Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2014 Earnings Presentation
55 slides from Oversea-chinese Banking's earnings presentation, Feb 11, 2015
Slide 1: 2014 Full Year Results Presentation
2014 Full Year Results Presentation 11 February 2015 Disclaimer: This material should be read as an overview of OCBC’s current business activities and operating environment. It should not be solely relied upon by investors or potential investors when making an investment decision. OCBC Bank accepts
Slide 2: Agenda
Agenda Results Overview FY14 Group Performance Trends Performance of Major Subsidiaries – OCBC Wing Hang – Great Eastern Holdings – OCBC Malaysia – OCBC NISP OCBC Corporate Strategy Greater China Strategy with the addition of OCBC Wing Hang Appendix: Financial Highlights of Malaysian and Indonesian
Slide 3: FY14 Highlights
FY14 Highlights Net profit after tax which included S$391 million one-off gain rose 39% YoY to S$3.84 billion - Core net profit before one-off gain up 25% YoY to S$3.45 billion from strong performance across all customer segments • OCBC Wing Hang results were progressively consolidated from July 201
Slide 4: Full year core net profit at a new high
Full year core net profit at a new high – an increase of 25% YoY to S$3.45b FY14 FY13 YoY OCBC Group S$m S$m +/(-)% Net interest income 4,736 3,883 22 Non-interest income 3,213 2,738 17 Total income 7,949 6,621 20 Operating expenses (3,258) (2,784) 17 Operating profit 4,691 3,837 22 Amortisation of
Slide 5: Full year core net profit before GEH contribution up 23% YoY
Full year core net profit before GEH contribution (“banking operations”) up 23% YoY to S$2.73b FY14 FY13 YoY Banking Operations S$m S$m +/(-)% Net interest income 4,668 3,818 22 Non-interest income 2,078 1,816 14 Total income 6,746 5,634 20 Operating expenses (3,049) (2,604) 17 Operating profit 3,69
Slide 6: 4Q14 core net profit rose 11% YoY to S$791m
4Q14 core net profit rose 11% YoY to S$791m 4Q14 4Q13 YoY 3Q14 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,277 1,031 24 1,246 2 Non-interest income 762 679 12 801 (5) Total income 2,039 1,710 19 2,047 - Operating expenses (922) (713) 29 (870) 6 Operating profit 1,117 997 12 1,177
Slide 7: 4Q14 core net profit before GEH contribution grew 7% YoY
4Q14 core net profit before GEH contribution grew 7% YoY to S$621m 4Q14 4Q13 YoY 3Q14 QoQ Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,259 1,017 24 1,228 3 Non-interest income 482 434 11 542 (11) Total income 1,741 1,451 20 1,770 (2) Operating expenses (866) (659) 32 (815) 6 Op
Slide 8: Key ratios remained healthy
Key ratios remained healthy Based on core earnings (%) FY14 FY13 4Q14 4Q13 3Q14 Net interest margin 1.68 1.64 1.67 1.64 1.68 Non-interest income / Total income 40.4 41.4 37.4 39.7 39.1 Cost / Income 41.0 42.0 45.2 41.7 42.5 Loans / Deposits 84.5 85.7 84.5 85.7 85.5 NPL Ratio 0.6 0.7 0.6 0.7 0.7 Allo
Slide 9: FY14 core ROE increased YoY to 13.2%
FY14 core ROE increased YoY to 13.2% – 4Q14 core ROE diluted by impact of rights issue and scrip dividend 14.9% 14.8% 12.5% 13.2% 12.7% 11.9% 13.1% 11.6% 11.7% Core ROE1/ 9.9% 10.6% 899 921 3,451 841 Core 791 net profit 2,825 759 (S$m) 2,768 696 715 597 2012 2013 2014 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3
