Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q3 2018 Earnings Presentation
46 slides from Oversea-chinese Banking's earnings presentation, Nov 1, 2018
Slide 1: Third Quarter 2018 Results Presentation
Third Quarter 2018 Results Presentation 1 November 2018 Disclaimer: This presentation should be read as an overview of OCBC’s current business activities and operating environment which may contain statements relating to OCBC’s growth strategy and future business aspirations. These statements involv
Slide 2: Agenda
Agenda Results Overview 3Q18 & 9M18 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: 3Q18 Highlights
Group performance 3Q18 Highlights Net profit grew 12% YoY to a record S$1.25b; Banking operations’ profit rose 23% YoY to S$1.07b Return on equity higher at 12.6% Net Interest Income: S$1.51b; +9% Continuing to deliver sustainable growth Higher Returns (3Q17 : S$1.38b) Year-on-Year Non-interest Inco
Slide 4: 3Q18 Group Performance
Group performance 3Q18 Group Performance Net profit rose 3% QoQ and 12% YoY to S$1.25b 3Q18 2Q18 QoQ 3Q17 YoY OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,505 1,450 4 1,382 9 Non-interest income 1,039 1,024 1 1,035 – Total income 2,544 2,474 3 2,417 5 Operating expenses (1,069) (1,035)
Slide 5: 3Q18 Banking Operations Performance
Banking Ops performance 3Q18 Banking Operations Performance Net profit before GEH contribution (“Banking Operations”) rose 6% QoQ and 23% YoY to new high of S$1.07b 3Q18 2Q18 QoQ 3Q17 YoY Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,485 1,430 4 1,360 9 Non-interest income 744 7
Slide 6: 9M18 Group Performance
Group performance 9M18 Group Performance Net profit increased 18% YoY to S$3.57b 9M18 9M17 YoY OCBC Group S$m S$m +/(-)% Net interest income 4,370 3,999 9 Non-interest income 2,981 2,890 3 Total income 7,351 6,889 7 Operating expenses (3,136) (2,967) 6 Operating profit 4,215 3,922 7 Amortisation of
Slide 7: 9M18 Banking Operations Performance
Banking Ops performance 9M18 Banking Operations Performance Net profit for Banking Operations grew 22% YoY to S$3.07b 9M18 9M17 YoY Banking Operations S$m S$m +/(-)% Net interest income 4,312 3,931 10 Non-interest income 2,179 2,067 5 Total income 6,490 5,997 8 Operating expenses (2,978) (2,786) 7 O
Slide 8: Agenda
Agenda Results Overview 3Q18 & 9M18 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 8
Slide 9: Performance by business and geography
Earnings Performance by business and geography Earnings well-diversified across key business segments and geographies 9M18 Operating Profit 9M18 Profit before Tax by Business1/ by Geography OCBC Wing Others Singapore Hang S$2,373m YoY: +21% 5% 10% 9M18 Global 9M18 Greater Malaysia Insurance Corporat
Slide 10: Net interest income
Net interest income Net interest income NII in 3Q18 rose 4% QoQ and 9% YoY, driven by loan growth and improved NIM which rose 5 bps QoQ and 6 bps YoY to 1.72%. The QoQ increase was underpinned by higher margins in Singapore, Malaysia, Indonesia and Greater China 1.72% 1.69% 1.67% 1.66% 1.67% 1.67% 1
Slide 11: Non-interest income
Non-interest income Non-interest income 3Q18 non-interest income up QoQ and YoY to S$1.04b 46.0% Non- 43.1% 42.8% 42.8% 41.4% 40.5% 40.6% 40.0% 39.3% 40.8% interest income / Total income 4,105 1,214 1,035 1,024 1,039 3,437 917 1,006 310 918 649 2,981 850 234 225 233 290 Life & General 561 206 Insura
Slide 12: Wealth Management
Wealth management Wealth Management 3Q18 wealth management income at S$748m; BOS’ AUM rose 3% QoQ and 11% YoY to US$105b from continued net new money inflows Wealth Management Income1/ 2/ (S$m) Bank of Singapore Earning Asset Base (US$b) As % of Group income Dec 14 – Dec 17 CAGR 23% 121 129 38% 33%
