Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q3 2014 Earnings Presentation
53 slides from Oversea-chinese Banking's earnings presentation, Oct 30, 2014
Slide 1: Third Quarter 2014 Results Presentation
Third Quarter 2014 Results Presentation 30 October 2014 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 accep
Slide 2: Agenda
Agenda Results Overview 3Q14 Group Performance Trends Performance of Major Subsidiaries – OCBC Wing Hang – Great Eastern Holdings – OCBC Malaysia – OCBC NISP Greater China Strategy with the addition of OCBC Wing Hang Appendix: Financial Highlights of Malaysian and Indonesian Subsidiaries Note: Amoun
Slide 3: 3Q14 Highlights
3Q14 Highlights Net profit up 62% YoY to S$1.23b, including a one-off gain of S$391 million – Earnings from Core Banking Operations rose 30% YoY; excluding OCBC Wing Hang up 23% – Group Core earnings grew 11% YoY; excluding OCBC Wing Hang up 6% • 3Q14 results included OCBC Wing Hang’s net profit con
Slide 4: 3Q14 core net profit grew 11% YoY to S$841m
3Q14 core net profit grew 11% YoY to S$841m 3Q14 3Q13 YoY 2Q14 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,246 978 27 1,126 11 Non-interest income 801 779 3 850 (6) Total income 2,047 1,757 17 1,976 4 Operating expenses (870) (681) 28 (760) 14 Operating profit 1,177 1,076 9 1,216
Slide 5: 3Q14 core net profit before GEH contribution rose 30% YoY to S$683m
3Q14 core net profit before GEH contribution (“banking operations”) rose 30% YoY to S$683m 3Q14 3Q13 YoY 2Q14 QoQ Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,228 962 28 1,109 11 Non-interest income 542 459 18 548 (1) Total income 1,770 1,421 25 1,657 7 Operating expenses (815)
Slide 6: 9M14 core net profit at a new record – up 30% YoY to S$2.66b
9M14 core net profit at a new record – up 30% YoY to S$2.66b 9M14 9M13 YoY OCBC Group S$m S$m +/(-)% Net interest income 3,459 2,851 21 Non-interest income 2,451 2,061 19 Total income 5,910 4,912 20 Operating expenses (2,336) (2,071) 13 Operating profit 3,574 2,841 26 Amortisation of intangibles (42
Slide 7: 9M14 core net profit before GEH contribution grew 28% YoY to S$2.11b
9M14 core net profit before GEH contribution grew 28% YoY to S$2.11b 9M14 9M13 YoY Banking Operations S$m S$m +/(-)% Net interest income 3,409 2,800 22 Non-interest income 1,596 1,382 15 Total income 5,006 4,183 20 Operating expenses (2,182) (1,945) 12 Operating profit 2,823 2,237 26 Allowances (203
Slide 8: Key ratios improved
Key ratios improved % 3Q14 3Q13 2Q14 9M14 9M13 Net interest margin 1.68 1.63 1.70 1.69 1.63 Non-interest income / Total income 39.1 44.3 43.0 41.5 41.9 Cost / Income 42.5 38.8 38.5 39.5 42.2 Loans / Deposits 85.5 88.4 87.2 85.5 88.4 NPL Ratio 0.7 0.8 0.7 0.7 0.8 Allowances / NPAs 154.6 130.1 149.1 1
Slide 9: 3Q14 ROE up YoY to 13.1%
3Q14 ROE up YoY to 13.1% 14.3% 14.9% 14.8% 12.5% 12.7% 13.1% 11.6% 11.7% 11.9% Core ROE 1/ 9.9% 2,825 2,768 899 921 2,660 841 Net profit 759 (S$m) 715 696 597 9M 2,162 2,053 2012 2013 9M14 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 1/ Quarterly and 9M figures annualised 9
Slide 10: 9M14 PBT breakdown – earnings further diversified
