Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2016 Earnings Presentation
49 slides from Oversea-chinese Banking's earnings presentation, Feb 14, 2017
Slide 1: 2016 Full Year Results Presentation
2016 Full Year Results Presentation 14 February 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 FY16 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 S$0.5m
Slide 3: FY16 Highlights
Group performance FY16 Highlights Resilient earnings in a challenging operating environment Earnings Net Interest Income: S$5.1b Results underscored strength of diversified franchise Core net profit (S$m) (2015: S$5.2b) • Wealth management fee income & AUM rose to new highs 1/ 3,903 Non-interest I
Slide 4: 2016 Group Performance
Group performance 2016 Group Performance Full year net profit declined 11% YoY to S$3.5b FY16 FY15 YoY OCBC Group S$m S$m +/(-)% Net interest income 5,052 5,189 (3) Non-interest income 3,437 3,533 (3) Total income 8,489 8,722 (3) Operating expenses (3,788) 1/ (3,664) 3 1/ Operating profit 4,701 5,05
Slide 5: 4Q16 Group Performance
Group performance 4Q16 Group Performance Net profit for the fourth quarter fell 16% QoQ and 18% YoY to S$789m 4Q16 3Q16 QoQ 4Q15 YoY OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,251 1,234 1 1,341 (7) Non-interest income 926 970 (5) 960 (4) Total income 2,177 2,204 (1) 2,301 (5) Operati
Slide 6: 2016 Banking Operations Performance
Banking Ops performance 2016 Banking Operations Performance Full year net profit before GEH contribution (“Banking Operations”) fell 8% YoY to S$3.0b FY16 FY15 YoY Banking Operations S$m S$m +/(-)% Net interest income 4,955 5,099 (3) Non-interest income 2,590 2,477 5 Total income 7,545 7,576 - Opera
Slide 7: 4Q16 Banking Operations Performance
Banking Ops performance 4Q16 Banking Operations Performance 4Q16 net profit before GEH contribution down 20% QoQ and 19% YoY to S$630m 4Q16 3Q16 QoQ 4Q15 YoY Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,227 1,209 1 1,312 (6) Non-interest income 660 706 (7) 677 (3) Total income
Slide 8: Subsidiaries' Performance
Major subsidiaries Subsidiaries’ Performance Major subsidiaries contributed to 35% of the Group’s full year net profit Key metrics FY16 FY15 YoY TWNS S$1,070m +11% S$968m NBEV S$466m Great S$383m +22% Eastern Holdings NBEV margin 43.6% 39.5% +4.1ppt FY16 14% S$470m Net profit * -26% S$639m FY15 16%
Slide 9: Agenda
Agenda Results Overview FY16 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 main businesses FY16 PBT FY16 PBT by Business1/ by Geography PBT Group OCBC Wing S$4,275m Hang 2/ Others YoY: -11% 9% 4% FY16 Singapore Greater FY16 S$2,154m China YoY: -19% Insurance 16% FY15 22% 4% 8% within which OCBC
Slide 11: Net interest income
Net interest income Net interest income 2016 NIM stable YoY; net interest income 3% down from lower average asset volumes 1.68% 1.67% 1.67% 1.62% 1.67% 1.66% 1.74% 1.75% 1.68% 1.62% 1.63% Net interest margin 5,189 5,052 4,736 1,317 1,341 1,282 1,307 1,249 1,260 1,234 1,251 Net interest income (S$m)
Slide 12: Non-interest income
Non-interest income Non-interest income FY16 non-interest income fell 3% YoY, largely from lower insurance income Non- interest 42.3% 44.0% 42.5% 40.4% 40.5% 40.5% 40.7% 41.7% income / 38.5% 37.1% 36.6% Total income 3,533 3,437 960 970 939 926 3,213 136 859 649 136 788 199 781 775 272 753 182 930 23
