Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2005 Earnings Presentation
33 slides from Oversea-chinese Banking's earnings presentation, Feb 28, 2006
Slide 1: 2005 Final Results
Presentation to Media and Analysts 2005 Final Results 28 February 2006
Slide 2: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Conclusion 2
Slide 3: Full Year Net Profit Up 13%
Full Year Net Profit Up 13% FY05 FY04* YoY S$m S$m +/(-)% Net Interest Income 1,597 1,518 5 Non-Interest Income 1,289 1,108 16 - Fee Income 507 464 9 Total Income 2,887 2,625 10 Operating Expenses (1,145) (988) 16 Operating Profit 1,742 1,637 6 Amortisation of Intangibles/ Goodwill (40) (158) (75) A
Slide 4: 4th Quarter Net Profit Up 24% YoY
4th Quarter Net Profit Up 24% YoY 4Q05 4Q04 YoY 3Q05 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 414 389 7 413 - Non-Interest Income 364 302 20 321 13 - Fee Income 128 113 13 131 (2) Total Income 778 691 13 735 6 Operating Expenses (312) (286) 9 (298) 5 Operating Profit 466 405 15 437 7 Amorti
Slide 5: Adjusted for Divestment Gains, Profits Showed Stronger Growth
Adjusted for Divestment Gains, Profits Showed Stronger Growth Exclude Non-Core Asset FY05 FY04 YoY Divestment Gains S$m S$m +/(-)% Adjusted Operating Profit 1,742 1,505 16 Adjusted Net Profit 1,298 1,051 24 Non-core asset divestment gains: S$132m (S$97m net of tax & minorities) in 2004 from sale of
Slide 6: Key Financial Ratios
Key Financial Ratios FY05 FY04 4Q05 3Q05 4Q04 % % % % % Net Interest Margin 1.84 1.91 1.90 1.83 1.93 Non-Interest Income/ 44.7 42.2 46.8 43.7 43.7 Total Income Cost-to-Income Ratio 39.6 37.6 40.1 40.5 41.4 Loans-to-Deposits Ratio 86.0 90.5 86.0 87.4 90.5 NPL Ratio 4.1 5.0 4.1 4.2 5.0 Allowances/NPLs
Slide 7: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Conclusion 7
Slide 8: Net Interest Income Growth of 5% in 2005
Net Interest Income Growth of 5% in 2005 Net 2.02% interest 1.90% 1.91% 1.93% 1.90% margin 1.84% 1.82% 1.83% 1.78% 1,597 1,509 1,518 1,435 407 413 414 389 Net 363 interest income (S$m) 2002 2003 2004 2005 4Q04 1Q05 2Q05 3Q05 4Q05 8
Slide 9: Net Interest Margin Affected by Higher Funding Costs and Flat Yield Curve
Net Interest Margin Affected by Higher Funding Costs and Flat Yield Curve Interest Interest Rate Ave Bal Fourth Quarter 2005 Inc / Exp Ave Rate YoY QoQ S$bn S$m % bps bps Customer loans 54.9 679 4.91 + 106 + 32 Placements with Banks 14.4 122 3.34 + 82 + 39 Securities/ Others 17.0 165 3.84 + 115 + 29
Slide 10: Contribution from Non-Interest Income on the Rise
Contribution from Non-Interest Income on the Rise Non- 46.3% 46.8% 44.7% 43.7% 43.7% interest 42.2% income/ 41.8% Total 34.6% income 39.1% 32.1% 1,289 1,108 30.5% 132 Non- 975 364 758 321 interest 712 302 313 291 income 128 (S$m) 630 2002 2003 2004 2005 4Q04 1Q05 2Q05 3Q05 4Q05 Gains from divestment
Slide 11: Fee Income Up 9% in 2005
Fee Income Up 9% in 2005 Fee 18.6% income/ 18.1% 18.0% 18.1% 17.8% Total 17.6% 16.8% 16.5% income 16.4% 17.7% 17.0% 507 464 374 373 126 131 128 122 Fee 113 income (S$m) 2002 2003 2004 2005 4Q04 1Q05 2Q05 3Q05 4Q05 Excluding divestment gains 11
Slide 12: Continued Growth in Wealth Management Sales
