Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q2 2017 Earnings Presentation
48 slides from Oversea-chinese Banking's earnings presentation, Jul 27, 2017
Slide 1: Second Quarter 2017 Results Presentation
Second Quarter 2017 Results Presentation 27 July 2017 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 2Q17 & 1H17 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP Note: - Certain comparative figures have been restated to conform with the current period’s presentation. - Amounts less than
Slide 3: 2Q17 Highlights
Group performance 2Q17 Highlights Net profit rose 22% YoY and 11% QoQ to S$1.1b; ROE improved to 11.9% Earnings Net Interest Income: S$1.35b Strong performance across OCBC Group (2Q16 : S$1.26b) Core net profit (S$m) • Broad-based income growth across geographies and businesses +22% YoY Non-intere
Slide 4: 2Q17 Group Performance
Group performance 2Q17 Group Performance Net profit grew 11% QoQ and 22% YoY to over S$1b 2Q17 1Q17 QoQ 2Q16 YoY OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,345 1,272 6 1,260 7 Non-interest income 1,053 977 8 788 34 Total income 2,398 2,249 7 2,048 17 Operating expenses (992) (973) 2
Slide 5: 1H17 Group Performance
Group performance 1H17 Group Performance Half year net profit increased 18% YoY to S$2.1b 1H17 1H16 YoY OCBC Group S$m S$m +/(-)% Net interest income 2,617 2,567 2 Non-interest income 2,030 1,541 32 Total income 4,647 4,108 13 Operating expenses (1,965) (1,855) 6 Operating profit 2,682 2,253 19 Amor
Slide 6: 2Q17 Banking Operations Performance
Banking Ops performance 2Q17 Banking Operations Performance 2Q17 net profit before GEH contribution (“Banking Operations”) rose 7% QoQ and 5% YoY to S$850m 2Q17 1Q17 QoQ 2Q16 YoY Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,322 1,248 6 1,235 7 Non-interest income 700 687 2 625
Slide 7: 1H17 Banking Operations Performance
Banking Ops performance 1H17 Banking Operations Performance Half year net profit for Banking Operations up 3% YoY to S$1.6b 1H17 1H16 YoY Banking Operations S$m S$m +/(-)% Net interest income 2,570 2,519 2 Non-interest income 1,387 1,224 13 Total income 3,958 3,743 6 Operating expenses (1,840) (1,74
Slide 8: Subsidiaries' Performance
Major subsidiaries Subsidiaries’ Performance Major subsidiaries contributed 40% to the Group’s second quarter net profit Key Metrics 2Q17 2Q16 YoY TWNS S$256m +6% S$242m Net Profit Contribution to the Group NBEV S$121m Great S$103m +17% Eastern Holdings NBEV margin 47.4% 42.7% +4.7ppt Net profit S$2
Slide 9: Agenda
Agenda Results Overview 2Q17 & 1H17 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 9
Slide 10: Profit before tax
Earnings Profit before tax Earnings well-diversified across key geographies and business segments 1H17 PBT 1H17 PBT by Business1/ by Geography OCBC Wing Singapore Hang 2/ Others S$1.40b YoY: +29% 7% 4% 1H17 Greater 1H17 Global China Malaysia within which Corporate / 20% 3% S$381m 8% OCBC Wing Insura
Slide 11: Net interest income
