Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q2 2011 Earnings Presentation
47 slides from Oversea-chinese Banking's earnings presentation, Aug 4, 2011
Slide 1: Second Quarter 2011 Results Presentation
Second Quarter 2011 Results Presentation 4 August 2011
Slide 2: Agenda
Agenda Results Overview Performance Trends Appendix: Financial Highlights of Malaysia and Indonesia Subsidiaries Notes: Amounts less than S$0.5 million are shown as “0”; NM denotes not meaningful; Due to rounding, figures may not sum to stated totals 2
Slide 3: Highlights
Results Overview Highlights Second quarter performance underpinned by record revenue • Record net interest income was driven by broad-based loan growth; net interest margin compression slowed • Strong non-interest income led by record fee income, underpinned by trade-related fees and service charges
Slide 4: 2Q11 core net profit of $577m up 15% YoY, down 3% QoQ
Results Overview 2Q11 core net profit of $577m up 15% YoY, down 3% QoQ 2Q11 2Q10 YoY 1Q11 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net Interest Income 827 720 15 784 6 Non-Interest Income 586 516 13 618 (5) Total Income 1,413 1,236 14 1,402 1 Operating Expenses (618) (559) 11 (581) 6 Operating Profi
Slide 5: 1H11 core net profit of $1,173m, up 9% HoH, flat YoY
Results Overview 1H11 core net profit of $1,173m, up 9% HoH, flat YoY 1H11 1H10 YoY 2H10 HoH OCBC Group S$m S$m +/(-)% S$m +/(-)% Net Interest Income 1,611 1,424 13 1,523 6 Non-Interest Income 1,204 1,197 1 1,181 2 Total Income 2,815 2,621 7 2,704 4 2/ Operating Expenses (1,199) (1,061) 13 (1,193) 1
Slide 6: Key ratios
Results Overview Key ratios 2Q11 1Q11 2Q10 1H11 1H10 Based on core earnings % % % % % Net Interest Margin 1.87 1.90 1.96 1.88 2.00 Non-Interest Income / Total Income 41.4 44.1 41.8 42.8 45.7 Costs / Income 43.7 41.5 45.2 42.6 40.5 Loans / Deposits 89.1 86.8 83.7 89.1 83.7 NPL Ratio 0.8 0.9 1.3 0.8 1
Slide 7: ROE of 11.8% for 1H11
Results Overview ROE of 11.8% for 1H11 15.3% Core ROE* 12.2% 12.1% 11.8% 12.0% 12.2% 10.9% 11.4% 10.3% 2,253 676 1,962 596 570 577 503 505 Core Net Profit (S$m) 1,173 1,179 1H 1,011 2009 2010 1H11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 * Annualised 7
Slide 8: Profit contribution by business and geography
Results Overview Profit contribution by business and geography 1H11 PBT 1H11 PBT By Business* by Geography Rest of the Other Asia World Others Pacific Greater 19% Rest of China 11% 3% 2% Southeast 7% Global Asia 4% Insurance Corporate 17% 40% Banking 60% Singapore Malaysia 24% 19% 13% Global Treasur
Slide 9: GEH: 2Q11 net profit contribution up 67% YoY
Results Overview GEH: 2Q11 net profit contribution up 67% YoY 2Q11 2Q10 YoY 1Q11 QoQ GEH Contribution S$m S$m +/(-)% S$m +/(-)% Total Income 194 132 47 221 (12) Operating Expenses (51) (35) 46 (40) 27 Operating Profit 144 96 48 180 (20) Amortisation of Intangibles (12) (11) 0 (12) 0 Allowances (0) (
Slide 10: GEH: 1H11 net profit contribution up 10% YoY
Results Overview GEH: 1H11 net profit contribution up 10% YoY 1H11 1H10 YoY 2H10 HoH GEH Contribution S$m S$m +/(-)% S$m +/(-)% Total Income 415 379 10 395 5 Operating Expenses (92) (78) 19 (81) 13 Operating Profit 323 301 7 313 3 Amortisation of Intangibles (23) (24) (4) (23) 0 Allowances (0) (4) (
