Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q3 2007 Earnings Presentation
31 slides from Oversea-chinese Banking's earnings presentation, Nov 6, 2007
Slide 1: Third Quarter 2007 Results Presentation
Third Quarter 2007 Results Presentation 6 November 2007
Slide 2: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Conclusion 2
Slide 3: Third Quarter Core Net Profit up 12%
Third Quarter Core Net Profit up 12% 3Q07 3Q06 YoY 2Q07 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 565 473 19 558 1 Non-Interest Income 481 357 35 493 (2) Total Income 1,047 831 26 1,050 - Operating Expenses (427) (333) 28 (416) 3 Operating Profit 620 498 24 634 (2) Amortisation of Intangible
Slide 4: Core Net Profit for Nine Months up 44%
Core Net Profit for Nine Months up 44% 9M07 9M06 YoY S$m S$m +/(-)% Net Interest Income 1,631 1,303 25 Non-Interest Income 1,480 1,035 43 Total Income 3,111 2,339 33 Operating Expenses (1,195) (989) 21 Operating Profit 1,916 1,349 42 Amortisation of Intangibles (35) (32) 8 (Allowances)/Write-back (2
Slide 5: Key Financial Ratios – Based on Core Earnings
Key Financial Ratios – Based on Core Earnings 9M07 9M06 3Q07 2Q07 3Q06 % % % % % Net Interest Margin 2.08 1.98 2.07 2.13 2.06 Non-Interest Income/ 47.6 44.3 46.0 46.9 43.0 Total Income Cost-to-Income Ratio 38.4 42.3 40.8 39.6 40.0 Loans-to-Deposits Ratio 77.6 82.6 77.6 77.4 82.6 NPL Ratio 2.1 3.3 2.
Slide 6: Bank's CDO Portfolio
Bank’s CDO Portfolio (S$m) Investment 3Q07 Allowance/ Cumulative Adj. to Fair Amount MTM Loss Value Reserves (taken to P&L) (taken to Equity) Total CDOs 641 (224) (16) - ABS CDOs 270 (221) - - Corporate CDOs 372 (3)* (16) * MTM loss in the value of credit default swaps embedded in some of the corpor
Slide 7: Great Eastern's CDO Exposure
Great Eastern’s CDO Exposure • Outstanding investment portfolio of S$176m (MTM basis) as at 30 Sep 07, inclusive of new S$30m investment in “AA” corporate CDO tranche in Aug 07 ¾ S$9m under shareholders’ funds ¾ S$167m under life funds (out of total life fund assets of S$42bn), including S$18m ABS C
Slide 8: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Conclusion 8
Slide 9: 3Q07 Net Interest Income up 19% YoY
3Q07 Net Interest Income up 19% YoY 2.13% 2.08% 2.06% 2.03% 2.04% 2.07% 2.00% 2.00% Net 1.89% interest 1.84% margin 1,794 558 565 1,597 1,631 508 491 473 435 395 Net interest income (S$m) 2005 2006 9M07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 9
Slide 10: Non-interest Income sustained in 3Q07 despite market turmoil
Non-interest Income sustained in 3Q07 despite market turmoil 49.9% 47.6% 46.8% 46.9% 46.0% Non- 44.7% 44.7% 45.7% interest 43.1% 43.0% income/ Total 845 2,045 income 598 1,573 598 92 515 1,289 1,480 92 1,448 495 493 481 506 Non- 83 interest 348 357 412 income (S$m) 329 2005 2006 9M07 1Q06 2Q06 3Q06
Slide 11: 3Q07 Fee Income up 36% YoY
3Q07 Fee Income up 36% YoY 20.7% 20.2% 19.5% Fee 18.9% 18.5% 18.7% 18.4% income/ 17.6% 17.8% 17.5% Total income 597 606 217 211 507 178 155 161 140 141 Fee income (S$m) 2005 2006 9M07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Excluding divestment gains 11
