Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q2 2019 Earnings Presentation
38 slides from Oversea-chinese Banking's earnings presentation, Aug 2, 2019
Slide 1: Second Quarter 2019 Results Presentation
Second Quarter 2019 Results Presentation 2 August 2019 Disclaimer: This presentation should be read as an overview of OCBC’s current business activities and operating environment which may contain statements relating to OCBC’s growth strategy and future business aspirations. These statements involve
Slide 2: Agenda
Agenda Results Overview 2Q19 & 1H19 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - Bank OCBC NISP Note: - Certain comparative figures have been restated to conform with the current period’s presentation. - Amounts less
Slide 3: 2Q19 Highlights
Group performance 2Q19 Highlights Net profit rose 1% YoY to S$1.22b, driven by record earnings from the Group’s banking franchise Interim dividend per share increased 25% or 5 cents YoY to 25 cents Sustainable Earnings Key Highlights Total income Net interest margin ➢ Profit from banking operations
Slide 4: 2Q19 Group Performance
Group performance 2Q19 Group Performance Net profit grew 1% YoY to S$1.22b 2Q19 2Q18 YoY 1Q19 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,588 1,450 10 1,534 4 Non-interest income 1,030 1,024 1 1,142 (10) Total income 2,618 2,474 6 2,676 (2) Operating expenses (1,151) (1,035) 11 (1
Slide 5: 2Q19 Banking Operations Performance
Banking Ops performance 2Q19 Banking Operations Performance Net profit from Banking Operations rose 7% YoY and 15% QoQ to a new high of S$1.09b 2Q19 2Q18 YoY 1Q19 QoQ Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,560 1,430 9 1,510 3 Non-interest income 788 732 8 699 13 Total inc
Slide 6: 1H19 Group Performance
Group performance 1H19 Group Performance Net profit grew 6% YoY to a record S$2.45b 1H19 1H18 YoY OCBC Group S$m S$m +/(-)% Net interest income 3,122 2,865 9 Non-interest income 2,172 1,942 12 Total income 5,294 4,807 10 Operating expenses (2,246) (2,067) 9 Operating profit 3,048 2,740 11 Associates
Slide 7: 1H19 Banking Operations Performance
Banking Ops performance 1H19 Banking Operations Performance Banking Operations’ net profit was up 1% YoY at S$2.03b 1H19 1H18 YoY Banking Operations S$m S$m +/(-)% Net interest income 3,070 2,827 9 Non-interest income 1,487 1,435 4 Total income 4,557 4,262 7 Operating expenses (2,090) (1,976) 6 Oper
Slide 8: Agenda
Agenda Results Overview 2Q19 & 1H19 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - Bank OCBC NISP 8
Slide 9: Performance by business and geography
Earnings Performance by business and geography Earnings well-diversified across key business segments and geographies 1H19 Operating Profit 1H19 Profit before Tax by Business1/ by Geography OCBC Wing Hang Others Global 8% Corporate / Greater 6% 1H19 Investment 1H19 China Insurance Banking 19% 5% 19%
Slide 10: Net interest income
Net interest income Net interest income 2Q19 net interest income grew 10% YoY; NIM rose 12bps YoY and 3bps QoQ to 1.79%, driven by higher asset yields 1.78% 1.79% 1.76% Net interest 1.72% 1.72% margin 1.67% 1.67% 1.67% (“NIM”) 3,122 1,588 1,505 1,520 1,534 2,865 1,450 1,415 Net interest income (S$m)
