Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Investor Presentation (February 2011)
30 slides from Oversea-chinese Banking's investor presentation, Feb 18, 2011
Slide 1: Presentation to Media and Analysts: New Horizons III
Presentation to Media and Analysts New Horizons lll ] 18 February 2011 1
Slide 2: Agenda
Agenda • Progress against New Horizons ll • Market Scan • New Horizons IIl • Conclusion Appendix: 2010 New Horizons II Report Card 2
Slide 3: New Horizons II: Overview
New Horizons ll: Overview Through the steady execution of our New Horizons I (2003–2005) and New Horizons II (2006–2010) strategies, we made good progress in transforming OCBC into a larger, stronger and more diversified financial services group: • Steadily improved our market position in Singapore
Slide 4: New Horizons II: Financial Performance
New Horizons ll: Financial Performance 5-Year CAGR: Core Revenue 13%, Core Net Profit 12% 13.4% Core 12.2% 12.1% ROE 11.4% 11.8% 9.9% 5,325 4,815 4,188 4,241 3,242 2,887 2,253 S$m 1,962 1,878 1,443 1,486 2,223 1,298 1,854 1,796 1,680 1,145 1,331 2005 2006 2007 2008 2009 2010 Core Revenue Expenses Al
Slide 5: New Horizons II: Financial Performance
New Horizons ll: Financial Performance 5-Year CAGR: Net Interest Income 13% 2.27% 2.23% 2.10% 2.00% 1.98% 1.84% Net interest margin 2,825 2,947 2,783 2,244 1,794 1,597 Net interest income (S$m) 2005 2006 2007 2008 2009 2010 5
Slide 6: New Horizons II: Financial Performance
New Horizons ll: Financial Performance 5-Year CAGR: Adjusted Net Interest Income 12% 2.00% 2.07% 1.90% 1.89% 1.89% Adjusted 1.82% net interest margin* 2,813 2,336 2,396 2,208 1,792 1,585 Adjusted net interest income* (S$m) 2005 2006 2007 2008 2009 2010 * Allowances for loans and other assets deducte
Slide 7: New Horizons II: Shareholder Value
New Horizons ll: Shareholder Value 5-Year CAGR: Core EPS 11%, DPS 10% 58% 49% 46% 44% 46% Dividend 44% Payout Ratio 66.1 59.7 59.4 45.4 46.1 40.1 30.0 EPS / DPS 28.0 28.0 28.0 (cents) 23.0 18.4 2005 2006 2007 2008 2009 2010 Core EPS Dividend Per Share 7
Slide 8: New Horizons II: Shareholder Value
New Horizons ll: Shareholder Value • Realised S$820m gains from divestments of non-core assets, and invested S$3.2bn in acquiring / increasing stakes in ING Asia Pte Bank, GEH, OCBC NISP, BoN, VP Bank, PacificMas and AVIC Trust (formerly South China Trust) • Raised S$6.1bn in alternative Tier 1 & Ti
Slide 9: New Horizons II: Relative Share Price Performance
New Horizons ll: CAGR 2006-2010: Price Total Shareholder Return Relative Share Price Performance OCBC : 8% OCBC : 12% STI : 6% STI : 10% 80 60 OCBC : +47% 40 STI : +36% 20 0 -20 -40 -60 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 9
Slide 10: Agenda
Agenda • Progress against New Horizons ll • Market Scan • New Horizons IIl • Conclusion Appendix: 2010 New Horizons II Report Card 10
Slide 11: Looking Ahead
Looking Ahead • Healthy economic growth in our key markets, underpinned by political stability, pro-business policies, increased expenditure on infrastructure, rising affluence and continued growth in China • Asia’s outstanding growth rates will cause competition to intensify – the competition will
Slide 12: Agenda
Agenda • Progress against New Horizons ll • Market Scan • New Horizons IIl • Conclusion Appendix: 2010 New Horizons II Report Card 12
Slide 13: New Horizons III
New Horizons lll Balanced Business • Continue to drive performance through a Balanced Scorecard Business Scorecard Customer Experience • Maintain focus on delivering a superior and differentiated customer experience to gain a sustainable competitive advantage International • Further deepen business
Slide 14: Maintain use of Balanced Business Scorecard
New Horizons lll • Maintain use of Balanced Business Scorecard Continue our disciplined approach to drive performance improvement through a balanced business scorecard, focusing on customers, products, risk management, productivity, people and shareholder value: – Strengthen our market position in S
Slide 15: Focus on Customer Experience delivery
New Horizons lll • Focus on Customer Experience delivery Maintain focus on delivering a superior and differentiated customer experience to gain a sustainable competitive advantage: – Leverage our customer insights (from survey of customers and mining of ‘GIFTS’ complaints platform) to develop and im
Slide 16: Deepen business presence in Malaysia, Indonesia and Greater China