Net interest income Net interest income 2Q17 net interest income up 6% QoQ, driven by asset growth and 3 bps rise in NIM Net interest 1.75% 1.68% 1.67% 1.67% 1.64% 1.65% margin 1.62% 1.63% 1.62% (“NIM”) 5,189 5,052 1,345 1,307 1,260 1,251 1,272 1,234 Net interest income (S$m) 1H 2,531 2,567 2,617 20
Slide 12: Non-interest income
Non-interest income Non-interest income 2Q17 non-interest income up 8% QoQ and 34% YoY Non- 43.7% 44.0% 43.4% 43.9% interest 42.5% 40.5% 40.5% 36.6% 38.5% income / Total income 3,533 3,437 136 1,053 970 977 649 926 781 278 788 199 211 228 429 753 182 2,030 146 112 91 96 552 529 122 162 53 158 140 No
Slide 13: Wealth Management
Wealth management Wealth Management 2Q17 wealth management income rose 52% YoY, driven by strong growth across OCBC’s Consumer Banking, Private Banking and Insurance franchise Wealth Management Income1/ (S$m) Bank of Singapore Earning Asset Base (US$b) As % of Group income Dec 12 – Dec 16 CAGR 17% 1
Slide 14: Fees & Commissions
Non-interest income Fees & Commissions Broad-based growth drove 2Q17 fee income up 18% YoY Fee income / 19.3% 20.9% 20.3% 19.4% 19.3% 21.4% 20.5% 18.8% 18.2% Total income 1,643 1,638 481 492 257 290 86 417 428 420 71 72 63 374 24 74 71 29 77 556 533 973 68 21 13 15 137 123 Fees and 143 14 commission
Slide 15: Operating expenses
Operating expenses Operating expenses 2Q17 expense growth well-controlled, up only 2% QoQ; cost-to-income ratio at 41.4% 44.6% 44.8% 45.5% 43.2% 45.1% 43.3% 42.0% 42.3% 41.4% Cost / Income 3,788 3,664 678 981 973 992 673 923 932 953 191 179 178 162 160 166 763 737 Operating 186 205 192 195 1,965 183
Slide 16: Allowances
Allowances Allowances 2Q17 net allowances relatively unchanged QoQ; specific allowances down QoQ, with credit costs lower at 19 bps 726 305 70 27 488 Net allowances for loans and 79 168 169 484 167 166 other assets 337 3 5 12 235 21 (S$m) 26 232 99 88 99 105 213 108 28 177 172 52 64 59 98 56 43 39 8
Slide 17: Customer loans
Loans Customer loans Broad-based YoY growth of 11% across most industry segments and key markets Loan growth Group QoQ: +2%; YoY: +11% In constant currency terms QoQ: +2%; YoY: +11% 225 229 220 208 209 Rest of the world 205 29 26 28 QoQ: +5% 1/ 24 YoY: +34% 22 22 Greater China 54 54 56 QoQ: +3% Cust
Slide 18: Customer loans
Loans Customer loans Loans portfolio well-diversified across geographies and industries Customer Loans by Geography Customer Loans by Industry (S$b) As27% of As of Rest of the Industry 30 Jun 2017 28% 30 Jun 2016 World Other Asia S$b % S$b % 16% Pacific Housing loans 61 27 58 28 7% 17% Jun 17 Profes
Slide 19: Oil & Gas exposure
Loans Oil & Gas exposure 0.53% 0.61% 0.62% 0.59% 0.43% 0.45% NPL ratio 1/ QoQ decrease of 8% mainly driven by drop in 17.1 exposure to oil majors and OSV sector 15.8 15.8 14.1 14.3 14.1 2.1 (S$b) 2.4 2.2 18 1.7 1.7 1.9 17 16 -0.2 -0.3 -0.1 (S$b) 15 -0.7 6% of 15.0 total 13.6 14 12.4 12.6 12.2 13.4 c
Slide 20: Commodities exposure
Loans Commodities exposure NPL 0.10% 0.16% 0.13% 0.13% 0.12% 0.11% ratio 1/ Commodities exposure declined 3% QoQ 17.1 16.4 15.8 15.3 (S$b) 14.2 13.6 3.4 2.8 2.1 17 2.4 2.3 2.1 16 -0.2 -0.2 -0.0 -0.2 15 (S$b) 6% of 14 total 13.7 13.6 13.7 customer 13 16.4 12.9 15.8 11.9 11.5 loans 12 11 0.2 0.3 0.3 0