Slide 11: Results excluding GEH: 2Q11 core net profit up 8% YoY and 4% QoQ
Results Overview Results excluding GEH: 2Q11 core net profit up 8% YoY and 4% QoQ 2Q11 2Q10 YoY 1Q11 QoQ OCBC excluding GEH S$m S$m +/(-)% S$m +/(-)% Net Interest Income 815 703 16 773 5 Non-Interest Income 403 401 0 409 (1) Total Income 1,218 1,104 10 1,182 3 Operating Expenses (567) (524) 8 (541)
Slide 12: Results excluding GEH: 1H11 core net profit up 9% HoH, down 3% YoY
Results Overview Results excluding GEH: 1H11 core net profit up 9% HoH, down 3% YoY 1H11 1H10 YoY 2H10 HoH OCBC excluding GEH S$m S$m +/(-)% S$m +/(-)% Net Interest Income 1,587 1,389 14 1,487 7 Non-Interest Income 812 853 (5) 823 (1) Total Income 2,400 2,242 7 2,309 4 Operating Expenses (1,107) (98
Slide 13: Net interest income up 6% QoQ
Performance Trends Net interest income up 6% QoQ; slight narrowing in margins was partly due to strong growth in lower-risk loans 2.23% Net interest margin 1.98% 2.03% 1.96% 1.98% 1.96% 1.88% 1.90% 1.87% 2,947 2,825 827 784 754 769 720 704 Net interest income (S$m) 1,611 1H 1,450 1,424 2009 2010 1H1
Slide 14: Net interest income adjusted for allowances increased 10% YoY and 5% QoQ
Performance Trends Net interest income adjusted for allowances increased 10% YoY and 5% QoQ Adjusted 1.89% 1.89% 1.96% 1.91% net interest 1.86% 1.83% 1.78% margin* 1.76% 1.74% 2,813 2,396 771 735 711 721 702 679 Adjusted net interest 1,506 income* (S$m) 1,381 1H 1,149 2009 2010 1H11 1Q10 2Q10 3Q10 4
Slide 15: Non-interest income up 13% YoY
Performance Trends Non-interest income up 13% YoY, strong growth in key components except other income 49.2% Non- 44.7% 45.1% interest 41.3% 42.8% 41.8% 42.1% 44.1% 41.4% income / Total income 2,378 681 1,990 669 621 618 586 560 489 236 516 144 121 86 Non- 176 interest 586 114 1,204 137 income 179 (
Slide 16: Fee income increased 20% YoY and 9% QoQ
Performance Trends Fee income increased 20% YoY and 9% QoQ, led by trade-related fees, service charges and fund management income 299 983 274 257 254 56 144 248 42 224 34 730 80 35 39 27 29 37 26 12 126 26 573 16 Fees and 54 401 commissions 98 99 115 103 (S$m) 97 106 56 95 319 214 169 42 45 46 42 41
Slide 17: GEH: Profit from life assurance declined QoQ
Performance Trends GEH: Profit from life assurance declined QoQ as investment profit from non-participating funds were lower 514 437 125 156 94 146 150 26 24 27 Profit from life 256 106 assurance * 292 (S$m) 240 56 29 69 105 66 99 92 139 26 18 47 16 19 96 104 61 25 33 31 30 23 24 2009 2010 1H11 1Q10
Slide 18: GEH: Underlying insurance business is strong
Performance Trends GEH: Underlying insurance business is strong, with total weighted new sales up 16% YoY 238 19 724 50 190 189 601 14 174 10 13 163 95 12 290 10 133 73 70 258 55 Weighted 7 new 364 80 business 22 45 premiums (S$m) 128 123 384 106 108 107 330 81 73 215 2009 2010 1H11 1Q10 2Q10 3Q10 4
Slide 19: GEH: New business embedded value up 23% YoY