New Horizons lll • Deepen business presence in Malaysia, Indonesia and Greater China – Expand our distribution capabilities in Malaysia and strive to take market share, including Islamic banking and Takaful insurance – Build on the enlarged OCBC NISP franchise in Indonesia to invest and grow more ef
Slide 17: Leverage on Group Synergies
New Horizons lll • Leverage on Group Synergies – Opportunity to differentiate OCBC by further leveraging on synergies among the entities within the Group, which include OCBC Malaysia, OCBC Al Amin, OCBC NISP, OCBC China, GEH, Lion Global, Bank of Singapore, OCBC Securities, and PacificMas – Broaden
Slide 18: Shareholder Value Commitment
New Horizons lll • Shareholder Value Commitment Our key financial targets remain unchanged: – Deliver 10% annual growth in EPS – Achieve and sustain ROE of 12% – Maintain our 45% dividend pay-out ratio 18
Slide 19: Agenda
Agenda • Progress against New Horizons ll • Market Scan • New Horizons IIl • Conclusion Appendix: 2010 New Horizons II Report Card 19
Slide 20: Conclusion
Conclusion • New Horizons lll is about: – Continuing to improve overall performance through the Balanced Business Scorecard – Gaining sustainable competitive advantage by delivering a differentiated customer experience – Deepening business presence in Singapore, Malaysia, Indonesia and Greater China
Slide 21: Appendix: 2010 New Horizons II Report Card
Appendix: 2010 New Horizons ll Report Card 21
Slide 22: Customers – Consumers
Customers – Consumers • Total customers increased 3% through +3% continued growth in target segments +5% +11% • Maintained AUM per customer despite growth in new customers +10% +7% • Continued to leverage on customer insights +2% to drive products and service improvements and innovations Tested ne
Slide 23: Customers – Businesses
Customers – Businesses +15% +10% +9% • Sustained growth of 9% in SME customer +15% base +6% +3% • Cross-sell ratio* declined 4%, as asset revenue growth of 21% outpaced non-asset revenue growth of 10% where the growth in deposit earnings was depressed by the low interest rate environment 2005 2006 2
Slide 24: Product Innovation
Product Innovation • Innovation index improved to 6% • Continued recognition for our improved 81 product capabilities 84 80 78 61 66 Best SME Bank (Cash Management) in S’pore (The Asset) and Best Foreign Cash Management Bank in M’sia (Asiamoney) 2005 2006 2007 2008 2009 2010 Best Trade Finance B
Slide 25: Risk Management
Risk Management • Adopted Basel II since 1 Jan 2008 S&P Moody’s Fitch Pillar 1 2010 A+ Aa1 AA- – Refined and expanded internal ratings framework 2009 A+ Aa1 AA- with significant RWA optimization – Adopted IRB approach for about 80%of credit 2008 A+ Aa1 AA- portfolios 2007 A+ Aa1 AA- Pillar 2 2006 A+
Slide 26: Productivity
Productivity 43.7% 42.3% 39.6% 41.1% 40.1% 37.3% • Productivity gains of 13% and unit cost reduction of 2% across processing centres in Singapore and Malaysia • Hubbed additional processes to Malaysia, with incremental annualised savings of 2005 2006 2007 2008 2009 2010 S$0.5 million Cost to Income
Slide 27: People
People • Employee engagement score up for the 8th consecutive year since 2002 +6% +5% +5% +5% • Employee shareholding above 50% +2% • Average training days per staff increased +1% 12%, 70% above annual target 2005 2006 2007 2008 2009 2010 * Employee Engagement Score Improvement 60% 53% 52% 29% 39% 3
Slide 28: Shareholder Value
Shareholder Value • ROE stable at 12.1%, meeting 12% target 13.4% (2006-2010 average: 11.9%, cash ROE 12.2% 12.1% 12.2%) 11.4% 11.8% 9.9% • Core EPS grew by 11%, exceeding 10% target (2006-2010 CAGR: 11%; cumulative EPS growth 65%) • Increased dividend to 30 cents per share, 2005 2006 2007 2008 2009
Slide 29: Overseas Expansion
Overseas Expansion Malaysia • Joined the MEPS Network which will provide our customers with access to 10,000 ATMs network nationwide Indonesia • Launched internet banking services and provided customers with access to OCBC’s ATM network in Singapore. • Merged Bank OCBC Indonesia with OCBC NISP to cr
Slide 30: In a Nutshell
In a Nutshell • We have executed well against our New Horizons ll strategy Improved our performance capabilities through the balanced business scorecard Increased our penetration in the New Horizons countries of Singapore, Malaysia, Indonesia and China • Our progress are increasingly being recog
Oversea-Chinese Banking — Investor Presentation (February 2011) on 6ix