Slide 21: Asset quality
Asset quality Asset quality NPL ratio of 1.3% unchanged QoQ; healthy coverage ratios maintained at above 100% for total NPAs and 300% for unsecured NPAs 1.1% 1.2% 1.3% 1.3% 1.3% 1.0% NPL ratio 2,886 2,870 2,920 103 60 61 2,585 365 2,488 388 374 108 131 2,221 323 376 307 67 372 354 187 185 340 355 62
Slide 22: NPL Ratio & Non-Performing Assets
Asset quality NPL Ratio & Non-Performing Assets Excluding oil and gas NPLs, the NPL ratio continued to be stable over the past quarters NPL ratio NPAs 1.26% 1.25% 1.25% 1.19% 2Q17 1Q17 2Q16 1.14% S$m S$m S$m 1.04% 0.61% 0.62% 0.59% 0.45% 0.53% Opening balance 2,870 2,886 2,221 0.43% New NPAs 445 391
Slide 23: Customer deposits
Deposits Customer deposits Customer deposits rose 7% YoY driven by 11% increase in CASA balances; CASA ratio at 51% of total deposits 50.2% 51.1% 49.9% 50.9% 49.3% 49.3% CASA ratio 261 265 264 242 246 247 14 18 22 17 17 16 114 115 108 106 108 108 Customer Deposits (S$b) 48 50 51 44 44 46 S$134b S$13
Slide 24: Loans-to-Deposits Ratio
Funding Loans-to-Deposits Ratio Group LDR at 85.2%, as compared to 82.2% in the prior year 261 265 264 246 247 Others 242 22 23 23 20 19 225 8 229 8 IDR 220 8 22 8 8 7 7 7 RMB 208 6 205 209 7 21 8 20 26 26 9 19 27 8 HKD 17 23 18 24 7 7 23 17 5 6 7 7 5 22 22 6 22 MYR 7 6 5 23 30 31 24 30 24 28 28 28
Slide 25: Funding sources
Funding Funding sources Well-diversified funding mix; customer deposits formed majority of the funding base Funding Composition as of 30 Jun 2017 Wholesale Funding by Currency as of 30 Jun 2017 Others EUR 7% By Maturity: Current account 3% & savings deposits ≤ 1 year 79% Others Bank deposits 39% 7%
Slide 26: Capital
Capital Capital Capital position remained robust and well above regulatory requirements Capital Adequacy Ratios (%) 17.3 17.5 17.6 17.1 16.5 16.1 15.1 15.5 15.6 15.1 Total CAR 14.2 13.9 14.6 14.9 15.1 14.7 Tier 1 CAR 13.3 13.0 Common Equity Tier 1 CAR Proforma Common Equity 12.4 12.7 12.8 12.4 12.2
Slide 27: Dividends
Dividends Dividends Interim dividend of 18 cents per share 42% 43% 40% 39% 38% Dividend Payout 37% Ratio 36.0 36.0 36.0 33.0 34.0 Net DPS 18.0 18.0 18.0 17.0 17.0 (cents) Final net dividend Interim net dividend 16.0 17.0 18.0 18.0 18.0 18.0 2012 2013 2014 2015 2016 1H17 Net Dividends (S$m) 1,133 1,1
Slide 28: Agenda
Agenda Results Overview 2Q17 & 1H17 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 28
Slide 29: 2Q17 Great Eastern Holdings' performance
Great Eastern 2Q17 Great Eastern Holdings’ performance Net profit contribution to the Group up QoQ and YoY at S$233m 2Q17 1Q17 QoQ 2Q16 YoY GEH S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 245 184 33 118 107 - Operating profit 1/ 157 122 30 132 20 - Non-operating profit / (loss)2/ 73 44
Slide 30: 1H17 Great Eastern Holdings' performance
