Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Investor Presentation (February 2006)
37 slides from Oversea-chinese Banking's investor presentation, Feb 28, 2006
Slide 1: New Horizons II - Embedding OCBC in the Region
Presentation to Media and Analysts New Horizons II - Embedding OCBC in the Region David Conner, CEO 28 February 2006
Slide 2: Agenda
Agenda • New Horizons 3-year Report Card • Market Scan • New Horizons II – Embedding OCBC in the Region • Conclusion
Slide 3: Our Achievements – Consumers
Our Achievements – Consumers OUR ACTION PLANS 3-YEAR ACHIEVEMENTS 1. Research and segment the market • CRM & customer analytics contributing to further competitiveness in consumer banking: Ö 58% increase in av. cross-sales conversion rate Ö Event-based leads generation for sales & retention Ö Funds
Slide 4: Our Achievements – Consumers (continued)
Our Achievements – Consumers (continued) OUR ACTION PLANS 3-YEAR ACHIEVEMENTS 4. Rapidly expand our existing customer base • Average 7% p.a. growth in number of consumer customers • 128% growth in Premier Banking customer base 5. Experiment with different business • Partnership with NTUC to offer un
Slide 5: Our Achievements – Businesses
Our Achievements – Businesses OUR ACTION PLANS 3-YEAR ACHIEVEMENTS 1. Maintain our current strong large • Average 9% p.a. growth in total corporate position revenues of large corporate business 2. Research and segment the SME market so • Introduced 28 new SME lending as to offer sound and competitiv
Slide 6: Our Achievements – Product Innovation
Our Achievements – Product Innovation OUR ACTION PLANS 3-YEAR ACHIEVEMENTS 1. Strive to build “best in class” products • Best Corporate/Institutional Internet Bank in Malaysia by Global Finance in 2005 • Best Trade Finance Bank (Singapore) by Global Finance in 2005 • Lion Capital won 3 awards in the
Slide 7: Our Achievements – Product Innovation (continued)
Our Achievements – Product Innovation (continued) OUR ACTION PLANS 3-YEAR ACHIEVEMENTS Become one of the top 3 banks in the • Wealth Management combined Singapore, Malaysia market for Ö Combined Wealth product sales grew by 160% Ö Formed Lion Capital Management , one of the wealth management, transa
Slide 8: Our Achievements – Risk Management
Our Achievements – Risk Management OUR ACTION PLANS 3-YEAR ACHIEVEMENTS 1. Continue to build our consumer and • Average growth of 6% p.a. in OCBC’s total business loan books loan portfolio 2. Maintain highly liquid liability base • Diversified sources of funds through US$500m MTN and US$2 billon ECP
Slide 9: Our Achievements – Productivity
Our Achievements – Productivity OUR ACTION PLANS 3-YEAR ACHIEVEMENTS 1. Centralise operations in 2 locations that • Hubbing project – On track: will back each other up as recovery Ö Completed centralisation of M’sia backroom centres operations Ö $55m investment over 2 years to create processing hubs
Slide 10: Our Achievements – People
Our Achievements – People OUR ACTION PLANS 3-YEAR ACHIEVEMENTS 1. Develop more local talent in each of our • “Career Best” training conducted for markets through extensive training and more than 1,800 employees from 2003 proactive career development programmes to 2005 to improve individual performan
Slide 11: Our Achievements – People (continued)
Our Achievements – People (continued) OUR ACTION PLANS 3-YEAR ACHIEVEMENTS More than 30% of our employees as Employee shareholding shareholders in 3 years Ö Employee shareholding grew to 29%, if employees on deferred shares and share purchase schemes are included, up from 6% in 2002 Overall OCBC Emp
Slide 12: Our Achievements – Shareholders
Our Achievements – Shareholders OUR ACTION PLANS 3-YEAR ACHIEVEMENTS 1. Deliver 10% EPS growth p.a. • Average EPS growth of 23% p.a. (excluding divestment gains) 2. Target minimum 35% dividend to core • Payout increased from 30% in 2002 to earnings ratio 44% in 2005; dividend per share increased by