Slide 11: Non-interest income
Non-interest income Non-interest income 2Q19 non-interest income up 1% YoY, largely led by higher fees and commissions and gains from sale of investment securities Non- 42.7% interest 40.4% 41.0% 41.4% 40.8% 39.3% 39.3% income / 35.3% Total income 2,172 1,142 1,942 1,024 1,039 1,030 464 918 276 225
Slide 12: Wealth Management (“WM”) Franchise
Wealth management Wealth Management (“WM”) Franchise 1H19 WM income up 12% at S$1.67b; BOS’ AUM grew 9% YoY and 3% QoQ to US$111b 31% 32% 31% 31% 34% As % of Group income 29% 26% 29% 1,672 1,488 921 727 761 748 751 Wealth management income1/ (S$m) 607 1H18 1H19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 US$b Ban
Slide 13: Net Fees & Commissions
Non-interest income Net Fees & Commissions 2Q19 net fee income rose 5% QoQ to S$522m, driven by a rise in wealth management fees 1,054 1,017 153 536 522 151 518 502 495 53 74 474 52 79 78 22 78 73 79 27 Others 2/ Net fees and 270 31 19 25 commissions 272 23 130 Investment Banking (S$m) 3/ 140 137 14
Slide 14: Operating expenses
Operating expenses Operating expenses 2Q19 expenses up 5% QoQ mainly from a rise in staff costs associated with annual salary increments, higher headcount and sales-related variable compensation 44.2% 45.9% 44.0% 43.0% 42.4% 41.9% 42.0% 40.9% Cost-to- income ratio (“CIR”) 1,151 2,246 1,069 1,078 1,0
Slide 15: Total cumulative allowances
Allowances Total cumulative allowances 3,067 3,046 2,800 2,798 2,769 2,695 674 675 Regulatory Loss 453 474 Allowance Reserve 353 534 (“RLAR”) Total Allowances for cumulative 1,034 1,049 1,130 1,115 1,055 1,014 non-impaired allowances assets (S$m) Allowances for impaired assets 1,212 1,232 1,269 1,22
Slide 16: Allowances
Allowances Allowances Total allowances for 2Q19 decreased 56% QoQ to S$111m; credit costs lower at 15bps +412% YoY +976% YoY -56% QoQ 360 Allowances for 249 loans and other 205 assets (S$m) 111 49 33 12 21 1H18 1H19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Allowances for loans and other assets (S$m) Allowances
Slide 17: Customer loans
Loans Customer loans Loans grew 4% YoY and 2% QoQ to S$263b In constant ccy terms +4% YoY +5% YoY +2% QoQ +2% QoQ 258 259 263 252 257 247 Rest of the world 35 36 38 41 YoY: +22% 32 33 QoQ: +6% Greater China Customer 65 66 64 63 64 YoY: -3% loans (S$b) 63 QoQ: +1% 20 20 20 20 20 Indonesia 19 YoY: +1%
Slide 18: Customer loans
Loans Customer loans Loan portfolio remained well-diversified Customer Loans by Geography Customer Loans by Industry Rest of the 1/ World Others Other Asia 9% Housing loans Pacific Jun 19 14% Jun 19 6% Singapore 9% Manufacturing 24% Mar 19 14% Mar 19 6% 7% 42% 7% 25% S$263b 42% Greater 24% 24% Gener
Slide 19: Greater China Customer Loans
Greater China Greater China Customer Loans Loans decreased YoY but rose 1% QoQ to S$64b 0.6% NPL ratio 0.4% 0.3% 0.3% 0.4% 0.4% 65 66 64 63 63 64 4 4 4 4 4 4 2 3 2 3 2 2 Macau 32 33 32 33 33 34 Taiwan Customer Hong Kong loans to Greater China (S$b) Offshore 2/ China 1/ 20 21 22 20 19 19 5 6 5 5 5 5
