fair value measurement and HKAS 40, Investment property The adoption of the improvements made in the Cycle has required additional disclosures in the segment note. Other than that, the remaining amendments are not material to the Group. DAH SING BANK, LIMITED ANNUAL REPORT

25 DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB D SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.1 Basis of preparation (Continued) ( ) (c) New standards and interpretations not yet adopted A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2015, and have not been early adopted in preparing these consolidated financial statements. None of these is expected to have a significant effect on the consolidated financial statements of the Group, except for the following standards: (i) (i) HKFRS 9, Financial instruments, addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of HKFRS 9 was issued in July It replaces the guidance in HKAS 39 that relates to the classification and measurement of financial instruments. HKFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortised cost, fair value through other comprehensive income and fair value through profit or loss. The basis of classification depends on the entity s business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss with the irrevocable option at inception to present changes in fair value in other comprehensive income not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in HKAS 39. For financial liabilities there were no changes to classification and measurement except for the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. HKFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the hedged ratio to be the same as the one management actually use for risk management purposes. Contemporaneous documentation is still required but is 39 different to that currently prepared under HKAS 39. The Group has already commenced the assessment of the 2018 full impact and so far has not decided to early adopt the 1 1 standard, which shall be effective for the financial year beginning on 1 January

26 B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.1 Basis of preparation (Continued) ( ) (c) New standards and interpretations not yet adopted (Continued) (ii) (ii) HKFRS 15, Revenue from contracts with customers deals with revenue recognition and establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. Revenue is recognised when a customer obtains control of a good or service and thus has the ability to direct the use and obtain the benefits from the good or service. The standard replaces HKAS 18 Revenue and HKAS 11 Construction contracts and related interpretations. HKFRS 15 is effective for annual periods beginning on or after 1 January 2018 and earlier application is permitted. The Group is assessing the impact of HKFRS Consolidation The consolidated financial statements include the financial statements of the Bank and all its subsidiaries made up to 31 December. (a) Subsidiaries A subsidiary is an entity (including a structured entity) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries are consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. DAH SING BANK, LIMITED ANNUAL REPORT

27 DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB D SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.2 Consolidation (Continued) (a) Subsidiaries (Continued) The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest s proportionate share of the acquiree s net assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value of the Group s share of the identifiable net assets acquired is recorded as goodwill. If the total of consideration transferred, non-controlling interest recognised and previously held interest measured is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income. Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. Impairment testing of the investments in subsidiaries is required upon receiving a dividend from these investments if the dividend exceeds the total comprehensive income of the subsidiary in the period the dividend is declared or if the carrying amount of the investment in the separate financial statements exceeds the carrying amount in the consolidated financial statements of the investee s net assets including goodwill. 26

28 B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.2 Consolidation (Continued) (b) Transactions with non-controlling interests The Group treats transactions with non-controlling interests as transactions with equity holders of the Bank. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss. (c) Associates Associates are all entities over which the Group has significant influence but not control. Investments in associates are accounted for using the equity method of accounting and are initially recognised at cost. The Group s investment in an associate includes goodwill (net of any accumulated impairment loss) identified on acquisition. The Group s share of its associates post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associates. DAH SING BANK, LIMITED ANNUAL REPORT

29 DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB D SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.2 Consolidation (Continued) (c) Associates (Continued) The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount adjacent to share of results of an associate in the income statement. Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group s interest in the associates. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group. Dilution gains and losses in associate are recognised in the income statement. In the Bank s statement of financial position, the investments in associates are stated at cost less provision for impairment losses. The results of associates are accounted for by the Bank on the basis of dividend received and receivable. (d) Jointly controlled entities A joint venture is a contractual arrangement whereby the Group and other parties undertake an economic activity, which is subject to joint control and none of the participating parties has unilateral control over the economic activity. The results and assets and liabilities of jointly controlled entities are accounted for using equity method of accounting. The consolidated income statement includes the Group s share of the results of jointly controlled entities for the year, and the consolidated statement of financial position includes the Group s share of the net assets of the jointly controlled entities. 28

30 B DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB DSB SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) 2.3 Interest income and expense Interest income and expense are recognised in the income statement for all instruments measured at amortised cost, available-for-sale securities and certain financial assets/liabilities designated at fair value through profit or loss using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Group estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts. Once a financial asset or a group of similar financial assets has been written down as a result of an impairment loss, interest income is recognised using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss Fee and commission income and expense Fees and commissions are generally recognised on an accrual basis when the service has been provided. Loan syndication fees are recognised as revenue when the syndication has been completed and the Group retained no part of the loan package for itself or retained a part at the same effective interest rate as the other participants. Wealth management, financial planning and custody services that are continuously provided over an extended period of time are recognised rateably over the period the service is provided Dividend income Dividends are recognised in the income statement when the Group s right to receive payment is established. DAH SING BANK, LIMITED ANNUAL REPORT