Performance Trends GEH: New business embedded value up 23% YoY 44% 43% 43% NBEV / 42% 42% 42% 42% Total 41% weighted 39% new sales 305 102 13 5 84 235 77 2 3 39 73 129 68 4 3 3 NBEV 58 38 104 157 (S$m) 2 33 31 5 34 22 70 164 58 128 40 40 43 34 31 83 2009 2010 1H11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 Singa
Slide 20: Other non-interest income decreased 24% YoY
Performance Trends Other non-interest income decreased 24% YoY on lower gains from investment securities and lower trading income 669 236 54 10 67 176 489 213 13 87 144 Other non- 47 58 15 121 interest 114 income 15 (S$m) 17 44 86 25* 207 159 13 402 28 54 344 117 32 57* 85 81 122 43 41 2009 2010 1H1
Slide 21: Wealth management revenue increased 29% YoY
Performance Trends Wealth management revenue increased 29% YoY 27.1% 27.0% 25.9% 26.1% As % of 24.7% 24.8% 23.5% Group 21.9% revenue 21.3% 1,317 373 378 361 350 1,027 312 Wealth 271 management revenue* 728 (S$m) 633 632 1H 2009 2010 1H11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 * Comprises the consolidated rev
Slide 22: Expenses increased 6% QoQ on higher staff costs
Performance Trends Expenses increased 6% QoQ on higher staff costs and other expenses linked to increased business volumes 46.6% 45.2% 42.6% 43.7% Costs / 42.3% 41.7% 41.5% Income 37.3% 36.2% 2,254 620 618 573 581 564 559 31 1,796 502 136 137 146 120 132 452 Operating 407 117 expenses 109 1,199 110
Slide 23: Core operating profit increased 17% YoY
Performance Trends Core operating profit increased 17% YoY 3,019 3,071 883 802 821 795 709 677 Core operating 1,616 profit before allowances (S$m) 1,688 1,560 1H 2009 2010 1H11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 23
Slide 24: Net allowances increased as portfolio allowances grew
Performance Trends Net allowances increased as portfolio allowances grew in line with loan growth, impacting quarterly earnings 429 Net allowances for loans and other assets (S$m) 301 1H 134 105 48 49 56 43 25 18 43 2009 2010 1H11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 24
Slide 25: Breakdown of allowances
Performance Trends Breakdown of allowances 2Q11 1Q11 2Q10 1H11 1H10 S$m S$m S$m S$m S$m Specific allowances for loans 3 12 11 15 16 Portfolio allowances for loans 54 30 5 84 35 Allowances for other assets (1) 7 2 6 (8) (Write-back) Total net allowances 56 49 18 105 43 Specific loan allowances/ 1 4 5
Slide 26: Movement in specific allowances for loans
Performance Trends Movement in specific allowances for loans 2Q11 1Q11 2Q10 1H11 1H10 S$m S$m S$m S$m S$m Allowances for new and 41 54 55 95 123 existing NPLs Write-backs 1/ (26) (29) (32) (54) (87) Recoveries 2/ (12) (13) (12) (26) (22) Net Specific Allowances 3 12 11 15 16 1/ Write-backs of specif
Slide 27: Loan growth of 27% YoY and 9% QoQ
Performance Trends Loan growth of 27% YoY and 9% QoQ; strong momentum in all key markets Loan growth Group QoQ: +9% YoY: +27% 121.2 YTD: +14% 110.9 106.4 International 101.8 QoQ: +16% 95.5 36.7 YoY: +42% 90.4 YTD: +25% 31.5 29.3 27.6 25.8 Malaysia 23.6 QoQ: +6% 18.9 Customer 17.8 YoY: +14% Loans (S$
Slide 28: Loan book remains diversified across geographies and sectors
Performance Trends Loan book remains diversified across geographies and sectors Customer Loans by Geography* Customer Loans by Industry As at 30 June 2011 As at 30 June 2011 Agriculture, Others Others mining & quarrying Rest of Housing Loans Southeast 12% Singapore Transport, storage & Comm 9% Asia
