Oversea-chinese Banking Corporation Limited · SGX:O39

Oversea-chinese Banking — Q2 2009 Earnings Presentation

43 slides from Oversea-chinese Banking's earnings presentation, Aug 3, 2009

  1. Slide 1: Second Quarter 2009 Results Presentation

    Second Quarter 2009 Results Presentation 3 August 2009 1

  2. Slide 2: Agenda

    Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 22

  3. Slide 3: Core net profit up 22% YoY, down 15% QoQ

    Core net profit up 22% YoY, down 15% QoQ 2Q09 2Q08 YoY 1Q09 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 710 678 5 740 (4) Non-Interest Income 494 360 37 607 (19) Total Income 1,204 1,038 16 1,347 (11) Operating Expenses (450) (473) (5) (413) 9 Operating Profit 754 565 33 934 (19) Amortisation

  4. Slide 4: First Half core net profit rose 20% YoY and 57% over 2H08

    First Half core net profit rose 20% YoY and 57% over 2H08 1H09 1H08 YoY 2H08 HoH S$m S$m +/(-)% S$m +/(-)% Net Interest Income 1,450 1,317 10 1,467 (1) Non-Interest Income 1,101 736 50 721 53 Total Income 2,551 2,053 24 2,188 17 Operating Expenses (863) (899) (4) (956) (10) Operating Profit 1,688 1,

  5. Slide 5: Key Financial Ratios - Based on Core Earnings

    Key Financial Ratios - Based on Core Earnings 1H09 1H08 2Q09 1Q09 2Q08 % % % % % Net Interest Margin 2.35 2.21 2.29 2.42 2.24 Non-Interest Income/ Total 43.2 35.9 41.0 45.1 34.6 Income Cost-to-Income Ratio 33.8 43.8 37.4 30.7 45.5 Loans-to-Deposits Ratio 80.3 83.3 80.3 85.3 83.3 NPL Ratio 2.1 1.4 2.

  6. Slide 6: ROE of 13.4% for First Half

    ROE of 13.4% for First Half 14.9% 13.4% 13.4% 12.2% 12.0% ROE 9.9% 11.3% 10.3% 2,071 6.7% 193 1,749 622 263 545 850 162 466 425 402 645 1,011 44 6 Net Profit (S$m) 301 51 460 1,028 381 396 841 250 2007 2008 1H09 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 First Half Second Half Divestment Gains/Tax Refunds Exclud

  7. Slide 7: Earnings contribution by segments

    Earnings contribution by segments 1H09 PBT by Business Segment 1H09 PBT by Geography Global Other Consumer ASEAN Others Financial 5% 1% Services 20% Insurance & Others 30% Malaysia Singapore Global 37% 57% Corporate Global Banking Treasury 26% 24% Note: Pretax profit before joint income elimination

  8. Slide 8: Excluding GEH – 2Q09 core net profit rose 3% YoY and 12% QoQ

    Excluding GEH – 2Q09 core net profit rose 3% YoY and 12% QoQ Excluding GEH 2Q09 2Q08 YoY 1Q09 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 694 659 5 725 (4) Non-Interest Income 307 310 (1) 314 (2) Total Income 1,001 969 3 1,039 (4) Operating Expenses (400) (435) (8) (389) 3 Operating Profit 601

  9. Slide 9: Excluding GEH – 1H09 core net profit fell 12% YoY, increased 51% over 2H08

    Excluding GEH – 1H09 core net profit fell 12% YoY, increased 51% over 2H08 Excluding GEH 1H09 1H08 YoY 2H08 HoH S$m S$m +/(-)% S$m +/(-)% Net Interest Income 1,419 1,277 11 1,430 (1) Non-Interest Income 621 640 (3) 410 51 Total Income 2,040 1,917 6 1,840 11 Operating Expenses (789) (833) (5) (870) (

  10. Slide 10: Agenda

    Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 10 10

  11. Slide 11: Net interest income up 5% YoY; interest margin down QoQ due to lower gapping income

    Net interest income up 5% YoY; interest margin down QoQ due to lower gapping income 2.47% 2.42% 2.35% 2.29% 2.27% 2.24% Net 2.17% 2.18% interest 2.10% margin 2,783 783 740 710 2,244 678 684 638 1,466 1,179 1,450 Net interest income (S$m) 1,317 1,065 2007 2008 1H09 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 First

  12. Slide 12: Non-interest income up 37% YoY

    Non-interest income up 37% YoY 46.4% 43.2% 45.1% 40.3% 41.0% 34.4% 37.1% Non-interest 34.6% 2,037 income/ 24.9% Total income 93 1,644 607 186 544 945 494 462 1,101 167 722 378 Non-interest 18 income (S$m) 259 999 377 360 736 2007 2008 1H09 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 First Half Second Half Divestm

