Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2018 Earnings Presentation
47 slides from Oversea-chinese Banking's earnings presentation, Feb 22, 2019
Slide 1: 2018 Full Year Results Presentation
2018 Full Year Results Presentation 22 February 2019 Disclaimer: This presentation should be read as an overview of OCBC’s current business activities and operating environment which may contain statements relating to OCBC’s growth strategy and future business aspirations. These statements involve r
Slide 2: Agenda
Agenda Results Overview FY18 & 4Q18 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - Bank OCBC NISP Note: - Certain comparative figures have been restated to conform with the current period’s presentation. - Amounts less
Slide 3: FY18 Highlights
Group performance FY18 Highlights Record full year net profit of S$4.49b, driven by 22% increase in profit from banking operations; 2018 proposed final dividend increased 15% from the interim dividend to 23 cents per share Net Interest Income: S$5.89b; +9% Delivering consistent and sustainable growt
Slide 4: FY18 Group Performance
Group performance FY18 Group Performance Full year net profit grew 11% YoY to S$4.49b FY18 FY17 YoY OCBC Group S$m S$m +/(-)% Net interest income 5,890 5,423 9 Non-interest income 3,811 4,105 (7) Total income 9,701 9,528 2 Operating expenses (4,214) (4,043) 4 Operating profit 5,487 5,485 – Amortisat
Slide 5: FY18 Banking Operations Performance
Banking Ops performance FY18 Banking Operations Performance Banking Operations’ net profit grew 22% YoY to a record S$3.89b FY18 FY17 YoY Banking Operations S$m S$m +/(-)% Net interest income 5,811 5,333 9 Non-interest income 2,818 2,715 4 Total income 8,629 8,048 7 Operating expenses (3,994) (3,771
Slide 6: 4Q18 Group Performance
Group performance 4Q18 Group Performance Net profit for the fourth quarter at S$926m 4Q18 4Q17 YoY 3Q18 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,520 1,424 7 1,505 1 Non-interest income 830 1,214 (32) 1,039 (20) Total income 2,350 2,638 (11) 2,544 (8) Operating expenses (1,078)
Slide 7: 4Q18 Banking Operations Performance
Banking Ops performance 4Q18 Banking Operations Performance Net profit for Banking Operations rose 22% YoY to S$817m 4Q18 4Q17 YoY 3Q18 QoQ Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,499 1,403 7 1,485 1 Non-interest income 639 648 (1) 744 (14) Total income 2,138 2,051 4 2,229
Slide 8: Agenda
Agenda Results Overview FY18 & 4Q18 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - Bank OCBC NISP 8
Slide 9: Performance by business and geography
Earnings Performance by business and geography Earnings well-diversified across key business segments and geographies FY18 Operating Profit FY18 Profit before Tax by Business1/ by Geography OCBC Wing Others Singapore Hang S$2,975m YoY: +8% 10% 5% FY18 Global FY18 Corporate / Greater Malaysia Insuran
Slide 10: Net interest income
Net interest income Net interest income FY18 net interest income rose 9% YoY, driven by loan growth and higher NIM. NIM up 5bps to 1.70% on the back of higher NIMs in Singapore, Malaysia and Greater China 1.72% 1.72% 1.70% Net interest 1.67% 1.66% 1.67% 1.67% 1.67% 1.65% 1.65% margin (“NIM”) 1.62% 5
Slide 11: Non-interest income
Non-interest income Non-interest income FY18 non-interest income 7% lower YoY, driven by a S$406m decline in net gains from investment securities and other income, as the prior year included substantial gains from GEH’s divestment of investments 46.0% Non- 43.1% 42.8% 42.8% 41.4% 40.8% 40.5% 39.3% 4
Slide 12: Wealth Management (“WM”)
Wealth management Wealth Management (“WM”) FY18 WM income down YoY, mainly from lower insurance contributions; Excluding insurance, WM income grew 7%; BOS’ AUM rose YoY to US$102b Wealth Management Income1/ 2/ (S$m) Bank of Singapore’s Earning Asset Base (US$b) As % of Group income Dec 14 – Dec 18 C
