Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q3 2010 Earnings Presentation
38 slides from Oversea-chinese Banking's earnings presentation, Nov 1, 2010
Slide 1: Third Quarter 2010 Results Presentation
Third Quarter 2010 Results Presentation 1 November 2010
Slide 2: Agenda
Agenda Results Overview Performance Trends Malaysia and Indonesia Subsidiaries In Summary 2
Slide 3: Third quarter net profit up 27% YoY and 13% QoQ
Results Overview Third quarter net profit up 27% YoY and 13% QoQ 3Q10 3Q09 YoY 2Q10 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 754 689 10 720 5 Non-Interest Income 1/ 621 392 59 516 20 Total Income 1,375 1,081 27 1,236 11 Operating Expenses (573) (467) 23 (559) 3 Operating Profit 802 614 31 6
Slide 4: Nine months net profit up 20%
Results Overview Nine months net profit up 20% 9M10 9M09 YoY S$m S$m +/(-)% Net Interest Income 2,178 2,138 2 Non-Interest Income 1/ 1,818 1,493 22 Total Income 3,996 3,631 10 Operating Expenses (1,634) (1,330) 23 Operating Profit 2,362 2,301 3 Amortisation of Intangibles (39) (35) 12 Allowances (86
Slide 5: Key financial ratios
Results Overview Key financial ratios 9M10 9M09 3Q10 2Q10 3Q09 % % % % % Net Interest Margin (annualised) 1.99 2.29 1.98 1.96 2.16 Non-Interest Income / Total Income 45.5 41.1 45.1 41.8 36.3 Cost-to-Income Ratio 40.9 36.6 41.7 45.2 43.2 Loans-to-Deposits Ratio 86.5 79.7 86.5 83.7 79.7 NPL Ratio 1.1
Slide 6: ROE for nine months improved to 12.7%
Results Overview ROE for nine months improved to 12.7% ROE 14.9% 15.3% 12.2% 12.7% 12.0% 11.6% 12.0% 10.8% 10.9% 9.9% 1,962 676 1,749 1,749 570 263 545 502 503 466 450 Net profit (S$m) 1,486 2008 2009 9M10 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 Divestment Gains/Tax Refunds ROE, excluding divestment gain
Slide 7: Earnings contribution by segments
Results Overview Earnings contribution by segments 9M10 PBT 9M10 PBT By Business Segment By Geography Global Consumer Asia Pacific Others Financial Other Services ASEAN 5% 3% 15% 15% Malaysia 25% Insurance 18% 35% Global Corporate 67% Singapore Banking Global Treasury 17% Note: Pretax profit before
Slide 8: GEH’s third quarter contribution up strongly QoQ as investment performance recovered
Results Overview GEH’s third quarter contribution up strongly QoQ as investment performance recovered 3Q10 3Q09^ YoY 2Q10 QoQ S$m S$m +/(-)% S$m +/(-)% Total Income 234 57 308 132 77 Operating Expenses (36) (36) - (35) 4 Operating Profit 198 21 842 96 104 Amortisation of Intangibles (12) (12) - (11)
Slide 9: GEH’s nine months contribution up 16%, accounting for 19% of Group net profit
Results Overview GEH’s nine months contribution up 16%, accounting for 19% of Group net profit 9M10 9M09* YoY S$m S$m +/(-)% Total Income 613 568 8 Operating Expenses (114) (111) 3 Operating Profit 499 457 9 Amortisation of Intangibles (35) (35) - Allowances (4) (6) (33) Associates & JVs (5) (3) 61
Slide 10: Results excluding GEH – third quarter net profit up 1% YoY
Results Overview Results excluding GEH – third quarter net profit up 1% YoY 3Q10 3Q09 YoY 2Q10 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 735 674 9 703 5 Non-Interest Income 406 350 16 401 1 Total Income 1,141 1,024 12 1,104 3 Operating Expenses (537) (431) 25 (524) 3 Operating Profit 604 593
Slide 11: Results excluding GEH – nine months net profit up 21%
