Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q3 2017 Earnings Presentation
47 slides from Oversea-chinese Banking's earnings presentation, Oct 26, 2017
Slide 1: Third Quarter 2017 Results Presentation
Third Quarter 2017 Results Presentation 26 October 2017 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 accep
Slide 2: Agenda
Agenda Results Overview 3Q17 & 9M17 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: 3Q17 Highlights
Group performance 3Q17 Highlights Net profit for the quarter rose 12% YoY to S$1.1b; ROE at 11.4% Earnings Net Interest Income: S$1.4b Strong income growth across core markets and businesses (3Q16 : S$1.2b) Net profit (S$m) • All major subsidiaries’ local currency earnings up YoY +12% YoY Non-inte
Slide 4: 3Q17 Group Performance
Group performance 3Q17 Group Performance Net profit increased 12% YoY to S$1.1b 3Q17 2Q17 QoQ 3Q16 YoY OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,382 1,345 3 1,234 12 Non-interest income 978 1,053 (7) 970 1 Total income 2,360 2,398 (2) 2,204 7 Operating expenses (1,001) (992) 1 (953)
Slide 5: 9M17 Group Performance
Group performance 9M17 Group Performance Nine months net profit rose 16% YoY to S$3.1b 9M17 9M16 YoY OCBC Group S$m S$m +/(-)% Net interest income 3,999 3,801 5 Non-interest income 3,008 2,511 20 Total income 7,007 6,312 11 Operating expenses (2,967) (2,807) 6 Operating profit 4,040 3,505 15 Amortis
Slide 6: 3Q17 Banking Operations Performance
Banking Ops performance 3Q17 Banking Operations Performance Third quarter net profit before GEH contribution (“Banking Operations”) rose 2% QoQ and 10% YoY to S$863m 3Q17 2Q17 QoQ 3Q16 YoY Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,360 1,322 3 1,209 12 Non-interest income 674
Slide 7: 9M17 Banking Operations Performance
Banking Ops performance 9M17 Banking Operations Performance Nine months net profit for Banking Operations increased 6% YoY to S$2.5b 9M17 9M16 YoY Banking Operations S$m S$m +/(-)% Net interest income 3,931 3,728 5 Non-interest income 2,061 1,931 7 Total income 5,992 5,659 6 Operating expenses (2,78
Slide 8: Subsidiaries’ Performance
Major subsidiaries Subsidiaries’ Performance Major subsidiaries contributed 39% to the Group’s 9M17 net profit Key Metrics 9M17 9M16 YoY Net profit S$733m +86% S$394m Net Profit Contribution to the Group NBEV S$341m Great S$315m +8% Eastern Holdings NBEV margin 40.4% 43.5% -3.1ppt TWNS S$843m 19% +1
Slide 9: Agenda
Agenda Results Overview 3Q17 & 9M17 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 9
Slide 10: Profit before tax
Earnings Profit before tax Earnings well-diversified across key geographies and business segments 9M17 PBT 9M17 PBT by Business1/ by Geography OCBC Wing Singapore Hang 2/ Others S$2.1b YoY: +23% 8% 4% 9M17 Greater Global 9M17 China Malaysia Corporate / within which 8% OCBC Wing 20% 3% S$596m Insuran
Slide 11: Net interest income
