Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2007 Earnings Presentation
39 slides from Oversea-chinese Banking's earnings presentation, Feb 21, 2008
Slide 1: New Horizons II Report Card
Presentation to Media and Analysts New Horizons II Report Card 21 February 2008 1
Slide 2: Agenda
Agenda • Recap - New Horizons II • Highlights of Our Achievements in 2007 Customers Products Risk Management Productivity People Shareholder Value Overseas Expansion • Appendix: Detailed Report Card 2
Slide 3: New Horizons II: Recap
New Horizons II: Recap 1. Focused Overseas Expansion Shift emphasis from adding more country flags to deepening market penetration in Malaysia, Indonesia, China Selectively explore opportunities to establish strategic partnerships in Indochina Grow market share in the consumer and SME segments
Slide 4: New Horizons II: Recap
New Horizons II: Recap 2. Improving our performance through a Balanced Business Scorecard Customers Products Risk Management Productivity People Shareholder Value 4
Slide 5: Agenda
Agenda • Recap - New Horizons II • Highlights of Our Achievements in 2007 Customers Products Risk Management Productivity People Shareholder Value Overseas Expansion • Appendix: Detailed Report Card 5
Slide 6: Customers – Consumers
Customers – Consumers +10% • Healthy growth in number of consumer +2% +7% customers and 20% increase in revenues +9% • Deployed customer insights to successfully strengthen differentiation and service innovation via “Service & 2004 2005 2006 2007 Convenience” # of Consumer Customers (Group) Enhanc
Slide 7: Customers – Businesses
Customers – Businesses +15% • Healthy growth in number of SME customers and 16% increase in +3% +6% +2% revenues • Maintained robust cross-sell ratio • Focused on building differentiation 2004 2005 2006 2007 around convenience and service # of SME Customers Simplified account opening process and p
Slide 8: Product Innovation
Product Innovation • Innovation index lower at 11%, but absolute revenues from new products are up 20% 84 83 78 • Increased recognition for our product 58 61 capabilities • Best Cash Management Bank in Singapore 2003 2004 2005 2006 2007 (Finance Asia and Asiamoney Customer Poll) # of New Products •
Slide 9: Risk Management
Risk Management S&P Moody’s Fitch • Adoption of Basel II from 1 January 2007 A+ Aa1 AA- 2008 2006 A+ Aa3 AA- Advanced IRB Approach for major retail portfolios 2005 A+ Aa3 AA- Foundation IRB Approach for major 2004 A+ Aa3 A+ corporate portfolios 2003 A Aa3 A+ Standardized Approach for operation
Slide 10: Productivity
Productivity • Productivity gains of 26% and unit cost reductions of 15% across 7 operations factories 41.4% 39.6% 39.6% 41.1% 40.1% • Two additional work streams commenced hubbing into Malaysia; 2003 2004 2005 2006 2007 cumulative hubbing of 6 streams to- Cost to Income Ratio date with up to 70% of
Slide 11: People
People • Employee engagement score up by another 6% +8% • Employee shareholding remains +5% +5% +6% above 30% +4% • Average training days per staff maintained at a high level (increased 2003 2004 2005 2006 2007 by >50% since 2002) Employee Engagement Score Improvement Launched leadership training
Slide 12: Shareholder Value
Shareholder Value 13.4% 11.4% 11.8% • Core ROE improved from 11.8% to 10.3% 13.4% (13.8% if Bank of Ningbo impact is excluded) • Core EPS growth of 32% vs 10% target 2004 2005 2006 2007 • Dividend per share increased by 22%, ROE excl divestment gains dividend payout at 46% of core earnings 49% 44% 4
Slide 13: Overseas Expansion
Overseas Expansion Malaysia • Obtained approval from Bank Negara to establish Islamic subsidiary • Opened another new branch in Damansara Indonesia • Continued network expansion at Bank NISP (added 93 branches and 148 ATMs) • Launched wealth management platform • Established exclusive partnership wi
Slide 14: In a Nutshell
In a Nutshell • Good progress on our scorecard objectives Continued to build differentiation in home markets Penetration of overseas markets picking up • New Horizons ll plan on target to achieve 2010 goals 14
Slide 15: Agenda
Agenda • Recap - New Horizons II • Highlights of Our Achievements in 2007 Customers Products Risk Management Productivity People Shareholder Value Overseas Expansion • Appendix: Detailed Report Card 15
Slide 16: Our Achievements – Consumers (continued)
Our Achievements – Consumers (continued) OUR ACTION PLANS PROGRESS 1. Focus on acquiring and doing • 10% overall growth in Consumer customers more with Customers • 18% growth in Premier Banking customers • 4% drop in assets per mass customer in Singapore* • 7% growth in assets per mass customer in M
Slide 17: Our Achievements – Consumers (continued)
Our Achievements – Consumers (continued) OUR ACTION PLANS PROGRESS 3. Refresh OCBC’s Branding through • Re-modeled 6 branches in Singapore and Malaysia with Service Excellence and Convenience new format, including enhanced service excellence training, integrated merchandizing designs, digital market
Slide 18: Our Achievements – Consumers (continued)
Our Achievements – Consumers (continued) OUR ACTION PLANS PROGRESS 3. Refresh OCBC’s Branding through • Gallup Customer Engagement score increased by 7% Service Excellence and Convenience • Rolled out more Building Emotional Engagement (BEE) (cont’d) programmes to drive service excellence bank wide.