9M14 PBT breakdown – earnings further diversified 9M14 PBT 9M14 PBT by Business1/ by Geography OCBC PBT Wing Hang Other Group 1% Asia S$3,377m Greater Rest of China Pacific the World YoY: +28% 11% 3% Singapore Insurance S$2,033 m 3% 20% YoY: +30% (within which OCBC Wing Hang: 1% ) Malaysia S$645m In
Slide 11: Agenda
Agenda Results Overview 3Q14 Group Performance Trends Performance of Major Subsidiaries – OCBC Wing Hang – Great Eastern Holdings – OCBC Malaysia – OCBC NISP Greater China Strategy with the addition of OCBC Wing Hang Appendix: Financial Highlights of Malaysian and Indonesian Subsidiaries 11
Slide 12: Net interest income grew 27% YoY to a new quarterly record; NIM improved 5 basis points YoY
Net interest income grew 27% YoY to a new quarterly record; NIM improved 5 basis points YoY 1.77% 1.69% Net interest 1.64% 1.70% 1.70% 1.68% 1.64% 1.64% 1.63% 1.64% margin 3,883 1,246 3,748 3,459 1,126 1,087 Net interest 1,031 income 961 978 (S$m) 912 9M 2,827 2,851 2012 2013 9M14 1Q13 2Q13 3Q13 4Q1
Slide 13: Non-interest income up 3% YoY, mainly on higher fee income and trading income
Non-interest income up 3% YoY, mainly on higher fee income and trading income Non- interest 43.6% 42.6% 44.3% 42.4% income / 41.4% 41.5% 38.6% 39.7% 43.0% 39.1% Total income 2,897 850 2,738 800 801 779 2,451 838 679 756 676 259 223 215 606 280 699 Non- 215 56 205 interest income 701 485 164 136 (S$m
Slide 14: Fee income rose 16% YoY to a new high
Fee income rose 16% YoY to a new high, led by wealth management, loan and trade fees + 16% YoY + 15% QoQ 406 1,355 352 353 353 55 347 341 1,198 168 1,111 316 42 43 29 42 50 157 92 44 149 39 24 37 15 16 25 91 17 70 150 Fees and 515 commissions 128 132 132 136 139 (S$m) 482 112 413 46 168 44 39 39 43
Slide 15: Profit from life assurance declined 27% YoY
Profit from life assurance declined 27% YoY due to lower unrealised mark-to-market gains - 27% YoY - 21% 692 QoQ 125 599 578 240 221 174 40 Profit from 152 life assurance 178 183 54 174 165 (S$m) 43 52 46 423 54 279 153 324 102 16 134 98 92 38 88 144 146 47 101 34 41 32 33 36 23 2012 2013 9M14 1Q13
Slide 16: Other non-interest income grew 24% YoY from higher trading income
Other non-interest income grew 24% YoY from higher trading income + 24% 701 YoY 70 - 17% QoQ Other non- 116 interest 495 485 income 196 (S$m) 47 65 13 164 102 149 1/ 17 136 158 16 84 14 120 109 107 18 14 43 5 515 19 16 50 22 346 43 133 262 113 90 99 69 56 47 2012 2013 9M14 2/ 1Q13 2Q13 3Q13 4Q13 1Q1
Slide 17: Wealth management income up 17%, to a new record nine-month performance
Wealth management income up 17%, to a new record nine-month performance 32.7% 32.1% 30.3% 27.6% 29.1% 28.4% 28.4% 29.0% 26.1% As % of 22.8% Group income 1,927 564 572 573 1,836 535 520 1,680 486 Wealth 357 management income (S$m) 1,441 9M 1,336 2012 2013 9M14 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Note:
Slide 18: Operating expenses grew 28% YoY
Operating expenses grew 28% YoY; excluding OCBC Wing Hang, expenses were up 16% YoY and 4% QoQ Cost / 45.8% 42.0% Income 40.6% 42.3% 42.5% 39.5% 38.8% 41.7% 38.5% 37.4% 2,784 2,695 870 539 2,336 554 760 164 718 713 706 672 681 448 147 530 140 491 112 161 137 158 126 Operating 427 137 expenses 133 13
