Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2017 Earnings Presentation
49 slides from Oversea-chinese Banking's earnings presentation, Feb 14, 2018
Slide 1: 2017 Full Year Results Presentation
2017 Full Year Results Presentation 14 February 2018 Disclaimer: This material should be read as an overview of OCBC’s current business activities and operating environment. It should not be solely relied upon by investors or potential investors when making an investment decision. OCBC Bank accepts
Slide 2: Agenda
Agenda Results Overview FY17 & 4Q17 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP Note: - Certain comparative figures have been restated to conform with the current period’s presentation. - Amounts less than
Slide 3: FY17 Highlights
Group performance FY17 Highlights Net profit rose 19% to a new high of S$4.15b; final dividend of 19 cents per share Earnings Net Interest Income: S$5.42b Strong momentum across the Group’s key businesses and (FY16 : S$5.05b; +7%) markets Net profit (S$m) Non-interest Income: S$4.21b • NII up 7%;
Slide 4: FY17 Group Performance
Group performance FY17 Group Performance Full year net profit grew 19% YoY to S$4.15b FY17 FY16 YoY OCBC Group S$m S$m +/(-)% Net interest income 5,423 5,052 7 Non-interest income 4,213 3,437 23 Total income 9,636 8,489 14 Operating expenses (4,034) (3,788) 6 Operating profit 5,602 4,701 19 Amortisa
Slide 5: 4Q17 Group Performance
Group performance 4Q17 Group Performance 4Q17 net profit rose 31% YoY to S$1.03b 4Q17 3Q17 QoQ 4Q16 YoY OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,424 1,382 3 1,251 14 Non-interest income 1,205 978 23 926 30 Total income 2,629 2,360 11 2,177 21 Operating expenses (1,067) (1,001) 7 (9
Slide 6: FY17 Banking Operations Performance
Banking Ops performance FY17 Banking Operations Performance Net profit before GEH contribution (“Banking Operations”) increased 6% YoY to S$3.18b FY17 FY16 YoY Banking Operations S$m S$m +/(-)% Net interest income 5,333 4,955 8 Non-interest income 2,712 2,590 5 Total income 8,045 7,545 7 Operating e
Slide 7: 4Q17 Banking Operations Performance
Banking Ops performance 4Q17 Banking Operations Performance 4Q17 net profit for Banking Operations up 7% YoY to S$673m 4Q17 3Q17 QoQ 4Q16 YoY Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,403 1,360 3 1,227 14 Non-interest income 650 674 (4) 660 (1) Total income 2,053 2,034 1 1,8
Slide 8: Agenda
Agenda Results Overview FY17 & 4Q17 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 8
Slide 9: Performance by geography and business
Earnings Performance by geography and business Earnings well-diversified across key geographical and business segments FY17 Operating Profit FY17 PBT by Business1/ by Geography OCBC Wing Singapore Hang 2/ Others S$2.88b YoY: +34% 7% 4% Greater FY17 China FY17 Malaysia Global within which 19% 9% OCBC
Slide 10: Net interest income
Net interest income Net interest income FY17 NII rose 7% YoY, driven by robust asset growth; NIM steadily improved over each successive quarter in FY17 1.75% 1.67% 1.67% 1.68% 1.66% 1.67% Net interest 1.65% 1.63% 1.65% margin 1.62% 1.62% (“NIM”) 5,423 5,189 5,052 1,424 1,382 1,345 1,307 1,260 1,251
Slide 11: Non-interest income
Non-interest income Non-interest income FY17 non-interest income increased 23% YoY from broad-based growth, led by higher fee and insurance income Non- 44.0% 43.9% 45.8% 43.7% 42.5% 43.4% interest 40.5% 40.5% 41.4% 36.6% 38.5% income / Total income 4,213 1,205 1,053 3,533 3,437 1,027 978 970 977 299
