Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2004 Earnings Presentation
37 slides from Oversea-chinese Banking's earnings presentation, Feb 14, 2005
Slide 1: 2004 Final Results
Presentation to Media and Analysts 2004 Final Results 14 February 2005
Slide 2: Agenda
Agenda • Results at a Glance • Income Statement Trends • Loans & Deposits • Asset Quality and Capital • Results of Key Subsidiaries • Accounting Changes • Conclusion 2
Slide 3: Full Year Net Profit Up 22%
Full Year Net Profit Up 22% FY04 FY03 YoY S$m S$m +/(-)% Net Interest Income 1,518 1,435 6 Non-Interest Income 1,126 758 48 - Fee Income 464 373 24 Total Income 2,643 2,193 21 Operating Expenses (974) (855) 14 Operating Profit 1,669 1,338 25 Goodwill (158) (127) 25 Provisions (77) (225) (66) Associa
Slide 4: Quarterly Comparison affected by Divestment Gains
Quarterly Comparison affected by Divestment Gains 4Q04 4Q03 YoY 3Q04 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 389 369 5 384 1 Non-Interest Income 313 206 52 384 (18) - Fee Income 113 103 10 118 (4) Total Income 702 575 22 768 (9) Operating Expenses (281) (216) 30 (251) 12 Operating Profit 4
Slide 5: Results Adjusted to Exclude Divestment Gains
Results Adjusted to Exclude Divestment Gains FY04 FY03 YoY Full Year S$m S$m +/(-)% Adjusted Operating Profit 1,537 1,211 27 Adjusted Net Profit 1,065 828 29 4Q04 4Q03 YoY 3Q04 QoQ Quarterly S$m S$m +/(-)% S$m +/(-)% Adjusted Operating Profit 421 308 37 385 9 Adjusted Net Profit 279 224 24 227 23 No
Slide 6: Key Financial Ratios
Key Financial Ratios FY04 FY03 4Q04 3Q04 % % % % Net Interest Margin 1.91 1.90 1.93 1.89 Non-Interest Income/ 42.6 34.6 44.6 50.0 Total Income Cost-to-Income Ratio 36.8 39.0 40.0 32.7 Loans-to-Deposits Ratio 92.5 93.8 92.5 93.9 NPL Ratio 4.9 6.9 4.9 5.4 Provision Coverage 82.9 67.0 82.9 76.7 ROE 11.
Slide 7: 65% Increase in Dividends Per Share and Higher Payout
65% Increase in Dividends Per Share and Higher Payout 2004 2003 S$m S$m Gross Dividend per Share 38¢ 23¢* Net Dividends 403 234 Net Profit 1,162 954 Less: Gain on non-core assets 97 126 Adjusted Net Profit 1,065 828 Payout based on adjusted Net Profit 38% 28% * Excluding Special Dividend of 63.78 ce
Slide 8: Agenda
Agenda • Results at a Glance • Income Statement Trends • Loans & Deposits • Asset Quality and Capital • Results of Key Subsidiaries • Accounting Changes • Conclusion 8
Slide 9: Moderate Growth in Net Interest Income and Stable Interest Margin
Moderate Growth in Net Interest Income and Stable Interest Margin Net 2.02% interest 1.91% 1.94% 1.92% 1.93% 1.90% 1.90% 1.89% margin 1,509 1,518 1,435 389 384 380 Net 369 365 interest income (S$m) 2002 2003 2004 4Q03 1Q04 2Q04 3Q04 4Q04 9
Slide 10: Non-Interest Income Boosted by Fee Income and Insurance Contribution
Non-Interest Income Boosted by Fee Income and Insurance Contribution 50.0% Non- 44.6% interest 42.6% 41.2% income/ Total 34.6% 39.6% 35.8% income 39.6% 32.1% 1,126 30.6% 132 30.5% 29.7% 994 384 758 Non- 712 313 interest 128 132 267 income 630 (S$m) 206 252 161 50 156 2002 2003 2004 4Q03 1Q04 2Q04 3Q
Slide 11: Fee Income Rose 24% in 2004
Fee Income Rose 24% in 2004 19.7% Fee 21.9% income/ 18.5% 18.5% 18.1% Total income 16.8% 18.0% 18.1% 17.5% 17.0% 16.1% 464 15.3% 374 373 Fee 115 117 118 113 103 income (S$m) 2002 2003 2004 4Q03 1Q04 2Q04 3Q04 4Q04 Excluding divestment gains 11
Slide 12: Robust Wealth Management Sales
Robust Wealth Management Sales 8,541 Sales* 7,858 (S$m) 5,210 4,669 3,628 3,877 1,408 1,438 541 683 249 30 2001 2002 2003 2004 Malaysia Singapore Total * Comprises sales of unit trusts, bancassurance products and structured deposits & notes 12
Slide 13: Excluding GEH's Expenses of S$51m, Underlying Cost Increase was 8% in 2004