Continued Growth in Wealth Management Sales 10,089 Sales* (S$m) 9,144 8,541 7,858 5,210 4,669 3,877 3,628 1,408 1,438 945 541 683 249 30 2001 2002 2003 2004 2005 Malaysia Singapore Total * Comprises sales of unit trusts, bancassurance products and structured deposits & notes 12
Slide 13: Adjusted for Consolidation Effects, Expenses Grew 4% in 2005
Adjusted for Consolidation Effects, Expenses Grew 4% in 2005 41.4% 41.4% 40.5% 40.5% 40.1% Cost-to- 39.6% 39.6% Income 38.2% 37.3% Ratio 39.0% 1,145 37.6% 988 278 849 855 226 298 312 192 152 233 286 283 216 252 Operating 71 81 Expenses 192 225 77 67 (S$m) 58 56 61 65 60 51 634 546 465 478 149 143 16
Slide 14: Core Operating Profit Up 16% in 2005
Core Operating Profit Up 16% in 2005 Operating Profit 1,742 before allowances 1,637 (S$m) 132 1,372 1,338 1,505 128 1,211 466 424 437 405 415 2002 2003 2004 2005 4Q04 1Q05 2Q05 3Q05 4Q05 Gains from divestment of non-core assets 14
Slide 15: Low Allowances Due to Recoveries
Low Allowances Due to Recoveries 501 Allowances for loans and other assets (S$m) 225 24 77 12 12 (2) (2) (23) 2002 2003 2004 2005 4Q04 1Q05 2Q05 3Q05 4Q05 15
Slide 16: Steady Increase in Earnings and ROE since 2002
Steady Increase in Earnings and ROE since 2002 12.1% 11.6% 11.3% 11.4% 10.2% 10.6% 10.7% ROE 10.0% (%) 7.4% 10.3% 8.7% 1,298 1,148 97 954 1,051 126 Net Profit 355 667 828 341 (S$m) 298 304 275 2002 2003 2004 2005 4Q04 1Q05 2Q05 3Q05 4Q05 Gains from divestment of non-core assets Excluding divestment
Slide 17: Earnings Contribution by Segments
Earnings Contribution by Segments Net Profit by Business Segment PBT by Geography Asia Pacific Others Insurance Other 1% 1% ASEAN 19% 4% Consumer Banking 28% Malaysia Treasury 30% 11% Singapore Business 64% Banking 43% 2005 Net Profit : S$1,298m 2005 Profit before Tax: S$1,706m 17
Slide 18: 6% Loans Growth Mainly from Overseas
6% Loans Growth Mainly from Overseas Loans (S$bn) 57.2 56.5 57.0 57.2 54.1 53.6 51.4 48.7 9.2 9.2 9.1 9.2 7.4 7.6 6.4 6.8 8.5 9.7 9.2 9.8 9.7 8.0 8.8 7.0 37.1 38.1 38.3 37.1 38.2 38.1 38.3 35.0 Dec-02 Dec-03 Dec-04 Dec-05 Mar-05 Jun-05 Sep-05 Dec-05 Singapore Malaysia International 18
Slide 19: Well Diversified Loans Portfolio
Well Diversified Loans Portfolio Loans by Sector Others 6% General Commerce 9% Housing Loans 32% Financial Institutions Consumer 13% Loans 47% Building & Construction 13% Professional & Transport, Individuals Storage & Comm Manufacturing 15% 3% 8% Total Loans : S$57.2 billion 19
Slide 20: Lower Loans-to-Deposits Ratio
Lower Loans-to-Deposits Ratio 91.6% 90.5% 87.4% 85.7% 86.0% 86.1% 85.6% 86.0% 0.9 Loans-to-deposits 87.8% 85.7% 84.4% 83.3% 83.7% 84.4% 0.8 64.1 63.6 62.8 64.1 57.3 59.7 53.9 53.5 0.7 9.1 8.2 8.6 9.1 7.2 7.0 5.3 6.1 11.0 11.2 11.4 11.4 11.0 Deposits 10.8 11.1 11.2 0.6 (S$bn) 40.5 38.9 40.4 40.4 40.5
Slide 21: Continued Improvement in NPLs
Continued Improvement in NPLs NPL Ratio 8.1% 6.9% 4,356 5.0% 4.8% 3,834 4.3% 4.2% 4.1% 4.1% NPLs (S$m) 1,199 2,866 2,705 2,592 1,068 2,392 2,467 2,392 902 886 821 707 745 707 2,646 2,389 1,735 1,596 1,485 1,454 1,416 1,416 Dec-02 Dec-03 Dec-04 Dec-05 Mar-05 Jun-05 Sep-05 Dec-05 Singapore Malaysia In
Slide 22: Maintained Strong Allowances Coverage
Maintained Strong Allowances Coverage 87% 87% 88% 83% 84% 67% Cumulative Allowances / NPLs 62% Specific Allowances / NPLs 49% 50% 48% 48% 43% 35% 36% Dec-02 Dec-03 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 22