Slide 13: Wealth Management
Wealth management Wealth Management FY16 wealth management income down 3% following drop in GEH contribution; Excluding GEH, wealth management income grew 10%; BOS’ AUM rose 45% to US$79b Wealth Management Income1/ (S$m) Bank of Singapore Earning Asset Base (US$b) CAGR 17% As % of Group income 97 18
Slide 14: Fee & Commissions
Non-interest income Fee & Commissions Wealth management fees at new high; fee income contribution to total income up YoY Fee income / 18.8% 18.8% 19.3% 18.7% 19.7% 19.5% 17.5% 18.2% 20.3% 19.4% 19.3% Total income 1,643 1,638 438 428 1,495 417 420 257 290 408 402 395 205 62 374 86 74 71 63 68 77 58 3
Slide 15: Profit from life assurance
Non-interest income Profit from life assurance Underlying business remains strong as TWNS and NBEV continued to grow; however profit mainly impacted by higher costs associated with strong sales growth, a rise in medical claims and mark-to-market losses in GEH’s Non-participating Fund -39% YoY -12% -
Slide 16: Operating expenses
Operating expenses Operating expenses FY16 expenses were well-controlled, up only 3% YoY; headcount growth tightly controlled. Excluding Barclays Wealth integration costs, expenses grew 2% (44.3% (43.9% 42.0% 44.6% excl. 43.0% 44.8% 45.5% 43.2% 45.1% excl. 41.0% Barclays 41.4% 41.3% 42.3% Barclays C
Slide 17: Allowances
Allowances Allowances FY16 net allowances up 49% led by higher specific allowances for corporate accounts in the oil and gas support services sector 726 305 70 27 Net allowances 488 for loans and 193 79 other assets 484 167 166 357 150 43 12 3 (S$m) 235 232 35 196 76 99 88 99 80 64 1 65 28 47 177 17
Slide 18: Customer loans
Loans Customer loans Up 5% YoY, driven by higher housing loans, other consumer-related loans and loans to the building and construction sector Loan growth Group QoQ: +6%; YoY: +5% Excl. Barclays Wealth acquisition QoQ: +4%; YoY: +3% 220 In constant currency terms 210 210 213 211 208 209 QoQ: +3%; Yo
Slide 19: Customer loans
Loans Customer loans Continue to be well-diversified across geographies and industries Customer Loans by Geography Customer Loans by Industry As of As of Rest of the Industry 31 Dec 2016 31 Dec 2015 World S$b % S$b % Other Asia Housing loans 60 27 56 27 Pacific 7% Professionals & Dec 16 26 12 24 11
Slide 20: Greater China Customer Loans
Loans Greater China Customer Loans Loans up QoQ but declined YoY; asset quality and coverage ratios remained sound 356% 275% 240% 241% 260% Total 157% 137% 148% allowances/ NPAs 0.7% 0.7% 0.7% 0.4% 0.3% 0.3% 0.4% 0.4% NPL ratio 57 58 59 56 4 4 54 4 2 4 52 2 2 2 49 49 4 4 2 2 4 4 Macau 2 2 Customer L
Slide 21: Oil & Gas exposure
Loans Oil & Gas exposure 0.39% 0.43% 0.45% 0.53% 0.61% NPL 0.07% 0.16% 0.35% ratio 1/ QoQ movement driven by short term trade- 15.6 15.8 14.6 related loans. OSV exposure down QoQ 14.2 14.1 14.1 14.3 14.1 (S$b) 2.1 2.4 17 2.2 1.7 1.7 1.7 1.7 1.9 16 0.2 1.1 15 0.7 (S$b) 6% of total 14 -0.3 13.5 12.4 1
Slide 22: Commodities exposure
Loans Commodities exposure NPL 0.08% 0.08% 0.08% 0.07% 0.10% 0.16% 0.13% 0.13% ratio 1/ QoQ movement led by short term loans to 17.5 17.1 trading companies and FX impact 16.8 15.6 15.5 15.3 (S$b) 2.5 2.1 14.2 1.6 13.6 3.4 18 2.3 2.4 0.2 0.2 17 0.8 2.3 2.1 16 0.6 (S$b) 15 6% of total 14 14.0 15.0 14.