Slide 13: Net Fees & Commissions
Non-interest income Net Fees & Commissions FY18 net fee income grew 4% YoY to S$2.03b, driven by an increase in wealth management, loan and trade-related fees. 4Q18 net fee income fell QoQ primarily due to lower wealth management fees as a result of subdued investment sentiments 22.7% 20.9% 23.0% 21
Slide 14: Operating expenses
Operating expenses Operating expenses FY18 expenses rose 4% YoY to S$4.21b. While 4Q18 expenses were tightly controlled and only up 1% QoQ and flat YoY, CIR was higher mainly from a fall in trading income led by unrealised MTM losses from GEH’s investment portfolio Cost-to- 44.6% 45.9% 44.2% 45.9% 4
Slide 15: Total cumulative allowances
Allowances Total cumulative allowances Total allowances set aside complied with requirements set out in SFRS(I) 9 and the revised MAS 612 2,800 2,798 2,769 2,695 453 474 RLAR 353 534 With effect from 1 January 2018, SFRS(I) 9 requires the Group to calculate credit loss allowances using Allowances fo
Slide 16: Allowances
Allowances Allowances FY18 allowances amounted to S$288m; Total credit costs at 11bps -57% YoY +14% YoY 726 671 Allowances for +311% QoQ loans and other assets (S$m) 205 168 169 178 288 156 49 12 21 FY16 FY17 FY18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Allowances for loans and other assets (S$m) Al
Slide 17: Customer loans
Loans Customer loans Loans rose 9% YoY to S$258b across all key markets In constant ccy terms +9% YoY +8% YoY flat QoQ +1% QoQ 252 257 258 247 Rest of the world 232 237 YoY: +16% 225 229 35 36 32 33 QoQ: +3% 30 31 28 29 Greater China YoY: +9% Customer 65 66 64 63 QoQ: -2% loans (S$b) 56 57 59 54 Ind
Slide 18: Customer loans
Loans Customer loans Loan portfolio remained well-diversified Customer Loans by Geography Customer Loans by Industry Rest of the World Other Asia Others 1/ Pacific Housing loans 9% 14% Dec 18 Dec 18 5% Manufacturing 13% 25% 8% 6% Dec 17 5% Dec 17 Singapore 42% 5% 27% 42% 12% S$258b Greater 25% 25% S
Slide 19: Greater China Customer Loans
Loans Greater China Customer Loans Loans grew 9% YoY to S$64b; NPL ratio at 0.4% 0.6% 0.6% 0.5% NPL ratio 0.4% 0.4% 0.3% 0.3% 0.4% 65 66 64 63 59 4 4 4 56 57 4 2 3 2 3 54 4 3 4 2 2 4 2 2 Macau 32 33 32 33 Taiwan 30 Customer 30 31 28 Hong Kong loans to Greater China (S$b) Offshore 2/ China 1/ 20 21 2
Slide 20: Asset quality
Asset quality Asset quality Portfolio quality sound, with NPL ratio stable YoY at 1.5% 1.5% 1.5% 1.3% 1.4% 1.4% 1.4% 1.3% 1.3% NPL ratio 3,938 100 3,514 3,594 3,468 3,452 43 61 700 Debt securities / 53 47 Contingent liabilities 2,920 2,983 626 1/ 2,870 652 684 773 Rest of the 55 261 World NPLs 60 61
Slide 21: NPL Ratio & Non-Performing Assets
Asset quality NPL Ratio & Non-Performing Assets NPL ratio relatively unchanged YoY NPL ratio NPAs 1.49% 1.45% 1.38% 1.38% 1.38% FY18 FY17 4Q18 4Q17 3Q18 1.25% 1.25% 1.26% S$m S$m S$m S$m S$m 0.87% Opening 0.91% 3,468 2,886 3,594 2,983 3,514 0.62% 0.59% 0.63% 0.85% 0.86% 0.84% balance New NPAs 1,721
Slide 22: Customer deposits
Deposits Customer deposits Customer deposits increased 4% YoY; CASA ratio at 46.4% 50.9% 50.5% 49.9% 49.2% CASA ratio 47.1% 47.7% 47.5% 46.4% 290 295 284 289 287 265 264 268 27 29 27 23 26 18 22 25 Others Customer 118 124 125 128 132 deposits 115 108 108 Fixed Deposits (S$b) Savings Deposits Current
Slide 23: Loans-to-Deposits Ratio
Funding Loans-to-Deposits Ratio Group LDR declined QoQ to 86.4% 88.5% 85.2% 85.3% 85.9% 86.4% Group 83.6% 84.4% 82.5% LDR 1/ 290 295 284 289 287 265 264 268 30 26 27 29 257 27 258 Others 252 24 247 9 9 8 9 IDR 23 23 237 8 7 8 8 8 229 232 8 29 30 RMB 225 8 8 8 28 8 7 8 29 27 28 29 28 24 29 8 8 9 20 2
Slide 24: Funding & Liquidity
