Oversea-chinese Banking Corporation Limited · SGX:O39

Oversea-chinese Banking — Q2 2008 Earnings Presentation

37 slides from Oversea-chinese Banking's earnings presentation, Aug 7, 2008

  1. Slide 1: Second Quarter 2008 Results Presentation

    Second Quarter 2008 Results Presentation 7 August 2008 1

  2. Slide 2: Agenda

    Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 22

  3. Slide 3: Core Net Profit Fell 26% YoY, 17% QoQ

    Core Net Profit Fell 26% YoY, 17% QoQ 2Q08 2Q07 YoY 1Q08 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 678 558 22 638 6 Non-Interest Income 360 493 (27) 377 (5) Total Income 1,038 1,050 (1) 1,015 2 Operating Expenses (473) (416) 14 (426) 11 Operating Profit 565 634 (11) 589 (4) Amortisation of I

  4. Slide 4: First Half Core Net Profit Fell 18% YoY, 1% HoH

    First Half Core Net Profit Fell 18% YoY, 1% HoH 1H08 1H07 YoY 2H07 HoH S$m S$m +/(-)% S$m +/(-)% Net Interest Income 1,317 1,065 24 1,179 12 Non-Interest Income 736 999 (26) 945 (22) Total Income 2,053 2,064 (1) 2,124 (3) Operating Expenses (899) (768) 17 (911) (1) Operating Profit 1,154 1,296 (11)

  5. Slide 5: First Half Core Net Profit Excluding GEH up 5% YoY, 32% HoH

    First Half Core Net Profit Excluding GEH up 5% YoY, 32% HoH 1H08 1H07 YoY 2H07 HoH S$m S$m +/(-)% S$m +/(-)% Net Interest Income 1,277 1,028 24 1,138 12 Non-Interest Income 640 641 - 569 13 Total Income 1,918 1,669 15 1,707 12 Operating Expenses (833) (711) 17 (843) (1) Operating Profit 1,085 958 13

  6. Slide 6: Key Financial Ratios - Based on Core Earnings

    Key Financial Ratios - Based on Core Earnings 1H08 1H07 2Q08 1Q08 2Q07 % % % % % Net Interest Margin 2.21 2.09 2.24 2.17 2.13 Non-Interest Income/ Total 35.9 48.4 34.6 37.1 46.9 Income Cost-to-Income Ratio 43.8 37.2 45.5 42.0 39.6 Loans-to-Deposits Ratio 83.3 77.4 83.3 79.7 77.4 NPL Ratio 1.4 2.4 1.

  7. Slide 7: Agenda

    Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 77

  8. Slide 8: Net Interest Income up 22% YoY, Consistent Uptrend in Interest Margin

    Net Interest Income up 22% YoY, Consistent Uptrend in Interest Margin 2.21% 2.24% 2.10% 2.13% 2.14% 2.17% 2.04% 2.07% Net 2.00% interest margin 678 2,244 638 613 558 565 1,794 508 1,317 Net interest income (S$m) 2006 2007 1H08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 88

  9. Slide 9: Non-Interest Income Affected by Lower Insurance and Trading Income

    Non-Interest Income Affected by Lower Insurance and Trading Income Due to Market Conditions 49.9% 46.4% 46.9% 46.0% 44.7% 43.0% Non-interest income/ 35.9% 37.1% Total income 34.6% 2,045 2,036 92 598 598 544 1,944 92 493 481 1,448 464 506 167 922 378 Non-interest 19 income 186 377 (S$m) 736 360 2006

  10. Slide 10: GEH's Underlying Insurance Business Remains Strong; Profits Impacted by MTM Losses

    GEH’s Underlying Insurance Business Remains Strong; Profits Impacted by MTM Investment Losses 2Q08 1Q08 2Q07 FY07 FY06 Life assurance profit from: S$m S$m S$m S$m S$m - Participating Fund 24 26 21 143 103 - Non-participating Fund (11) (30) 90 302 218 - Investment-linked Fund 20 11 13 64 55 Total lif