Slide 29: Customer deposits increased 20% YoY and 7% QoQ
Performance Trends Customer deposits increased 20% YoY and 7% QoQ 86.5% 85.1% 86.8% 89.1% 83.7% Loans / 81.9% Deposits 85.0% 134.3 123.3 126.0 116.0 112.3 108.5 59.4 58.6 56.6 Deposits 56.9 57.5 55.6 (S$b) 26.1 26.6 25.6 CASA 23.8 24.7 22.7 48.5% ratio: 45.9% 46.5% 44.9% 47.6% 42.7% 31.7 35.0 37.3 2
Slide 30: NPL ratio improved to 0.8%
Performance Trends NPL ratio improved to 0.8% 1.5% NPL ratio 1.3% 1.1% 0.9% 0.9% 0.8% 1,402 1,316 83 56 1,170 1,208 1,191 1,201 323 55 292 213 215 288 253 NPAs* 199 (S$m) 243 229 562 567 494 478 463 444 434 401 368 318 270 240 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Singapore NPLs Malaysia NPLs In
Slide 31: 68% of NPAs in the substandard category
Performance Trends 68% of NPAs in the “substandard” category – typically well-collateralised or no overdues 1,402 1,316 250 1,170 1,208 1,191 1,201 261 212 172 168 224 NPAs* 500 252 216 414 217 (S$m) 292 779 767 817 652 641 654 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sub-standard NPAs Doubtful NPA
Slide 32: Movement in NPAs
Performance Trends Movement in NPAs 2Q11 1Q11 2Q10 1H11 1H10 S$m S$m S$m S$m S$m NPAs - Opening Balance 1,191 1,208 1,403 1,208 1,449 New NPAs 222 135 124 357 247 Net Recoveries/Upgrades (170) (129) (155) (299) (266) Write-offs (42) (23) (56) (65) (114) NPAs - Closing Balance 1,201 1,191 1,316 1,201
Slide 33: Allowance coverage ratios of 123% of total NPAs
Performance Trends Allowance coverage ratios of 123% of total NPAs and 311% of unsecured NPAs 400% 350% 350% 311% 288% 300% 271% 272% Total 266% allowances / Unsecured 250% NPAs 200% 150% 126% 123% 123% 119% 107% 112% Total allowances 100% / NPAs 50% 0% Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 33
Slide 34: Capital ratios remained strong
Performance Trends Capital ratios remained strong: Tier 1 ratio of 15.4% and Core Tier 1 of 11.9% 17.6% 17.3% 17.0% CAR 16.3% 1.3% 15.5% 1.8% 1.6% (% of RWA) 15.2 % 1.0% 0.3% 0.8% 3.7% 3.7% 3.5% 3.5% 3.7% 16.3% Tier 2 capital 3.7% 15.5% 15.4% 15.3% 15.2% Tier 1 preference 14.4% shares Core Tier 1 12
Slide 35: Interim dividend of 15 cents per share
Performance Trends Interim dividend of 15 cents per share 30.0 28.0 28.0 28.0 Net DPS (cents) 23.0 15.0 14.0 14.0 14.0 12.0 Final net dividend Interim net dividend 14.0 14.0 14.0 15.0 15.0 11.0 2006 2007 2008 2009 2010 1H11 Net Dividends (S$m) 709 864 868 897 994 508 Core Net Profit (S$m) 1,443 1,87
Slide 36: OCBC Malaysia: Net interest income up 6% YoY
Performance Trends OCBC Malaysia: Net interest income up 6% YoY, Non-interest income up 38% YoY Net Interest Income and Islamic Non-Interest Income (RM m) Banking Income (RM m) Net Non-int. income/ interest Total income margin 2.46% 2.55% 2.42% 2.39% 31.2% 29.3% 2.27% 2.29% 27.3% 26.2% 24.2% 19.9% 3
Slide 37: OCBC Malaysia: Loan growth of 17% YoY and 7% QoQ
Performance Trends OCBC Malaysia: Loan growth of 17% YoY and 7% QoQ; NPL ratio continued to improve Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 3.6% 3.6% 83.4% 83.9% 81.7% 83.7% 3.1% 2.8% 80.3% 81.5% 2.6% 2.4% 47.4 43.2 43.4 39.4 40.5 39.6 40.6 34.8 36.1 36.9 33.2 33.8 Mar-10 Jun-1