Results Overview Results excluding GEH – nine months net profit up 21% 9M10 9M09 YoY S$m S$m +/(-)% Net Interest Income 2,124 2,093 1 Non-Interest Income 1,259 970 30 Total Income 3,383 3,063 10 Operating Expenses (1,520) (1,219) 25 Operating Profit 1,863 1,844 1 Amortisation of Intangibles (4) 0 -
Slide 12: Net interest income supported by robust loan growth, interest margin stable QoQ
Performance Trends Net interest income supported by robust loan growth, interest margin stable QoQ 2.42% 2.27% 2.23% 2.29% Net 2.16% interest 2.08% margin 1.99% 2.03% 1.96% 1.98% 2,783 2,825 754 740 720 710 704 689 687 2,178 Net interest income (S$m) 2008 2009 9M10 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10
Slide 13: Net interest income adjusted for allowances shows steady uptrend; adjusted NIM stable
Performance Trends Net interest income adjusted for allowances shows steady uptrend; adjusted NIM stable 1.95% 2.01% 1.90% 1.89% 1.91% 1.94% 1.90% 1.86% 1.88% Adjusted 1.75% net interest margin* 2,396 702 711 2,336 679 2,092 637 606 610 543 Adjusted net interest income* (S$m) 2008 2009 9M10 1Q09 2Q0
Slide 14: Non-interest income grew 20% QoQ and 22% in 9M10
Performance Trends Non-interest income grew 20% QoQ and 22% in 9M10 49.2% 45.5% 45.1% 45.1% 41.3% 41.0% 42.0% 41.8% 34.4% 36.3% 1,990 681 1,818 607 621 1,644 624 155 497 273 516 170 186 601 494 275 158 143 392 152 Non-interest 636 191 income 409 479 297* 174 182 106 (S$m) 157 153 29^ 774 730 738 252
Slide 15: Fee income for nine months exceeded full year 2009
Performance Trends Fee income for nine months exceeded full year 2009, driven by wealth management, loan and trade activities and investment banking 774 730 738 260 252 129 37 126 115 226 39 51 26 54 68 194 192 39 26 189 30 35 16 Fee and 31 155 commission 309 22 9 11 income 298 30 97 106 319 (S$m) 1
Slide 16: Other non-interest income up 8% QoQ
Performance Trends Other non-interest income up 8% QoQ 624 273 601 10 87 42 155* 174 157 170 278 43 14 152 158 Other non- 344 143 15 interest 15 17 income 275 15 39 (S$m) 94 82 66 61 78 112 43 165 58 67 54 26 23 44 36 35 140 135 116 36 44 39 48 30 24 29 2008 2009 9M10 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3
Slide 17: GEH: Total weighted new sales up 12% YoY in 3Q10 and 19% in 9M10
Performance Trends GEH: Total weighted new sales up 12% YoY in 3Q10 and 19% in 9M10 749 189 192 601 248 172 165 491 48 83 134 72 258 128 112 81 Total 199 46 weighted 68 new sales 59 (S$m) 492 119 330 103 106 260 81 73 51 57 2008 2009 9M10 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 Singapore Malaysia Other A
Slide 18: GEH: New business embedded value up 29% YoY in 3Q10 and 31% in 9M10
Performance Trends GEH: New business embedded value up 29% YoY in 3Q10 and 31% in 9M10 43% New business 42% 42% 42% 41% 40% embedded 39% value/Total 38% weighted new 35% 35% sales 264 78 78 235 69 205 60 109 58 54 34 34 New business 104 embedded 43 23 35 value 91 23 (S$m) 25 21 153 43 128 40 105 36
Slide 19: Operating expenses up 23% in 9M10
Performance Trends Operating expenses up 23% in 9M10, driven by renewed investments in regional expansion, consolidation of Bank of Singapore and higher business volumes 45.2% 43.7% 43.2% Cost-to-income 41.7% Ratio 40.9% 39.4% 37.3% 37.4% 36.2% 573 1,854 30.7% 559 1,796 Operating 502 1,634 expenses
