Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2002 Earnings Presentation
29 slides from Oversea-chinese Banking's earnings presentation, Feb 25, 2003
Slide 1: 2002 Final Results
2002 Final Results Presentation to Media and Analysts by Soon Tit Koon, CFO 25 February 2003 1
Slide 2: Agenda
Agenda ■ Results at a Glance ■ Income Statement Trends ■ Loans and Deposits ■ Asset Quality and Provisions ■ Concluding Remarks 2
Slide 3: Results at a Glance - Actual
Results at a Glance- Actual FY02 FY01 YoY S$m S$m % Net Interest Income 1,509 1,392 8 Non-interest Income 713 822* (13) Total Income 2,222 2,214 0 Operating Expenses 849 867 (2) Operating Profit 1,372 1,347 2 Goodwill 127 51 147 Provisions 501 518 (3) Associates 161 198 (19) Net Profit 667 778 (14)
Slide 4: Results at a Glance - Adjusted
Results at a Glance - Adjusted* FY02 FY01* YoY S$m S$m % Net Interest Income 1,509 1,392 8 Non-interest Income 713 562 27 Total Income 2,222 1,954 14 Operating Expenses 849 867 (2) Operating Profit 1,372 1,087 26 Goodwill 127 51 147 Provisions 501 518 (3) Associates 161 198 (19) Net Profit 667 526 2
Slide 5: Results at a Glance - 2H02 vs 1H02
Results at a Glance - 2H02 vs 1H02 2H02 1H02 HoH S$m S$m % Net Interest Income 764 745 3 Non-interest Income 350 363 (4) Total Income 1,114 1,108 1 Operating Expenses 420 429 (2) Operating Profit 694 679 2 Goodwill 62 65 (3) Provisions 205 295 (31) Associates 57 103 (45) Net Profit 349 317 10 5
Slide 6: Agenda
Agenda ■ Results at a Glance ■ Income Statement Trends ■ Loans and Deposits ■ Asset Quality and Provisions ■ Concluding Remarks 6
Slide 7: Net Interest Income Improved Over 1H02
Net Interest Income Improved Over 1H02 2.35% 2.30% 2.24% Net Interest Margin 1.96% 1.93% 1.94% 764 748 745 636 644 624 (S$m) 1H00 2H00 1H01 2H01 1H02 2H02 7
Slide 8: Non-interest Income Maintained at Higher Level Than 2001
Non-interest Income Maintained at Higher Level Than 2001 32.7% Non-interest income/ 31.4% * Total income 29.3% 27.9% 28.2% 26.2% 569 363 350 (S$m) 309 246 253 222 1H00 2H00 1H01 2H01 1H02 2H02 One-off gain of S$260m from sale of OUB shares 8 * Excluding one-off gain from sale of OUB shares
Slide 9: Fee Income Remains Robust
Fee Income Remains Robust 16.2% 16.6% 17.0% 15.3% 14.7%* 13.5% Fee income/ Total income 190 184 155 137 137 (S$m) 119 1H00 2H00 1H01 2H01 1H02 2H02 * Excluding one-off gain from sale of OUB shares 9
Slide 10: Expenses Held Down by Integration Synergies and Tight Cost Control
Expenses Held Down by Integration Synergies and Tight Cost Control Cost-to-Income Ratio 41.8% 40.2% 47.8%* 38.7% 37.7% 34.0% 506 429 420 369 361 288 (S$m) 1H00 2H00 1H01 2H01 1H02 2H02 Staff Cost Premises & Equipment Others Restructuring Expenses 10 * Excluding one-off gain from sale of OUB shares
Slide 11: Operating Profit Continues to Improve
Operating Profit Continues to Improve (S$m) 811 679 694 558 552 536 513 1H00 2H00 1H01 2H01 1H02 2H02 One-off gain of S$260m from sale of OUB shares 11
Slide 12: Net Profit Rebounded from Low in 2H 2001
Net Profit Rebounded from Low in 2H 2001 (S$m) 445 433 395 345 349 317 93* 1H00 2H00 1H01 2H01 1H02 2H02 One-off gain of S$252m (after tax) from sale of OUB shares * Excluding one-off gain from sale of OUB shares 12
Slide 13: Similar Trend for EPS and ROE
Similar Trend for EPS and ROE 11.7% 10.5% 10.4% 9.1% 10.2% 8.6% 69¢ 67¢ 7.5% 61¢ 7.1% 55¢ 54¢ 49¢ 3.3%* EPS¢ 2.2%* 14¢ 1H00 2H00 1H01 2H01 1H02 2H02 ROE ROE (Cash basis) Gain from sale of OUB shares 13 * Excluding one-off gain from sale of OUB shares Note: ROE and EPS are annualised
Slide 14: Agenda
Agenda ■ Results at a Glance ■ Income Statement Trends ■ Loans and Deposits ■ Asset Quality and Provisions ■ Concluding Remarks 14
Slide 15: Loan Demand Generally Weak
Loan Demand Generally Weak 52.8 (S$bn) 50.7 49.8 6.0 6.7 6.8 7.2 36.3 7.1 7.0 35.2 31.8 4.5 5.0 4.5 6.9 6.7 5.9 39.6 36.9 36.0 23.5 24.9 21.4 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Singapore Malaysia International 15
Slide 16: Slight Decline in Non-Bank Deposits
Slight Decline in Non-Bank Deposits 90.7% Loans-to-deposits 86.8% 86.3% 86.2% 87.6% 76.4% 54.7 55.1 53.9 38.4 39.5 10.8 11.2 37.9 10.8 (S$bn) 7.0 7.5 6.9 37.4 37.2 36.2 25.8 27.2 23.0 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Fixed Deposits Savings Deposits Current Account Others 16
Slide 17: Cost of Funds in line with Peer Banks
Cost of Funds in line with Peer Banks 5.84% Old Methodology 5.36% Revised * 5.13% 4.56% Interest Yield 3.53% 4.11% 3.67% 3.28% 2.77% Cost of Funds 1.72% 2000 2001 2002 * 2000 & 2001 interest yield and cost of funds have been restated to reflect the matching of swap interest expense against the inter
Slide 18: Agenda
Agenda ■ Results at a Glance ■ Income Statement Trends ■ Loans and Deposits ■ Asset Quality and Provisions ■ Concluding Remarks 18
Slide 19: NPL Management - What Has Changed?