  13. Slide 13: Higher fee income from brokerage, wealth management, investment banking and loan-related activities

    Higher fee income from brokerage, wealth management, investment banking and loan- related activities 20.9% 19.3% 19.5% 18.2% 17.4% Fee income/ 15.3% 16.1% Total income 13.7% 11.5% 808 774 212 202 199 194 413 359 159 155 Fee 349 income (S$m) 395 415 2007 2008 1H09 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 First

  14. Slide 14: GEH's life assurance profits up due to equity markets and tighter credit spreads

    GEH’s life assurance profits up due to equity markets and tighter credit spreads 2Q09 1Q09 2Q08 FY08 FY07 Life assurance profit from: S$m S$m S$m S$m S$m - Participating Fund 27 29 24 102 143 - Non-participating Fund 74 195 (11) 130 302 - Investment-linked Fund 23 42 20 68 64 Total life assurance pr

  15. Slide 15: Costs fell 4% in 1H09; increase over 1Q09 due to higher insurance-related expenses

    Costs fell 4% in 1H09; increase over 1Q09 was due to higher insurance-related expenses 45.5% 43.7% 43.0% 44.5% 42.0% 40.1% Cost-to- Income 37.4% Ratio 33.8% 1,854 30.7% 1,680 492 473 463 469 450 426 433 413 122 132 117 99 127 340 88 301 86 81 94 863 78 85 89 Operating 215 Expenses (S$m) 174 1,045 94

  16. Slide 16: Second quarter core operating profit up 33% YoY

    Second quarter core operating profit up 33% YoY Operating Profit before allowances 2,601 2,573 (S$m) 93 186 934 756 754 1,212 1,233 1,688 654 167 583 579 18 589 565 1,296 1,154 2007 2008 1H09 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 First Half Second Half Divestment gains Note: 1Q09 operating profit includes S

  17. Slide 17: Net allowances declined from the previous quarter

    Net allowances declined from the previous quarter Allowances for loans and other 447 assets (S$m) 301 243 197 156 104 36 55 (8) 2007 2008 1H09 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 17 17

  18. Slide 18: Breakdown of allowances

    Breakdown of allowances 1H09 1H08 2Q09 1Q09 2Q08 S$m S$m S$m S$m S$m Specific allowances/ 132 (24) 44 88 (18) (write-back) for loans Portfolio allowances for loans 7 - 5 2 - Allowances/(write-back) for 92 67 (2) 94 67 CDOs 70 5 57 13 6 Allowances for other assets Total net allowances 301 48 104 197

  19. Slide 19: Movement in specific allowances for loans

    Movement in specific allowances for loans 1H09 1H08 2Q09 1Q09 2Q08 S$m S$m S$m S$m S$m Allowances for new and existing 242 141 104 138 69 NPLs Write-backs 1/ (93) (123) (51) (42) (58) Recoveries 2/ (18) (42) (10) (9) (28) Net Specific Allowances/ 132 (24) 44 88 (18) (Write-backs) 1/ Write-backs of s

  20. Slide 20: Bank's CDO portfolio fully provided for since 1Q09

    Bank’s CDO portfolio fully provided for since 1Q09 As at 30 Jun 2009 As at 31 Mar 2009 (S$m) Exposure Cumulative Cumulative Fair Value Exposure Cumulative Cumulative Fair Value Allowances MTM Adj. in Allowances MTM Adj. in Losses 3/ Equity Losses 3/ Equity ABS CDOs 1/ 95 (95) - - 100 (100) - - Corpo

  21. Slide 21: Provision to be made in 3Q09 for GreatLink Choice redemption offer

    Provision to be made in 3Q09 for GreatLink Choice redemption offer Overview of GreatLink Choice Tranche GLC1 GLC2 GLC3 GLC4 GLC5 Policy Commencement Date 30-Sep-05 31-Oct-05 31-Aug-06 31-Dec-06 31-Oct-07 Maturity Date 30-Sep-10 31-Oct-10 31-Aug-13 31-Dec-13 31-Oct-12 Loss Protection Level (at incept

  22. Slide 22: Loans grew 1% YoY, declined 2% from previous quarter

    Loans grew 1% YoY, declined 2% from previous quarter 81.3 81.3 80.4 78.4 79.2 75.4 18.5 17.7 18.0 17.2 17.5 Loans 16.2 (S$bn) 13.6 14.3 14.7 12.7 14.7 12.3 46.9 48.4 49.2 49.3 47.7 47.0 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Singapore Malaysia International Note: Loans by geography are based on w