Slide 20: Third quarter operating profit up 18% QoQ
Performance Trends Third quarter operating profit up 18% QoQ Operating profit before allowances (S$m) 3,019 934* 883 2,573 802 186 2,362 754 718 677 614^ 2,387 2008 2009 9M10 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 Divestment gains * Includes S$201m non-recurring gains from GEH ^ Includes GLC loss of S$2
Slide 21: Sustained low net allowances as credit quality remains stable
Performance Trends Sustained low net allowances as credit quality remains stable 447 Net allowances 429 for loans and other assets (S$m) 197 104 86 77 52 43 25 18 2008 2009 9M10 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 21
Slide 22: Breakdown of allowances
Performance Trends Breakdown of allowances 9M10 9M09 3Q10 2Q10 3Q09 S$m S$m S$m S$m S$m Specific allowances for loans 32 181 16 11 49 Portfolio allowances for loans 64 12 29 5 5 Allowances for CDOs (Write-back) (8) 86 (#) (1) (6) Allowances for other assets (Write-back) (2) 74 (2) 3 4 Total net allo
Slide 23: Movement in specific allowances for loans
Performance Trends Movement in specific allowances for loans 9M10 9M09 3Q10 2Q10 3Q09 S$m $m S$m S$m S$m Allowances for new and existing NPLs 200 360 77 55 118 Write-backs 1/ (136) (144) (49) (32) (51) Recoveries 2/ (32) (36) (11) (12) (17) Net Specific Allowances 32 181 16 11 49 1/ Write-backs of s
Slide 24: Broad-based loan growth of 29% YoY and 7% QoQ
Performance Trends Broad-based loan growth of 29% YoY (23% excluding Bank of Singapore) and 7% QoQ Non-bank loans (S$bn) 101.8 95.5 90.4 27.6 80.4 82.3 79.2 78.7 25.8 23.5 18.0 18.5 17.5 17.5 16.8 16.6 16.2 14.7 14.7 15.3 14.5 57.4 50.7 53.1 47.7 47.0 46.7 48.5 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun
Slide 25: Diversified loan book
Performance Trends Diversified loan book Customer Loans by Geography* Customer Loans by Sector As at 30 September 2010 As at 30 September 2010 Agriculture, mining & Transport, quarrying storage & Others Comm Others 11% 2% 6% 6% Building & Greater Construction China 11% 17% Housing Loans Indonesia 5%
Slide 26: Customer deposits grew 20% YoY and 3% QoQ
Performance Trends Customer deposits grew 20% YoY and 3% QoQ, led by current account and savings deposits 85.3% 86.5% 81.9% 83.7% Loans-to- 80.3% 79.7% 80.4% 85.0% deposits 75.0% 116.0 112.3 108.5 65.0% 100.6 96.6 96.9 92.4 28.5 23.6 26.6 55.0% 17.4 20.8 18.4 16.1 45.0% 22.7 23.8 24.7 17.7 19.6 20.9
Slide 27: NPL ratio continued to decline
Performance Trends NPL ratio continued to decline 2.0% 1.8% 1.8% NPL ratio 1.7% 1.5% 1.3% 1.1% 1,785 1,633 202 1,583 210 1,448 1,402 181 64 1,316 467 83 56 1,170 479 395 386 323 292 55 253 NPAs* 568 (S$m) 521 560 582 562 567 494 548 447 423 416 434 401 368 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 S
Slide 28: 56% of NPAs in “substandard” category
Performance Trends 56% of NPAs in “substandard” category – typically well-collateralised or no overdues 2.0% NPL ratio 1.8% 1.8% 1.7% 1.5% 1.3% 1.1% 1,785 1,633 1,583 238 283 1,448 1,402 234 1,316 241 250 676 1,170 261 NPAs 610 224 714 451 (S$m) 500 414 292 871 636 739 756 652 641 654 Mar-09 Jun-09
Slide 29: Inflow of new NPAs remained low, offset by recoveries and upgrades