Slide 12: Wealth Management
Wealth management Wealth Management FY17 wealth management income rose 43% from robust growth across key customer segments; BOS’ AUM rose 25% YoY to US$99b Wealth Management Income1/ (S$m) Bank of Singapore Earning Asset Base (US$b) As % of Group income Dec 13 – Dec 17 38% CAGR 21% 121 34% 97 32% 33
Slide 13: Fees & Commissions
Non-interest income Fees & Commissions FY17 fee income grew 19%, underpinned by a 45% rise in wealth management fees 19.3% 20.3% 20.3% 19.4% 19.3% 21.4% 20.5% 20.7% Fee income / 18.8% 18.2% 18.7% Total income 1,953 299 1,643 1,638 94 492 488 491 257 481 290 417 428 420 72 72 86 63 71 84 528 374 29 2
Slide 14: Operating expenses
Operating expenses Operating expenses FY17 expenses up 6% YoY, largely driven by an increase in staff costs and expenditure associated with expanded business growth; CIR improved to 41.9% 44.6% 44.8% 45.5% 43.2% 45.1% 43.3% Cost / 42.0% 41.9% 41.4% 42.4% 40.6% Income 4,034 3,788 1,067 3,664 1,001 98
Slide 15: Allowances under SFRS(I) 9 and new MAS 612
Allowances Allowances under SFRS(I) 9 and new MAS 612 Group well-positioned to comply with SFRS(I) 9 and new MAS 612 requirements upon transition on 1 Jan 2018 Estimates based on 31 Dec 2017 As at 31 Dec 2017 position As at 1 Jan 2018 Under SFRS(I) 9, the Group is required to calculate credit loss E
Slide 16: Allowances
Allowances Allowances Excess portfolio allowances of S$887m released in 4Q17; OSV exposures drove the increase in specific allowances -7% YoY 726 671 -41% YoY 488 Net allowances for loans and 305 other assets (S$m) 167 166 168 169 156 178 88 FY15 FY16 FY17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 Net
Slide 17: Customer loans
Loans Customer loans Loans up 8% YoY and 2% QoQ to S$237b In constant ccy terms +8% YoY +11% YoY +2% QoQ +3% QoQ 232 237 225 229 Rest of the world 220 QoQ: +4% 208 205 209 30 31 YoY: +16% 1/ 28 29 26 22 22 24 Greater China QoQ: +3% 57 59 YoY: +9% 54 54 56 Customer 52 49 Loans (S$b) 49 Indonesia 19 2
Slide 18: Customer loans
Loans Customer loans Loans portfolio well-diversified across geographies and industries Customer Loans by Geography Customer Loans by Industry Rest of the World 1/ Other Asia Others Pacific 8% Dec 17 Housing loans Dec 17 13% 5% Singapore Manufacturing 7% 13% 5% 42% 5% 27% Dec 16 Greater China Dec 16
Slide 19: Greater China Customer Loans
Loans Greater China Customer Loans Loans up QoQ and YoY; NPL ratio lower at 0.4% and coverage ratios maintained 260% 157% 184% 171% 185% 185% Total 137% 148% allowances/ NPAs 0.7% 0.7% 0.7% 0.6% 0.6% NPL ratio 0.5% 0.4% 0.4% 57 59 56 54 54 4 52 3 49 49 4 2 2 4 4 2 4 2 2 2 4 4 Macau 2 2 Customer Loan
Slide 20: Oil & Gas exposure
Loans Oil & Gas exposure 0.91% 0.62% 0.59% 0.63% NPL 0.43% 0.45% 0.53% 0.61% QoQ decline largely due to lower OSV exposure ratio 1/ mainly from repayments and write-offs 17.1 15.8 15.8 16.0 (S$b) 14.3 2.1 14.8 17 14.1 14.1 2.4 2.2 2.5 2.2 16 1.7 1.7 1.9 15 (0.2) (0.9) (0.03) (0.03) 14 (S$b) 5% of to
Slide 21: Commodities exposure
Loans Commodities exposure NPL 0.10% 0.16% 0.13% 0.13% 0.12% 0.11% 0.05% 0.03% ratio 1/ QoQ increase largely due to a rise in short-term trade exposure 17.1 16.7 17.3 16.4 15.8 15.3 (S$b) 14.2 3.4 2.6 2.5 13.6 2.8 2.1 18 0.2 0.01 2.4 0.6 2.3 17 2.1 16 (0.2) (S$b) 6% of 15 total 14.8 14 12.9 13.7 13.