Excluding GEH’s Expenses of S$51m, Underlying Cost Increase was 8% in 2004 41.4% 41.2% Cost-to- 39.5% Income 38.2% 38.8% Ratio 39.0% 39.1% 40.0% 36.8% 37.6% 974 36.4% 849 855 227 32.7% 189 152 281 216 236 251 Operating 225 192 216 206 77 Expenses 51 62 (S$m) 47 37 60 54 53 50 48 478 531 465 119 120
Slide 14: Operating Profit before Provisions and Goodwill up 25% in 2004
Operating Profit before Provisions and Goodwill up 25% in 2004 (S$m) 1,669 132 1,372 1,338 1,537 128 517 1,211 411 421 132 358 320 385 50 308 2002 2003 2004 4Q03 1Q04 2Q04 3Q04 4Q04 Gains from divestment of non-core assets 14
Slide 15: Substantial Reduction in Provisions
Substantial Reduction in Provisions Provisions 501 (S$m) 54 225 36 20 22 77 (2) 2002 2003 2004 4Q03 1Q04 2Q04 3Q04 4Q04 15
Slide 16: Breakdown of Provision Charges
Breakdown of Provision Charges FY04 FY03 4Q04 4Q03 3Q04 S$m S$m S$m S$m S$m Specific provision for Loans 143 194 81 47 37 General provision for Loans (32) (26) (33) 2 0 SP for Diminution in Value of Investment Securities (34) 57 (50) 5 (1) and other Assets Total Provision Charge 77 225 (2) 54 36 16
Slide 17: Record Net Profit and Improved ROE
Record Net Profit and Improved ROE 12.6% 12.1% 11.4% 11.8% 10.7% 10.4% ROE 10.0% (%) 10.4% 7.4% 8.7% 9.5% 8.4% 1,162 97 954 1,065 126 Net Profit 667 828 (S$m) 324 303 279 279 256 97 54 224 227 2002 2003 2004 4Q03 1Q04 2Q04 3Q04 4Q04 Gains from divestment of non-core assets Excluding divestment gains
Slide 18: Earnings Contribution by Segments
Earnings Contribution by Segments PBT by Business Segment PBT by Geography Asia Pacific Others Others 7% 2% 7% Other ASEAN Insurance 1% 16% Consumer Banking 24% Malaysia 21% Global Singapore Treasury Business 69% 16% Banking 37% 2004 Profit Before Tax, Goodwill & Amortisation: S$1,592m 2004 Profit B
Slide 19: Agenda
Agenda • Results at a Glance • Income Statement Trends • Loans & Deposits • Asset Quality and Capital • Results of Key Subsidiaries • Accounting Changes • Conclusion 19
Slide 20: Loans Growth of 5% in 2004
Loans Growth of 5% in 2004 Loans (S$bn) 54.7 55.0 55.2 51.4 52.6 53.0 49.7 51.2 6.8 7.0 7.4 6.4 6.2 6.6 6.3 6.7 7.9 8.3 8.4 8.5 7.8 8.0 7.1 7.5 37.1 37.3 38.2 38.9 39.5 39.6 39.3 35.8 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Singapore Malaysia International 20
Slide 21: Rising Share of Consumer Loans
Rising Share of Consumer Loans Loans by Sector Consumer Loans Share of Group 44.7% 46.8% Others Loans 7% 39.9% General Commerce 9% Housing 35.4% Loans 25,862 31% 23,511 Financial Consumer Institutions 19,926 15% Loans 18,718 47% Building & Construction Professional & 13% Individuals S$m 16% Transpor
Slide 22: Deposits Grew 7% in 2004
Deposits Grew 7% in 2004 Loans-to- 93.8% 93.9% deposits 93.2% 92.5% 90.9% 91.5% 89.1% 85.3% 92.2% 90.1% 89.7% 55.3 57.2 56.2 57.3 54.8 53.9 53.5 54.3 5.6 5.7 6.2 6.8 6.8 7.2 6.1 6.1 11.1 11.3 11.2 11.2 11.2 11.2 11.1 11.4 Deposits (S$bn) 36.9 35.9 34.4 34.3 34.6 36.4 35.5 36.3 Mar-03 Jun-03 Sep-03 D
Slide 23: Agenda
Agenda • Results at a Glance • Income Statement Trends • Loans & Deposits • Asset Quality and Capital • Results of Key Subsidiaries • Accounting Changes • Conclusion 23
Slide 24: Sustained Improvement in Asset Quality
Sustained Improvement in Asset Quality NPL Ratio 8.0% 7.5% 7.1% 6.9% 6.6% 6.1% 5.4% 4,290 4.9% 4,115 3,890 3,834 3,644 3,512 NPLs 3,129 (S$m) 1,250 2,866 1,219 1,105 1,068 1,040 1,028 970 902 2,559 2,480 2,388 2,389 2,266 2,150 1,909 1,735 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Sing
Slide 25: Provision Coverage Increased to 83%
