ANNOUNCEMENT OF 1997 FINAL RESULTS

The Directors of Dah Sing Financial Holdings Limited (the "Company") announce that the audited results of the Company and its subsidiaries (the "Group") for the year ended 31st December 1997 are as follows:

Consolidated Profit and Loss Account

for the year ended 31st December

Notes:

Other Financial Indicators
Consolidated Balance Sheet

as at 31st December

Financial Ratios

Banking Group (Note)

Note:

Banking Group comprises Dah Sing Bank, Limited, Dah Sing Finance Limited, D.A.H. Private Bank Limited (formerly The Wing On Bank Limited), The Wing On Finance Company Limited and Jian Sing Bank Limited.

Final Dividend

At the forthcoming annual general meeting of the Company to be held on Monday, 27th April 1998, the Directors will propose a final dividend of HK$0.62 per share, making a total dividend per share of HK$1.13 for the year. This is 9.7% higher than the total dividend per share for 1996 if the special dividend of HK$0.10 per share to mark the 50th anniversary of Dah Sing Bank, Limited ("DSB") is excluded from the 1996 total dividend.

Shareholders whose names are on the Register of Shareholders at the close of business on Wednesday, 8th April 1998 will be entitled to the proposed final dividend. Dividend warrants will be sent to shareholders by mail on or about Tuesday, 28th April 1998.

Review of Business

The operating environment in 1997 was volatile, with the first half registering strong economic growth and keen competition in the banking sector leading to strong loan growth and a squeeze in loan margins. The second half, especially since October 1997, was difficult with much higher and volatile interbank interest rates, rapid decline in stock market and property prices, and a slowdown in economic activity triggered by the regional financial turmoil and negative sentiment on the HK$ pegged exchange rate. Although prime rate was raised 3/4% in October, higher interbank interest rates resulted in a significant contraction in the spread between prime and interbank interest rates for the final quarter of the year.

Against that background, the Group achieved a solid overall business performance, with growth in both our banking and life assurance businesses resulting in operating profit up by 3.8% over 1996. Operating income rose by 6.5% although net interest income was flat compared to 1996 by reason of higher interest rates and a contraction in net interest margin, with a 15.3% increase in interest income offset by interest expense growth of 25.8%. The Group made effective use of interest rate swaps to hedge our fixed-rate loans which represent 23.6% of our loan book. Nevertheless the significant increase in interest rates in the second half of 1997 led to a lower net interest margin of 3.26% for full year 1997, down from the 3.76% in 1996.

Other operating income was up 33.3%, and it was encouraging to see the banking and life assurance businesses achieve excellent growth in fee and non-interest income as a result of higher business volumes and increased customer base. Included in other operating income is our life assurance's net profit which is the increase in the value of the business to the shareholders of the Company based on actual operating results and the rise in the aggregate present value of life policies in force in the year as calculated by an independent professional actuary using the "embedded value" accounting method.

Operating expenses increased 16.1% over 1996 due to higher staff expenses, spending in corporate and product advertising to increase our marketing effectiveness and to celebrate the 50th year anniversary of DSB, spend on information technology to improve long-term efficiency and service enhancement all contributing to this growth. The rapidity of the decline in business sentiment in the last quarter has focused the Group's attention on managing the cost line in 1998 to reflect current market conditions.

The Group's overall charge for bad and doubtful debts was lower than 1996. While the general provision charge reflected the growth in loans and advances, DSB's US$300 million mortgage backed securitisation closed in mid 1997 contributed to reduce such charge as the general provision associated with the securitised mortgages was written back. Specific provisions, however, were higher with a larger loan portfolio, but overall the quality of our loan book remained resilient after a thorough review, with the ratio of non performing loans to total loans being 0.2% at the end of 1997.

Total loans and deposits as at end of the year were up by 19.2% and 5.4% respectively. Growth was accomplished in all major loan products, both retail and commercial. In June 1997, DSB closed a US$300 million mortgage backed securitisation which was the largest cross-currency mortgage securitisation ever done in Asia (excluding Japan). The issue was rated at triple A by both Standard & Poor's and Moody's due to the credit enhancement provided by external financial guarantors. The issue was very well received by the international capital market. New certificates of deposit issued in 1997 amounted to HK$2.8 billion. These transactions, both on and off balance sheet, worked to strengthen the Group's medium term funding, improve our asset and liability maturity mismatch, and reduce the need to bid aggressively for customer deposits.

Due to the stronger loan growth achieved, the loan to deposit ratio increased to 79% at the end of 1997. One of our priorities for 1998 will be to manage this ratio closer to 75%. Liquidity was well maintained throughout the year and the Banking Group's average liquidity ratio for December 1997 was 46.5%.

D.A.H. Private Bank Limited, the joint-venture private bank 51% owned by the Company and 24.5% each by Abbey National plc and Hambros Bank Limited, commenced business in September 1997 to offer private banking services to clients in Hong Kong and the Asian region, and we anticipate encouraging growth in this niche business during 1998.

Our life assurance business achieved satisfactory results in a competitive market and annualised premiums from new policies increased by 48% over 1996 as a result of sales made by both agents and branch staff of DSB. A conservative investment approach was adopted in 1997 so that the long-term assets of our life assurance company were not significantly affected by the higher interest rates and lower stock market values in the second half of 1997.

On 31st January, 1997, the Company placed and issued 12.0 million new shares, representing approximately 5% of the enlarged share capital of the Company, to Abbey National plc which is one of the largest banks in the United Kingdom. The new equity capital raised through this placing was approximately HK$381 million and this sum was injected into the banking and life assurance businesses to increase their capital bases to support business growth. Abbey National plc is a valued strategic shareholder with its expertise in banking and life assurance, and we appreciate their Board involvement, together with The Mitsui Trust & Banking Company.

Prospects For 1998

The key determinants for financial performance in 1998 will be a return to stability in Hong Kong's interbank interest rates, the maintenance of sound loan asset quality and tight management of the expense base. Given the uncertain market conditions for the past few months it is difficult to be precise in forecasting at this juncture, although we remain confident that, barring unforeseen circumstances, the prospects for our increasingly diversified financial services businesses are sound in the long term.

Closing of Register of Shareholders

The Register of Shareholders will be closed from Thursday, 9th April 1998 to Friday, 17th April 1998, both days inclusive. In order to qualify for the final 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 Wednesday, 8th April 1998.

Dealings in the 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 year ended 31st December 1997.

Hong Kong, Thursday, 5th March 1998