Great Eastern 1H17 Great Eastern Holdings’ performance Half year earnings contribution rose to S$413m 1H17 1H16 YoY GEH S$m S$m +/(-)% Profit from insurance business 428 209 105 - Operating profit 1/ 279 249 12 - Non-operating profit / (loss) 2/ 118 (73) 262 - Others 32 33 (4) Profit from Shareholde
Slide 31: GEH: Operating Profit
Great Eastern GEH: Operating Profit 2Q17 operating profit at S$157m +20% YoY 561 13 157 495 3 121 13 132 134 Operating 32 profit from 5 4 122 133 117 112 5 insurance 2 33 36 3 business (S$m) 279 39 26 38 317 7 89 227 71 64 65 50 49 48 138 109 121 29 30 30 33 29 34 63 2015 2016 1H17 1Q16 2Q16 3Q16 4Q
Slide 32: GEH: Non-operating profit
Great Eastern GEH: Non-operating profit Higher non-operating profit largely contributed by narrowing of credit spreads and gains from favourable interest rate movements 118 Non-operating 73 profit/(loss) from insurance 44 business 23 (S$m) 20 13 (33) (39) (39) 2015 2016 1H17 1Q16 2Q16 3Q16 4Q16 1Q17
Slide 33: GEH: Total weighted new sales
Great Eastern GEH: Total weighted new sales TWNS grew 6% YoY, underpinned by growth from both agency and bancassurance channels +6% 1/ 1,067 YoY 16 965 37 343 5 361 281 304 264 5 1/ 4 134 256 242 5 1/ 218 4 73 537 3 81 TWNS 9 84 (S$m) 81 64 157 691 624 204 203 180 167 151 157 370 2015 2016 1H17 1Q16
Slide 34: GEH: New business embedded value
Great Eastern GEH: New business embedded value Robust 17% YoY growth in NBEV for 2Q17; NBEV margin improved to 47.4% 48.9% 47.4% NBEV 43.6% 43.8% margin 41.7% 42.7% 39.5% (NBEV / Total 37.8% 36.5% weighted 1/ new sales) 465 5 150 382 1 4 153 129 1 121 1/ 50 2 132 103 103 38 1 1 1/ 43 224 82 3 1 36 3
Slide 35: 2Q17 OCBC Wing Hang's performance
OCBC Wing Hang 2Q17 OCBC Wing Hang’s performance Net profit up 2% QoQ in local currency terms, driven by strong earnings growth 2Q17 1Q17 QoQ 2Q16 YoY OCBC Wing Hang HKD m HKD m +/(-)% HKD m +/(-)% Net interest income 1,023 972 5 885 16 Non-interest income 321 312 3 307 4 Total income 1,343 1,284 5
Slide 36: 1H17 OCBC Wing Hang's performance
OCBC Wing Hang 1H17 OCBC Wing Hang’s performance Profit before tax up YoY but net profit lower as the prior period included a tax write-back 1H17 1H16 YoY OCBC Wing Hang HKD m HKD m +/(-)% Net interest income 1,995 1,828 9 Non-interest income 632 543 16 Total income 2,628 2,371 11 Operating expenses
Slide 37: OCBC Wing Hang: Revenue
OCBC Wing Hang OCBC Wing Hang: Revenue Net interest income up 5% QoQ while non-interest income rose 3% Net interest income (HKD m) Non-interest income (HKD m) Net interest Non-int. income/ margin Total income 1.83% 1.73% 1.73% 1.73% 22.2% 25.7% 24.1% 28.0% 28.1% 24.3% 23.9% 1.76% 1.75% 1.60% 1/ 1.60
Slide 38: OCBC Wing Hang: Loans & Deposits
OCBC Wing Hang OCBC Wing Hang: Loans & Deposits Loans and deposits both increased QoQ; NPL ratio at 0.9% Gross Loans (HKD b) Deposits (HKD b) Loans / Deposits 1/ NPL ratio 0.7% 0.9% 0.9% 0.8% 0.9% 0.6% 80.7% 81.5% 80.6% 82.1% 83.4% 83.3% 166 170 160 163 199 198 199 204 150 186 144 177 Mar 16 Jun 16
Slide 39: Greater China Customer Loans