Slide 20: Asset quality
Asset quality Asset quality Portfolio quality remained sound; NPL ratio unchanged QoQ at 1.5% 1.5% 1.5% 1.5% 1.4% 1.4% 1.4% NPL ratio 3,938 3,920 3,914 3,594 100 47 54 3,452 3,514 Debt securities / 43 61 700 653 631 Contingent liabilities 47 626 1/ Rest of the 684 773 282 World NPLs 261 351 199 Grea
Slide 21: NPL Ratio & Non-Performing Assets
Asset quality NPL Ratio & Non-Performing Assets NPL ratio stable against the previous quarter at 1.5% NPL ratio NPAs 1.49% 1.50% 1.47% 1.38% 1.38% 2Q19 2Q18 1Q19 S$m S$m S$m 0.87% 0.86% 0.84% Opening balance 3,920 3,452 3,938 0.86% 0.84% New NPAs 390 277 298 Net recoveries/ (248) (144) (223) upgrade
Slide 22: Customer deposits
Deposits Customer deposits Customer deposits rose 2% YoY to S$297b, boosted by higher CASA deposits 88.5% 87.1% 87.6% 85.9% 86.4% 84.4% Group LDR 289 290 295 294 297 287 27 27 25 23 29 23 132 131 131 Others 124 125 128 Customer deposits Fixed Deposits (S$b) 47.1% 47.7% 47.5% 46.8% 47.9% 46.4% CASA r
Slide 23: Funding & Liquidity
Funding Funding & Liquidity Customer deposits accounted for 78% of total funding; All-currency LCR and NSFR well above regulatory guidelines Funding Composition as of 30 Jun 2019 Wholesale Funding by Currency as of 30 Jun 2019 By Maturity: Customer deposits Current account Others & savings deposits
Slide 24: Capital
Capital Capital CET1 CAR rose YoY and QoQ to 14.4% Capital adequacy ratios (“CAR”) (%) 16.4 16.7 16.8 15.8 15.9 16.1 14.8 14.9 15.1 14.2 14.3 14.4 Total CAR Tier 1 CAR Common Equity 14.0 14.2 14.4 13.1 13.2 13.6 Tier 1 (“CET1”) CAR Mar 18 Jun 18 Sep 18 Dec 18 Mar 19 Jun 19 RWA (S$m) 198,817 200,786
Slide 25: Dividends
Dividends Dividends Interim dividend increased 25% from a year ago to 25 cents per share 43% 44% 39% 38% 40% Dividend payout ratio 37% 43.0 36.0 36.0 36.0 37.0 23.0 DPS (cents) 18.0 18.0 18.0 19.0 Final dividend Interim dividend 25.0 18.0 18.0 18.0 18.0 20.0 2014 2015 2016 2017 2018 1H19 25
Slide 26: Agenda
Agenda Results Overview 2Q19 & 1H19 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - Bank OCBC NISP 26
Slide 27: Great Eastern Holdings’ performance
Great Eastern Great Eastern Holdings’ performance 1H19 net profit contribution rose 33% YoY to S$426m YoY YoY QoQ S$m 1H19 1H18 2Q19 2Q18 1Q19 +/(-)% +/(-)% +/(-)% Profit from insurance business 395 373 6 155 201 (23) 240 (36) - Operating profit 1/ 312 320 (2) 162 157 3 150 8 - Non-operating profit
Slide 28: GEH: Profit from insurance business
Great Eastern GEH: Profit from insurance business 1H19 profit from insurance business up 10% YoY at S$360m +10% YoY -21% YoY 360 326 225 49 7 183 172 165 75 154 11 136 Profit from 15 21 insurance business (net of tax) 320 312 Non-operating (S$m) profit/(loss) 2/ 163 157 172 162 144 150 Operating pro
Slide 29: GEH: Profit from Shareholders’ Fund
Great Eastern GEH: Profit from Shareholders’ Fund 2Q19 Shareholders’ Fund profit at S$38m, below the previous quarter which saw better investment performance 186 Profit from Shareholders’ 148 Fund (S$m) 81 79 66 38 2 (55) 1H18 1H19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 29