Slide 10: FY14 PBT breakdown – earnings diversified across segments and geographies
FY14 PBT breakdown – earnings diversified across business segments and geographies FY14 PBT FY14 PBT by Business1/ by Geography PBT Group OCBC Other Asia Rest of the S$4,372m Greater Wing Hang Pacific World YoY: +23% China 2% 3% 3% 12% Singapore S$2,579 m Insurance YoY: +23% (within which OCBC 21% W
Slide 11: Agenda
Agenda Results Overview FY14 Group Performance Trends Performance of Major Subsidiaries – OCBC Wing Hang – Great Eastern Holdings – OCBC Malaysia – OCBC NISP OCBC Corporate Strategy Greater China Strategy with the addition of OCBC Wing Hang Appendix: Financial Highlights of Malaysian and Indonesian
Slide 12: Net interest income rose 22% YoY to a new high
Net interest income rose 22% YoY to a new high; NIM increased 4 basis points YoY 1.77% 1.68% Net interest 1.64% 1.70% 1.70% 1.68% 1.67% 1.64% 1.64% 1.63% 1.64% margin 1/ 4,736 1,277 1,246 3,883 1,126 3,748 1,087 Net interest income 1,031 (S$m) 961 978 912 2012 2013 2014 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14
Slide 13: Non-interest income grew 17% YoY
Non-interest income grew 17% YoY, led by higher fee, trading and insurance income Non- interest 43.6% 42.6% 44.3% 42.4% 43.0% income / 41.4% 40.4% 38.6% 39.7% 39.1% 37.4% Total income 3,213 850 800 801 2,897 779 762 2,738 930 676 679 259 223 215 838 606 280 232 756 Non- 215 56 205 interest income 60
Slide 14: Fee income was a new record, up 10% YoY
Fee income was a new record, up 10% YoY on growth in wealth management income, trade & loan fees + 12% YoY - 6% + 10% QoQ YoY 1,495 406 383 1,355 352 353 353 55 212 347 341 62 1,198 168 316 42 43 29 86 42 50 44 16 157 92 39 24 37 16 25 15 91 17 558 150 Fees and 145 commissions 515 128 132 132 136 13
Slide 15: Life assurance profit increased 28% YoY
Life assurance profit increased 28% YoY due to growing in-force business and mark-to-market gains + 28% + 16% YoY YoY + 9% 768 QoQ 692 207 240 599 125 221 Profit from 40 life assurance 183 190 174 178 54 174 (S$m) 165 43 52 54 46 423 423 54 153 279 102 16 134 92 99 98 38 88 144 146 138 41 47 34 23 3
Slide 16: Other non-interest income for 2014 grew 25% YoY
Other non-interest income for 2014 grew 25% YoY; – 4Q14 impacted by lower trading income, despite higher investment securities gains 701 + 25% + 4% YoY YoY 70 606 - 18% QoQ Other non- 116 68 interest income 485 196 (S$m) 1/ 65 174 13 164 149 1/ 17 136 158 16 84 14 120 109 107 18 111 14 43 5 515 19 1
Slide 17: Wealth management income rose 15% YoY to a new record
Wealth management income rose 15% YoY to a new record 32.7% 32.1% 30.3% 27.6% 29.1% 27.9% 28.4% 29.0% 26.1% 26.3% As % of 22.8% Group income 2,216 564 572 573 535 536 520 1,927 1,836 486 Wealth 357 management income (S$m) 2012 2013 2014 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 Note: Comprises the con
Slide 18: Operating expenses, including OCBC Wing Hang, 17% higher YoY
Operating expenses, including the consolidation of OCBC Wing Hang, 17% higher YoY – 4Q14 expenses before OCBC Wing Hang up 3% QoQ Cost / 42.0% 41.0% 45.8% 45.2% 40.6% 42.3% 42.5% Income 38.8% 41.7% 37.4% 38.5% 3,258 1/ 922 870 2,784 636 188 2,695 760 164 718 713 706 539 672 681 554 147 619 140 112 1