Net interest income Net interest income 3Q17 NII up 3% QoQ and 12% YoY, driven by asset growth and higher NIM 1.67% 1.67% 1.75% 1.68% 1.64% 1.62% 1.63% 1.62% 1.65% 1.66% Net interest margin (“NIM”) 5,189 5,052 1,382 1,345 1,307 1,260 1,251 1,272 1,234 Net interest income (S$m) 9M 3,848 3,801 3,999 2
Slide 12: Non-interest income
Non-interest income Non-interest income 3Q17 non-interest income rose 1% YoY Non- 42.9% 44.0% 42.5% 43.4% 43.9% interest 40.5% 40.5% 41.4% 36.6% 38.5% income / Total income 3,533 3,437 136 1,053 3,008 970 977 978 649 926 781 278 727 788 199 211 238 228 429 753 182 146 112 91 96 552 529 276 122 162 8
Slide 13: Wealth Management
Wealth management Wealth Management 3Q17 wealth management income grew 18% YoY across consumer banking, private banking and insurance operations; BOS’ AUM rose 53% YoY and 6% QoQ to US$95b Wealth Management Income1/ (S$m) Bank of Singapore Earning Asset Base (US$b) As % of Group income Dec 12 – Dec
Slide 14: Fees & Commissions
Non-interest income Fees & Commissions 3Q17 fee income rose 14% YoY from broad-based income growth across the Group’s business segments 19.3% 20.9% 20.3% 19.4% 19.3% 21.4% 20.5% 20.7% 18.8% 18.2% Fee income / Total income 1,643 1,638 1,461 481 492 488 257 290 86 227 417 428 420 71 72 84 63 68 374 24
Slide 15: Operating expenses
Operating expenses Operating expenses Expenses grew only 1% QoQ as a result of ongoing cost discipline 44.6% 44.8% 45.5% 43.2% 45.1% 43.3% 42.0% 42.3% 41.4% 42.4% Cost / Income 3,788 3,664 981 973 992 1,001 678 953 673 923 932 2,967 191 179 178 198 162 160 166 763 555 737 186 205 192 195 195 Operati
Slide 16: Allowances
Allowances Allowances 3Q17 net allowances down QoQ & YoY; specific allowances largely set aside for restructured loans exhibiting ongoing weakness and for decline in collateral valuations 726 305 70 27 488 493 Net allowances for loans and 41 79 other assets 484 167 166 168 169 3 5 156 (S$m) 12 235 2
Slide 17: Customer loans
Loans Customer loans Broad-based YoY growth of 11% across most industry segments and key markets In constant ccy terms +11% YoY +12% YoY +2% QoQ +2% QoQ 229 232 220 225 Rest of the world 209 QoQ: +1% 208 205 30 1/ 28 29 YoY: +25% 26 22 22 24 Greater China QoQ: +3% 54 56 57 Customer 54 YoY: +16% 52 4
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 27% World 1/ 28% Other Asia Others 16% Pacific Housing loans 7% 12% 17% Sep 17 Sep 17 Singapore Manufacturing 6% 15% 6% 6%13% 13% 27% 5% Sep 16 G
Slide 19: Greater China Customer Loans
Loans Greater China Customer Loans Loans up QoQ and YoY; sound asset quality and coverage ratios maintained 260% 157% 184% 171% 185% Total 137% 148% allowances/ NPAs 0.7% 0.7% 0.7% 0.6% 0.6% NPL ratio 0.5% 0.4% 56 57 54 54 52 3 49 49 4 2 4 4 2 4 2 2 2 4 4 Macau 2 2 Customer Loans to Taiwan Greater 3
Slide 20: Oil & Gas exposure
Loans Oil & Gas exposure 0.53% 0.61% 0.62% 0.59% 0.63% 0.43% 0.45% NPL ratio 1/ Total O&G exposure remained relatively stable QoQ 17.1 15.8 15.8 16.0 14.1 14.3 14.1 2.1 (S$b) 2.4 2.2 2.5 17 1.7 1.7 1.9 0.1 0.1 16 0.2 15 -0.2 (S$b) 6% of total 14 15.0 12.4 12.6 13.4 13.6 13.5 customer 12.2 loans 13 1