Slide 13: Fees & Commissions
Non-interest income Fees & Commissions 3Q18 fee income up 3% YoY at S$502m from higher wealth management, loan and trade- related fees 21.2% 22.7% 23.0% 21.0% Fee income / 19.3% 20.5% 20.9% 20.2% 19.8% 18.6% Total income 1/ 1,953 299 1,638 536 1,557 518 94 492 491 502 481 488 290 74 231 79 72 72 22
Slide 14: Operating expenses
Operating expenses Operating expenses Expenses rose 3% QoQ; CIR at 42.0% Cost-to- 44.6% 45.9% 44.2% 42.4% 42.7% 42.2% 41.4% 40.8% 41.9% 42.0% income ratio (“CIR”) 4,042 3,788 1,075 1,069 1,032 1,035 993 1,001 778 973 678 3,136 223 176 218 200 179 179 198 Others Operating 793 594 763 210 194 200 Prop
Slide 15: Total cumulative allowances
Allowances Total cumulative allowances Allowances met requirements set out in SFRS(I) 9 and the revised MAS 612 2,800 2,798 2,695 453 474 RLAR 353 With effect from 1 January 2018, SFRS(I) 9 requires the Group to calculate credit loss allowances using Allowances for non- a forward-looking expected cr
Slide 16: Allowances
Allowances Allowances 3Q18 allowances at S$49m; Credit costs for impaired loans at 14bps 726 671 -68% YoY Allowances for +131% QoQ loans and other assets (S$m) 9M 493 168 169 178 421 156 83 49 12 21 FY16 FY17 9M18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Allowances for loans and other assets (S$m) Allowan
Slide 17: Customer loans
Loans Customer loans Broad-based loan growth, rising 2% QoQ and 10% YoY to S$257b In constant ccy terms +10% YoY +11% YoY +2% QoQ +2% QoQ 252 257 Rest of the world 247 232 237 QoQ: +5% 225 229 35 32 33 YoY: +17% 30 31 28 29 Greater China QoQ: +1% Customer 63 65 66 YoY: +15% Loans (S$b) 56 57 59 54 I
Slide 18: Customer loans
Loans Customer loans Loan portfolio remained well-diversified Customer Loans by Geography Customer Loans by Industry Rest of the World Other Asia Others 1/ Pacific Housing loans 8% 14% Sep 18 Sep 18 5% Manufacturing 12% 26% 7% Singapore 6% Sep 17 6% Sep 17 6% 41% 27% 12% 42% S$257b Greater 26% 25% S
Slide 19: Greater China Customer Loans
Loans Greater China Customer Loans Loans up 1% QoQ and 15% YoY; NPL ratio stable QoQ and declined YoY to 0.3% 0.6% 0.6% 0.5% NPL ratio 0.4% 0.4% 0.3% 0.3% 65 66 63 59 4 4 56 57 4 2 3 54 4 2 3 4 2 2 4 2 2 Macao 32 33 32 Taiwan Customer 30 30 31 loans to 28 Hong Kong Greater China Offshore 2/ (S$b) Ch
Slide 20: Asset quality
Asset quality Asset quality Sound portfolio quality with NPL ratio flat QoQ at 1.4% 1.5% 1.4% 1.4% 1.4% 1.3% 1.3% 1.3% NPL ratio 3,594 3,468 3,452 3,514 43 61 53 47 Debt securities / 626 1/ Contingent liabilities 2,983 2,870 2,920 652 684 773 Rest of the 61 55 World NPLs 60 199 334 374 365 232 Great
Slide 21: NPL Ratio & Non-Performing Assets
Asset quality NPL Ratio & Non-Performing Assets NPL ratio stable at 1.38% for the past three quarters NPL ratio NPAs 1.45% 1.38% 1.38% 1.38% 3Q18 2Q18 3Q17 1.25% 1.25% 1.26% S$m S$m S$m 0.91% Opening balance 3,514 3,452 2,920 0.62% 0.59% 0.63% 0.85% 0.86% 0.84% New NPAs 338 277 409 Net recoveries/ (
Slide 22: Customer deposits
Deposits Customer deposits Customer deposits of S$287b were 7% higher YoY; CASA ratio at 47.5% 50.9% 50.5% 49.9% 49.2% CASA ratio 47.1% 47.7% 47.5% 289 290 287 284 265 264 268 29 27 23 26 18 22 25 Others Customer deposits 118 124 125 128 Fixed Deposits (S$b) 115 108 108 Savings Deposits Current Acco
Slide 23: Loans-to-Deposits Ratio
Funding Loans-to-Deposits Ratio Group LDR higher QoQ and YoY at 88.5% 88.5% 85.2% 85.3% 84.4% 85.9% Group 83.6% 82.5% LDR 1/ 289 290 287 284 265 264 268 Others 26 27 29 257 27 247 252 IDR 24 9 9 8 23 23 237 8 7 8 8 229 232 8 29 RMB 225 8 8 8 28 8 7 8 29 29 27 28 29 24 8 8 HKD 20 21 23 26 8 5 26 26 8