Slide 19: Net allowances increased YoY; credit quality remained sound
Net allowances increased YoY mainly from Singapore and Malaysia; credit quality remained sound Net 357 allowances for loans and other 271 266 assets 8 2 196 (S$m) 81 115 154 10 94 97 83 3 66 71 183 163 68 148 11 42 26 41 1 36 66 21 2 72 23 73 2 49 45 42 31 17 17 (2) (3) (12) 2012 2013 2014 1Q13 2Q13
Slide 20: Net specific allowances were higher YoY
Net specific allowances were higher YoY FY14 FY13 4Q14 4Q13 3Q14 S$m S$m S$m S$m S$m Allowances for new and 340 255 112 83 100 existing NPLs Write-backs1/ (96) (118) (27) (45) (23) Recoveries2/ (48) (56) (14) (12) (11) Net specific allowances 196 81 71 26 66 1/ Write-backs of specific allowances for
Slide 21: Customer loans up 24% YoY and 2% QoQ
Customer loans up 24% YoY and 2% QoQ Loan growth Group YoY: +24% QoQ: +2% 1/ 210 205 Excl. OCBC Wing Hang 25 YoY: +8% 26 175 177 QoQ: +2% 170 159 162 Rest of the 23 24 World 149 21 56 21 52 YoY: +15% 19 QoQ: -5% 19 30 27 27 Greater China Customer 20 24 17 13 13 14 YoY: +104% Loans (S$b) 12 12 13 QoQ
Slide 22: Customer loan book diversified across geographies and sectors
Customer loan book diversified across geographies and sectors Customer Loans by Geography Customer Loans by Industry As of 31 December 2014 As of 31 December 2014 Rest of the As of As of World Industry 31 Dec 2014 31 Dec 2013 Other Asia 7% S$b % S$b % Pacific Housing loans 54 26 42 25 4% Singapore P
Slide 23: Customer deposits grew 25% YoY and 4% QoQ
Customer deposits grew 25% YoY and 4% QoQ, CASA deposits increased 20% YoY Loans / 89.2% 88.4% 87.0% 87.0% 87.2% Deposits 85.7% 85.5% 84.5% 246 237 27 27 196 199 201 176 181 23 25 26 169 17 19 15 109 Customer 105 Deposits 82 80 80 (S$b) 72 67 71 S$110b 40 +S$18b YoY 39 +S$4b QoQ 33 32 33 34 32 32 CA
Slide 24: Asset quality strong; NPL ratio improved to 0.6%
Asset quality strong; NPL ratio improved to 0.6% 0.8% NPL ratio 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 0.6% 1,338 1,373 1,304 1,317 25 1,230 1,215 35 1,177 65 38 NPAs 1,119 39 43 26 (S$m) 28 499 525 498 516 448 430 449 420 532 572 507 407 472 529 536 535 264 230 256 194 207 207 267 274 Mar13 Jun13 Sep13 Dec1
Slide 25: NPAs stable YoY
NPAs stable YoY FY14 FY13 4Q14 4Q13 3Q14 S$m S$m S$m S$m S$m NPAs – Opening balance 1,304 1,172 1,297 1,338 1,215 New NPAs 887 896 200 237 273 New recoveries/upgrades (801) (597) (235) (212) (153) Write-offs (167) (167) (39) (59) (38) NPAs – Closing balance (excluding OCBC Wing 1,223 1,304 1,223 1,3
Slide 26: Allowance coverage ratios sound
Allowance coverage ratios sound 560.00% 539% Total 480% allowances/ 503% 460.00% Excl. Unsecured 423% NPAs OCBC WH 396% 429% Excl. 350% OCBC WH 360.00% 329% 310% 294% 260.00% Total 160.00% allowances/ 171% NPAs 149% 149% 155% 144% 134% 145% 130% 60.00% Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Dec14
Slide 27: Capital position strong; capital ratios well above requirements
Capital position strong; capital ratios well above regulatory requirements 18.1 17.4 CAR 16.8 16.3 1.9 16.1 15.6 15.9 (% of RWA) 15.5 1.9 2.7 1.8 1.8 1.2 2.3 2.1 Tier 2 capital Common Equity Tier 1 / Tier 1 capital 16.2 14.9 14.3 14.5 14.4 14.7 13.2 13.8 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 1/