Slide 21: Commodities exposure
Loans Commodities exposure 0.10% 0.16% 0.13% 0.13% 0.12% 0.11% 0.05% NPL ratio 1/ QoQ increase largely due to a rise in short-term trade exposure 17.1 16.7 16.4 15.8 (S$b) 15.3 14.2 13.6 3.4 2.6 2.8 2.1 18 2.4 2.3 17 0.2 0.3 2.1 0.6 16 (S$b) 6% of 15 -0.2 total customer 14 12.9 13.7 13.6 13.7 14.1 1
Slide 22: Asset quality
Asset quality Asset quality New NPA formation eased; NPL ratio of 1.3% stable over 4 quarters with healthy coverage ratios maintained 1.1% 1.2% 1.3% 1.3% 1.3% 1.3% 1.0% NPL ratio 2,920 2,983 2,886 2,870 61 55 103 60 2,585 334 NPAs 2,488 374 365 108 388 (S$m) 131 304 2,221 323 376 307 67 372 354 187
Slide 23: NPL Ratio & Non-Performing Assets
Asset quality NPL Ratio & Non-Performing Assets Excluding oil and gas NPLs, the NPL ratio continued to be stable over the past quarters. 3Q17 new NPAs lower compared to the previous quarter and a year ago NPL ratio NPAs 1.26% 1.25% 1.25% 1.26% 1.19% 3Q17 2Q17 3Q16 1.14% S$m S$m S$m 1.04% 0.61% 0.62%
Slide 24: Customer deposits
Deposits Customer deposits Growth in customer deposits underpinned by 9% YoY increase in CASA balances; CASA ratio at 50.5% of total deposits 50.2% 51.1% 49.9% 50.9% 50.5% 49.3% 49.3% CASA ratio 265 264 268 261 242 246 247 14 18 22 25 17 17 16 114 115 108 108 106 108 108 Customer Deposits (S$b) 48 5
Slide 25: Loans-to-Deposits Ratio
Funding Loans-to-Deposits Ratio Group LDR at 85.3% 84.7% 85.2% 85.3% Group 83.6% 83.1% 82.9% LDR1/ 82.2% 265 264 268 261 246 247 24 Others 242 22 23 23 229 232 8 IDR 20 19 8 225 8 8 22 220 8 8 7 8 RMB 7 209 7 23 208 6 205 7 21 26 8 20 26 26 9 19 27 HKD 24 7 8 7 17 23 18 7 6 5 23 17 5 5 22 7 7 22 22
Slide 26: Funding sources
Funding Funding sources Well-diversified funding mix; customer deposits formed majority of the funding base Funding Composition as of 30 Sep 2017 Wholesale Funding by Currency as of 30 Sep 2017 Others EUR By Maturity: 6% Current account 3% & savings deposits ≤ 1 year 78% Others Bank deposits 39% AUD
Slide 27: Capital
Capital Capital Capital position remained robust and well above regulatory requirements Capital Adequacy Ratios (%) 17.3 17.5 17.6 17.1 16.5 16.1 16.2 15.5 15.6 15.1 15.1 Total CAR 14.2 14.0 14.9 15.1 13.9 14.6 14.7 Tier 1 CAR 13.3 13.0 13.1 Common Equity Tier 1 CAR Proforma Common Equity 12.4 12.7
Slide 28: Agenda
Agenda Results Overview 3Q17 & 9M17 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 28
Slide 29: 3Q17 Great Eastern Holdings’ performance
Great Eastern 3Q17 Great Eastern Holdings’ performance Net profit contribution to the Group rose 22% YoY to S$194m 3Q17 2Q17 QoQ 3Q16 YoY GEH S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 212 245 (13) 173 23 - Operating profit 1/ 159 158 1 135 18 - Non-operating profit / (loss) 2/ 32 73 (
Slide 30: 9M17 Great Eastern Holdings’ performance
