Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q3 2009 Earnings Presentation
39 slides from Oversea-chinese Banking's earnings presentation, Oct 28, 2009
Slide 1: Third Quarter 2009 Results Presentation
Third Quarter 2009 Results Presentation 28 October 2009 1
Slide 2: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 2
Slide 3: Third quarter core net profit rose 14% YoY, down 3% QoQ
Third quarter core net profit rose 14% YoY, down 3% QoQ – includes GLC loss of S$213m (S$154m net impact) 3Q09 3Q08 YoY 2Q09 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 689 684 1 710 (3) Non-Interest Income 1/ 392 462 (15) 494 (21) Total Income 1,081 1,146 (6) 1,204 (10) Operating Expenses (46
Slide 4: Core net profit for nine months up 18% YoY
Core net profit for nine months up 18% YoY 9M09 9M08 YoY S$m S$m +/(-)% Net Interest Income 2,138 2,000 7 Non-Interest Income 1/ 1,493 1,198 25 Total Income 3,631 3,198 14 Operating Expenses (1,330) (1,391) (4) Operating Profit 2,301 1,807 27 Amortisation of Intangibles (35) (35) - Allowances (353)
Slide 5: Key financial ratios - Based on core earnings
Key financial ratios - Based on core earnings 9M09 9M08 3Q09 2Q09 3Q08 % % % % % Net Interest Margin 2.29 2.20 2.16 2.29 2.18 Non-Interest Income/ Total 41.1 37.5 36.3 41.0 40.3 Income Cost-to-Income Ratio 36.6 43.5 43.2 37.4 43.0 Loans-to-Deposits Ratio 79.7 84.4 79.7 80.3 84.4 NPL Ratio 1.8 1.3 1.
Slide 6: Nine months' core earnings almost matching full year 2008; ROE improves to 12.5%
Nine months’ core earnings almost matching full year 2008; ROE improves to 12.5% 14.9% 13.4% 12.5% 12.2% 12.0% ROE 9.9% 11.3% 10.3% 10.8% 2,071 6.7% 193 1,749 622 263 1,461 545 162 466 450 425 402 44 6 Net Profit 1,878 (S$m) 301 1,486 51 460 381 396 250 2007 2008 9M09 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3
Slide 7: Earnings contribution by segments
Earnings contribution by segments 9M09 PBT by Business Segment 9M09 PBT by Geography Other Asia Global Pacific Other Others Consumer 1% ASEAN 1% Financial Services 5% 21% Insurance & Others 28% Malaysia Singapore 35% 58% Global Global Treasury Corporate 23% Banking 28% Note: Pretax profit before joi
Slide 8: Excluding GEH: Third quarter core net profit grew 49% YoY
Excluding GEH: Third quarter core net profit grew 49% YoY, 10% QoQ Excluding GEH 3Q09 3Q08 YoY 2Q09 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 674 665 1 694 (3) Non-Interest Income 350 282 24 307 14 Total Income 1,024 947 8 1,001 2 Operating Expenses (431) (455) (5) (400) 8 Operating Profit 5
Slide 9: Excluding GEH: Nine months' core net profit up 4%
Excluding GEH: Nine months’ core net profit up 4% Excluding GEH 9M09 9M08 YoY S$m S$m +/(-)% Net Interest Income 2,093 1,941 8 Non-Interest Income 970 922 5 Total Income 3,063 2,863 7 Operating Expenses (1,219) (1,287) (5) Operating Profit 1,844 1,576 17 Allowances (347) (188) 84 Associates & JVs 5
Slide 10: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 10
Slide 11: Net interest income up marginally YoY, fell 3% QoQ as margins narrowed