  11. Slide 11: Fee Income Held Up Well Despite Weaker Brokerage Income

    Fee Income Held Up Well Despite Weaker Brokerage Income 20.2% 20.7% 20.2% 20.9% 19.5% 19.3% 18.8% 18.4% 17.5% Fee income/ Total income 808 217 211 212 202 202 597 178 415 Fee income (S$m) 2006 2007 1H08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Excluding divestment gains 11 11

  12. Slide 12: Half of 2Q08 expense increase due to overseas expansion

    Half of 2Q08 expense increase due to overseas expansion (China), business volume-related expenses, and consolidation of PacMas 45.0% 45.5% 43.8% 42.0% 41.1% 40.8% Cost-to- 40.1% 39.6% Income Ratio 1,680 34.7% 485 473 416 427 426 1,331 433 143 121 352 99 98 108 332 301 899 83 74 81 87 71 78 277 Opera

  13. Slide 13: Core Operating Profit down 4% QoQ

    Core Operating Profit down 4% QoQ Operating Profit before allowances 2,601 (S$m) 2,508 92 598 754 756 2,509 92 634 620 167 662 593 584 1,911 589 1,340 565 186 1,154 2006 2007 1H08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 Divestment gains 13 13

  14. Slide 14: Continued Net Loan Recoveries Offset by S$67m CDO Allowances in 2Q08

    Continued Net Loan Recoveries Offset by S$67m CDO Allowances in 2Q08 Allowances for loans and other assets (S$m) 55 48 39 36 13 0.3 2 (8) (16) 2006 2007 1H08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 14 14

  15. Slide 15: Allowances Breakdown

    Allowances Breakdown 1H08 1H07 2Q08 1Q08 2Q07 S$m S$m S$m Specific allowances/ (24) (21) (18) (6) (18) (write-back) for loans Allowances for CDOs 67 - 67 - - Allowances/(write-back) for 5 6 6 (1) 2 other assets Total net allowances/ 48 (15) 55 (8) (16) (write-back) 15 15

  16. Slide 16: Movements in Specific Allowances for Loans

    Movements in Specific Allowances for Loans* 2Q08 1Q08 FY07 FY06 S$m S$m S$m S$m Allowances for new and existing 69 72 297 355 NPLs Write-backs 1/ (58) (64) (351) (288) Recoveries 2/ (28) (13) (54) (46) Net Specific Allowances/ (18) (6) (108) 21 (Write-backs) * Excludes CDOs 1/ Write-backs of specifi

  17. Slide 17: Bank's CDO Portfolio: ABS CDOs Fully Written Off

    Bank’s CDO Portfolio: ABS CDOs Fully Written Off (S$m) Investment 2Q08 Cumulative 2Q08 Cumulative Negative Fair as at Allowance Allowances MTM MTM Value 30 Jun 08 Charges Losses^ Losses^ Adjustment in / (Gains) Equity ABS CDOs 246 39 246 - - - Corporate CDOs 343 28 28 (13) 20 34 Total CDOs 589 67 27

  18. Slide 18: ROE of 11.3% in the First Half

    ROE of 11.3% in the First Half 13.8% 15.9% 13.0% 11.8% 11.8% 15.4% 12.2% 12.1% ROE 13.4% 10.7% 11.3% (%) 12.2% 11.5% 11.2% 2,071 10.3% 2,002 104 647 622 47 559 90 532 1,878 156 518 463 1,443 510 428 425 1,047 38 460 26 Net Profit 32 425 425 (S$m) 174 381 841 2006 2007 1H08 1Q07 2Q07 3Q07 4Q07 1Q08 2

  19. Slide 19: Earnings Contribution by Segments

    Earnings Contribution by Segments 1H08 PBT by Business Segment 1H08 PBT by Geography Insurance Other Asia Rest of the & Others Pacific World Treasury (1)% Other 6% 1% 20% ASEAN 3% Consumer Financial Services Malaysia 32% 26% Singapore Corporate 63% Banking 48% 1H08 Profit Before Tax & MI : S$1,088m