Slide 23: Asset quality
Asset quality Asset quality NPL ratio rose YoY to 1.3% mainly due to classification of a number of corporate accounts associated with the oil & gas support services sector; Coverage for NPAs remained healthy 1.1% 1.2% 1.3% 0.9% 0.9% 1.0% 0.6% 0.7% NPL ratio 2,886 103 2,585 2,488 388 108 2,221 131 37
Slide 24: NPL Ratio & Non-Performing Assets
Asset quality NPL Ratio & Non-Performing Assets Excluding oil and gas NPLs, the NPL ratio was relatively stable over the past quarters NPL ratio NPAs 1.26% 1.19% 1.14% FY16 FY15 4Q16 3Q16 4Q15 S$m S$m S$m S$m S$m 1.04% 0.93% 0.88% 0.61% 0.45% 0.53% NPAs – Opening 2,039 1,317 2,585 2,488 1,932 0.43%
Slide 25: Customer deposits
Deposits Customer deposits Customer deposits and CASA grew 6% and 11% YoY respectively; CASA made up 51.1% of total deposits 50.2% 51.1% 48.9% 49.3% 49.3% 47.5% 45.5% 46.0% CASA ratio 261 250 246 252 246 246 247 242 14 24 21 22 20 17 16 17 114 111 106 106 108 108 Customer 113 112 Deposits (S$b) 48 4
Slide 26: Loans-to-Deposits Ratio
Funding Loans-to-Deposits Ratio Group LDR at 82.9%, as compared to 84.5% in prior year 261 250 252 246 246 246 247 242 22 Others 25 22 22 20 19 8 IDR 22 220 22 8 5 5 213 5 211 7 7 RMB 210 210 12 6 208 209 12 6 205 8 7 14 10 9 19 27 15 18 16 HKD 16 25 17 23 18 24 24 25 24 17 7 5 5 6 7 23 5 10 10 9 8
Slide 27: Funding sources
Funding Funding sources Well-diversified; Customer deposits accounted for 80% of funding composition Funding Composition as of 31 Dec 2016 Wholesale Funding by Currency as of 31 Dec 2016 By Maturity: Customer deposits Current account & 80% savings deposits ≤ 1 year 63% Others 41% Bank deposits Other
Slide 28: Capital
Capital Capital Capital position remained strong and comfortably above regulatory requirements Capital Adequacy Ratios (%) 17.3 17.5 17.6 17.1 16.6 16.8 16.1 15.6 15.5 15.1 15.5 15.1 Total CAR 14.5 14.8 14.1 13.5 14.8 14.6 14.9 15.1 14.7 14.1 14.5 Tier 1 CAR 13.5 Common Equity Tier 1 CAR Proforma Co
Slide 29: Dividends
Dividends Dividends Final dividend of 18 cents per share proposed; dividend payout ratio of 43% 46% 44% 45% 42% 43% Dividend Payout 40% 39% 38% Ratio 36.0 36.0 36.0 33.0 34.0 30.0 30.0 28.0 Net DPS 18.0 18.0 18.0 17.0 17.0 (cents) 15.0 15.0 14.0 Final net dividend Interim net dividend 16.0 17.0 18.0
Slide 30: Agenda
Agenda Results Overview FY16 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 30
Slide 31: 2016 Great Eastern Holdings' performance
Great Eastern 2016 Great Eastern Holdings’ performance Full year earnings contribution of S$470m FY16 FY15 YoY GEH S$m S$m +/(-)% Profit from insurance business 533 661 (19) - Operating profit 1/ 504 582 (13) - Non-operating (loss)/profit 2/ (48) 3 nm - Others 77 76 − Profit from Shareholders’ Fund