Slide 28: Proposed final dividend of 18 cents per share
Proposed final dividend of 18 cents per share, bringing FY14 total dividend higher at 36 cents per share, as compared to 34 cents in FY13 Net DPS 36.0 (cents) 34.0 33.0 30.0 30.0 28.0 28.0 18.0 17.0 17.0 15.0 15.0 14.0 14.0 Final net dividend Interim net dividend 16.0 17.0 18.0 14.0 14.0 15.0 15.0 2
Slide 29: Agenda
Agenda Results Overview FY14 Group Performance Trends Performance of Major Subsidiaries – OCBC Wing Hang – Great Eastern Holdings – OCBC Malaysia – OCBC NISP OCBC Corporate Strategy Greater China Strategy with the addition of OCBC Wing Hang Appendix: Financial Highlights of Malaysian and Indonesian
Slide 30: OCBC Wing Hang: FY14 net profit contribution of S$81m
OCBC Wing Hang: FY14 net profit contribution of S$81m FY14 4Q14 3Q14 QoQ OCBC Wing Hang HK$m HK$m HK$m +/(-)% Net interest income 1,705 949 756 26 Non-interest income 393 183 210 (13) Total income 2,098 1,132 966 17 Operating expenses (1,130) (638) (492) 30 Operating profit 968 494 474 4 Allowances
Slide 31: Greater China customer loans doubled YoY
Greater China customer loans, including OCBC Wing Hang, doubled YoY and up 6% QoQ Loan growth 56 Greater China 52 4 YoY: +104% 3 1 QoQ: +6% 1 Excl. OCBC Wing Hang YoY: +9% QoQ: +5% 26 24 30 30 Customer 27 27 28 Loans to 0.2 0.3 1 0.3 1 Greater 24 0.2 0.3 1 Macau 1 1 China 0.2 7 (S$b) 20 7 8 Taiwan 1
Slide 32: Customer deposits continued to grow; USD and RMB LDRs improved
Customer deposits continued to grow, USD and RMB LDRs improved YoY and QoQ Deposit growth 246 237 Group 25 YoY: +25% 24 211 5 205 QoQ: +4% 199 201 5 14 196 13 21 181 20 5 Excl. OCBC 176 21 21 22 5 20 5 21 7 Wing Hang 169 5 5 7 4 YoY: +8% 20 6 6 4 18 7 5 4 4 26 QoQ: +3% 17 5 3 26 26 6 26 6 6 3 23 24
Slide 33: Asset quality of Greater China strong, NPL ratio 0.3%
Asset quality of Greater China strong, NPL ratio improved YoY to 0.3% Total allowances/ 185% 191% 200% 288% 276% NPAs NPL ratio 0.4% 0.3% 0.3% 0.3% 0.3% 185 169 NPAs 94 76 (S$m) 108 107 102 OCBC Wing Hang OCBC Group 108 107 102 (excluding OCBC 93 91 Wing Hang) Dec13 Mar14 Jun14 Sep14 Dec14 33 Note:
Slide 34: GEH: Full year earnings contribution 33% higher at S$719m
GEH: Full year earnings contribution 33% higher at S$719m FY14 FY13 YoY GEH Contribution S$m S$m +/(-)% Profit from insurance business 814 633 29 - Operating profit 1/ 591 560 6 - Non-operating profit/(loss) 2/ 145 (11) nm - Others 3/ 78 84 (8) Profit from Shareholders’ Fund 180 175 3 Sub-total 994
Slide 35: GEH: 4Q14 earnings contribution grew 28% YoY
GEH: 4Q14 earnings contribution grew 28% YoY to S$169m 4Q14 4Q13 YoY 3Q14 QoQ GEH Contribution S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 207 175 18 183 13 - Operating profit 1/ 156 135 15 149 4 - Non-operating profit/(loss) 2/ 26 15 67 14 81 - Others 3/ 26 24 5 20 28 Profit from Share
Slide 36: GEH: Operating profit rose 6% YoY
GEH: Operating profit rose 6% YoY, mainly driven by growing in-force business, particularly in the Investment-linked Fund + 15% + 6% YoY YoY + 4% QoQ 591 560 24 155 156 16 149 502 143 143 9 139 135 4 19 131 31 7 4 142 169 7 5 4 37 99 44 32 43 46 Operating 35 44 profit from insurance business 89 (S$m