  20. Slide 20: Broad-based Loans Growth of 20% YoY, 4% QoQ

    Broad-based Loans Growth of 20% YoY, 4% QoQ 78.4 75.4 72.8 68.0 Loans 65.3 17.2 63.3 16.2 (S$bn) 15.4 13.7 11.9 13.0 12.7 12.1 12.3 11.0 11.5 10.9 45.3 46.9 48.4 40.5 41.3 42.8 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Singapore Malaysia International Note: Loans by geography are based on where the

  21. Slide 21: Deposits up 12% YoY, down 1% QoQ

    Deposits up 12% YoY, down 1% QoQ 83.3% 78.9% 80.3% 79.7% 85.0% 77.4% 77.6% 75.0% Loans-to- deposits 65.0% 92.9 92.4 88.8 82.2 85.7 78.0 55.0% 13.3 14.2 11.6 12.5 11.6 9.9 14.1 14.7 45.0% 12.9 13.0 11.7 13.0 35.0% 25.0% Deposits 57.2 58.8 60.5 59.2 51.8 53.2 (S$bn) 15.0% Mar-07 Jun-07 Sep-07 Dec-07 M

  22. Slide 22: Improved Asset Quality, NPL Ratio at 1.4%

    Improved Asset Quality, NPL Ratio at 1.4% 2.7% 2.4% NPL Ratio 2.1% 1.7% 1.6% 1.4% 1,766 1,614 239 1,484 244 1,354 1,325 1,232 286 658 294 349 621 320 NPLs 581 (S$m) 548 519 470 869 749 617 512 456 442 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Singapore Malaysia International 22 22

  23. Slide 23: Allowance Coverage Increased to 122%

    Allowance Coverage Increased to 122% 122% 116% 115% 107% 102% 104% Total Allowances / NPLs 47% 45% 44% 43% 43% 44% Specific Allowances / NPLs Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 23 23

  24. Slide 24: Strong Tier 1 CAR

    Strong Tier 1 CAR (%) Total CAR 15.4 14.6 2.3 13.5 13.6 Tier 2 CAR 2.1 12.8 12.4 0.7 1.3 0.9 0.9 Tier 1 CAR 13.1 12.5 11.9 12.8 12.3 11.5 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 (S$m) Tier-1 Capital 10,738 11,049 11,051 11,431 11,530 11,531 Risk Weighted 81,878 87,846 92,849 99,381 89,645 93,331 A

  25. Slide 25: Proposed S$1bn Innovative Tier 1 Issue

    Proposed S$1bn Innovative Tier 1 Issue: Improves Tier 1 mix by adding lower cost non-dilutive capital, strengthens overall capital for business growth and market opportunities 13.7 13.9 (S$bn) 12.7 0.4 Components of Group 1.2 1.4 Total Capital (in S$bn): 1.2 0.4 24% 18% 0.4 1.9 of T1 1.9 of T1 11% T

  26. Slide 26: Interim Tax Exempt Dividend of 14 cents Declared; 51% payout

    Interim Tax Exempt Dividend of 14 cents Declared; 51% payout 28.0 23.0 Net DPS (cents) 14.0 18.4 12.0 12.6 9.6 7.6 6.3 14.0 14.0 Final Net Dividend 4.0 11.0 8.8 6.3 Interim Net Dividend 3.6 (S$m) 2003* 2004 2005* 2006 2007 1H08 Net Dividends 234 403 574 709 864 433 Core Net Profit 828 1,051 1,298 1,

  27. Slide 27: Agenda

    Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 27 27

  28. Slide 28: GEH: Second Quarter Contribution

    GEH: Second Quarter Contribution GEH’s Contribution to 2Q08 ^ 2Q07 YoY 1Q08 ^ QoQ OCBC’s Results S$m S$m +/(-)% S$m +/(-)% Total Income 71 203 (65) 105 (33) Operating Expenses (37) (28) 31 (29) 29 Operating Profit 34 175 (81) 77 (56) Amortisation of Intangibles (12) (12) - (12) - Allowances - - - (3