Performance Trends Inflow of new NPAs remained low, offset by recoveries and upgrades 9M10 9M09 3Q10 2Q10 3Q09 S$m S$m S$m S$m S$m Opening Balance (excluding CDOs) 1,442 1,239 1,309 1,396 1,658 New NPAs 366 999 119 124 158 Net Recoveries/Upgrades (493) (467) (227) (155) (183) Write-offs (151) (314)
Slide 30: Healthy allowance coverage ratios of 126% of total NPAs
Performance Trends Healthy allowance coverage ratios of 126% of total NPAs and 350% of unsecured NPAs 400% Total allowances/Unsecured NPAs 350% 350% 288% 300% 266% 249% 250% 221% 212% 188% 200% Total allowances/NPAs 150% 126% 109% 107% 112% 97% 103% 102% 100% Specific allowances/NPAs 50% 49% 42% 40%
Slide 31: Tier 1 and Core Tier 1 ratios remain strong
Performance Trends Tier 1 and Core Tier 1 ratios remain strong (% of RWA) 16.4% 16.3% Total CAR 15.2% 0.5% 15.2% 15.5% 1.0% 0.3% 0.8% Tier 2 capital Tier 1 preference shares 11.2% 12.0% 15.2% 15.9% 10.8% 11.6% 15.3% 11.5% 15.2% Core Tier 1 (adjusted 14.4% common equity) Sep-09 Dec-09 Mar-10 Jun-10 S
Slide 32: OCBC Malaysia: Quarterly results
Malaysia and Indonesia Subsidiaries OCBC Malaysia: Quarterly results 3Q10 3Q09 YoY 2Q10 QoQ RM m RM m +/(-)% RM m +/(-)% Net Interest Income 294 269 9 281 5 Islamic Banking Income 39 28 40 39 - Non-Interest Income 125 92 36 102 22 Total Income 458 389 18 422 8 Operating Expenses (171) (146) 17 (171)
Slide 33: OCBC Malaysia: Nine months results
Malaysia and Indonesia Subsidiaries OCBC Malaysia: Nine months results 9M10 9M09 YoY RM m RM m +/(-)% Net Interest Income 839 774 8 Islamic Banking Income 120 89 35 Non-Interest Income 366 330 11 Total Income 1,325 1,193 11 Operating Expenses (485) (426) 14 Operating Profit 839 767 9 Allowances (106
Slide 34: OCBC Malaysia: Key financial ratios
Malaysia and Indonesia Subsidiaries OCBC Malaysia: Key financial ratios 9M10 9M09 3Q10 2Q10 3Q09 % % % % % Net Interest Margin 2.42 2.39 2.55 2.46 2.37 Non-Interest Income / 27.6 27.7 27.3 24.2 23.7 Total Income Cost-to-Income Ratio 36.6 35.7 37.3 40.5 37.5 Loans-to-Deposits Ratio 83.9 78.8 83.9 83.
Slide 35: Bank OCBC NISP: Quarterly results
Malaysia and Indonesia Subsidiaries Bank OCBC NISP: Quarterly results 3Q10 3Q09 YoY 2Q10 QoQ RP bn RP bn +/(-)% RP bn +/(-)% Net Interest Income 465 456 2 442 5 Non-Interest Income 130 110 17 111 17 Total Income 595 566 5 553 8 Operating Expenses (398) (346) 15 (377) 6 Operating Profit 197 220 (10)
Slide 36: Bank OCBC NISP: Nine months results
Malaysia and Indonesia Subsidiaries Bank OCBC NISP: Nine months results 9M10 9M09 YoY RP bn RP bn +/(-)% Net Interest Income 1,353 1,285 5 Non Interest Income 359 389 (8) Total Income 1,712 1,674 2 Operating Expenses (1,133) (1,029) 10 Operating Profit 579 645 (10) Allowances (89) (205) (56) Tax (12
Slide 37: Bank OCBC NISP: Key financial ratios
Malaysia and Indonesia Subsidiaries Bank OCBC NISP: Key financial ratios 9M10 9M09 3Q10 2Q10 3Q09 % % % % % Net Interest Margin 5.26 5.53 5.17 5.21 6.17 Non-Interest Income / Total Income 21.0 23.2 21.8 20.0 19.7 Cost-to-Income Ratio 66.2 61.5 66.9 68.1 61.0 Loans-to-Deposits Ratio 78.5 76.5 78.5 77
Slide 38: In Summary
In Summary • QoQ loan growth was again strong in our key markets, driving an improvement in net interest income, while interest margins remained stable • Insurance and trading income improved as unstable market conditions receded from the second quarter • Great Eastern delivered robust growth in new
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