Slide 32: 4Q16 Great Eastern Holdings' performance
Great Eastern 4Q16 Great Eastern Holdings’ performance 4Q16 earnings contribution stable QoQ 4Q16 3Q16 QoQ 4Q15 YoY GEH S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 151 173 (13) 241 (38) - Operating profit 1/ 112 137 (18) 169 (33) - Non-operating profit 2/ 13 18 (28) 49 (74) - Others 26
Slide 33: GEH: Operating Profit
Great Eastern GEH: Operating Profit Lower operating profit mainly due to higher costs associated with strong sales growth and a rise in medical claims -33% -13% YoY YoY -18% QoQ 591 582 24 14 169 504 2 151 131 13 30 170 3 135 137 Operating 132 130 120 5 4 profit from 138 41 4 5 2 112 insurance 37 33
Slide 34: GEH: Non-operating profit
Great Eastern GEH: Non-operating profit Lower non-operating profit from insurance business due to unfavourable market conditions compared to last year 145 Non-operating profit/(loss) 49 from insurance 41 business (S$m) 18 13 3 (9) (36) (48) (43) (79) 2014 2015 2016 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16
Slide 35: GEH: Total weighted new sales
Great Eastern GEH: Total weighted new sales TWNS grew 11%, driven by strong growth from both agency and bancassurance channels +11% YoY 1,070 +13% YoY 16 968 900 39 344 5 29 362 304 306 12 266 265 295 243 4 135 9 110 219 4 201 197 71 3 81 TWNS (S$m) 9 9 82 65 57 68 691 624 576 204 186 182 180 151 15
Slide 36: GEH: New business embedded value
Great Eastern GEH: New business embedded value NBEV 22% higher YoY, led by increase in sales; NBEV margin grew to 43.6% 50.7% NBEV 43.6% 42.6% 42.7% 42.3% 41.4% 41.2% margin 39.5% 39.3% 37.8% (NBEV / Total 36.6% weighted 466 new sales) 5 372 383 5 154 145 6 134 2 2 128 133 112 47 104 0 104 39 1 1 NB
Slide 37: 2016 OCBC Wing Hang's performance
OCBC Wing Hang 2016 OCBC Wing Hang’s performance Net contribution to Group up 3% FY16 FY15 YoY OCBC Wing Hang HKD m HKD m +/(-)% Net interest income 3,820 3,774 1 Non-interest income 1,320 1,079 22 Total income 5,140 4,854 6 Operating expenses (2,699) (2,350) 15 Operating profit 2,441 2,503 (3) Allo
Slide 38: 4Q16 OCBC Wing Hang's performance
OCBC Wing Hang 4Q16 OCBC Wing Hang’s performance 4Q16 profit higher QoQ and YoY 4Q16 3Q16 QoQ 4Q15 YoY OCBC Wing Hang HKD m HKD m +/(-)% HKD m +/(-)% Net interest income 1,016 976 4 935 9 Non-interest income 398 379 5 290 37 Total income 1,413 1,355 4 1,226 15 Operating expenses (746) (767) (3) (594
Slide 39: OCBC Wing Hang: Revenue
OCBC Wing Hang OCBC Wing Hang: Revenue Full year interest income up 1%; non-interest income grew 22% Net interest income (HKD m) Non-interest income (HKD m) Non-int. income/ Net interest margin Total income 1.73% 1.76% 1.75% 1.72% 1.72% 1.81% 1.78% 1.83% 1.73% 1.73% 1.73% 18.7% 22.2% 25.7% 23.5% 23.