Slide 13: Our Achievements – Shareholders (continued)
Our Achievements – Shareholders (continued) OUR ACTION PLANS 3-YEAR ACHIEVEMENTS 5. Deliver 12% ROE in three years • ROE improved from 7.4% in 2002 to 11.4% in 2005 • Cash ROE of 11.7% in 2005 6. Maintain Tier 1 capital (and total • Tier 1 and total CAR of 13.4% and capital) at a comfortable cushion
Slide 14: Our Achievements – Overseas Expansion
Our Achievements – Overseas Expansion OUR ACTION PLANS 3-YEAR ACHIEVEMENTS 1. First aggressively exploit our strong • OCBC Malaysia’s net profit rose 115% to distribution capability in Malaysia and RM415m in 2005 Singapore to become even more entrenched • Malaysia home loans increased 66% as a commu
Slide 15: Our Achievements – Overseas Expansion
Our Achievements – Overseas Expansion OUR ACTION PLANS 3-YEAR ACHIEVEMENTS 3. Transfer successful customer/ product • Launched joint initiatives with NISP: solutions from Singapore and Malaysia to Ö ATM network link-up in April 2005 other ASEAN countries and China within 24 Ö Corporate internet bank
Slide 16: Our Achievements – Awards received (2003 to 2005)
Our Achievements – Awards received (2003 to 2005) Asia Pacific Retail Bank of the Year 2004 South-East Asia Retail Bank of the Year 2004 Best Bank in Singapore 2004 Winner of 5 awards in Best Trade Finance the S & P Investment Bank Singapore 2005 Fund Awards 2004 Country Award for Best Bond House 20
Slide 17: Taking Stock and Looking Ahead
Taking Stock and Looking Ahead • Key targets were met, notably in overseas expansion, Malaysia growth, capital management, improving shareholder value • Build-and-transfer approach well received by overseas partners • Balanced business scorecard delivering overall performance improvements • New Hori
Slide 18: Agenda
Agenda • New Horizons 3-year Report Card • Market Scan • New Horizons II – Embedding OCBC in the Region • Conclusion
Slide 19: Market Scan
Market Scan Market Scan in 2003 Market Scan in 2006 • Singapore market is mature • Unchanged; competition intensifying • 1997 crisis receding regionally • Regional business and consumer confidence stronger now • Opportunities in Malaysia to be • Good growth momentum in Malaysia; exploited opportunit
Slide 20: What is Different?
What is Different? • OCBC is the largest financial institution in combined Singapore- Malaysia assets (S$120 bn) after GEH became a subsidiary • Established Indonesia as our 3rd major market (Bank NISP); established strategic partnership in China (Ningbo Commercial Bank) • Formed Lion Capital Manage
Slide 21: Agenda
Agenda • New Horizons 3-year Report Card • Market Scan • New Horizons II – Embedding OCBC in the Region • Conclusion
Slide 22: Key Strategic Thrusts for 2006 - 2010: Focused Overseas Expansion
Key Strategic Thrusts for 2006 - 2010 (1) Focused Overseas Expansion • Shift emphasis from adding more country flags to deepening market penetration in Malaysia, Indonesia, China • Selectively explore opportunities to establish strategic partnerships in Indochina • Grow market share in the consumer
Slide 23: Key Strategic Thrusts for 2006 - 2010: Balanced Business Scorecard
Key Strategic Thrusts for 2006 - 2010 (2) Maintain use of Balanced Business Scorecard • Continue with our disciplined approach to measure improvement in: customers, products, risk management, productivity, people, shareholder value • Focus on strengthening our market position in Singapore and taking
Slide 24: Key Strategic Thrusts for 2006 - 2010
Key Strategic Thrusts for 2006 - 2010 1. Focused Overseas Expansion • Indonesia • China 2. Maintain Use of Balanced Business Scorecard • Customers • Products • Risk management • Productivity • People • Shareholder value 24
Slide 25: Focused Overseas Expansion: Indonesia
FOCUSED OVERSEAS EXPANSION In Indonesia, we will… • Work with Bank NISP to become a top-tier nationwide bank focused on SMEs and consumers • Expand our geographic branch coverage • Broaden Bank NISP’s consumer and SME product suite, including wealth management, credit cards, cash management and trad