Slide 38: OCBC NISP: Net interest income up 10% YoY
Performance Trends OCBC NISP: Net interest income up 10% YoY, Non-interest income up 30% YoY Net Interest Income (Rp b) Non-Interest Income (Rp b) Net Non-int. income/ interest Total income margin 5.31% 5.07% 5.05% 5.05% 22.4% 22.7% 23.2% 22.7% 20.3% 20.0% 4.65% 4.68% 515 504 535 533 489 486 150 148
Slide 39: OCBC NISP: Loan growth of 28% YoY and 12% QoQ
Performance Trends OCBC NISP: Loan growth of 28% YoY and 12% QoQ; NPL ratio continued to improve Gross Loans (Rp t) Deposits (Rp t) NPL Ratio Loans/ 3.3% Deposits 83.5% 85.7% 3.0% 3.0% 78.9% 79.7% 80.0% 78.5% 2.0% 1.9% 1.8% 39.4 40.1 35.8 36.9 34.4 33.7 31.5 30.8 30.2 26.8 28.4 23.9 Mar-10 Jun-10 Se
Slide 40: Appendix
Appendix OCBC Malaysia: Financial Highlights OCBC NISP: Financial Highlights 40
Slide 41: OCBC Malaysia: 2Q11 net profit up 25% YoY and 9% QoQ
Appendix OCBC Malaysia: 2Q11 net profit up 25% YoY and 9% QoQ 2Q11 2Q10 YoY 1Q11 QoQ OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net Interest Income 297 281 6 289 3 Islamic Banking Income 44 39 13 44 - Non-Interest Income 141 102 38 118 19 Total Income 482 422 14 452 7 Operating Expenses (178) (171)
Slide 42: OCBC Malaysia: 1H11 net profit up 5% YoY and 17% HoH
Appendix OCBC Malaysia: 1H11 net profit up 5% YoY and 17% HoH 1H11 1H10 YoY 2H10 HoH OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net Interest Income 586 545 7 585 0 Islamic Banking Income 89 81 10 77 15 Non-Interest Income 260 241 8 207 26 Total Income 934 867 8 869 7 Operating Expenses (347) (315) 1
Slide 43: OCBC Malaysia: Key ratios
Appendix OCBC Malaysia: Key ratios 2Q11 1Q11 2Q10 1H11 1H10 OCBC Malaysia % % % % % Net Interest Margin 2.29 2.39 2.46 2.34 2.36 Non-Interest Income / Total Income 29.3 26.2 24.2 27.8 27.8 Costs / Income 36.9 37.4 40.5 37.1 36.3 Loans / Deposits 81.5 83.7 83.4 81.5 83.4 NPL Ratio 2.4 2.6 3.6 2.4 3.6
Slide 44: Bank OCBC NISP: 2Q11 net profit up 15% YoY and 14% QoQ
Appendix Bank OCBC NISP: 2Q11 net profit up 15% YoY and 14% QoQ 2Q11 2Q10 YoY 1Q11 QoQ Bank OCBC NISP RP b RP b +/(-)% RP b +/(-)% Net Interest Income 533 486 10 535 (0) Non-Interest Income 161 124 30 126 28 Total Income 694 610 14 661 5 Operating Expenses (425) (403) 5 (419) 1 Operating Profit 269
Slide 45: Bank OCBC NISP: 1H11 net profit up 6% YoY
Appendix Bank OCBC NISP: 1H11 net profit up 6% YoY and more than doubled HoH 1H11 1H10 YoY 2H10 HoH Bank OCBC NISP RP b RP b +/(-)% RP b +/(-)% Net Interest Income 1,068 975 10 1,018 5 Non-Interest Income 287 265 8 299 (4) Total Income 1,355 1,240 9 1,317 3 Operating Expenses (844) (787) 7 (807) 5 O
Slide 46: Bank OCBC NISP: Key ratios
Appendix Bank OCBC NISP: Key ratios 2Q11 1Q11 2Q10 1H11 1H10 Bank OCBC NISP % % % % % Net Interest Margin 4.68 5.05 5.07 4.85 5.19 Non-Interest Income / Total Income 23.1 20.0 20.3 21.2 21.4 Costs / Income 61.2 63.9 66.1 62.3 63.5 Loans / Deposits 85.7 83.5 79.7 85.7 79.7 NPL Ratio 1.8 1.9 2.9 1.8 2
Slide 47: Thank You
Second Quarter 2011 Results Thank You
Oversea-Chinese Banking — Q2 2011 Earnings Presentation on 6ix