Slide 12: Higher Expenses from Increased Staff Costs and Business Expansion
Higher Expenses from Increased Staff Costs and Business Expansion 45.6% Cost-to- Income 41.1% 41.5% 40.8% Ratio 39.6% 40.0% 39.6% 38.4% 37.9% 34.7% 1,331 416 427 1,195 1,145 332 349 342 352 333 98 108 278 289 308 87 87 83 Operating 277 89 71 Expenses 227 68 87 233 (S$m) 83 62 69 69 64 634 722 679 23
Slide 13: 3Q07 Core Operating Profit up 24% YoY
3Q07 Core Operating Profit up 24% YoY Operating Profit before 2,508 allowances (S$m) 598 931 754 2,008 92 92 1,742 1,916 644 634 1,911 515 620 662 83 498 561 435 416 2005 2006 9M07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 Divestment gains 13
Slide 14: Allowances
Allowances Allowances for loans and other 39 assets (S$m) 23 12 12 2 3 0.3 (7) (5) (16) 2005 2006 9M07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 14
Slide 15: CDO-related allowances partially offset by net write-backs for loans and properties
CDO-related allowances partially offset by net write-backs for loans and properties* 9M07 9M06 3Q07 2Q07 3Q06 S$m S$m S$m S$m S$m Specific allowances/ (103) 6 (82) (18) 1 (write-back) for loans Allowances for CDOs 221 - 221 - - Allowances/(write-back) for (95) (16) (101) 2 2 other assets Total net a
Slide 16: Quarterly ROE Included Effect of Bank of Ningbo Surplus of S$1bn
Quarterly ROE Included Effect of Bank of Ningbo Surplus of S$1bn 15.9% 15.4% 14.4% 13.8% ROE 14.1% 12.3% (%) 11.4% 11.8% 12.2% 10.8% 10.4% 647 11.5% 2,002 47 559 1,642 90 532 795 510 100 481 510 518 463 1,298 77 38 Net Profit 1,443 1,453 379 432 425 (S$m) 318 314 2005 2006 9M07 1Q06 2Q06 3Q06 4Q06 1
Slide 17: Earnings Contribution by Segments
Earnings Contribution by Segments PBT by Business Segment PBT by Geography Other Asia Insurance Pacific Others & Others 3% 1% Other 19% ASEAN 4% Consumer Banking Malaysia 26% 19% Treasury 14% Business Singapore Banking 73% 41% 9M07 Profit Before Tax & MI : S$1,880m 9M07 Profit Before Tax & MI : S$1,
Slide 18: Loans Growth of 15% YoY, 4% QoQ
Loans Growth of 15% YoY, 4% QoQ Loans (S$bn) 68.0 65.3 63.3 61.1 59.4 56.6 58.1 13.7 13.0 11.9 11.2 9.6 10.3 8.8 11.5 10.9 11.0 9.8 10.1 10.4 9.6 40.5 41.3 42.8 38.1 38.6 38.9 39.5 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Singapore Malaysia International 18
Slide 19: Deposits Up 23% YoY, 4% QoQ
Deposits Up 23% YoY, 4% QoQ 84.6% 81.7% 82.6% 85.0% 79.0% 78.9% 77.4% 77.6% Loans-to-deposits 83.2% 80.0% 81.2% 75.0% 77.8% 77.8% 76.8% 76.7% 65.0% 85.7 82.2 78.0 75.1 55.0% 68.7 69.6 11.6 64.5 11.6 10.0 9.9 9.5 9.2 12.9 45.0% 11.7 13.0 9.0 11.2 10.8 10.6 Deposits 11.0 35.0% (S$bn) 57.2 25.0% 50.2 5
Slide 20: NPL Ratio Improved to 2.1%
NPL Ratio Improved to 2.1% 4.1% NPL Ratio 3.6% 3.3% 3.0% 2.7% 2,346 2.4% 2,096 2.1% 258 1,966 NPLs 1,829 1,766 290 (S$m) 262 1,614 701 226 1,484 239 683 244 673 286 652 658 621 581 1,387 1,123 1,031 951 869 749 617 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Singapore Malaysia International 20
Slide 21: Allowances Coverage at 107%