Funding Funding & Liquidity Customer deposits accounted for 79% of total funding; All-currency LCR and NSFR comfortably above regulatory guidelines Funding Composition as of 31 Dec 2018 Wholesale Funding by Currency as of 31 Dec 2018 By Maturity: Customer deposits Current account Others & savings de
Slide 25: Capital
Capital Capital CET1 CAR improved QoQ and YoY to 14.0% Capital adequacy ratios (“CAR”) (%) Basel III transitional arrangements 1/ Basel III 1/ 17.2 16.5 16.1 16.2 16.1 16.4 Total CAR 15.8 15.9 14.9 14.8 14.2 14.0 14.2 14.3 14.4 13.9 Tier 1 CAR 13.9 13.3 13.0 13.1 Common Equity Tier 1 (“CET1”) CAR 13
Slide 26: Dividends
Dividends Dividends Proposed final dividend increased to 23 cents per share Dividend payout 42% 43% 40% 39% 38% 37% ratio 43.0 36.0 36.0 36.0 37.0 34.0 Net DPS (cents) 23.0 18.0 18.0 18.0 19.0 17.0 Final net dividend Interim net dividend 18.0 18.0 18.0 18.0 20.0 17.0 2013 2014 2015 2016 2017 2018 Ne
Slide 27: Agenda
Agenda Results Overview FY18 & 4Q18 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - Bank OCBC NISP 27
Slide 28: Subsidiaries’ Performance
Major subsidiaries Subsidiaries’ Performance Major subsidiaries contributed 34% to the Group’s profit Key Metrics FY18 FY17 YoY Net profit 1/ S$741m -29% S$1,037m TWNS S$1,235m -6% Great Eastern S$1,313m Holdings S$528m NBEV -3% S$543m NBEV margin 42.7% 41.4% +1.3ppt Net profit HKD2,762m +15% HKD2,4
Slide 29: FY18 Great Eastern Holdings’ performance
Great Eastern FY18 Great Eastern Holdings’ performance Net profit contribution at S$604m FY18 FY17 YoY GEH S$m S$m +/(-)% Profit from insurance business 761 797 (5) - Operating profit 1/ 625 600 4 - Non-operating profit 2/ 49 113 (57) - Others 87 84 4 Profit from Shareholders’ Fund 91 412 (78) Profi
Slide 30: 4Q18 Great Eastern Holdings’ performance
Great Eastern 4Q18 Great Eastern Holdings’ performance Net profit contribution lower YoY and QoQ at S$109m 4Q18 4Q17 YoY 3Q18 QoQ GEH S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 204 278 (26) 183 12 - Operating profit 1/ 172 163 5 141 21 - Non-operating profit 2/ 11 84 (86) 24 (51) - Oth
Slide 31: GEH: Operating Profit
Great Eastern GEH: Operating Profit FY18 operating profit from insurance business rose 4% YoY, largely driven by insurance business growth in Malaysia +5% YoY +4% YoY 625 600 172 163 159 158 158 153 502 141 Operating profit from 121 insurance business (S$m) FY16 FY17 FY18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q
Slide 32: GEH: Non-operating profit
Great Eastern GEH: Non-operating profit FY18 non-operating profit of S$49m was led by favourable interest rates movement and the narrowing of swap spreads. Comparatively, better performance was achieved in FY17 as financial market conditions were stronger then Non-operating 113 profit/(loss) from in
Slide 33: GEH: Total weighted new sales
Great Eastern GEH: Total weighted new sales FY18 TWNS fell 6% YoY to S$1.24b. TWNS rose in Malaysia, while agency and bancassurance sales in Singapore declined -6% YoY -30% YoY 1,313 19 1,235 471 24 1/ 5 1,078 353 15 369 121 347 327 330 371 4 306 6 7 TWNS 280 5 86 Emerging markets (S$m) 256 5 91 5 7
Slide 34: GEH: New business embedded value
Great Eastern GEH: New business embedded value FY18 NBEV declined by 3% to S$528m; NBEV margin rose to 42.7% from 41.4% a year ago from a shift in product mix 50.3% 50.4% NBEV 43.6% 41.4% 42.7% 40.8% 43.6% 42.7% 39.6% margin 37.9% 34.8% (NBEV / Total weighted new sales) 543 528 179 6 2 167 1/ 8 470
Slide 35: FY18 OCBC Wing Hang’s performance
OCBC Wing Hang FY18 OCBC Wing Hang’s performance Net profit rose 15% YoY to a new high of HKD2.76b FY18 FY17 YoY OCBC Wing Hang HKD m HKD m +/(-)% Net interest income 4,772 4,254 12 Non-interest income 1,774 1,403 26 Total income 6,546 5,657 16 Operating expenses (3,071) (2,963) 4 Operating profit 3
Slide 36: 4Q18 OCBC Wing Hang’s performance
