Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q3 2011 Earnings Presentation
47 slides from Oversea-chinese Banking's earnings presentation, Nov 3, 2011
Slide 1: Third Quarter 2011 Results Presentation
Third Quarter 2011 Results Presentation 3 November 2011
Slide 2: Agenda
Agenda Results Overview Performance Trends Appendix: Financial Highlights of Malaysia and Indonesia Subsidiaries Notes: Amounts less than S$0.5 million are shown as “0”; NM denotes not meaningful; Figures may not sum to stated totals because of rounding 2
Slide 3: 3Q11 Highlights
3Q11 Highlights Our core customer-related earnings continued to grow: • Net interest income grew strongly, driven by broad-based loan growth • Fee income grew from the contribution of increased wealth management, loan and trade-related activity • Insurance new sales and new business embedded value b
Slide 4: 3Q11 core net profit of $513m, down 10% YoY
3Q11 core net profit of $513m, down 10% YoY due to poor trading performance and lower insurance income 3Q11 3Q10 YoY 2Q11 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 874 754 16 827 6 Non-interest income 436 621 (30) 586 (26) Total income 1,310 1,375 (5) 1,413 (7) Operating expenses
Slide 5: 9M11 core net profit down 4% YoY
9M11 core net profit down 4% YoY largely due to impact of volatile financial markets on 3Q11 trading and insurance income 9M11 9M10 YoY OCBC Group S$m S$m +/(-)% Net interest income 2,486 2,178 14 Non-interest income 1,639 1,818 (10) Total income 4,125 3,996 3 Operating expenses (1,810) (1,634) 11 O
Slide 6: Key ratios
Key ratios 3Q11 2Q11 3Q10 9M11 9M10 Based on core earnings % % % % % Net interest margin 1.85 1.87 1.98 1.87 1.99 Non-interest income / Total income 33.3 41.4 45.1 39.7 45.5 Costs / Income 46.6 43.7 41.7 43.9 40.9 Loans / Deposits 88.0 89.1 86.5 88.0 86.5 NPL Ratio 0.7 0.8 1.1 0.7 1.1 Allowances / N
Slide 7: ROE of 11.1% for 9M11
ROE of 11.1% for 9M11 reflected adverse impact of volatile financial markets on net profits 15.3% 12.2% 12.1% 12.0% 12.2% Core ROE* 11.1% 10.9% 11.4% 10.3% 9.8% 2,253 676 1,962 596 570 577 1,686 Core net 513 503 505 profit (S$m) 1,749 9M 1,461 2009 2010 9M11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 * 9M a
Slide 8: Profit contribution by business and geography
Profit contribution by business and geography 9M11 PBT 9M11 PBT by Business* by Geography Rest of the Other Asia World Others Pacific Greater China 19% 10% Rest of 3% 2% 7% Southeast Insurance Asia 5% 14% Global 44% Corporate Banking 58% Singapore Malaysia 25% 19% Global Treasury 13% Global Consumer
Slide 9: GEH: 3Q11 net profit contribution down
GEH: 3Q11 net profit contribution down as volatile markets resulted in lower investment profits from Non-participating fund 3Q11 3Q10 YoY 2Q11 QoQ GEH Contribution S$m S$m +/(-)% S$m +/(-)% Total income 1131/ 234 (52) 194 (42) Operating expenses (49) (36) 35 (51) (4) Operating profit 64 198 (68) 144
Slide 10: GEH: 9M11 net profit contribution down 27% YoY