Slide 24: Funding & Liquidity
Funding Funding & Liquidity Customer deposits made up 78% of total funding; all-currency LCR and NSFR at 130% and 108% respectively, comfortably above regulatory guidelines Funding Composition as of 30 Sep 2018 Wholesale Funding by Currency as of 30 Sep 2018 By Maturity: Customer deposits Current ac
Slide 25: Capital
Capital Capital CET1 CAR rose to 13.6% from 13.2% in the previous quarter Capital Adequacy Ratios Basel III transitional arrangements 1/ Basel III 1/ (“CAR”) (%) 17.2 16.5 16.1 16.2 16.1 15.8 15.9 Total CAR 14.9 14.2 14.0 14.2 14.3 14.4 13.9 13.9 Tier 1 CAR 13.3 13.0 13.1 Common Equity Tier 1 (“CET1
Slide 26: Agenda
Agenda Results Overview 3Q18 & 9M18 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 26
Slide 27: Subsidiaries’ Performance
Major subsidiaries Subsidiaries’ Performance Major subsidiaries contributed 33% to the Group’s profit Key Metrics 9M18 9M17 YoY Net profit 1/ S$604m -1% S$610m TWNS S$905m +7% Great Eastern S$842m Holdings S$361m NBEV -1% S$364m NBEV margin 39.9% 43.3% -3.4ppt Net profit HKD2,048m +12% HKD1,826m HKD
Slide 28: 3Q18 Great Eastern Holdings’ performance
Great Eastern 3Q18 Great Eastern Holdings’ performance Net profit contribution lower QoQ and YoY at S$176m 3Q18 2Q18 QoQ 3Q17 YoY GEH S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 183 201 (9) 264 (31) - Operating profit 1/ 141 153 (8) 158 (11) - Non-operating profit 2/ 24 19 24 85 (72) -
Slide 29: 9M18 Great Eastern Holdings’ performance
Great Eastern 9M18 Great Eastern Holdings’ performance Net profit contribution down 1% to S$496m 9M18 9M17 YoY GEH S$m S$m +/(-)% Profit from insurance business 557 520 7 - Operating profit 1/ 454 437 4 - Non-operating profit 2/ 37 29 28 - Others 66 53 23 Profit from Shareholders’ Fund 146 193 (24)
Slide 30: GEH: Operating Profit
Great Eastern GEH: Operating Profit 3Q18 operating profit from insurance business was 11% lower YoY at S$141m, mainly due to the release of reserves in the prior year from the repositioning of the maturity profile of assets and liabilities in the Singapore insurance business -11% YoY 163 159 158 158
Slide 31: GEH: Non-operating profit
Great Eastern GEH: Non-operating profit 3Q18 non-operating profit at S$24m mainly from the narrowing of credit spreads and gains from equities Non-operating 113 profit/(loss) from insurance 85 84 business (S$m) 37 27 19 24 (5) (46) (82) FY16 FY17 9M18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 Note: - Non-o
Slide 32: GEH: Total weighted new sales
Great Eastern GEH: Total weighted new sales 3Q18 TWNS rose 14% YoY to S$347m, driven by higher sales from agency channels in Singapore and Malaysia 1,313 +14% YoY 19 471 5 1/ 1,078 353 15 121 905 347 17 327 371 4 306 6 247 280 5 86 TWNS 5 256 91 (S$m) 5 75 231 Emerging markets 73 7 84 Malaysia 940 7
Slide 33: GEH: New business embedded value
Great Eastern GEH: New business embedded value 3Q18 NBEV at S$121m; NBEV margin down from a year ago as a result of a shift in product mix in Singapore 50.3% NBEV 43.6% 40.8% 43.6% 42.7% 41.4% 39.9% 39.6% margin 37.9% 34.8% (NBEV / Total weighted new sales) 543 179 6 2 1/ 470 5 140 210 129 69 2 361
Slide 34: 3Q18 OCBC Wing Hang’s performance
OCBC Wing Hang 3Q18 OCBC Wing Hang’s performance Operating profit rose 13% QoQ and 5% YoY to HKD955m 3Q18 2Q18 QoQ 3Q17 YoY OCBC Wing Hang HKD m HKD m +/(-)% HKD m +/(-)% Net interest income 1,205 1,177 2 1,103 9 Non-interest income 536 463 16 566 (5) Total income 1,741 1,640 6 1,669 4 Operating exp
Slide 35: 9M18 OCBC Wing Hang’s performance