Slide 19: Our Achievements – Consumers (continued)
Our Achievements – Consumers (continued) OUR ACTION PLANS PROGRESS 4. Leverage our Great Eastern / Lion • Maintained No. 1 position in Bancassurance Capital partnership to cross-sell more • Converted >15,000 Malaysian policy holders into OCBC products GE co-brand cardholders • Agency force contribut
Slide 20: Our Achievements – Businesses
Our Achievements – Businesses OUR ACTION PLANS PROGRESS 1. Grow our current strong large • 24% growth in total revenues of large corporate business corporate position (Singapore & Malaysia) • 15% growth in number of SME customers, including China and International branches 2. Expand our customer bas
Slide 21: Our Achievements – Businesses (continued)
Our Achievements – Businesses (continued) OUR ACTION PLANS PROGRESS 4. Increase cross sell and wallet share • Cross sell ratio* for SMEs increased by 13% penetration of SME customers • Launched innovative products and services for SMEs in through innovative delivery methods Singapore and Malaysia: a
Slide 22: Our Achievements – Product Innovation
Our Achievements – Product Innovation OUR ACTION PLANS PROGRESS • 2007 Best Cash Management Bank in Singapore in 1. Strive to build “best in class” Asiamoney Customer Poll products • 2007 Best Cash Management Bank in Singapore by Finance Asia • 2007 Best Trade Finance Bank in Singapore by Alpha Sout
Slide 23: Our Achievements – Product Innovation (continued)
Our Achievements – Product Innovation (continued) OUR ACTION PLANS PROGRESS 2. Add to our SME Cash management • Launched various new products / services to better meet capabilities and enhance our trade SME customers’ needs finance services / solutions with B Auto-fax Export LC Advising service in S
Slide 24: Our Achievements – Product Innovation (continued)
Our Achievements – Product Innovation (continued) OUR ACTION PLANS PROGRESS 3. Strengthen our position in • 1st position in Singapore syndicated loans and 5th Singapore, Malaysia and Indonesia position in Malaysia syndicated loans league tables for investment banking products and • Sponsored first I
Slide 25: Our Achievements – Product Innovation (continued)
Our Achievements – Product Innovation (continued) OUR ACTION PLANS PROGRESS 5. Be the bank of choice for treasury • Ranked 1st in all Singapore Dollar denominated instruments in selected currencies categories by Asia Risk End User Survey 2007 Ö No. 1 in SGD Interest Rate Swaps Ö No. 1 in SGD Interes
Slide 26: Our Achievements – Product Innovation (continued)
Our Achievements – Product Innovation (continued) OUR ACTION PLANS PROGRESS 6. Be one of the top 3 banks in the • Maintained No. 1 position in Bancassurance Combined Singapore/ Malaysia market for Wealth Management, • >16% growth in deposit and >28% growth in wealth Credit Cards and Unsecured Lendin
Slide 27: Our Achievements – Product Innovation (continued)
Our Achievements – Product Innovation (continued) OUR ACTION PLANS PROGRESS 6. Be one of the top 3 banks in the • Product innovations launched in 2007: Combined Singapore/ Malaysia market for Wealth Management, B ‘SmartChange’ debit cards to help customers save as Credit Cards and Unsecured Lending
Slide 28: Our Achievements – Risk Management
Our Achievements – Risk Management OUR ACTION PLANS PROGRESS 1. Execute our Basel ll implementation • Received approval from MAS to adopt the Internal plan in line with regulatory guidelines Ratings Based Approach for Credit Risk in 2008; Operational Risk on Standardized Approach • On track to devel
Slide 29: Our Achievements – Productivity