Slide 19: Net allowances flat YoY; credit quality healthy
Net allowances flat YoY; credit quality healthy 271 266 Net 2 8 allowances for loans 203 and other 81 assets 115 (S$m) 125 94 97 83 3 68 66 183 11 148 42 66 26 36 41 1 90 21 2 72 49 45 23 2 42 31 17 17 (3) (12) (12) 2012 2013 9M14 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 Specific loan 8 5 9 1 3 10 6 5 8 1
Slide 20: Net specific allowances included OCBC Wing Hang consolidation
Net specific allowances included OCBC Wing Hang consolidation; excluding OCBC Wing Hang, specific allowances were unchanged YoY 3Q14 3Q13 2Q14 9M14 9M13 S$m S$m S$m S$m S$m Allowances for new and 100 72 71 225 171 existing NPLs Write-backs1/ (23) (19) (23) (66) (72) Recoveries2/ (11) (11) (12) (34)
Slide 21: Customer loans grew 27% YoY and 15% QoQ
Customer loans grew 27% YoY and 15% QoQ; OCBC Wing Hang accounted for 12% of Group loans Loan growth Group YoY: +27% QoQ: +15% 205 Excl. OCBC Wing Hang 26 YoY: +11% 175 177 170 QoQ: +1% 159 162 23 24 Rest of the 149 21 21 52 World 19 YoY: +25% 19 30 27 QoQ: +7% 27 20 24 17 Greater China Customer 13
Slide 22: Customer loan book diversified across geographies and sectors
Customer loan book diversified across geographies and sectors Customer Loans by Geography Customer Loans by Industry As of 30 September 2014 As of 30 September 2014 Rest of the As of As of World Industry 30 Sep 2014 30 Sep 2013 Other Asia 8% S$b % S$b % Pacific Housing loans 53 26 41 25 5% Singapore
Slide 23: Customer deposits rose 31% YoY and 18% QoQ
Customer deposits rose 31% YoY and 18% QoQ, CASA deposits grew 18% YoY Loans / 89.2% 88.4% 87.0% 87.0% 87.2% Deposits 85.7% 85.5% 237 27 196 199 201 176 181 23 25 26 169 17 19 15 105 Customer Deposits 82 80 80 (S$b) 72 67 71 S$106b +S$16b YoY 39 +S$11b QoQ 33 32 33 34 32 32 CASA ratio: 44.5% S$89b S
Slide 24: Asset quality healthy; NPL ratio at 0.7%
Asset quality healthy; NPL ratio at 0.7% 0.8% NPL ratio 0.7% 0.7% 0.7% 0.7% 0.7% 0.7% 1,338 1,373 1,304 25 1,230 1,215 35 1,177 65 NPAs 1,119 39 43 26 (S$m) 28 499 525 516 448 430 449 420 532 572 407 472 529 536 535 264 230 256 194 207 207 267 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 1/ Singapore M
Slide 25: NPAs lower YoY, excluding OCBC Wing Hang consolidation
NPAs lower YoY, excluding OCBC Wing Hang consolidation 3Q14 3Q13 2Q14 9M14 9M13 S$m S$m S$m S$m S$m NPAs – Opening balance 1,215 1,177 1,230 1,304 1,172 New NPAs 273 287 227 687 662 New recoveries/upgrades (153) (103) (183) (566) (387) Write-offs (38) (23) (59) (128) (109) NPAs – Closing balance 1,2
Slide 26: Allowance coverage ratios strong
Allowance coverage ratios strong 500.00% 480% 450.00% Total 423% allowances/ 396% Unsecured 400.00% NPAs 350% 350.00% 329% 310% 294% 300.00% 250.00% 200.00% Total allowances/ 150.00% NPAs 155% 149% 144% 145% 149% 130% 134% 100.00% 50.00% 0.00% Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 26
Slide 27: Strong capital adequacy ratios, well-positioned to meet regulatory requirements