OCBC Wing Hang 9M18 OCBC Wing Hang’s performance Operating profit up 22% YoY to HKD2.52b 9M18 9M17 YoY OCBC Wing Hang HKD m HKD m +/(-)% Net interest income 3,592 3,094 16 Non-interest income 1,231 1,154 7 Total income 4,823 4,248 14 Operating expenses (2,305) (2,184) 6 Operating profit 2,518 2,064
Slide 36: OCBC Wing Hang: Revenue
OCBC Wing Hang OCBC Wing Hang: Revenue 3Q18 net interest income rose 2% QoQ to HKD1.21b, with NIM up 5bps QoQ at 1.61%. Non-interest income grew 16% QoQ to HKD536m Net interest income (HKD m) Non-interest income (HKD m) Net interest Non-int. income/ margin Total income 33.9% 28.2% 30.8% 1.67%1.57% 1
Slide 37: OCBC Wing Hang: Loans & Deposits
OCBC Wing Hang OCBC Wing Hang: Loans & Deposits Loans and deposits increased 12% and 8% YoY respectively; NPL ratio at 0.4% Gross Loans (HKD b) Deposits (HKD b) NPL ratio Loans / Deposits 1/ 0.9% 72.3% 74.8% 74.8% 74.1% 0.8% 0.8% 71.7% 71.8% 70.3% 0.5% 0.5% 0.4% 0.4% 189 190 192 180 222 219 217 222
Slide 38: 3Q18 OCBC Malaysia’s Performance
OCBC Malaysia 3Q18 OCBC Malaysia’s Performance Operating profit grew 6% QoQ and 17% YoY 3Q18 2Q18 QoQ 3Q17 YoY OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 390 375 4 355 10 Islamic banking income 1/ 107 116 (8) 108 (1) Non-interest / finance income 156 137 14 128 22 Total income 65
Slide 39: 9M18 OCBC Malaysia’s Performance
OCBC Malaysia 9M18 OCBC Malaysia’s Performance Operating profit rose 6% YoY 9M18 9M17 YoY OCBC Malaysia RM m RM m +/(-)% Net interest income 1,124 1,046 7 Islamic banking income 1/ 328 334 (2) Non-interest / finance income 444 419 6 Total income 1,896 1,799 5 Operating expenses (859) (820) 5 Operati
Slide 40: OCBC Malaysia: Revenue
OCBC Malaysia OCBC Malaysia: Revenue 3Q18 net interest/finance income grew 4% QoQ and 8% YoY; with NIM higher at 2.11%. Non-interest income rose 6% QoQ and 19% YoY Net interest/finance income (RM m) Non-interest/finance income1/ (RM m) Net interest/ Non-interest/finance finance margin income/ Total
Slide 41: OCBC Malaysia: Loans & Deposits
OCBC Malaysia OCBC Malaysia: Loans & Deposits Customer loans and deposits rose QoQ to RM69b and RM74b respectively; NPL ratio improved to 1.8% Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 2.3% 2.3% 2.2% 94.2% 92.4% 92.7% 94.2% 93.3% 94.1% 2.1% 2.1% 2.0% 1.8% 88.9% 74 75 74 71 71 72
Slide 42: 3Q18 OCBC NISP’s performance
OCBC NISP 3Q18 OCBC NISP’s performance Net profit increased 4% QoQ and 29% YoY to IDR698b 3Q18 2Q18 QoQ 3Q17 YoY OCBC NISP IDR b IDR b +/(-)% IDR b +/(-)% Net interest income 1,628 1,596 2 1,537 6 Non-interest income 391 194 101 383 2 Total income 2,019 1,790 13 1,920 5 Operating expenses (875) (866
Slide 43: 9M18 OCBC NISP’s performance
OCBC NISP 9M18 OCBC NISP’s performance Net profit grew 22% YoY to IDR2.03t 9M18 9M17 YoY OCBC NISP IDR b IDR b +/(-)% Net interest income 4,775 4,465 7 Non-interest income 971 1,146 (15) Total income 5,746 5,611 2 Operating expenses (2,626) (2,477) 6 Operating profit 3,120 3,134 – Allowances (434) (
Slide 44: OCBC NISP: Revenue
OCBC NISP OCBC NISP: Revenue 3Q18 net interest income increased 2% QoQ; NIM improved 18bps QoQ to 4.26% Net interest income (IDR b) Non-interest income (IDR b) Net interest Non-int. income/ margin Total income 4.62% 4.47% 4.67% 4.48% 4.41% 4.19% 4.31% 4.24% 4.08%4.26% 20.8% 20.0% 21.8%19.9% 16.9% 19
Slide 45: OCBC NISP: Loans & Deposits
OCBC NISP OCBC NISP: Loans & Deposits Loans rose 16% YoY to IDR120t, NPL ratio flat at 1.8%; deposits up 3% YoY to IDR118t Gross Loans (IDR t) Deposits (IDR t) NPL Ratio Loans / Deposits 100.9% 94.3% 93.4% 96.7% 1.9% 1.9% 1.9% 89.8% 91.1% 1.8% 1.7% 1.8% 1.8% 85.9% 117 120 111 121 121 118 103 106 115
Slide 46: Third Quarter 2018 Results Thank You
Third Quarter 2018 Results Thank You
Oversea-Chinese Banking — Q3 2018 Earnings Presentation on 6ix