  23. Slide 23: Diversified loans

    Diversified loans Loans by Geography* Loans by Sector Agriculture, mining & Transport, quarrying Others Others storage & 2% 7% Comm Greater 8% 7% China Building & 9% Construction 20% Indonesia Housing 5% Loans 25% Singapore Malaysia 59% 19% Manufacturing 7% Professionals & Individuals Non-Bank Finan

  24. Slide 24: NPL ratio increased moderately to 2.1%

    NPL ratio increased moderately to 2.1% 2.1% 1.8% NPL Ratio 1.6% 1.5% 1.4% 1.3% 1,785 1,633 157 209 1,325 1,348 1,232 468 1,204 113 166 150 479 262 162 201 314 232 568 NPAs (S$m) 495 450 521 434 474 592 455 431 376 394 424 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Singapore Malaysia International Deb

  25. Slide 25: 49% of NPAs in substandard category

    49% of NPAs in substandard category 2.1% 1.8% NPL Ratio 1.6% 1.5% 1.4% 1.3% 1,785 1,633 238 1,348 283 1,325 1,232 1,204 286 262 676 274 269 714 NPAs 458 393 615 (S$m) 415 871 581 565 636 519 471 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Substandard NPA Doubtful NPA Loss NPA 25 25

  26. Slide 26: New NPA formation stable relative to 1Q09

    New NPA formation stable relative to 1Q09 NPAs 1H09 1H08 2Q09 1Q09 2Q08 S$m S$m S$m S$m S$m Opening Balance (excluding 1,239 1,268 1,462 1,239 1,242 CDOs) New NPAs 841 361 417 423 161 Net Recoveries/Upgrades (283) (427) (160) (123) (242) Write-offs (139) (80) (61) (77) (39) Closing Balance (excl CDO

  27. Slide 27: Healthy allowance coverage of 97% over total NPAs and 188% over unsecured NPAs

    Healthy allowance coverage of 97% over total NPAs and 188% over unsecured NPAs 295% 280% 287% Total Allowances / Unsecured NPAs 240% 212% 188% Total Allowances / NPAs 122% 128% 125% 115% 109% 97% Specific Allowances / NPAs 43% 44% 47% 52% 49% 42% Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 27 27

  28. Slide 28: Property exposure – Resilient portfolio with comfortable LTVs

    Property exposure – Resilient portfolio with comfortable LTVs Singapore Development Project Loans ƒ Average LTVs are 44% for residential projects (4Q08: 54%) and 46% for commercial projects (4Q08: 59%) ƒ Diversified portfolio with about 70% residential and 30% commercial ƒ Development project financ

  29. Slide 29: AFS Portfolio – Fair Value Reserves increased by S$580m over 1Q09

    AFS Portfolio – Fair Value Reserves increased by S$580m over 1Q09 Jun-09 Mar-09 Jun-08 S$m S$m S$m Available-for-Sale Securities Corporate Debt Securities 6,795 6,912 7,791 Equities & investment funds 2,342 1,767 2,164 Government Securities 15,029 15,741 12,328 - Singapore 11,031 11,392 10,156 - Oth

  30. Slide 30: Deposits up 5% YoY and QoQ from growth in savings and current account deposits

    Deposits up 5% YoY and QoQ from growth in savings and current account deposits 84.4% 84.8% 85.3% 83.3% 79.7% 80.3% 85.0% Loans-to- 75.0% deposits 94.7 96.6 92.9 92.4 94.1 92.4 65.0% 13.3 14.2 15.8 16.1 17.4 16.1 55.0% 14.1 14.7 15.1 16.1 17.7 19.6 45.0% 35.0% Deposits 60.5 59.2 59.5 57.2 55.0 53.4 (

  31. Slide 31: Strong Tier 1 ratio of 15.4%, core Tier 1 of 11.4%

    Strong Tier 1 ratio of 15.4%, core Tier 1 of 11.4% 15.8% 15.9% 15.1% 0.5% 14.7% 0.7% 0.3% 0.2% (% of RWA) 13.6% Total CAR 1.3% Tier 2 Capital Tier 1 preference shares 11.0% 10.6% 11.0% 11.2% 15.1% 11.4% 15.4% 14.4% 14.9% Core Tier 1 – 12.3% adjusted common equity Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 (

  32. Slide 32: Interim dividend maintained at 14 cents per share

    Interim dividend maintained at 14 cents per share 28.0 28.0 23.0 Net DPS (cents) 14.0 14.0 18.4 12.0 12.6 9.6 Final Net Dividend 6.3 14.0 14.0 14.0 11.0 8.8 Interim Net Dividend 6.3 2004 2005* 2006 2007 2008 1H09 (S$m) Net Dividends 403 574 709 864 868 445 Core Net Profit 1,051 1,298 1,443 1,878 1,4