Great Eastern 9M17 Great Eastern Holdings’ performance Nine months earnings contribution up 96% to S$607m 9M17 9M16 YoY GEH S$m S$m +/(-)% Profit from insurance business 640 382 68 - Operating profit 1/ 438 384 14 - Non-operating profit / (loss) 2/ 149 (53) 380 - Others 53 51 4 Profit from Sharehold
Slide 31: GEH: Operating Profit
Great Eastern GEH: Operating Profit 3Q17 operating profit was up 18% YoY, mainly driven by the Singapore insurance business +18% YoY 561 13 158 159 496 3 8 121 13 438 132 135 Operating 32 16 5 4 122 35 profit from 134 117 112 5 insurance 106 2 33 36 3 business (S$m) 39 26 38 318 89 227 84 222 64 65
Slide 32: GEH: Non-operating profit
Great Eastern GEH: Non-operating profit 3Q17 non-operating profit at S$32m from favourable equity markets and narrowing of credit spreads 149 Non-operating 73 profit/(loss) from insurance 44 business 32 23 (S$m) 20 13 (33) (40) (40) 2015 2016 9M17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 Note: - Non-opera
Slide 33: GEH: Total weighted new sales
Great Eastern GEH: Total weighted new sales TWNS rose 16% YoY, led by growth in agency and bancassurance sales in Singapore 16% 1/ 1,068 YoY 16 966 37 343 843 5 361 306 14 281 5 305 265 4 1/ 134 256 234 242 4 76 5 1/ 218 4 74 3 81 TWNS 84 (S$m) 81 65 691 624 596 226 204 203 180 167 151 157 2015 2016
Slide 34: GEH: New business embedded value
Great Eastern GEH: New business embedded value 3Q17 NBEV at S$117m with NBEV margin of 38.1% 48.9% 47.4% NBEV 43.6% 43.8% 42.7% margin 39.5% 40.4% (NBEV / Total 37.8% 36.5% 38.1% weighted 1/ new sales) 465 5 150 382 2 4 153 129 341 1 121 117 4 1/ 50 2 132 103 103 2 38 121 1 1 1/ 43 41 83 1 36 37 NBE
Slide 35: 3Q17 OCBC Wing Hang’s performance
OCBC Wing Hang 3Q17 OCBC Wing Hang’s performance Net profit up QoQ and YoY in local currency terms 3Q17 2Q17 QoQ 3Q16 YoY OCBC Wing Hang HKD m HKD m +/(-)% HKD m +/(-)% Net interest income 1,106 1,023 8 976 13 1/ Non-interest income 565 321 76 1/ 379 49 1/ Total income 1,671 1,343 24 1,355 23 Operat
Slide 36: 9M17 OCBC Wing Hang’s performance
OCBC Wing Hang 9M17 OCBC Wing Hang’s performance Net profit up 26% YoY to HKD1.8b 9M17 9M16 YoY OCBC Wing Hang HKD m HKD m +/(-)% Net interest income 3,101 2,804 11 Non-interest income 1,197 1/ 922 30 1/ Total income 4,298 3,726 15 Operating expenses (2,190) (1,953) 12 Operating profit 2,109 1,773 1
Slide 37: OCBC Wing Hang: Revenue
OCBC Wing Hang OCBC Wing Hang: Revenue Net interest income rose 8% QoQ while non-interest income grew 76% from higher net gains from sale of investment securities Net interest income (HKD m) Non-interest income (HKD m) Net interest Non-int. income/ margin Total income 1.83% 1.73% 1.73% 1.73% 22.2% 2
Slide 38: OCBC Wing Hang: Loans & Deposits
OCBC Wing Hang OCBC Wing Hang: Loans & Deposits Loans and deposits both increased QoQ; NPL ratio lower QoQ at 0.8% Gross Loans (HKD b) Deposits (HKD b) Loans / Deposits 1/ NPL ratio 0.7% 0.9% 0.9% 0.8% 0.9% 0.8% 0.6% 80.7% 81.5% 80.6% 82.1% 83.4% 83.3% 83.1% 175 166 170 160 163 210 199 198 199 204 1