Net interest income up marginally YoY, fell 3% QoQ as margins narrowed under sustained low interest rate environment 2.47% 2.42% 2.27% 2.29% 2.24% 2.29% Net 2.17% 2.18% 2.16% interest 2.10% margin 2,783 783 740 710 689 2,244 678 684 2,138 638 Net interest income (S$m) 2007 2008 9M09 1Q08 2Q08 3Q08 4
Slide 12: Non-interest income: Strong insurance, trading and investment income offset by GLC loss
Non-interest income: Strong insurance, trading and investment income in 3Q09 offset by GLC loss 46.4% 45.1% 41.1% 40.3% 41.0% 34.4% 37.1% 36.3% 34.6% Non-interest 24.9% income/ 2,037 Total income 93 607 1,644 562 544 1,493 155 186 494 462 260 167 392* 275 378 86 143 574 18 Non-interest 409 259* inco
Slide 13: GEH's life assurance profits up 68% over 2Q09
GEH’s life assurance profits up 68% over 2Q09 3Q09 2Q09 3Q08 9M09 9M08 Life assurance profit from: S$m S$m S$m S$m S$m - Participating Fund 20 27 26 76 75 - Non-participating Fund 163 74 103 432 63 - Investment-linked Fund 26 23 16 91 48 Total life assurance profit 209 125 145 599* 185 Life assuranc
Slide 14: Impact of GreatLink Choice redemption offer
Impact of GreatLink Choice redemption offer Underlying CDOs of redeemed GLC units accounted for at fair value in GEH’s shareholder funds Carried at fair value of S$193m as at 30 Sep 09 – mainly relating to GLC 1, 2 & 3 tranches Loss of S$213m from the redemption offer was recognised in 3Q09 in
Slide 15: Expenses down 5% YoY in 3Q09, up 4% QoQ
Expenses down 5% YoY in 3Q09, up 4% QoQ 45.5% 43.7% 43.0% 44.5% 42.0% 43.2% 40.1% Cost-to- 36.6% 37.4% Income Ratio 1,854 30.7% 1,680 492 473 463 467 469 450 426 433 1,330 413 122 132 117 122 99 127 340 88 337 301 86 81 94 88 78 85 89 Operating 263 Expenses (S$m) 1,045 946 270 274 257 249 252 240 23
Slide 16: Core operating profit for nine months up 27%
Core operating profit for nine months up 27% Operating Profit before allowances 2,601 2,573 (S$m) 934 93 186 2,301 756 754 654 167 614 583 579 18 2,508 2,387 589 565 2007 2008 9M09 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 Divestment gains Note: 1Q09 includes S$201m non-recurring gains from GEH; 3Q09 inclu
Slide 17: Net allowances for loans and other assets: Declining trend since 4Q08
Net allowances for loans and other assets: Declining trend since 4Q08 Allowances for loans and other 447 assets (S$m) 353 243 197 156 104 55 52 36 (8) 2007 2008 9M09 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 17
Slide 18: Breakdown of allowances
Breakdown of allowances 9M09 9M08 3Q09 2Q09 3Q08 S$m S$m S$m S$m S$m Specific allowances for loans 181 5 49 44 30 Portfolio allowances for loans 12 9 5 5 9 Allowances for CDOs/(write-back) 86 71 (6) (2) 4 Allowances for other assets 74 118 4 57 113 Total net allowances 353 203 52 104 156 Specific lo
Slide 19: Movement in specific allowances for loans
Movement in specific allowances for loans 9M09 9M08 3Q09 2Q09 3Q08 S$m S$m S$m S$m S$m Allowances for new and existing NPLs 360 211 118 104 71 Write-backs 1/ (144) (157) (51) (51) (34) Recoveries 2/ (36) (49) (17) (10) (7) Net Specific Allowances/ 181 5 49 44 30 (Write-backs) 1/ Write-backs of speci
Slide 20: Loans down 3% YoY due to loan repayments and subdued corporate loan demand