  33. Slide 33: Agenda

    Agenda • First Quarter Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 33 33

  34. Slide 34: GEH: Quarterly contribution

    GEH: Quarterly contribution GEH’s Contribution to 2Q09 2Q08^ YoY 1Q09 QoQ OCBC’s Results S$m S$m +/(-)% S$m +/(-)% Total Income 203 69 193 308 (34) Operating Expenses (50) (37) 33 (24) 103 Operating Profit 153 32 380 284 (46) Amortisation of Intangibles (12) (12) - (12) - Allowances (2) - - (3) (39)

  35. Slide 35: GEH: First Half Contribution

    GEH: First Half Contribution GEH’s Contribution to 1H09 1H08^ YoY 2H08^ HoH OCBC’s Results S$m S$m +/(-)% S$m +/(-)% Total Income 511 136 276 348 47 Operating Expenses (74) (66) 12 (86) (14) Operating Profit 437 70 527 262 68 Amortisation of Intangibles (24) (23) - (23) - Allowances (5) (4) 36 (52)

  36. Slide 36: OCBC Malaysia: Quarterly Results

    OCBC Malaysia: Quarterly Results 2Q09 2Q08 YoY 1Q09 QoQ Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 253 246 3 252 - Islamic Banking Income 28 27 4 33 (15) Non-Interest Income 65 82 (21) 173 (62) Total Income 346 355 (2) 458 (24) Operating Expenses (141) (145) (3) (140) 1 Oper

  37. Slide 37: OCBC Malaysia: Half-Year Results

    OCBC Malaysia: Half-Year Results 1H09 1H08 YoY 2H08 HoH Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 505 479 5 516 (2) Islamic Banking Income 61 54 13 59 3 Non-Interest Income 238 231 3 202 18 Total Income 804 764 5 777 3 Operating Expenses (280) (288) (3) (311) (10) Operating

  38. Slide 38: OCBC Malaysia: Financial Ratios

    OCBC Malaysia: Financial Ratios 1H09 1H08 2Q09 1Q09 2Q08 % % % % % Net Interest Margin 2.41 2.48 2.35 2.46 2.51 Non-Interest Income / 29.6 30.2 18.8 37.8 23.1 Total Income Cost-to-Income Ratio 34.8 37.7 40.8 30.3 40.8 Loans-to-Deposits Ratio 80.3 87.7 80.3 79.0 87.7 Gross NPL Ratio 3.8 3.4 3.8 3.6 3

  39. Slide 39: Bank OCBC NISP: Quarterly Results

    Bank OCBC NISP: Quarterly Results 2Q09 2Q08 YoY 1Q09 QoQ RP bn RP bn +/(-)% RP bn +/(-)% Unaudited Results* Net Interest Income 430 352 22 399 8 Non Interest Income 159 99 61 119 34 Expenses (347) (289) 21 (335) 4 Operating Profit 242 162 49 183 32 Allowances (112) (30) 273 (79) 43 Net Profit 89 93

  40. Slide 40: Bank OCBC NISP: Half-Year Results

    Bank OCBC NISP: Half-Year Results 1H09 1H08 YoY 2H08 HoH RP bn RP bn +/(-)% RP bn +/(-)% Unaudited Results* Net Interest Income 829 655 27 746 11 Non Interest Income 278 185 51 286 (3) Expenses (682) (596) 14 (642) 6 Operating Profit 425 244 74 390 9 Allowances (192) (35) 447 (146) 31 Net Profit 162

  41. Slide 41: Bank OCBC NISP: Financial Ratios

    Bank OCBC NISP: Financial Ratios 1H09 1H08 2Q09 1Q09 2Q08 % % % % % Net Interest Margin 5.22 5.38 5.41 5.04 5.77 Non-Interest Income / Total 25.1 22.1 27.1 23.0 22.0 Income Cost-to-Income Ratio 61.6 70.6 59.0 64.6 64.1 Loans-to-Deposits Ratio 69.4 95.0 69.4 71.0 95.0 Gross NPL Ratio 3.9 2.3 3.9 3.6

  42. Slide 42: In Summary

    In Summary • Achieved resilient results in a challenging operating environment • Asset quality holding up well, with comfortable coverage ratios • GEH taking decisive action to resolve GLC issue and will recognise earnings impact in the third quarter • Global economy and financial markets are on the

  43. Slide 43: Second Quarter 2009 Results Thank You

    Second Quarter 2009 Results ___________________________ Thank You 43

Oversea-Chinese Banking — Q2 2009 Earnings Presentation on 6ix