GEH: 9M11 net profit contribution down 27% YoY largely due to 3Q11 impact from volatile markets 9M11 9M10 YoY GEH Contribution S$m S$m +/(-)% Total income 529 613 (14) Operating expenses (141) (114) 24 Operating profit 388 499 (22) Amortisation of intangibles (35) (35) - Allowances (1) (4) (84) Asso
Slide 11: Results excluding GEH: 3Q11 net profit up 13% YoY
Results excluding GEH: Core banking business remained robust, 3Q11 net profit up 13% YoY 3Q11 3Q10 YoY 2Q11 QoQ OCBC excluding GEH S$m S$m +/(-)% S$m +/(-)% Net interest income 860 735 17 815 6 Non-interest income 336 406 (17) 403 (17) Total income 1,196 1,141 5 1,218 (2) Operating expenses (561) (5
Slide 12: Results excluding GEH: 9M11 core net profit up 2% YoY
Results excluding GEH: 9M11 core net profit up 2% YoY 9M11 9M10 YoY OCBC excluding GEH S$m S$m +/(-)% Net interest income 2,447 2,124 15 Non-interest income 1,149 1,259 (9) Total income 3,596 3,383 6 Operating expenses (1,669) (1,520) 10 Operating profit 1,927 1,863 3 Amortisation of intangibles (11
Slide 13: Agenda
Agenda Results Overview Performance Trends Appendix: Financial Highlights of Malaysia and Indonesia Subsidiaries 13
Slide 14: Net interest income up 6% QoQ; margin compression slowed
Net interest income up 6% QoQ; margin compression slowed Net interest 2.23% margin 2.03% 1.98% 1.98% 1.96% 1.96% 1.87% 1.90% 1.87% 1.85% 2,825 2,947 874 2,486 827 769 784 754 Net interest 704 720 income (S$m) 9M 2,138 2,178 2009 2010 9M11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 14
Slide 15: Net interest income less allowances improved 8% QoQ
Net interest income less allowances improved 8% QoQ; adjusted NIM* increased by 3 bps QoQ 1.96% 1.91% Adjusted 1.89% 1.89% 1.86% 1.83% 1.78% 1.77% net interest 1.76% 1.74% margin* 2,813 836 2,396 2,343 771 721 735 702 711 Adjusted 679 net interest income* (S$m) 2,092 9M 1,785 2009 2010 9M11 1Q10 2Q1
Slide 16: Non-interest income down 26% QoQ
Non-interest income down 26% QoQ due to poor trading performance and lower insurance income 49.2% Non- 44.7% 45.1% 44.1% interest 41.8% 42.1% 41.4% 41.3% income / 39.7% Total income 2,378 33.3% 681 1,990 621 669 618 586 560 489 1,639 236 516 121 144 86 Non- 198 436 114 176 interest 586 137 income 17
Slide 17: Fee income increased 20% YoY
Fee income increased 20% YoY, led by wealth management, loan and trade-related fees 983 880 135 307 299 80 134 274 730 49 257 254 48 248 83 36 126 224 32 27 33 33 27 29 54 26 12 401 36 26 Fees and commissions 334 16 115 120 (S$m) 103 99 319 97 106 95 169 132 46 42 45 46 42 41 166 39 198 197 60 68 64
Slide 18: GEH: Profit from life assurance
GEH: Profit from life assurance reflected weaker investment performance in Non-participating fund during the quarter 514 437 125 156 94 146 150 332 26 24 27 Profit from life 94 106 assurance 292 * (S$m) 240 29 76 69 66 105 92 148 99 26 18 47 38 16 19 9 96 104 90 25 33 31 30 29 23 24 2009 2010 9M11 1
Slide 19: GEH: Underlying insurance businesses remained robust
GEH: Underlying insurance businesses remained robust, with total weighted new sales up 8% YoY 238 724 19 205 50 190 189 7 601 174 569 14 10 13 163 95 12 29 77 290 10 133 73 70 258 55 Weighted 205 7 new 80 business 45 premiums (S$m) 123 120 384 106 108 107 330 335 81 73 2009 2010 9M11 1Q10 2Q10 3Q10