NPL Management - What Has Changed? ■ Brought in expertise in 2H02 to strengthen management of NPLs, property collateral, and credit audit function ■ Established Special Asset Management unit in Oct 02 to consolidate management of non-performing business loans ■ Extensive portfolio reviews to apply m
Slide 20: Asset Quality & Provisions
Asset Quality & Provisions ■ Total NPLs fell 16% from Dec 01, and NPL ratio reduced from 9.7% to 8.1% ■ NPLs dominated by business loans in Singapore and Malaysia ■ Consumer NPL ratio remains low ■ Strong provision coverage - 62% overall coverage of NPLs; unsecured NPLs 100% covered by specific prov
Slide 21: NPLs By Geography: Singapore & Malaysia account for bulk of NPLs
NPLs By Geography: Singapore & Malaysia account for bulk of NPLs 5,183 (S$m) 4,979 4,550 567 536 4,356 4,092 794 3,921 1,176 511 636 1,137 518 838 1,199 963 1,182 3,440 3,306 2,918 2,493 2,646 2,221 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Singapore Malaysia International Note: The increase in NPLs
Slide 22: NPL Ratios By Geography: Trending Down
NPL Ratios By Geography: Trending Down (%) 16.9 16.7 16.1 15.7 14.1 14.3 14.2 13.7 12.2 11.0 9.0 8.9 10.6 7.3 8.9 8.6 7.1 6.2 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Singapore Malaysia International 22
Slide 23: NPLs By Business Segment: Largely from Business Loans
NPLs By Business Segment: Largely from Business Loans 5,183 4,979 (S$m) 4,550 998 4,356 4,092 987 3,921 1,178 876 1,017 714 4,185 3,991 3,372 3,480 3,075 3,207 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Consumer Business Banking Note: The increase in NPLs from Jun 01 to Dec 01 was due to the consolid
Slide 24: NPL Ratios By Business Segment: Consumer NPL ratio relatively low
NPL Ratios By Business Segment: Consumer NPL ratio relatively low 15.7 (%) 12.6 12.8 12.6 12.9 14.2 11.1 11.7 11.5 10.7 9.7 9.7 9.6 8.1 6.4 5.0 4.9 4.1 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Consumer Business Banking Total 24
Slide 25: Provision Charge Fell
Provision Charge Fell (S$m) Total Provision Charge 393 2002: $501m SP for Singapore Loans 2001: $518m SP for Malaysia Loans 295 SP for Loans - Other Countries Other Provisions * 205 85 125 54 1H00 2H00 1H01 2H01 1H02 2H02 * Other provisions comprise general provision for loans and specific provision
Slide 26: Cumulative Loan Provisions: SPs Reduced Due to NPL Write-Offs
Cumulative Loan Provisions: SPs Reduced Due to NPL Write-Offs 3,355 3,368 (S$m) 2,713* 2,519 1,246 1,210 2,405 2,306 918 1,206 818 811 2,109 2,158 1,601 1,587 1,495 1,506* Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 General Provision Specific Provision * Specific provisions of $974m were written off i
Slide 27: Provision Coverage Ratios Remain Comfortable
Provision Coverage Ratios Remain Comfortable SPs / Unsecured NPLs 105% 99% 100% 88% 90% 89% 68% 65% 62% 59% 59% 55% (SPs+GPs) / NPLs 43% 39% 41% 38% 35% SPs / NPLs 35% Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 27
Slide 28: Concluding Remarks
Concluding Remarks ■ Healthy underlying operating performance despite a difficult economic environment ■ Robust fee income, benefiting from cross-selling to a broader customer base ■ Effective management of costs; target integration cost savings exceeded ■ Measures taken to manage asset quality bett
Slide 29: 2002 Final Results - Thank You
2002 FINAL RESULTS Thank You 29
Oversea-Chinese Banking — FY2002 Earnings Presentation on 6ix