  29. Slide 29: GEH: First Half Contribution

    GEH: First Half Contribution GEH’s Contribution to 1H08^ 1H07 YoY 2H07 HoH OCBC’s Results S$m S$m +/(-)% S$m +/(-)% Total Income 176 395 (55) 417 (58) Operating Expenses (66) (57) 16 (68) (3) Operating Profit 110 338 (67) 349 (68) Amortisation of Intangibles (23) (23) - (23) - Allowances (3) - - (4)

  30. Slide 30: OCBC Malaysia: Quarterly Results

    OCBC Malaysia: Quarterly Results 2Q08 2Q07 YoY 1Q08 QoQ Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 246 216 14 233 6 Islamic Banking Income 27 20 35 27 - Non-Interest Income 82 78 5 149 (45) Total Income 355 314 13 409 (13) Operating Expenses (145) (131) 11 (143) 1 Operating

  31. Slide 31: OCBC Malaysia: Half-Year Results

    OCBC Malaysia: Half-Year Results 1H08 1H07 YoY 2H07 HoH Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 479 418 15 449 7 Islamic Banking Income 54 38 42 44 23 Non-Interest Income 231 174 33 183 26 Total Income 764 630 21 676 13 Operating Expenses (288) (240) 20 (303) (5) Operatin

  32. Slide 32: OCBC Malaysia: Financial Ratios

    OCBC Malaysia: Financial Ratios 1H08 1H07 2Q08 1Q08 2Q07 % % % % % Net Interest Margin 2.48 2.53 2.51 2.46 2.50 Non-Interest Income / 30.2 27.6 23.1 36.3 25.0 Total Income Cost-to-Income Ratio 37.7 38.0 40.8 35.0 41.7 RM Loans-to-Deposits Ratio 87.1 78.0 87.1 83.6 78.0 Gross NPL Ratio 3.4 5.0 3.4 3.

  33. Slide 33: Bank NISP: Quarterly Results

    Bank NISP: Quarterly Results 2Q08 2Q07 YoY 1Q08 QoQ RP bn RP bn +/(-)% RP bn +/(-)% Unaudited Results* Net Interest Income 352 291 21 302 16 Non Interest Income 97 87 12 88 11 Expenses (288) (253) 14 (308) (7) Operating Profit 162 125 30 82 98 Allowances (30) (45) (34) (6) 434 Net Profit 93 59 58 54

  34. Slide 34: Bank NISP: Half-Year Results

    Bank NISP: Half-Year Results 1H08 1H07 YoY 2H07 HoH RP bn RP bn +/(-)% RP bn +/(-)% Unaudited Results* Net Interest Income 655 554 18 624 5 Non Interest Income 185 183 1 153 21 Expenses (596) (474) 26 (573) 4 Operating Profit 244 263 (7) 204 20 Allowances (35) (68) (48) (49) (28) Net Profit 147 141

  35. Slide 35: Bank NISP: Financial Ratios

    Bank NISP: Financial Ratios 1H08 1H07 2Q08 1Q08 2Q07 % % % % % Net Interest Margin 5.38 4.78 5.77 4.99 5.25 Non-Interest Income / Total 22.1 24.8 21.7 22.5 23.1 Income Cost-to-Income Ratio 69.2 63.1 64.0 79.0 67.0 Loans-to-Deposits Ratio 95.0 93.8 95.0 91.3 93.8 Gross NPL Ratio 2.3 2.7 2.3 2.6 2.7 L

  36. Slide 36: In Summary

    In Summary • First half performance affected by volatile markets impacting GEH’s results and Bank’s trading income • Insurance fundamentals remain strong • Bank’s lending, fee-based and treasury businesses performed well • While remaining on alert given potential further weakening of the global econ

  37. Slide 37: Thank You

    Second Quarter 2008 Results ___________________________ Thank You 37

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