Loans Greater China Customer Loans Loans up QoQ and YoY; sound asset quality and coverage ratios maintained 260% 148% 157% 184% 171% Total 137% allowances/ NPAs 0.7% 0.7% 0.7% 0.6% 0.6% NPL ratio 0.4% 56 54 54 52 49 49 4 4 4 2 4 2 2 2 4 4 Macau 2 2 Customer Loans to Taiwan Greater 30 China 27 29 28
Slide 40: 2Q17 OCBC Malaysia's Performance
OCBC Malaysia 2Q17 OCBC Malaysia’s Performance Net profit 3% above previous quarter and increased 6% YoY 2Q17 1Q17 QoQ 2Q16 YoY OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 345 346 - 335 3 Islamic banking income 1/ 115 111 4 119 (4) Non-interest / finance income 164 128 29 144 14 T
Slide 41: 1H17 OCBC Malaysia's Performance
OCBC Malaysia 1H17 OCBC Malaysia’s Performance Half year net profit rose 3% 1H17 1H16 YoY OCBC Malaysia RM m RM m +/(-)% Net interest income 691 666 4 Islamic banking income 1/ 226 245 (8) Non-interest / finance income 292 282 3 Total income 1,209 1,193 1 Operating expenses (540) (537) 1 Operating p
Slide 42: OCBC Malaysia: Revenue
OCBC Malaysia OCBC Malaysia: Revenue Net interest/finance income at RM441m; Non-interest/finance income grew 31% QoQ and 20% YoY Net interest/finance income (RM m) Non-interest/finance income1/ (RM m) Net interest/ Non-interest/finance finance margin income/ Total income 27.7% 29.4% 1.99% 1.91% 1.94
Slide 43: OCBC Malaysia: Loans & Deposits
OCBC Malaysia OCBC Malaysia: Loans & Deposits Customer loans stable YoY, NPL ratio at 2.3%; Deposits at RM 71b with CASA ratio at 33% Gross Loans (RM b) Deposits (RM b) Loans / NPL Ratio Deposits 2.3% 94.2% 92.4% 2.1% 2.1% 2.2% 2.1% 90.3% 89.7% 90.5% 91.5% 1.9% 72 74 73 71 71 71 69 69 68 69 71 69 Ma
Slide 44: 2Q17 OCBC NISP's performance
OCBC NISP 2Q17 OCBC NISP’s performance Net profit increased 1% QoQ and 24% YoY 2Q17 1Q17 QoQ 2Q16 YoY OCBC NISP IDR b IDR b +/(-)% IDR b +/(-)% Net interest income 1,515 1,413 7 1,341 13 Non-interest income 422 341 24 363 16 Total income 1,937 1,754 10 1,704 14 Operating expenses (847) (804) 5 (790)
Slide 45: 1H17 OCBC NISP's performance
OCBC NISP 1H17 OCBC NISP’s performance Half year net profit rose 24% YoY 1H17 1H16 YoY OCBC NISP IDR b IDR b +/(-)% Net interest income 2,928 2,646 11 Non-interest income 763 699 9 Total income 3,691 3,345 10 Operating expenses (1,651) (1,557) 6 Operating profit 2,040 1,788 14 Allowances (547) (580)
Slide 46: OCBC NISP: Revenue
OCBC NISP OCBC NISP: Revenue 2Q17 Net interest income and non-interest income up 13% and 16% YoY respectively Net interest income (IDR b) Non-interest income (IDR b) Net interest Non-int. income/ margin 4.79% 4.62% Total income 4.62% 4.49% 4.49% 4.60% 4.31% 4.67% 23.1% 4.07% 20.8% 20.7% 20.5% 21.3%
Slide 47: OCBC NISP: Loans & Deposits
OCBC NISP OCBC NISP: Loans & Deposits Loans grew 17% YoY, NPL ratio steady at 1.9%; deposits up 15% YoY Gross Loans (IDR t) Deposits (IDR t) Loans / NPL Ratio Deposits 1.9% 1.9% 1.9% 1.5% 94.7% 92.8% 92.1% 94.3% 1.4% 1.4% 89.9% 85.9% 110 101 104 106 93 94 95 86 88 90 93 85 Mar 16 Jun 16 Sep16 Dec16
Slide 48: Thank You
Second Quarter 2017 Results Thank You
Oversea-Chinese Banking — Q2 2017 Earnings Presentation on 6ix