Slide 20: GEH: New business embedded value up 13% YoY
GEH: Underlying insurance profitability continued to improve, new business embedded value up 13% YoY 44.3% NBEV / 42.9% 43.2% 43.0% 42.1% 42.1% 42.4% Total 41.8% weighted 40.5% new sales 39.0% 305 102 13 5 87 84 244 1 235 77 2 6 73 3 129 39 68 4 3 3 37 NBEV 58 38 104 107 (S$m) 2 33 31 34 22 164 58 1
Slide 21: Poor trading performance under challenging market conditions
Poor trading performance under challenging financial market conditions 669 54 236 489 10 213 87 67 176 Other non- 13 58 144 interest income 15 47 121 (S$m) 114 15 17 44 86 198 25 402 159 44 13 (9) 344 54 117 32 15 100 85 81 43 41 44 54 2009 2010 9M11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 Net gains from
Slide 22: Wealth management revenue impacted by lower insurance income
Wealth management revenue impacted by lower insurance income 27.1% 27.0% 26.1% 24.7% 24.8% 24.8% As % of 23.5% Group 21.9% 22.4% revenue 21.3% 1,317 373 378 361 350 1,027 1,022 312 294 Wealth 271 management revenue (S$m) 1,005 9M 769 2009 2010 9M11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 Note: Comprises
Slide 23: Disciplined cost management resulted in 7% YoY increase in expenses
Disciplined cost management resulted in a modest 7% YoY increase in expenses 46.6% 46.6% 45.2% 43.9% 43.7% Costs / 42.3% 41.7% 41.5% Income 37.3% 36.2% 2,254 620 618 611 1,796 564 1,810 573 581 559 31 502 136 137 452 393 137 146 120 Operating 407 132 expenses 117 109 (S$m) 331 110 112 349 100 104 10
Slide 24: Core operating profit of $699m, down 13% YoY
Core operating profit of $699m, down 13% YoY 3,019 3,071 883 802 821 2,315 795 Core 709 699 677 operating profit before allowances (S$m) 9M 2,362 2,301 2009 2010 9M11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 24
Slide 25: Net allowances continue to reflect sound portfolio quality
Net allowances continue to reflect sound portfolio quality 429 Net allowances for loans and other assets (S$m) 9M 353 134 143 56 43 48 49 38 25 18 86 2009 2010 9M11 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 25
Slide 26: Breakdown of allowances
Breakdown of allowances 3Q11 2Q11 3Q10 9M11 9M10 S$m S$m S$m S$m S$m Specific allowances for loans 16 3 16 31 32 Portfolio allowances for loans 23 54 29 107 64 Allowances for other assets (1) (1) (2) 5 (10) (Write-back) Total net allowances 38 56 43 143 86 Specific loan allowances/average 5 1 7 4 5
Slide 27: Movement in specific allowances for loans
Movement in specific allowances for loans 3Q11 2Q11 3Q10 9M11 9M10 S$m S$m S$m S$m S$m Allowances for new and 48 41 77 144 200 existing NPLs Write-backs1/ (22) (26) (49) (76) (136) Recoveries2/ (10) (12) (11) (37) (32) Net specific allowances 16 3 16 31 32 1/ Write-backs of specific allowances for e
Slide 28: Loan growth of 7% QoQ and 21% YTD
Loan growth of 7% QoQ and 21% YTD, broad-based across key geographies Loan growth Group QoQ: +7% YoY: +27% 129 YTD: +21% 121 111 International 106 QoQ: +11% 102 41 YoY: +48% 95 37 YTD: +39% 90 31 29 28 Malaysia 26 QoQ: +7% 24 20 YoY: +20% 19 Customer 18 YTD: +18% 17 Loans (S$b) 17 17 16 Singapore Qo