Slide 22: Asset quality
Asset quality Asset quality NPL ratio at 1.5%; NPA increased to S$3.47b mainly from downgrade of OSV exposures 1.1% 1.2% 1.3% 1.3% 1.3% 1.3% 1.5% 1.0% NPL ratio 3,468 53 2,983 NPAs 2,886 2,870 2,920 6521/ 61 55 (S$m) 2,488 2,585 103 60 334 374 365 232 2,221 108 388 131 304 376 307 323 67 372 354 588
Slide 23: NPL Ratio & Non-Performing Assets
Asset quality NPL Ratio & Non-Performing Assets Non-oil and gas related NPLs continued to be low NPL ratio NPAs 1.45% FY17 FY16 4Q17 3Q17 4Q16 1.26% 1.25% 1.25% 1.26% S$m S$m S$m S$m S$m 1.19% 1.14% 1.04% Opening 0.91% 2,886 2,039 2,983 2,920 2,585 balance 0.45% 0.53% 0.61% 0.62% 0.59% 0.63% 0.43% N
Slide 24: Customer deposits
Deposits Customer deposits Growth in customer deposits underpinned by 4% YoY increase in CASA balances; CASA ratio at 49.2% of total deposits 50.2% 51.1% 49.9% 50.9% 50.5% 49.3% 49.3% 49.2% CASA ratio 284 265 264 268 261 26 242 246 247 14 18 22 25 17 17 16 118 114 115 108 108 106 108 108 Customer De
Slide 25: Loans-to-Deposits Ratio
Funding Loans-to-Deposits Ratio Group LDR at 82.5% 84.7% 85.2% 85.3% 83.1% 82.9% 83.6% Group 82.2% 82.5% LDR1/ 284 265 264 268 261 26 Others 246 247 24 IDR 242 22 23 23 8 237 8 229 232 20 19 8 225 8 8 8 RMB 22 220 8 8 7 8 7 24 29 208 7 209 21 23 HKD 6 205 8 7 20 26 26 26 9 19 27 8 24 7 8 7 5 22 17 2
Slide 26: Funding & Liquidity
Funding Funding & Liquidity Well-diversified funding mix; customer deposits formed majority of the funding base; LCR comfortably above regulatory guidelines Funding Composition as of 31 Dec 2017 Wholesale Funding by Currency as of 31 Dec 2017 Others EUR 6% By Maturity: Customer deposits Current acco
Slide 27: Capital
Capital Capital Capital position remained robust and well above regulatory requirements Capital Adequacy Ratios (%) 17.3 17.5 17.6 17.2 17.1 16.5 16.1 16.2 15.5 15.6 15.1 15.1 14.9 Total CAR 14.2 15.1 13.9 14.0 14.6 14.9 14.7 13.9 Tier 1 CAR 13.3 13.0 13.1 Common Equity Tier 1 CAR Proforma Common Eq
Slide 28: Dividends
Dividends Dividends Proposed final dividend increased from 18 cents to 19 cents per share 42% 43% 40% 39% 38% Dividend Payout 37% Ratio 36.0 36.0 37.0 36.0 33.0 34.0 18.0 18.0 18.0 19.0 Net DPS 17.0 (cents) 17.0 Final net dividend Interim net dividend 16.0 17.0 18.0 18.0 18.0 18.0 2012 2013 2014 201
Slide 29: Agenda
Agenda Results Overview FY17 & 4Q17 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 29
Slide 30: Subsidiaries’ Performance
Major subsidiaries Subsidiaries’ Performance Major subsidiaries’ full year earnings all up and contributed 46% to the Group’s net profit Key Metrics FY17 FY16 YoY Net profit S$1,156m +96% S$589m NBEV S$548m S$470m +17% Great Eastern Holdings 41.5% NBEV margin -2.1ppt 43.6% TWNS S$1,321m S$1,078m +23
Slide 31: FY17 Great Eastern Holdings’ performance
Great Eastern FY17 Great Eastern Holdings’ performance Full year earnings contribution increased to S$968m from S$470m a year ago FY17 FY16 YoY GEH S$m S$m +/(-)% Profit from insurance business 907 533 70 - Operating profit 1/ 599 502 19 - Non-operating profit / (loss) 2/ 224 (46) 583 - Others 84 77