Allowances Coverage at 107% 107% 102% 104% 101% 97% 94% 88% Total Allowances / NPLs 46% 48% 48% 48% 47% 44% 43% Specific Allowances / NPLs Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 21
Slide 22: Capital Ratios Lower Due to RWA Growth, Dividend Payment and Tier 2 Amortisation
Capital Ratios Lower Due to RWA Growth, Dividend Payment and Tier 2 Amortisation (%) 17.9 Total CAR 17.0 15.8 15.8 15.4 4.2 14.6 3.9 Tier 2 CAR 2.9 2.7 2.3 12.8 2.1 0.9 Tier 1 CAR 13.1 13.7 12.9 13.1 13.1 12.5 11.9 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 (S$m) Tier-1 Capital 9,268 9,881 9,5
Slide 23: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Conclusion 23
Slide 24: OCBC Malaysia: Quarterly Results
OCBC Malaysia: Quarterly Results 3Q07 3Q06 YoY 2Q07 QoQ Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 216 198 9 216 0 Islamic Banking Income 20 12 67 20 0 Non-Interest Income 91 63 44 78 17 Total Income 327 273 20 314 4 Operating Expenses (139) (113) 23 (131) 6 Operating Profit
Slide 25: OCBC Malaysia: Year to Date Results
OCBC Malaysia: Year to Date Results 9M07 9M06 YoY Unaudited Results* RM m RM m +/(-)% Net Interest Income 634 551 15 Islamic Banking Income 58 37 57 Non Interest Income 266 201 32 Total Income 958 789 21 Operating Expenses (379) (303) 25 Operating Profit 578 486 19 Allowances (31) (42) (26) Tax (156
Slide 26: OCBC Malaysia: Financial Ratios
OCBC Malaysia: Financial Ratios 9M07 9M06 3Q07 2Q07 3Q06 Unaudited Results* % % % % % Net Interest Margin 2.49 2.60 2.41 2.50 2.67 Non-Interest Income / 27.8 25.5 27.8 25.0 23.1 Total Income Cost-to-Income Ratio 39.6 38.4 42.5 41.7 41.4 RM Loans-to-Deposits Ratio 81.8 83.7 81.8 78.0 83.7 Gross NPL R
Slide 27: GEH Contributed 23% of Core Net Profit
GEH Contributed 23% of Core Net Profit GEH’s Contribution to 9M07 9M06 ^ 3Q07 2Q07 3Q06 OCBC’s Results S$m S$m S$m S$m S$m Total Income 575 450 179 204 160 Operating Expenses (86) (84) (29) (28) (26) Operating Profit 489 367 150 175 134 Amortisation of Intangibles (35) (32) (12) (12) (11) Associates
Slide 28: Bank NISP: Quarterly Results
Bank NISP: Quarterly Results 3Q07 3Q06 YoY 2Q07 QoQ Unaudited Results* RP bn RP bn +/(-)% RP bn +/(-)% Net Interest Income 319 228 40 291 10 Non Interest Income 65 58 11 87 (26) Expenses (271) (179) 51 (253) 7 Operating Profit 112 108 4 125 (10) Allowances (20) (14) 38 (45) (56) Net Profit 66 68 (3)
Slide 29: Bank NISP: Year to Date Results
Bank NISP: Year to Date Results 9M07 9M06 YoY Unaudited Results* RP bn RP bn +/(-)% Net Interest Income 873 638 37 Non Interest Income 247 132 87 Expenses (745) (499) 49 Operating Profit 375 271 38 Allowances (87) (26) 242 Net Profit 206 171 20 Gross Loans 18,212 14,154 29 Net Interest Margin (%) 5.
Slide 30: In Summary
In Summary • Core earnings held up well despite market turmoil • Nine months core revenue up 33%, core earnings up 44% • Operating trends improved in all key business segments and geographies • Prudent, substantial allowances for CDO exposure • Healthy economic fundamentals in our key markets – Sing
Slide 31: Third Quarter 2007 Results Thank You
Third Quarter 2007 Results Thank You
Oversea-Chinese Banking — Q3 2007 Earnings Presentation on 6ix