Slide 37: GEH: Non-operating profit increased YoY
GEH: Non-operating profit increased YoY due to mark- to-market gains amid favourable financial market conditions Non-operating 161 profit/(loss) 145 from insurance business (S$m) 91 72 38 33 26 15 14 2012 2013 2014 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 (11) (156) Note: Non-operating profit / loss
Slide 38: GEH: Total weighted new sales declined 8% YoY
GEH: Total weighted new sales declined 8% YoY as 2013 was boosted by the recapture of an exceptionally high volume of maturing policies - 8% - 3% YoY YoY 1,037 33 950 305 296 29 9 273 8 818 259 7 324 30 8 346 113 225 218 76 212 126 201 8 6 Weighted 287 78 7 new 10 60 business 80 57 80 premiums (S$m)
Slide 39: GEH: New business embedded value declined 6% YoY
GEH: New business embedded value declined 6% YoY; NBEV margin improved YoY to 41.5% NBEV 45.0% 44.0% 42.9% 41.5% 41.7% margin 40.5% 39.7% 40.5% 39.8% 39.5% 38.7% (NBEV / Total weighted new sales) 420 127 8 394 2 6 115 341 109 1 105 7 144 2 98 2 43 150 93 89 2 34 2 43 126 80 2 NBEV 38 (S$m) 2 39 30 3
Slide 40: OCBC Malaysia: Net interest and Islamic financing income up 12%
OCBC Malaysia: Total net interest income and Islamic financing income climbed 12% YoY, non- interest income 13% lower YoY Net interest income and Non-interest income (RM m) Islamic financing income (RM m) Net Interest/ Non-int. income/ financing margin Total income 2.32% 2.18% 2.21% 30.3% 2.13% 2.20
Slide 41: OCBC Malaysia: Loans up 13%, deposits up 14%
OCBC Malaysia: Loans increased 13% YoY and deposits grew 14% YoY; NPL ratio lower at 2.0% Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 88.6% 89.4% 88.0% 87.2% 86.5% 88.7% 85.6% 86.4% 2.3% 2.3% 2.3% 2.2% 2.3% 2.1% 2.0% 1.8% 70 71 72 67 61 63 62 64 60 59 61 58 54 56 50 52 Mar13 Jun13
Slide 42: OCBC NISP: Net interest income 19% higher YoY
OCBC NISP: Net interest income 19% higher YoY, NIM up 4 basis points YoY to 4.15% Net interest income (Rp b) Non-interest income (Rp b) Non-int. income/ Net interest margin Total income 4.23% 4.33% 4.17% 4.11% 4.15% 3.87% 4.00% 4.13% 4.09% 4.17% 4.20% 24.6% 23.6% 22.4% 21.9% 21.9% 19.1% 20.1% 18.9%
Slide 43: OCBC NISP: Loans expanded 7%; deposits grew 6%
OCBC NISP: Loans expanded 7% YoY; deposits grew 6% YoY Gross Loans (Rp t) Deposits (Rp t) NPL Ratio Loans / Deposits 98.0% 97.0% 100.8% 1.3% 92.5% 91.5% 93.6% 1.1% 1.1% 90.2% 0.8% 0.7% 0.7% 0.7% 0.8% 83.6% 67 68 79 64 64 66 73 61 69 71 57 63 63 54 59 58 Mar13 Jun13 Sep13Dec13 Mar14 Jun14 Sep14Dec14
Slide 44: Agenda
Agenda Results Overview FY14 Group Performance Trends Performance of Major Subsidiaries – OCBC Wing Hang – Great Eastern Holdings – OCBC Malaysia – OCBC NISP OCBC Corporate Strategy Greater China Strategy with the addition of OCBC Wing Hang Appendix: Financial Highlights of Malaysian and Indonesian
Slide 45: OCBC Corporate Strategy
OCBC Corporate Strategy Deepen Presence in Core Markets A leading, well-diversified Asian financial services group with a broad geographical footprint in North & South East Asia SINGAPORE MALAYSIA INDONESIA GREATER CHINA Dominant market Top foreign bank with One of Top 10 national Strong presence wi