Slide 32: 4Q17 Great Eastern Holdings’ performance
Great Eastern 4Q17 Great Eastern Holdings’ performance 4Q17 net profit contribution to the Group higher QoQ and YoY at S$361m 4Q17 3Q17 QoQ 4Q16 YoY GEH S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 267 212 26 151 77 - Operating profit 1/ 156 160 (3) 114 37 - Non-operating profit / (loss)
Slide 33: GEH: Operating Profit
Great Eastern GEH: Operating Profit Full year operating profit up 19% from broad-based insurance business growth 19% YoY +37% YoY 599 568 21 14 159 160 502 156 148 3 8 5 124 13 134 136 Operating 33 5 4 123 36 40 profit from 137 119 114 5 insurance 2 37 34 3 business (S$m) 40 27 39 283 319 61 89 229
Slide 34: GEH: Non-operating profit
Great Eastern GEH: Non-operating profit FY17 non-operating profit of S$224m driven by realised investment gains, favourable equity markets and narrowing of credit spreads 224 Non-operating profit/(loss) from insurance 80 business 72 (S$m) 43 30 16 18 12 (35) (46) (41) FY15 FY16 FY17 1Q16 2Q16 3Q16 4
Slide 35: GEH: Total weighted new sales
Great Eastern GEH: Total weighted new sales TWNS rose 23% YoY to S$1.32b, led by strong agency and bancassurance sales growth in Singapore +23% YoY 1,321 +36% YoY 19 472 1/ 5 1,078 362 15 974 122 37 347 371 5 308 314 283 4 267 4 258 244 1/ 4 138 5 78 TWNS (S$m) 220 1/ 4 76 3 83 86 83 940 67 344 691
Slide 36: GEH: New business embedded value
Great Eastern GEH: New business embedded value NBEV grew 17% to S$548m driven by higher sales in Singapore and margin growth in Malaysia; NBEV margin at 41.5% 48.9% 47.4% NBEV 43.6% 43.7% 43.3% margin 41.5% 42.7% 39.6% 37.8% 38.2% (NBEV / Total 36.6% weighted new sales) 548 204 6 2 470 1/ 5 215 152
Slide 37: FY17 OCBC Wing Hang’s performance
OCBC Wing Hang FY17 OCBC Wing Hang’s performance Net profit up 18% YoY to HKD2.41b FY17 FY16 YoY OCBC Wing Hang HKD m HKD m +/(-)% Net interest income 4,254 3,794 12 Non-interest income 1,403 1/ 1,228 14 1/ Total income 5,657 5,022 13 Operating expenses (2,963) (2,673) 11 Operating profit 2,693 2,34
Slide 38: 4Q17 OCBC Wing Hang’s performance
OCBC Wing Hang 4Q17 OCBC Wing Hang’s performance 4Q17 net profit of HKD582m 4Q17 3Q17 QoQ 4Q16 YoY OCBC Wing Hang HKD m HKD m +/(-)% HKD m +/(-)% Net interest income 1,160 1,103 5 1,015 14 Non-interest income 248 566 1/ (56) 1/ 360 (31) Total income 1,408 1,669 (16) 1,375 2 Operating expenses (779)
Slide 39: OCBC Wing Hang: Revenue
OCBC Wing Hang OCBC Wing Hang: Revenue FY17 net interest income rose 12%; 4Q17 NIM rose 6 bps over the previous quarter; non-interest income grew 14% Net interest income (HKD m) Non-interest income (HKD m) Net interest Non-int. income/ margin Total income 33.9% 23.0% 24.4% 24.8% 27.0% 26.2% 22.1% 23
Slide 40: OCBC Wing Hang: Loans & Deposits
