ANNOUNCEMENT OF 1998 INTERIM RESULTS

The Directors of Dah Sing Financial Holdings Limited (the "Company") announce that the unaudited profit attributable to shareholders was HK$227.1 million for the six months ended 30th June 1998, down 34.8% from the HK$348.5 million for the same period in 1997.

Unaudited Financial Results

The unaudited financial results of the Company and its subsidiaries (the "Group") are as follows:

Unaudited Consolidated Profit and Loss Account

for the six months to 30th June

Notes:
1. The charge for bad and doubtful debts for the period comprises:

2. Taxation                    

3. The calculation of earnings per share is based on the earnings of HK$227,117,000
    (1997: HK$348,500,000) and the weighted average number of 242,607,742 shares
    (1997: 239,912,650 shares) in issue during the period.
   
    The effect of any dilution to earnings per share is not material.

Other Financial Indicators

Selected Unaudited Consolidated Balance Sheet Items and Ratio

as at 30th June

Additional Unaudited Information on Advances to Customers and Other Accounts

(a) Advances to customers and other accounts:

(b) Gross advances to customers by industry sectors:

(c) Advances on which interest is being placed in suspense or on which interest accrual has ceased:

(d) Overdue advances:

(e) Rescheduled advances (net of those which have been overdue for over three months and reported in Note (d) above):

Interim Dividend

The Directors have declared an interim dividend of HK$0.30 per share for 1998, down 41.2% from that paid in 1997. The dividend will be payable on or after Friday, 25th September 1998 to shareholders on the Register of Shareholders at the close of business on Monday, 31st August 1998.

Closing of Register of Shareholders

The Register of Shareholders will be closed from 25th August 1998 to 31st August 1998, both days inclusive. In order to qualify for the interim dividend, all transfers accompanied by the relevant share certificates must be lodged with the Company's Registrars, Central Registration Hong Kong Limited, 17th Floor, Hopewell Centre, 183 Queen's Road East, Hong Kong for registration not later than 4:00 p.m. on 24th August 1998.

Review of Business

The operating environment in the first half of 1998 was difficult due to the deterioration in domestic economic conditions and the continuation of the Asian financial crisis. With higher interest rates, a decline in property prices, a rise in unemployment, a fall in consumer spending and contraction in bank credit, we experienced a marked business contrast compared to first half 1997. The Group's businesses and performance were negatively affected by the unfavourable market environment.

Operating profit before provisions was 23.7% lower than the first half of 1997 mainly due to the lower revenue contribution from our banking business. Our life assurance business continued its strong performance and revenue growth despite the difficult market.

Net interest income fell 16.0% in the period under review as a result of a contraction in our net interest margin due to the tighter spread between average Prime rate and interbank interest rates, and the higher cost of deposits due to keen deposit competition. Our Banking Group's net interest margin in the first half of 1998 narrowed to 2.82%, down from the 3.54% achieved in the first six months of 1997.

Other operating income was 20.0% higher than that booked in the first six months of 1997. Our life assurance business' performance, valued using the embedded value accounting treatment, generated a profit of HK$52.0 million in the period, up 92.6% from the HK$27.0 million earned in the first half of 1997. Non interest income from the banking business was slightly higher than 1997 same period mainly due to the servicing income earned on the securitised mortgages and fees from our growing credit card business more than offsetting the reduction in other fee and commission income.

Operating expenses increased 10.7% over the same period in 1997. We have undertaken a vigorous streamlining of our operations and support departments in the first half of 1998. The increase in our operating expenses was driven mainly by the need to continue investment in upgrading our information technology and the higher rental cost on some office premises renewed in the fourth quarter of 1997. However, the pace of expense increase has sharply declined.

The Group's charge for bad and doubtful debts was notably higher than the first half of 1997. Specific provision charge was up by more than three times from the relatively low base of HK$15.7 million in the first half of 1997, reflecting the deterioration in economic conditions and asset quality, and the decline in collateral values after the sizeable drop in local property prices. The small amount of general provision charge in the period reflected the modest increase in outstanding loan balance relative to the end of 1997. As at end of June 1998, total delinquent loans and advances overdue by more than 3 months were 0.65% of total advances whilst non-accrual advances were 0.92% of total advances.

Total loans and advances to customers net of provisions increased by 13.2% and 1.6% respectively when compared with the balances at the end of June and December 1997 respectively. Total deposits at the end of June 1998, comprised of customers' deposits and certificates of deposit, were basically the same as the total balances as at mid and the end of 1997. Our loan to deposit ratio as at end of June 1998 rose slightly relative to December end 1997 level to reach 80.4%, but our Banking Group's liquidity ratio was consistently maintained during the period at a level which is well in excess of the 25% statutory minimum.

We are focusing on improving revenue generation, reducing the cost base, controlling asset quality and reducing the loan to deposit ratio. Our management approach will continue to take into account the uncertain operating environment to ensure both consistent service to our customer base and a prudent approach to balance sheet quality.

Year 2000 Problem

The Group has established a group-wide programme to address the Year 2000 Problem. This programme commenced in early 1997, and covers all systems critical to our businesses. In line with Hong Kong Monetary Authority directives, we have set a target date of 31st December 1998 for achieving Year 2000 compliance and currently expect to achieve this target. The programme remains in line with its original plan.

A full statement on this subject will be included in our interim report to shareholders.

Board of Directors

On 3rd August 1998, Mr Tatsuo Maruyama, with Mr. Yoshiki Kiyono as his alternate, succeeded Mr. Hiroshi Ueno as the Vice Chairman and non-executive Director of the Company, and Mr. Maruyama's alternate directorship to Mr. Ueno will automatically cease on the same day.

Dealings in Company's Shares

There was no purchase, sale or redemption by the Company, or any of its subsidiaries, of the Company's listed shares during the period ended 30th June 1998.

Hong Kong, 3rd August 1998