OCBC Wing Hang 4Q18 OCBC Wing Hang’s performance Net profit grew 23% YoY to HKD715m 4Q18 4Q17 YoY 3Q18 QoQ OCBC Wing Hang HKD m HKD m +/(-)% HKD m +/(-)% Net interest income 1,181 1,160 2 1,205 (2) Non-interest income 543 248 118 536 1 Total income 1,724 1,408 22 1,741 (1) Operating expenses (766) (
Slide 37: OCBC Wing Hang: Revenue
OCBC Wing Hang OCBC Wing Hang: Revenue FY18 net interest income rose 12% YoY and NIM increased 3bps to 1.60%; Non-interest income up 26% YoY Net interest income (HKD m) Non-interest income (HKD m) Net interest Non-int. income/ margin Total income 33.9% 28.2% 30.8% 31.5% 24.4%24.8% 27.1% 22.1%23.5% 1
Slide 38: OCBC Wing Hang: Loans & Deposits
OCBC Wing Hang OCBC Wing Hang: Loans & Deposits Loans increased 8% YoY to HKD193b, with deposits stable at HKD222b; NPL ratio at 0.6% Gross Loans (HKD b) Deposits (HKD b) NPL ratio Loans / Deposits 1/ 0.8% 0.9% 0.8% 72.3% 71.7% 71.8% 70.3% 74.8% 74.8% 74.1% 73.9% 0.5% 0.5% 0.4% 0.4% 0.6% 190 190 192
Slide 39: FY18 OCBC Malaysia’s Performance
OCBC Malaysia FY18 OCBC Malaysia’s Performance Net profit for the year at RM814m FY18 FY17 YoY OCBC Malaysia RM m RM m +/(-)% Net interest income 1,506 1,405 7 Islamic banking income 1/ 436 450 (3) Non-interest / finance income 520 607 (14) Total income 2,462 2,462 Operating expenses (1,146) (1,09
Slide 40: 4Q18 OCBC Malaysia’s Performance
OCBC Malaysia 4Q18 OCBC Malaysia’s Performance Net profit rose 9% QoQ to RM189m 4Q18 4Q17 YoY 3Q18 QoQ OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 382 359 6 390 (2) Islamic banking income 1/ 109 116 (6) 107 2 Non-interest / finance income 76 187 (59) 156 (51) Total income 567 662
Slide 41: OCBC Malaysia: Revenue
OCBC Malaysia OCBC Malaysia: Revenue FY18 net interest/finance income grew 5% YoY to RM1.88b; NIM increased 12bps to 2.07% Net interest/finance income (RM m) Non-interest/finance income1/ (RM m) Net interest/ Non-interest/finance finance margin income/ Total income 29.4% 32.1% 27.3% 25.4% 27.5% 23.6
Slide 42: OCBC Malaysia: Loans & Deposits
OCBC Malaysia OCBC Malaysia: Loans & Deposits Gross loans up 2% YoY at RM69b; NPL ratio at 1.9%; Deposits grew 3% YoY to RM76b and CASA ratio improved to 32.5% Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 2.3% 2.3% 2.2% 94.2% 92.4% 92.7% 94.2% 93.3% 94.1% 2.1% 2.1% 92.1% 2.0% 1.9% 8
Slide 43: FY18 Bank OCBC NISP’s performance
Bank OCBC NISP FY18 Bank OCBC NISP’s performance Net profit rose 21% YoY to a record IDR2.64t FY18 FY17 YoY Bank OCBC NISP IDR b IDR b +/(-)% Net interest income 6,378 6,039 6 Non-interest income 1,411 1,513 (7) Total income 7,789 7,552 3 Operating expenses (3,513) (3,363) 4 Operating profit 4,276 4
Slide 44: 4Q18 Bank OCBC NISP’s performance
Bank OCBC NISP 4Q18 Bank OCBC NISP’s performance Net profit increased 19% YoY but lower QoQ at IDR605b 4Q18 4Q17 YoY 3Q18 QoQ Bank OCBC NISP IDR b IDR b +/(-)% IDR b +/(-)% Net interest income 1,603 1,574 2 1,628 (2) Non-interest income 440 367 20 391 13 Total income 2,043 1,941 5 2,019 1 Operating
Slide 45: Bank OCBC NISP: Revenue
Bank OCBC NISP Bank OCBC NISP: Revenue FY18 net interest income rose 6% to IDR6.38t; NIM at 4.15% Net interest income (IDR b) Non-interest income (IDR b) Net interest Non-int. income/ margin Total income 4.62%4.47% 4.67%4.48% 4.31% 4.41%4.24% 21.8%19.9% 21.6% 4.15% 4.08%4.26%4.05% 20.8% 20.0% 18.1%
Slide 46: Bank OCBC NISP: Loans & Deposits
Bank OCBC NISP Bank OCBC NISP: Loans & Deposits Loans and deposits both grew 11% YoY; NPL ratio lower at 1.7% Gross Loans (IDR t) Deposits (IDR t) NPL Ratio Loans / Deposits 100.9% 94.3% 96.7% 93.5% 1.9% 1.9% 1.9% 89.8% 93.4% 91.1% 1.8% 1.7% 1.8% 1.8% 1.7% 85.9% 117 120 118 126 111 121 121 118 103 1
Slide 47: Thank You
2018 Full Year Results Thank You
Oversea-Chinese Banking — FY2018 Earnings Presentation on 6ix