Loans down 3% YoY due to loan repayments and subdued corporate loan demand 81.3 81.3 80.4 78.4 79.2 78.7 75.4 18.5 17.7 18.0 17.2 17.5 17.5 Loans 16.2 (S$bn) 13.6 14.3 14.7 12.7 14.7 14.5 12.3 46.9 48.4 49.2 49.3 47.7 47.0 46.7 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Singapore Malaysia Inte
Slide 21: Diversified loans
Diversified loans Loans by Geography* Loans by Sector Agriculture, mining & Transport, quarrying Others storage & Others 2% Greater 10% 7% Comm China 7% 8% Building & Construction Indonesia 20% 5% Housing Loans Singapore 26% Malaysia 59% 18% Manufacturing 7% Professionals & Individuals Non-Bank Fina
Slide 22: NPLs declined 12% QoQ, NPL ratio improves to 1.8%
NPLs declined 12% QoQ, NPL ratio improves to 1.8% 2.1% 1.8% 1.8% NPL Ratio 1.6% 1.5% 1.4% 1,785 1.3% 1,633 1,583 157 209 155 1,325 1,348 1,232 468 113 1,204 166 479 395 137 156 262 205 314 232 568 NPAs 495 561 (S$m) 450 521 434 474 592 455 440 382 394 424 472 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-0
Slide 23: NPAs declined QoQ across all categories
NPAs declined QoQ across all categories 2.1% NPL Ratio 1.8% 1.8% 1.6% 1.5% 1.4% 1,785 1.3% 1,633 238 1,583 1,325 1,348 283 234 1,232 1,204 286 262 676 274 269 714 610 NPAs 458 (S$m) 393 415 615 871 636 739 581 565 519 471 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Substandard NPAs Doubtful NPA
Slide 24: New NPA formation has slowed in third quarter
New NPA formation has slowed in third quarter NPAs 9M09 9M08 3Q09 2Q09 3Q08 S$m S$m S$m S$m S$m Opening Balance (excluding CDOs) 1,239 1,268 1,658 1,462 1,122 New NPAs 999 529 158 417 168 Net Recoveries/Upgrades (467) (608) (183) (160) (181) Write-offs (314) (100) (175) (61) (20) Closing Balance (ex
Slide 25: Allowance coverage increased to 103% over total NPAs
Allowance coverage increased to 103% over total NPAs and 221% over unsecured NPAs 295% 280% 287% Total Allowances / Unsecured NPAs 240% 212% 221% 188% Total Allowances / NPAs 122% 128% 125% 115% 109% 97% 103% Specific Allowances / NPAs 43% 44% 47% 52% 49% 42% 40% Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 J
Slide 26: AFS Portfolio – Fair value reserves increased by S$168m QoQ
AFS Portfolio – Fair value reserves increased by S$168m QoQ Sep-09 Jun-09 Sep-08 S$m S$m S$m Available-for-Sale Securities Corporate Debt Securities 7,152 6,795 8,267 Equities & investment funds 2,430 2,342 1,909 Government Securities 13,698 15,029 10,795 - Singapore 10,186 11,031 8,474 - Others 3,5
Slide 27: Deposits grew 2% YoY; share of low cost deposits has increased
Deposits grew 2% YoY; share of low cost deposits has increased over time 84.4% 84.8% 85.3% 83.3% 79.7% 80.3% 79.7% 85.0% Loans-to- 75.0% deposits 94.7 96.6 96.9 92.9 92.4 94.1 92.4 65.0% 13.3 14.2 15.8 16.1 17.4 18.4 16.1 55.0% 14.1 14.7 15.1 16.1 17.7 19.6 20.9 45.0% 35.0% Deposits 60.5 59.2 59.5 5
Slide 28: Capital position remains strong
Capital position remains strong 15.8% 15.9% 15.1% 15.2% 0.7% 0.5% 0.2% 14.1% (% of RWA) Total CAR Tier 2 Capital Tier 1 preference shares 11.2% 11.3% 15.4% 11.2% 15.2% 11.0% 14.9% 15.1% 10.3% 14.1% Core Tier 1 – adjusted common equity Dec-08 Mar-09 Jun-09 Sep-09 Sep-09 (S$m) Pro-forma* Tier 1 Capita
Slide 29: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 29
Slide 30: GEH: Third quarter contribution