Our Achievements – Productivity OUR ACTION PLANS PROGRESS 1. Continue to drive for productivity gains • Productivity gains of 26% and unit cost reductions of and unit cost reduction while 15% across 7 product processing factories for 2007 enhancing service quality Ö Account Services, Cards and Treas
Slide 30: Our Achievements – People
Our Achievements – People OUR ACTION PLANS PROGRESS 1. Build people resources with a focus • Moved another 70 employees overseas for cross- on diversity, cross border border assignments to / from Singapore, Malaysia, management skills and competencies Indonesia and China to support our overseas expa
Slide 31: Our Achievements – People (continued)
Our Achievements – People (continued) OUR ACTION PLANS PROGRESS 4. Continue to improve employee • New OCBC Recreation Club @ OCBC for staff satisfaction so as to be increasingly • Opened the childcare centre, The Little Skool-House at recognised as a regional employer of OCBC Centre choice 5. Mainta
Slide 32: Our Achievements – Shareholder Value
Our Achievements – Shareholder Value OUR ACTION PLANS PROGRESS 1. Grow revenues faster than expenses • Core revenue grew 29%, versus 26% increase for expenses 2. Deliver 10% EPS growth per annum • Core EPS growth of 32% 3. Achieve and sustain ROE of above • Core ROE improved from 11.8% to 13.4% (13.
Slide 33: Our Achievements – Shareholder Value (continued)
Our Achievements – Shareholder Value (continued) OUR ACTION PLANS PROGRESS 5. Continue to divest non-core assets at • Realised S$90m gain from sale of office property the right time and invest the gains in Samsung Hub core financial services growth opportunities • Announced cash offer for Malaysia’s
Slide 34: Our Achievements – Shareholder Value (continued)
Our Achievements – Shareholder Value (continued) OUR ACTION PLANS PROGRESS 8. Raise alternative Tier 1 / Tier 2 • Raised S$225m of Lower Tier 2 subordinated capital as necessary to meet notes, as part of plan to replenish Tier 2 capital additional capital needs over time Build the basis for our OCBC
Slide 35: Our Achievements – Overseas Expansion
Our Achievements – Overseas Expansion (Indonesia) (continued) OUR ACTION PLANS PROGRESS 1. Work with Bank NISP to become a • 2X increase in wealth management fee income Top Tier Nationwide bank focused on • Completed BEE customer engagement training for > 3,500 SMEs and Consumers Bank NISP staff to
Slide 36: Our Achievements – Overseas Expansion
Our Achievements – Overseas Expansion (Indonesia) (continued) OUR ACTION PLANS PROGRESS 4. Work closely with GE Indonesia to • Established exclusive partnership between GE and build their life business through Bank NISP for customised bancassurance solutions bancassurance and agency models Build Ind
Slide 37: Our Achievements – Overseas Expansion
Our Achievements – Overseas Expansion (China) OUR ACTION PLANS PROGRESS 1. Leverage on strategic partnership in • Joint workshops conducted with Bank of Ningbo (BoN) to China as part of strategy to grow our define business models for OCBC China retail and SME customer franchise • 11 mid-level execut
Slide 38: Our Achievements – Overseas Expansion
Our Achievements – Overseas Expansion (Vietnam) OUR ACTION PLANS PROGRESS 1. Work with VP Bank to build • Launched the 1st MasterCard Platinum EMV card in Capabilities in Customer and Product Vietnam targeting affluent customers solutions • Rolled out MasterCard merchant & ATM acquiring businesses &
Slide 39: Thank You
Q Ask OCBC Thank You &) ocBc Bank 39
Oversea-Chinese Banking — FY2007 Earnings Presentation on 6ix