Slide 29: Loan book remained diversified across geographies and sectors
Loan book remained diversified across geographies and sectors Customer Loans by Geography Customer Loans by Industry As of 30 September 2011 As of 30 September 2011 Agriculture, Others Others mining & quarrying Rest of Housing Loans Singapore Transport, Southeast 11% 9% Asia storage & comm. 3% 24% 7
Slide 30: Customer deposits increased 8% QoQ
Customer deposits increased 8% QoQ; Loan-to-deposit ratio reduced to 88% 89.1% 88.0% 86.5% 86.8% Loans / 85.1% 83.7% Deposits 81.9% 145 134 12 123 126 11 116 112 7 8 109 6 5 6 65 59 Deposits 59 57 (S$b) 57 58 56 27 26 27 26 CASA 24 25 23 47.6% ratio: 46.5% 48.5% 44.9% 45.8% 46.9% 42.7% 35 37 41 27 2
Slide 31: NPL ratio improved to 0.7%
NPL ratio improved to 0.7% 1.5% NPL ratio 1.3% 1.1% 0.9% 0.9% 0.8% 1,402 0.7% 1,316 83 56 1,208 1,191 1,201 1,170 1,158 323 55 292 213 215 288 258 253 199 NPAs 243 (S$m) 229 218 562 567 494 478 463 423 444 434 401 368 318 270 240 259 Mar10 Jun10 Sep10 Dec10 Mar11 Jun11 Sep11 Singapore Malaysia Inter
Slide 32: 65% of NPAs in the substandard category
65% of NPAs in the “substandard” category – largely well-collateralised or no overdues 1,402 1,316 250 1,208 1,191 1,201 1,170 1,158 261 212 172 168 136 224 500 252 216 NPAs 217 265 414 (S$m) 292 779 767 817 757 652 641 654 Mar10 Jun10 Sep10 Dec10 Mar11 Jun11 Sep11 Sub-standard NPAs Doubtful NPAs Lo
Slide 33: Movement in NPAs
Movement in NPAs 3Q11 2Q11 3Q10 9M11 9M10 S$m S$m S$m S$m S$m NPAs – Opening balance 1,201 1,191 1,316 1,208 1,448 New NPAs 116 222 119 474 366 New recoveries/upgrades (122) (170) (227) (422) (493) Write-offs (37) (42) (37) (102) (151) NPAs – Closing balance 1,158 1,201 1,170 1,158 1,170 33
Slide 34: Healthy allowance coverage ratios
Healthy allowance coverage ratios of 130% of total NPAs and 365% of unsecured NPAs 400% 365% 350% 350% 311% 288% 300% 271% 272% Total 266% allowances/ Unsecured 250% NPAs 200% 150% 126% 123% 130% 119% 123% 107% 112% Total allowances/ 100% NPAs 50% 0% Mar10 Jun10 Sep10 Dec10 Mar11 Jun11 Sep11 34
Slide 35: Capital adequacy ratios remained strong
Capital adequacy ratios remained strong: Tier 1 ratio of 14.4% and Core Tier 1 of 11.2% 17.6% 17.3% 17.0% 16.3% 15.9% 1.3% 15.2% 15.5% 1.8% 1.6% CAR 1.0% 0.3% 1.5% (% of RWA) 0.8% 3.7% 3.7% 3.5% 3.5% 3.7% 3.7% 16.3% 3.2% Tier 2 capital 15.5% 15.4% 15.3% 15.2% 14.4% 14.4% Tier 1 preference shares Cor
Slide 36: OCBC Malaysia: Net interest income and Islamic banking income up 7% YoY
OCBC Malaysia: Net interest income and Islamic banking income up 7% YoY Net interest income and Non-interest income (RM m) Islamic banking Income (RM m) Net Non-int. income/ interest margin Total income 2.55% 31.2% 2.46% 2.42% 2.39% 29.3% 2.29% 2.27% 27.3% 26.2% 2.27% 24.2% 356 19.9% 19.2% 333 330 3
Slide 37: OCBC Malaysia: Loan growth of 7% QoQ
OCBC Malaysia: Loan growth of 7% QoQ and 17% YTD; NPL ratio improved to 2.1% Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / 87.1% Deposits 3.6% 3.6% 83.4% 83.9% 83.7% 3.1% 81.7% 81.5% 2.8% 80.3% 2.6% 2.4% 2.1% 47 47 43 43 42 41 41 39 40 36 37 34 35 33 Mar10 Jun10 Sep10 Dec10 Mar11 Jun11 Sep11