GEH: Third quarter contribution GEH’s Contribution to 3Q09^ 3Q08 YoY 2Q09 QoQ OCBC’s Results S$m S$m +/(-)% S$m +/(-)% Total Income 57 199 (71) 203 (72) Operating Expenses (36) (37) (5) (50) (26) Operating Profit 21 162 (87) 153 (86) Amortisation of Intangibles (12) (12) - (12) - Allowances (2) (12)
Slide 31: GEH: Nine months contribution
GEH: Nine months contribution GEH’s Contribution to 9M09* 9M08 YoY OCBC’s Results S$m S$m +/(-)% Total Income 568 335 70 Operating Expenses (111) (104) 6 Operating Profit 457 231 98 Amortisation of Intangibles (35) (35) - Allowances (6) (15) (58) Associates & JVs (3) (5) (42) Tax & Minority Interest
Slide 32: OCBC Malaysia: Quarterly results
OCBC Malaysia: Quarterly results 3Q09 3Q08 YoY 2Q09 QoQ Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 269 254 6 253 6 Islamic Banking Income 28 28 1 28 (1) Non-Interest Income 92 81 13 65 42 Total Income 389 363 7 346 12 Operating Expenses (146) (153) (5) (141) 4 Operating Prof
Slide 33: OCBC Malaysia: Nine months results
OCBC Malaysia: Nine months results 9M09 9M08 YoY Unaudited Results* RM m RM m +/(-)% Net Interest Income 774 733 6 Islamic Banking Income 89 81 9 Non-Interest Income 330 312 6 Total Income 1,193 1,126 6 Operating Expenses (426) (440) (3) Operating Profit 767 686 12 Allowances (122) (15) 742 Tax (162
Slide 34: OCBC Malaysia: Financial ratios
OCBC Malaysia: Financial ratios 3Q09 2Q09 3Q08 9M09 9M08 % % % % % Net Interest Margin 2.37 2.35 2.57 2.39 2.51 Non-Interest Income / 23.7 18.8 22.4 27.7 27.7 Total Income Cost-to-Income Ratio 37.5 40.8 42.1 35.7 39.1 Loans-to-Deposits Ratio 78.8 80.3 90.5 78.8 90.5 Gross NPL Ratio 3.8 3.8 3.2 3.8 3
Slide 35: Bank OCBC NISP: Quarterly results
Bank OCBC NISP: Quarterly results 3Q09 3Q08 YoY 2Q09 QoQ RP bn RP bn +/(-)% RP bn +/(-)% Unaudited Results* Net Interest Income 456 356 28 430 6 Non Interest Income 110 94 17 159 (31) Expenses (346) (302) 15 (347) (0) Operating Profit 220 148 49 242 (9) Allowances (13) (34) (62) (112) (88) Net Profi
Slide 36: Bank OCBC NISP: Nine months results
Bank OCBC NISP: Nine months results 9M09 9M08 YoY RP bn RP bn +/(-)% Unaudited Results* Net Interest Income 1,285 1,011 27 Non Interest Income 389 280 39 Expenses (1,029) (898) 15 Operating Profit 645 393 64 Allowances (205) (70) 193 Net Profit 310 227 36 * Bank OCBC NISP’s contribution to Group net
Slide 37: Bank OCBC NISP: Financial ratios
Bank OCBC NISP: Financial ratios 3Q09 2Q09 3Q08 9M09 9M08 % % % % % Net Interest Margin 6.17 5.41 5.62 5.53 5.46 Non-Interest Income / Total Income 19.7 27.0 21.1 23.2 21.7 Cost-to-Income Ratio 61.0 59.0 67.1 61.5 69.4 Loans-to-Deposits Ratio 76.5 69.4 94.9 76.5 94.9 Gross NPL Ratio 3.9 3.9 2.3 3.9
Slide 38: In Summary
In Summary • Strong results year-to-date despite a challenging environment – nine months’ core earnings almost matching full year 2008 • Healthy revenues and strict cost discipline have lifted operating profits by 27% year-to-date • Prudent risk management has contained credit losses and NPLs • Acqu
Slide 39: Third Quarter 2009 Results – Thank You
Third Quarter 2009 Results Thank You 39
Oversea-Chinese Banking — Q3 2009 Earnings Presentation on 6ix