Slide 46: Agenda
Agenda Results Overview FY14 Group Performance Trends Performance of Major Subsidiaries – OCBC Wing Hang – Great Eastern Holdings – OCBC Malaysia – OCBC NISP OCBC Corporate Strategy Greater China Strategy with the addition of OCBC Wing Hang Appendix: Financial Highlights of Malaysian and Indonesian
Slide 47: OCBC Greater China Strategy
OCBC Greater China Strategy Leverage OCBC’s coordinated and connected platform of geographical network, in-market franchise and onshore-offshore competencies in commercial banking and wealth management as competitive advantage Serve onshore and regional needs of customers in Greater China G R E AT E
Slide 48: Greater China Re-positioning - with OCBC Wing Hang
Greater China Re-positioning - with OCBC Wing Hang 1. Leverage Group resources to accelerate Wealth Management, Retail & Commercial Banking and Insurance business growth supported by an enlarged product suite, expanded geographical coverage and bigger customer franchise 2. Capture trade, capital and
Slide 49: OCBC Wing Hang Integration Updates
OCBC Wing Hang Integration Updates Integration on track and showing results China cross-border trade transactions from Pearl River Delta initiated Commercial Trade Window at Wing Hang Bank China established in Shanghai Banking Cross-border cross-sell programme commenced for OCBC Wing Hang cust
Slide 50: Agenda
Agenda Results Overview FY14 Group Performance Trends Performance of Major Subsidiaries – OCBC Wing Hang – Great Eastern Holdings – OCBC Malaysia – OCBC NISP OCBC Corporate Strategy Greater China Strategy with the addition of OCBC Wing Hang Appendix: Financial Highlights of Malaysian and Indonesian
Slide 51: OCBC Malaysia: Full year net profit fell 12% YoY
OCBC Malaysia: Full year net profit fell 12% YoY FY14 FY13 YoY OCBC Malaysia RM m RM m +/(-)% Net interest income 1,372 1,273 8 Islamic Financing Income 467 369 27 Non-interest income 473 545 (13) Total income 2,312 2,187 6 Operating expenses (942) (877) 7 Operating profit 1,370 1,310 5 Allowances (
Slide 52: OCBC Malaysia: 4Q14 net profit 24% lower YoY
OCBC Malaysia: 4Q14 net profit 24% lower YoY 4Q14 4Q13 YoY 3Q14 QoQ OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 359 327 10 350 3 Islamic Financing Income 127 96 32 125 2 Non-interest income 119 161 (26) 113 5 Total income 605 584 4 588 3 Operating expenses (246) (235) 5 (248) (1)
Slide 53: OCBC NISP: Full year net profit grew 17% YoY
OCBC NISP: Full year net profit grew 17% YoY to a new record FY14 FY13 YoY OCBC NISP RP b RP b +/(-)% Net interest income 3,745 3,139 19 Non-interest income 743 879 (15) Total income 4,488 4,018 12 Operating expenses (2,490) (2,215) 12 Operating profit 1,998 1,803 11 Allowances (221) (259) (15) Non
Slide 54: OCBC NISP: 4Q14 net profit rose 28% YoY
OCBC NISP: 4Q14 net profit rose 28% YoY, achieving a new quarter high 4Q14 4Q13 YoY 3Q14 QoQ OCBC NISP RP b RP b +/(-)% RP b +/(-)% Net interest income 973 834 17 967 1 Non-interest income 226 241 (6) 95 140 Total income 1,199 1,075 12 1,062 13 Operating expenses (610) (577) 6 (624) (2) Operating pr
Slide 55: 2014 Full Year Results Thank You
2014 Full Year Results Thank You
Oversea-Chinese Banking — FY2014 Earnings Presentation on 6ix