Slide 39: 3Q17 OCBC Malaysia’s Performance
OCBC Malaysia 3Q17 OCBC Malaysia’s Performance Net profit 4% above previous quarter and increased 22% YoY 3Q17 2Q17 QoQ 3Q16 YoY OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 355 345 3 314 13 Islamic banking income 1/ 108 115 (6) 116 (7) Non-interest / finance income 128 164 (22) 12
Slide 40: 9M17 OCBC Malaysia’s Performance
OCBC Malaysia 9M17 OCBC Malaysia’s Performance Nine months net profit rose 9% to RM707m 9M17 9M16 YoY OCBC Malaysia RM m RM m +/(-)% Net interest income 1,046 980 7 Islamic banking income 1/ 334 361 (7) Non-interest / finance income 419 403 4 Total income 1,799 1,744 3 Operating expenses (820) (804)
Slide 41: OCBC Malaysia: Revenue
OCBC Malaysia OCBC Malaysia: Revenue 3Q17 net interest/finance income up 8% YoY; Non-interest/finance income rose 6% YoY Net interest/finance income (RM m) Non-interest/finance income1/ (RM m) Net interest/ Non-interest/finance finance margin income/ Total income 27.7% 29.4% 1.99% 1.91% 1.93% 1.99%
Slide 42: OCBC Malaysia: Loans & Deposits
OCBC Malaysia OCBC Malaysia: Loans & Deposits Customer loans at RM69b, NPL ratio at 2.3%; Deposits up 2% QoQ with CASA ratio at 31% Gross Loans (RM b) Deposits (RM b) Loans / NPL Ratio Deposits 2.3% 2.3% 94.2% 92.4% 92.7% 2.1% 2.1% 2.2% 2.1% 90.3% 89.7% 90.5% 91.5% 1.9% 72 74 73 71 71 71 72 69 69 69
Slide 43: 3Q17 OCBC NISP’s performance
OCBC NISP 3Q17 OCBC NISP’s performance Net profit increased 22% YoY to IDR539b 3Q17 2Q17 QoQ 3Q16 YoY OCBC NISP IDR b IDR b +/(-)% IDR b +/(-)% Net interest income 1,537 1,515 2 1,332 15 Non-interest income 383 422 (9) 401 (5) Total income 1,920 1,937 (1) 1,733 11 Operating expenses (826) (847) (2)
Slide 44: 9M17 OCBC NISP’s performance
OCBC NISP 9M17 OCBC NISP’s performance Nine months net profit rose 23% YoY to IDR1.7t 9M17 9M16 YoY OCBC NISP IDR b IDR b +/(-)% Net interest income 4,465 3,978 12 Non-interest income 1,146 1,100 4 Total income 5,611 5,078 11 Operating expenses (2,477) (2,363) 5 Operating profit 3,134 2,715 15 Allow
Slide 45: OCBC NISP: Revenue
OCBC NISP OCBC NISP: Revenue 3Q17 net interest income up 15%; non-interest income at IDR383b Net interest income (IDR b) Non-interest income (IDR b) Net interest Non-int. income/ margin Total income 4.79% 4.62% 4.62% 4.49% 4.49% 4.60% 4.31% 4.67% 4.48% 23.1% 21.8% 19.9% 4.07% 20.8% 20.4% 20.5% 21.3%
Slide 46: OCBC NISP: Loans & Deposits
OCBC NISP OCBC NISP: Loans & Deposits Loans grew 17% YoY, NPL ratio steady at 1.9%; deposits up 20% YoY Gross Loans (IDR t) Deposits (IDR t) Loans / NPL Ratio Deposits 1.9% 1.9% 1.9% 1.9% 1.5% 94.7% 92.8% 92.1% 94.3% 1.4% 1.4% 89.9% 89.8% 85.9% 101 103 115 93 94 110 104 106 85 86 88 93 95 90 Mar 16
Slide 47: Third Quarter 2017 Results Thank You
Third Quarter 2017 Results Thank You
Oversea-Chinese Banking — Q3 2017 Earnings Presentation on 6ix