Slide 40: OCBC Wing Hang: Loans & Deposits
OCBC Wing Hang OCBC Wing Hang: Loans & Deposits Loans higher YoY at HKD163b; NPL ratio stable QoQ at 0.9%; CASA ratio improved YoY to 37.1% Gross Loans (HKD b) Deposits (HKD b) NPL ratio Loans / Deposits 1/ 0.9% 0.9% 80.5% 78.4% 81.7% 82.1% 80.7% 81.5% 80.6% 82.1% 0.6% 0.6% 0.6% 0.7% 0.4% 0.4% 161 1
Slide 41: 2016 OCBC Malaysia's Performance
OCBC Malaysia 2016 OCBC Malaysia’s Performance Full year net profit down 8% FY16 FY15 YoY OCBC Malaysia RM m RM m +/(-)% Net interest income 1,309 1,367 (4) Islamic banking income 1/ 470 514 (9) Non-interest/finance income 560 598 (6) Total income 2,339 2,479 (6) Operating expenses (1,066) (1,017) 5
Slide 42: 4Q16 OCBC Malaysia's Performance
OCBC Malaysia 4Q16 OCBC Malaysia’s Performance 4Q16 net profit down 28% YoY 4Q16 3Q16 QoQ 4Q15 YoY OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 329 314 5 338 (3) Islamic banking income 1/ 109 116 (6) 130 (16) Non-interest/finance income 157 121 30 173 (9) Total income 595 551 8 641
Slide 43: OCBC Malaysia: Revenue
OCBC Malaysia OCBC Malaysia: Revenue Full year net interest/finance income down 5% YoY; Non-interest/finance income 8% lower Net interest/finance income (RM m) Non-interest/finance income1/ (RM m) Net interest/ Non-interest/finance finance margin income/ Total income 2.11% 1.99% 28.8% 27.7% 1.91% 1.
Slide 44: OCBC Malaysia: Loans & Deposits
OCBC Malaysia OCBC Malaysia: Loans & Deposits Loans and deposits both declined 2% YoY; NPL ratio at 2.2% Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 2.2% 91.6% 93.2% 91.8% 89.7% 90.8% 93.4% 2.1% 2.1% 2.1% 2.1% 2.1% 1.9% 1.9% 86.0% 88.2% 70 70 69 69 69 75 76 75 73 74 76 74 72 68 68
Slide 45: 2016 OCBC NISP's performance
OCBC NISP 2016 OCBC NISP’s performance Full year net profit rose 19% YoY FY16 FY15 YoY OCBC NISP IDR b IDR b +/(-)% Net interest income 5,393 4,419 22 Non-interest income 1,416 854 66 Total income 6,809 5,273 29 Operating expenses (3,151) (2,818) 12 Operating profit 3,658 2,455 49 Allowances (1,316)
Slide 46: 4Q16 OCBC NISP's performance
OCBC NISP 4Q16 OCBC NISP’s performance 4Q16 net profit declined 3% QoQ and 2% YoY 4Q16 3Q16 QoQ 4Q15 YoY OCBC NISP IDR b IDR b +/(-)% IDR b +/(-)% Net interest income 1,415 1,332 6 1,303 9 Non-interest income 316 401 (21) 316 - Total income 1,731 1,733 - 1,619 7 Operating expenses (788) (806) (2) (7
Slide 47: OCBC NISP: Revenue
OCBC NISP OCBC NISP: Revenue Full year net interest income 22% higher YoY; NIM increased to 4.62% in 2016 Net interest income (IDR b) Non-interest income (IDR b) Non-int. income/ Net interest margin Total income 4.62% 4.67% 4.79% 4.62% 4.49% 4.60% 4.15% 4.07% 4.15% 3.82% 3.60% 23.1% 20.8% 21.3% 20.0
Slide 48: OCBC NISP: Loans & Deposits
OCBC NISP OCBC NISP: Loans & Deposits Loans grew 9% YoY, NPL at 1.9%; deposits up 19% YoY, with LDR at 89.9% Gross Loans (IDR t) Deposits (IDR t) NPL Ratio Loans / Deposits 98.0% 94.7% 1.9% 92.8% 92.1% 89.9% 87.3% 89.7% 1.4% 1.3% 1.3% 1.3% 1.4% 1.4% 1.5% 84.6% 93 104 86 85 86 88 95 82 91 90 93 85 87
Slide 49: Thank You
2016 Full Year Results Thank You
Oversea-Chinese Banking — FY2016 Earnings Presentation on 6ix