Slide 23: Strong Capital Position Despite Returning > S$2.5bn in Excess Capital Since 2003
Strong Capital Position Despite Returning > S$2.5bn in Excess Capital Since 2003 Total CAR 20.9 (%) 18.4 17.7 17.3 Tier 2 CAR 9.3 5.6 5.1 4.1 Tier 1 CAR 13.2 12.8 12.6 11.5 (S$m) Dec-02* Dec-03* Dec-04 Dec-05 Tier-1 capital 6,894 7,893 8,642 9,302 Risk Weighted Assets 59,884 62,723 68,737 70,708 * D
Slide 24: Earnings Per Share
Earnings Per Share Earnings per Share 40.1 (cents) 35.4 30.0 3.0 4.2 21.5 32.4 25.8 2002 2003 2004 2005 Gains from divestment of non-core assets 24
Slide 25: Full Year Dividend up 45% from 2004, Dividend Payout Ratio Increased to 44%
Full Year Dividend up 45% from 2004, Dividend Payout Ratio Increased to 44% 23.0 Gross DPS (cents) 15.8 12.0 9.6 7.9 8.3 Final Dividend 5.0 6.3 11.0 7.9 Interim Dividend 4.6 2.1 (S$m) 2002 2003* 2004 2005* Net Dividends 201 234 403 574 Core Net Profit 667 828 1,051 1,298 Dividend Payout Ratio 30% 28
Slide 26: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Conclusion 26
Slide 27: OCBC Malaysia's Net Profit Up 53% in 2005
OCBC Malaysia’s Net Profit Up 53% in 2005 FY05 FY04 YoY RM m RM m +/(-)% Net Interest Income 627 551 14 Islamic Banking Income 45 29 52 Non Interest Income 257 204 26 Total Income 929 784 18 Operating Expenses (370) (295) 25 Operating Profit 559 489 14 Allowances 26 (102) n.m. Tax (170) (116) 46 Net
Slide 28: OCBC Malaysia's 4Q05 Net Profit Up 25% QoQ
OCBC Malaysia’s 4Q05 Net Profit Up 25% QoQ 4Q05 4Q04 YoY 3Q05 QoQ RM m RM m +/(-)% RM m +/(-)% Net Interest Income 170 144 18 159 7 Islamic Banking Income 14 14 - 10 47 Non Interest Income 65 57 14 73 (11) Total Income 249 215 16 241 3 Operating Expenses (100) (95) 5 (99) 1 Operating Profit 149 120
Slide 29: OCBC Malaysia: Financial Ratios
OCBC Malaysia: Financial Ratios FY05 FY04 4Q05 3Q05 4Q04 % % % % % Net Interest Margin 2.39 2.23 2.55 2.35 2.36 Non-Interest Income / 27.7 26.0 26.0 30.2 26.5 Total Income Cost-to-Income Ratio 39.8 37.6 40.0 41.0 44.1 RM Loans-to-Deposits Ratio 85 87 85 92 87 Gross NPL Ratio 6.2 8.0 6.2 6.4 8.0 Loan
Slide 30: GEH Contributed 19% of Group Net Profit
GEH Contributed 19% of Group Net Profit GEH’s Contribution FY05 FY04* 4Q05 3Q05 4Q04 to OCBC’s Results S$m S$m S$m S$m S$m Total Income 523 286 139 127 151 Operating Expenses (88) (51) (23) (24) (24) Operating Profit 436 234 116 103 126 Amortisation of Intangibles/ (40) (32) (10) (10) (14) Goodwill
Slide 31: Bank NISP's FY05 Results Hurt by Interest Rate Volatility
Bank NISP’s FY05 Results Hurt by Interest Rate Volatility FY05 FY04 4Q05 3Q05 4Q04 RP bn RP bn RP bn RP bn RP bn Net Interest Income 721 642 187 177 170 Non-Interest Income 205 178 169 (39) 66 Expenses (593) (409) (177) (145) (111) Operating Profit 333 410 180 (7) 125 Allowances (39) (19) (15) (6) (
Slide 32: Conclusion
Conclusion Healthy set of results in 2005 despite effects of higher cost of funds, flat yield curve and keen price competition Growth lifted by Malaysia and recent acquisitions of Great Eastern Holdings and Bank NISP Over past three years, Group earnings have almost doubled, and dividends per
Slide 33: 2005 Final Results
2005 Final Results Thank You &) OCBC Bank
Oversea-Chinese Banking — FY2005 Earnings Presentation on 6ix