Slide 30: GEH: Total weighted new sales
Great Eastern GEH: Total weighted new sales 2Q19 TWNS at S$300m -3% YoY -9% YoY 566 549 +20% QoQ 12 13 350 331 4 331 170 5 7 300 211 90 7 TWNS 95 249 Emerging markets (S$m) 235 122 7 6 118 Malaysia 75 92 Singapore 384 256 325 230 202 175 154 150 1H18 1H19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Note: - For co
Slide 31: GEH: New business embedded value
Great Eastern GEH: New business embedded value NBEV margin rose to 49.3% in 2Q19, driven by increase in regular premium sales; QoQ increase in NBEV in line with higher TWNS 49.3% NBEV 45.5% 46.1% 46.4% 44.9% 46.1% margin 42.3% (NBEV / Total 35.9% weighted new sales) unchanged YoY +40% QoQ 258 253 4
Slide 32: OCBC Wing Hang Hong Kong & Macau’s performance
OCBC Wing Hang OCBC Wing Hang Hong Kong & Macau’s performance 2Q19 net profit rose 12% QoQ and 8% YoY to HKD599m YoY YoY QoQ HKD m 1H19 1H18 2Q19 2Q18 1Q19 +/(-)% +/(-)% +/(-)% Net interest income 1,892 1,766 7 982 881 11 910 8 Non-interest income 530 535 (1) 274 263 4 256 7 Total income 2,422 2,301
Slide 33: OCBC Wing Hang Hong Kong & Macau: Loans & Deposits
OCBC Wing Hang OCBC Wing Hang Hong Kong & Macau: Loans & Deposits Loans and deposits rose 1% and 5% YoY to HKD162b and HKD193b respectively; CASA ratio improved to 43.1%; NPL ratio fell QoQ to 0.3% Gross Loans (HKD b) Deposits (HKD b) NPL ratio Loans / Deposits 1/ 0.4% 0.3% 0.3% 0.4% 0.3% 74.6% 75.9
Slide 34: OCBC Malaysia’s performance
OCBC Malaysia OCBC Malaysia’s performance 2Q19 net profit rose 18% YoY and 43% QoQ to RM244m YoY YoY QoQ RM m 1H19 1H18 2Q19 2Q18 1Q19 +/(-)% +/(-)% +/(-)% Net interest income 756 734 3 376 375 – 380 (1) Islamic banking income 1/ 222 221 – 114 116 (2) 108 6 Non-interest / finance income 334 288 16 1
Slide 35: OCBC Malaysia: Loans & Deposits
OCBC Malaysia OCBC Malaysia: Loans & Deposits Gross loans rose 3% YoY to RM71b while NPL ratio fell to 1.8%; Deposits up 7% YoY to RM78b and CASA ratio improved to 34.4% Gross Loans (RM b) Deposits (RM b) NPL ratio Loans / Deposits 2.2% 93.3% 94.1% 92.1% 2.0% 1.9% 1.9% 88.9% 90.3% 90.5% 1.8% 1.8% 71
Slide 36: Bank OCBC NISP’s performance
Bank OCBC NISP Bank OCBC NISP’s performance 2Q19 net profit rose 15% YoY to a record IDR771b YoY YoY QoQ IDR b 1H19 1H18 2Q19 2Q18 1Q19 +/(-)% +/(-)% +/(-)% Net interest income 3,210 3,147 2 1,669 1,596 5 1,541 8 Non-interest income 955 580 65 499 194 157 456 10 Total income 4,165 3,727 12 2,168 1,7
Slide 37: Bank OCBC NISP: Loans & Deposits
Bank OCBC NISP Bank OCBC NISP: Loans & Deposits Loans and deposits grew 2% and 8% YoY respectively; CASA ratio at 37.6%; NPL ratio stable at 1.8% Gross Loans (IDR t) Deposits (IDR t) NPL ratio Loans / Deposits 100.9% 1.8% 1.8% 1.7% 1.8% 1.8% 96.7% 93.5% 1.7% 91.1% 89.7% 91.1% 120 118 119 131 130 117
Slide 38: Second Quarter 2019 Results Thank You
Second Quarter 2019 Results Thank You
Oversea-Chinese Banking — Q2 2019 Earnings Presentation on 6ix