Slide 38: OCBC NISP: Net interest income up 12% YoY
OCBC NISP: Net interest income up 12% YoY Net interest income (Rp b) Non-interest income (Rp b) Net Non-int. income/ interest margin Total income 5.31% 5.07% 5.05% 5.05% 23.2% 22.8% 22.4% 22.7% 22.7% 4.65% 4.68% 4.81% 20.3% 20.0% 579 535 533 515 504 489 486 161 171 141 150 148 124 126 1Q10 2Q10 3Q10
Slide 39: OCBC NISP: Loan growth of 5% QoQ
OCBC NISP: Loan growth of 5% QoQ and 14% YTD; NPL ratio improved to 1.5% Gross Loans (Rp t) Deposits (Rp t) NPL Ratio Loans / 3.3% Deposits 85.7% 3.0% 3.0% 83.5% 83.7% 80.0% 78.9% 79.7% 78.5% 2.0% 1.9% 1.8% 1.5% 43 36 39 40 34 37 32 36 31 34 28 30 27 24 Mar10 Jun10 Sep10 Dec10 Mar11 Jun11 Sep11 Mar1
Slide 40: Agenda
Agenda Results Overview Performance Trends Appendix: Financial Highlights of Malaysia and Indonesia Subsidiaries 40
Slide 41: OCBC Malaysia: 3Q11 net profit down 13% YoY
OCBC Malaysia: 3Q11 net profit down 13% YoY 3Q11 3Q10 YoY 2Q11 QoQ OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 306 294 4 297 3 Islamic Banking Income 50 39 27 44 13 Non-interest income 84 125 (33) 141 (40) Total income 440 458 (4) 482 (9) Operating expenses (199) (171) 16 (178) 11
Slide 42: OCBC Malaysia: 9M11 net profit down 1% YoY
OCBC Malaysia: 9M11 net profit down 1% YoY 9M11 9M10 YoY OCBC Malaysia RM m RM m +/(-)% Net interest income 891 839 6 Islamic Banking Income 138 120 16 Non-interest income 344 366 (6) Total income 1,373 1,325 4 Operating expenses (545) (485) 12 Operating profit 828 839 (1) Allowances (113) (106) 7 T
Slide 43: OCBC Malaysia: Key ratios
OCBC Malaysia: Key ratios 3Q11 2Q11 3Q10 9M11 9M10 OCBC Malaysia % % % % % Net interest margin 2.27 2.29 2.55 2.31 2.42 Non-interest income / Total income 19.2 29.3 27.3 25.0 27.6 Costs / Income 45.1 36.9 37.3 39.7 36.6 Loans / Deposits 87.1 81.5 83.9 87.1 83.9 NPL Ratio 2.1 2.4 3.1 2.1 3.1 ROE 13.1
Slide 44: Bank OCBC NISP: 3Q11 net profit up 43% YoY
Bank OCBC NISP: 3Q11 net profit up 43% YoY 3Q11 3Q10 YoY 2Q11 QoQ OCBC NISP RP b RP b +/(-)% RP b +/(-)% Net interest income 579 515 12 533 9 Non-interest income 171 150 14 161 6 Total income 750 665 13 694 8 Operating expenses (432) (431) - (425) 2 Operating profit 318 234 36 269 18 Allowances (37)
Slide 45: Bank OCBC NISP: 9M11 net profit up 18% YoY
Bank OCBC NISP: 9M11 net profit up 18% YoY 9M11 9M10 YoY OCBC NISP RP b RP b +/(-)% Net interest income 1,647 1,489 11 Non-interest income 458 415 10 Total income 2,105 1,904 11 Operating expenses (1,276) (1,218) 5 Operating profit 829 686 21 Allowances (147) (100) 47 Non Op Income / (Expenses) 15 7
Slide 46: Bank OCBC NISP: Key ratios
Bank OCBC NISP: Key ratios 3Q11 2Q11 3Q10 9M11 9M10 OCBC NISP % % % % % Net interest margin 4.81 4.68 5.05 4.84 5.12 Non-interest income / Total income 22.8 23.1 22.6 21.7 21.8 Costs / Income 57.6 61.2 64.8 60.6 64.0 Loans / Deposits 83.7 85.7 79.3 83.7 79.3 NPL Ratio 1.5 1.8 2.9 1.5 2.9 ROE 14.3 11
Slide 47: Third Quarter 2011 Results - Thank You
Third Quarter 2011 Results Thank You 47
Oversea-Chinese Banking — Q3 2011 Earnings Presentation on 6ix