OCBC Wing Hang OCBC Wing Hang: Loans & Deposits Loans and deposits increased 11% and 15% YoY respectively; NPL ratio of 0.5% lower YoY and QoQ Gross Loans (HKD b) Deposits (HKD b) Loans / Deposits 1/ NPL ratio 0.7% 0.7% 0.9% 0.8% 0.9% 0.8% 69.9% 70.7% 69.8% 71.2% 72.3% 71.7% 71.8% 70.3% 0.6% 0.5% 18
Slide 41: FY17 OCBC Malaysia’s Performance
OCBC Malaysia FY17 OCBC Malaysia’s Performance Net profit rose 17% to RM949m FY17 FY16 YoY OCBC Malaysia RM m RM m +/(-)% Net interest income 1,405 1,309 7 Islamic banking income 1/ 450 470 (4) Non-interest / finance income 607 560 8 Total income 2,462 2,339 5 Operating expenses (1,094) (1,066) 3 Op
Slide 42: 4Q17 OCBC Malaysia’s Performance
OCBC Malaysia 4Q17 OCBC Malaysia’s Performance 4Q17 net profit up 50% YoY to RM241m 4Q17 3Q17 QoQ 4Q16 YoY OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 359 355 1 329 9 Islamic banking income 1/ 116 108 7 109 6 Non-interest / finance income 187 128 46 157 19 Total income 662 591 12
Slide 43: OCBC Malaysia: Revenue
OCBC Malaysia OCBC Malaysia: Revenue FY17 net interest/finance income up 2% YoY; NIM increased 4bps to 1.95%; non- interest/finance income rose 14% Net interest/finance income (RM m) Non-interest/finance income1/ (RM m) Net interest/ Non-interest/finance finance margin income/ Total income 27.7% 29.
Slide 44: OCBC Malaysia: Loans & Deposits
OCBC Malaysia OCBC Malaysia: Loans & Deposits Customer loans at RM68b, NPL ratio improved to 2.1%; deposits up 4% YoY at RM74b with CASA ratio at 30.4% Gross Loans (RM b) Deposits (RM b) Loans / NPL Ratio Deposits 2.3% 2.3% 94.2% 92.4% 92.7% 94.2% 2.1% 2.1% 2.2% 2.1% 2.1% 90.3% 89.7% 90.5% 91.5% 1.9
Slide 45: FY17 OCBC NISP’s performance
OCBC NISP FY17 OCBC NISP’s performance Net profit increased 22% YoY to IDR2.18t FY17 FY16 YoY OCBC NISP IDR b IDR b +/(-)% Net interest income 6,039 5,393 12 Non-interest income 1,513 1,416 7 Total income 7,552 6,809 11 Operating expenses (3,363) (3,151) 7 Operating profit 4,189 3,658 15 Allowances
Slide 46: 4Q17 OCBC NISP’s performance
OCBC NISP 4Q17 OCBC NISP’s performance 4Q17 net profit rose 17% YoY to IDR507b 4Q17 3Q17 QoQ 4Q16 YoY OCBC NISP IDR b IDR b +/(-)% IDR b +/(-)% Net interest income 1,574 1,537 2 1,415 11 Non-interest income 367 383 (4) 316 16 Total income 1,941 1,920 1 1,731 12 Operating expenses (886) (826) 7 (788)
Slide 47: OCBC NISP: Revenue
OCBC NISP OCBC NISP: Revenue FY17 net interest income up 12%; non-interest income 7% higher Net interest income (IDR b) Non-interest income (IDR b) Net interest Non-int. income/ margin Total income 4.79% 4.62% 4.62% 4.47% 4.49% 4.60% 4.31% 4.67% 4.48% 4.41% 23.1% 21.8% 4.07% 20.8% 20.0% 20.5% 21.3%
Slide 48: OCBC NISP: Loans & Deposits
OCBC NISP OCBC NISP: Loans & Deposits Loans grew 14% YoY, NPL ratio lower at 1.8%; deposits up 10% Gross Loans (IDR t) Deposits (IDR t) Loans / NPL Ratio Deposits 1.9% 1.9% 1.9% 1.9% 1.8% 94.7% 92.8% 92.1% 94.3% 1.4% 1.4% 1.5% 89.9% 89.8% 93.4% 85.9% 103 106 115 113 101 110 94 104 106 93 85 86 88 93
Slide 49: Thank You
2017 Full Year Results Thank You
Oversea-Chinese Banking — FY2017 Earnings Presentation on 6ix