Strong capital adequacy ratios, well-positioned to meet regulatory requirements 18.1 17.4 CAR 16.8 16.3 1.9 16.1 15.6 (% of RWA) 15.5 1.9 2.7 1.8 1.8 1.2 2.3 Tier 2 capital Common Equity Tier 1 / Tier 1 capital 16.2 14.9 14.3 14.5 14.4 14.7 13.2 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 1/ CET1 capi
Slide 28: Agenda
Agenda Results Overview 3Q14 Group Performance Trends Performance of Major Subsidiaries – OCBC Wing Hang – Great Eastern Holdings – OCBC Malaysia – OCBC NISP Greater China Strategy with the addition of OCBC Wing Hang Appendix: Financial Highlights of Malaysian and Indonesian Subsidiaries 28
Slide 29: OCBC Wing Hang: 3Q14 net profit contribution of S$38m
OCBC Wing Hang: 3Q14 net profit contribution of S$38m 3Q14 OCBC Wing Hang S$m Net interest income 125 Non-interest income 32 Total income 157 Operating expenses (83) Operating profit 74 Allowances (30) Profit before tax 44 Tax (7) Net profit1/ 38 OCBC Group core net profit ex. OCBC Wing Hang 803 One
Slide 30: Greater China customer loans doubled YoY with OCBC Wing Hang’s contribution
Greater China customer loans doubled YoY with OCBC Wing Hang’s contribution Loan growth 52 Greater China + 19% 3 YoY: +120% YoY 1 QoQ: +91% Loan growth excluding OCBC Wing Hang + 3% QoQ Macau YoY: + >100% QoQ: + >100% 24 30 28 Taiwan Customer 27 27 0.2 YoY: +57% Loans to 0.3 QoQ: -7% 24 0.2 1 0.3 Gr
Slide 31: USD and RMB deposit base enlarged with inclusion of OCBC Wing Hang’s deposits
USD and RMB deposit base enlarged with inclusion of OCBC Wing Hang’s deposits 237 24 Deposit growth 201 205 196 199 5 Group 13 YoY: +31% 181 21 20 176 20 21 5 21 QoQ: +18% 169 5 5 7 5 6 20 7 6 4 18 5 4 4 Excl. OCBC 17 5 3 26 6 26 Wing Hang 6 6 3 23 24 26 6 4 YoY: +13% 3 22 22 QoQ: +2% 22 50 55 46 46
Slide 32: Asset quality of Greater China book remained sound
Asset quality of Greater China book remained sound Total allowances/ 195% 185% 191% 200% 285% NPAs NPL ratio 0.4% 0.4% 0.3% 0.3% 0.3% 165 NPAs 76 (S$m) 108 107 101 102 OCBC Wing Hang 101 108 107 102 OCBC Group 89 (excluding OCBC Wing Hang) Sep13 Dec13 Mar14 Jun14 Sep14 32 Note: NPAs comprise NPLs an
Slide 33: GEH: 3Q14 earnings contribution of S$158m
GEH: 3Q14 earnings contribution of S$158m 3Q14 3Q13 YoY 2Q14 QoQ GEH Contribution S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 183 253 (28) 230 (20) - Operating profit 1/ 149 139 8 143 4 - Non-operating profit/(loss) 2/ 14 91 (85) 72 (80) - Others 3/ 20 24 (15) 15 32 Profit from Sharehol
Slide 34: GEH: 9M14 earnings contribution up 35% to S$550m
GEH: 9M14 earnings contribution up 35% to S$550m 9M14 9M13 YoY GEH Contribution S$m S$m +/(-)% Profit from insurance business 607 458 33 - Operating profit 1/ 435 424 3 - Non-operating profit/(loss) 2/ 120 (26) n.m. - Others 3/ 52 60 (13) Profit from Shareholders’ Fund 144 146 (2) Sub-total 751 604
Slide 35: GEH: Operating profit rose 8% YoY
GEH: Operating profit rose 8% YoY on better performance from the Non-participating and Investment-linked Funds + 8% YoY + 4% 560 QoQ 16 155 502 149 143 143 19 139 135 4 142 435 131 31 7 4 7 5 99 15 4 37 32 43 46 Operating 126 35 44 profit from insurance business 280 89 (S$m) 264 60 77 63 67 63 206 6