Slide 26: Focused Overseas Expansion: China
FOCUSED OVERSEAS EXPANSION In China, we will… • Leverage on strategic partnerships in China as part of strategy to grow our retail and SME customer franchise • Experiment with customer and product solutions through our partners • Continue to support GE’s initiatives in life insurance in China throug
Slide 27: Key Strategic Thrusts for 2006 - 2010
Key Strategic Thrusts for 2006 - 2010 1. Focused Overseas Expansion • Indonesia • China 2. Maintain Use of Balanced Business Scorecard • Customers • Products • Risk management • Productivity • People • Shareholder value 27
Slide 28: Our Strategy Starts with Customers: Consumers
OUR STRATEGY STARTS WITH CUSTOMERS For Consumers, we will… • Focus on new customer acquisitions in the Mass Consumer, Premier and Private Banking segments • Survey customers to understand their needs and deploy these insights into our value propositions • Leverage our Great Eastern/Lion Capital part
Slide 29: Our Strategy Starts with Customers: Businesses
OUR STRATEGY STARTS WITH CUSTOMERS For Businesses, we will… • Grow our current strong large corporate position • Expand customer base and grow market share in the SME segment • Survey customers and work towards an overall improvement in customer satisfaction as measured by survey results • Increase
Slide 30: Our Strategy Springs from Product Strengths
OUR STRATEGY SPRINGS FROM PRODUCT STRENGTHS We will… • Strive to build more “best-in-class” products • Add to our SME cash management capabilities and enhance our trade finance services/ solutions with increasing focus on supporting our customers expanding regionally • Strengthen our position in Sin
Slide 31: Our Strategy Is Grounded on Sound Risk Management
OUR STRATEGY IS GROUNDED ON SOUND RISK MANAGEMENT We will… • Execute our Basel II implementation plan in line with regulatory guidelines • Manage our balance sheet proactively to deliver enhanced risk- return with portfolio re-balancing and hedging • Build a robust management attestation process to
Slide 32: Our Strategy Requires Ongoing Productivity Gains
OUR STRATEGY REQUIRES ONGOING PRODUCTIVITY GAINS We will… • Continue to drive for productivity gains and unit cost reduction while enhancing service quality • Leverage our cross-border processing hubs in Singapore and Malaysia to deliver further efficiency gains • Continue to re-engineer cross-funct
Slide 33: Our Strategy Requires Employee Commitment
OUR STRATEGY REQUIRES EMPLOYEE COMMITMENT We will… • Build people resources with a focus on diversity, cross-border management skill sets and competencies to support our overseas expansion efforts • Continue to develop talent within OCBC through evolving training and career development programmes •
Slide 34: Our Strategy Is Focused on Results
OUR STRATEGY IS FOCUSED ON RESULTS We will… • Grow revenues faster than expenses • Deliver 10% EPS growth p.a. • Achieve and sustain ROE of above 12% ….. be a high performance bank 34
Slide 35: Our Strategy Delivers Shareholder Value
OUR STRATEGY DELIVERS SHAREHOLDER VALUE We will… • Periodically review our target minimum dividend payout of 35% of core earnings for possible increase • Continue to divest non-core assets at the right time and invest the gains in core financial services growth opportunities • Continue policy of ret
Slide 36: Agenda
Agenda • New Horizons 3-year Report Card • Market Scan • New Horizons II – Embedding OCBC in the Region • Conclusion
Slide 37: Conclusion
Conclusion New Horizons II is about… • Continuing our international growth strategy • Shifting emphasis from adding more country flags to deepening market penetration in Malaysia, Indonesia, China • Continuing to work on improving overall performance through balanced business scorecard • Maintaining
Oversea-Chinese Banking — Investor Presentation (February 2006) on 6ix