Slide 36: GEH: Non-operating profit was weaker YoY
GEH: Non-operating profit was weaker YoY Non-operating 161 profit/(loss) from insurance 120 business (S$m) 91 72 38 33 15 14 2012 2013 9M14 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 (11) (156) Note: Non-operating profit / loss (net of tax) mainly comprises changes in the fair value of assets and liabilitie
Slide 37: GEH: Total weighted new sales were 22% lower YoY
GEH: Total weighted new sales were 22% lower YoY as 3Q13 was boosted by the recapture of an exceptionally high volume of maturing policies -22% YoY 1,046 33 307 9 275 826 261 333 7 29 8 116 226 220 660 78 214 202 8 6 Weighted 295 20 81 7 new 10 62 business 82 premiums 226 59 82 (S$m) 680 191 183 502
Slide 38: GEH: Increase in new business embedded value margin
GEH: Increase in new business embedded value margin, brought about by positive shift in product and channel mix NBEV 45.1% 44.0% 42.2% 42.8% 41.7% margin 40.5% 39.7% 40.6% 39.8% 39.5% (NBEV / Total weighted new sales) 424 128 8 2 348 110 106 6 148 2 99 2 45 94 283 89 2 1 80 35 2 134 5 39 NBEV (S$m)
Slide 39: OCBC Malaysia: Net interest income and Islamic financing income up 13% YoY
OCBC Malaysia: Total net interest income and Islamic financing income up 13% YoY, non-interest income up 4% YoY Net interest income and Non-interest income (RM m) Islamic financing income (RM m) Net Interest/ Non-int. income/ financing margin Total income 2.32% 2.18% 2.21% 30.3% 2.13% 2.20% 2.08% 2.
Slide 40: OCBC Malaysia: Loans expanded 14% YoY; NPL ratio steady YoY
OCBC Malaysia: Loans expanded 14% YoY; NPL ratio steady YoY Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 88.6% 89.4% 88.0% 87.2% 86.5% 85.6% 86.4% 2.3% 2.3% 2.3% 2.2% 2.3% 2.1% 1.8% 70 71 67 61 63 62 60 59 61 58 54 56 50 52 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Mar13 Jun13 Sep13
Slide 41: OCBC NISP: Net interest income increased 18% YoY, NIM improved QoQ to 4.17%
OCBC NISP: Net interest income increased 18% YoY, NIM improved QoQ to 4.17% Net interest income (Rp b) Non-interest income (Rp b) Non-int. income/ Net interest margin Total income 4.17% 4.11% 4.13% 4.23% 4.33% 4.00% 4.13% 4.09% 4.17% 3.87% 24.6% 21.9% 21.9% 23.6% 22.4% 20.1% 19.1% 17.8% 3,139 967 15
Slide 42: OCBC NISP: Loans grew 9% YoY; deposits rose 26% YoY
OCBC NISP: Loans grew 9% YoY; deposits rose 26% YoY Gross Loans (Rp t) Deposits (Rp t) NPL Ratio Loans / Deposits 98.0% 97.0% 100.8% 1.1% 1.1% 90.2% 92.5% 91.5% 0.8% 0.7% 0.7% 0.7% 0.8% 83.6% 66 67 79 64 64 71 61 69 57 63 63 54 59 58 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Sep14 Mar13 Jun13 Sep13 Dec13
Slide 43: Agenda
Agenda Results Overview 3Q14 Group Performance Trends Performance of Major Subsidiaries – OCBC Wing Hang – Great Eastern Holdings – OCBC Malaysia – OCBC NISP Greater China Strategy with the addition of OCBC Wing Hang Appendix: Financial Highlights of Malaysian and Indonesian Subsidiaries 43
Slide 44: OCBC Greater China Strategy
OCBC Greater China Strategy Leverage OCBC’s coordinated and connected platform of geographical network, in-market franchise and onshore-offshore competencies in commercial banking and wealth management as competitive advantage Serve onshore and regional needs of customers in Greater China G R E AT E
Slide 45: Greater China Re-positioning - with OCBC Wing Hang
Greater China Re-positioning - with OCBC Wing Hang 1. Leverage Group resources to accelerate Wealth Management, Retail & Commercial Banking and Insurance business growth supported by an enlarged product suite, expanded geographical coverage and bigger customer franchise 2. Capture trade, capital and
Slide 46: Greater China Business Focus
Greater China Business Focus Deepen relationships • Continue focus on growing large corporate relationships through OCBC Hong Kong with Large Corporates branch, including Hong Kong blue chip companies and Chinese Top Tier SOEs • Leverage on OCBC Wing Hang’s presence in the Pearl River Delta region a
Slide 47: Integration in Motion
Integration in Motion Post Offer close on 29 July, priority initiatives completed on schedule 100% Fully acquired OCBC Wing Hang on 15 Oct 2014 Acquisition Delisted from the Hong Kong Stock Exchange on 16 Oct 2014 Rights issue offer successfully closed on 26 Sept 2014, with a subscription Comp
Slide 48: Agenda
Agenda Results Overview 3Q14 Group Performance Trends Performance of Major Subsidiaries – OCBC Wing Hang – Great Eastern Holdings – OCBC Malaysia – OCBC NISP Greater China Strategy with the addition of OCBC Wing Hang Appendix: Financial Highlights of Malaysian and Indonesian Subsidiaries 48
Slide 49: OCBC Malaysia: 3Q14 net profit 4% lower YoY
OCBC Malaysia: 3Q14 net profit 4% lower YoY 3Q14 3Q13 YoY 2Q14 QoQ OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 350 320 9 335 4 Islamic Financing Income 125 100 24 109 15 Non-interest income 113 109 4 121 (7) Total income 588 529 11 565 4 Operating expenses (248) (223) 11 (232) 7 O
Slide 50: OCBC Malaysia: 9M14 net profit declined 7% YoY
OCBC Malaysia: 9M14 net profit declined 7% YoY 9M14 9M13 YoY OCBC Malaysia RM m RM m +/(-)% Net interest income 1,013 946 7 Islamic Financing Income 341 272 25 Non-interest income 354 384 (8) Total income 1,708 1,602 7 Operating expenses (696) (642) 8 Operating profit 1,012 960 5 Allowances (167) (4
Slide 51: OCBC NISP: 3Q14 net profit increased 3% YoY to a new quarterly high
OCBC NISP: 3Q14 net profit increased 3% YoY to a new quarterly high 3Q14 3Q13 YoY 2Q14 QoQ OCBC NISP RP b RP b +/(-)% RP b +/(-)% Net interest income 967 820 18 898 8 Non-interest income 95 253 (63) 194 (51) Total income 1,062 1,073 (1) 1,092 (3) Operating expenses (624) (570) 9 (643) (3) Operating
Slide 52: OCBC NISP: 9M14 net profit up 12% YoY
OCBC NISP: 9M14 net profit, a record nine months performance, up 12% YoY 9M14 9M13 YoY OCBC NISP RP b RP b +/(-)% Net interest income 2,772 2,305 20 Non-interest income 517 638 (19) Total income 3,289 2,943 12 Operating expenses (1,880) (1,638) 15 Operating profit 1,409 1,305 8 Allowances (152) (186
Slide 53: Third Quarter 2014 Results Thank You
Third Quarter 2014 Results Thank You
Oversea-Chinese Banking — Q3 2014 Earnings Presentation on 6ix