Provision Coverage Increased to 83% SPs / Unsecured NPLs 105% 105% 105% 106% 103% 100% 100% 99% 83% (SPs+GPs) / NPLs 77% 70% 70% 66% 67% 63% 63% SPs / NPLs 43% 37% 37% 39% 35% 35% 36% 36% Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 25
Slide 26: Strong Capital Position despite Acquisitions and S$1.3bn Capital Reduction/Buybacks
Strong Capital Position despite Acquisitions and S$1.3bn Capital Reduction/Buybacks * (%) Total CAR 18.4 18.3 17.7 17.6 17.7 5.6 5.5 5.1 5.1 5.1 Tier 1 CAR 12.8 12.8 12.6 12.5 12.6 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 (S$m) Tier-1 capital 7,986 8,131 8,495 8,557 8,642 Risk Weighted Assets 62,178 63,37
Slide 27: Agenda
Agenda • Results at a Glance • Income Statement Trends • Loans & Deposits • Asset Quality and Capital • Results of Key Subsidiaries • Accounting Changes • Conclusion 27
Slide 28: OCBC Malaysia's Net Profit Up 35%
OCBC Malaysia’s Net Profit Up 35% FY04 FY03 YoY 2H04 1H04 HoH Reported Results* RM m RM m +/(-)% RM m RM m +/(-)% Net Interest Income 551 552 - 279 273 2 Islamic Banking Income 29 13 132 20 10 104 Non Interest Income 204 130 57 110 94 17 Total Income 784 694 13 408 376 9 Operating Expenses (288) (23
Slide 29: OCBC Malaysia: Financial Ratios
OCBC Malaysia: Financial Ratios FY04 FY03 2H04 1H04 % % % % Net Interest Margin 2.23 2.48 2.25 2.18 Non-Interest Income / 26.0 18.7 26.9 24.9 Total Income Cost-to-Income Ratio 36.7 33.5 39.6 33.5 Loans-to-Deposits Ratio 113 106 113 103 Net NPL Ratio 5.9 7.4 5.9 6.9 Loans Growth 13.8 10.7 7.6 5.7 ROE
Slide 30: GEH Contributed 16% of Group Net Profit
GEH Contributed 16% of Group Net Profit FY04* FY03 4Q04 3Q04 GEH’s Contribution to OCBC’s Results S$m S$m S$m S$m Total Income 304 - 162 104 Operating Expenses (51) - (24) (22) Operating Profit 252 - 138 83 Goodwill Amortisation (32) - (14) (13) Tax (64) - (38) (18) Minority Interests (36) - (17) (1
Slide 31: Agenda
Agenda • Results at a Glance • Income Statement Trends • Loans & Deposits • Asset Quality and Capital • Results of Key Subsidiaries • Accounting Changes • Conclusion 31
Slide 32: FRS 39 – Classification of Financial Instruments
FRS 39 – Classification of Financial Instruments Classification of Financial Assets & Liabilities Available for Sale (AFS): Marked to market (MTM), with changes in value taken directly to equity Held for Trading: MTM with changes in value taken to income statement Held to Maturity: Stated at cost le
Slide 33: FRS 39 – Hedge Accounting and Loan Impairment
FRS 39 – Hedge Accounting and Loan Impairment Hedge Accounting All derivatives on balance sheet to be marked-to-market; impact of hedge ineffectiveness reflected in income statement ¾ On 1 Jan 05, re-statement of revenue reserves (retained earnings) – relatively minor impact as most of the hedging d
Slide 34: FRS 103 – Business Combinations
FRS 103 – Business Combinations ¾ Goodwill no longer amortised, but subject to impairment test to be conducted annually or when indication of impairment exists ¾ Intangible assets with definite useful life to be amortised over their useful life Impact ¾ Amortisation of goodwill & intangibles in 2004
Slide 35: FRS 102 – Share-based Payments
FRS 102 – Share-based Payments ¾ Expense fair value of options granted over the vesting period ¾ Fair value determined using option pricing models Impact: ¾ Estimated additional operating expenses of approx. S$13m for FY2005 arising from: • OCBC Share Option Scheme • OCBC Employee Share Purchase Pla
Slide 36: Agenda
Agenda • Results at a Glance • Income Statement Trends • Loans & Deposits • Asset Quality and Capital • Results of Key Subsidiaries • Accounting Changes • Conclusion 36
Slide 37: Conclusion
Conclusion • Healthy operating results driven by top line growth • Major strategic initiatives accomplished in 2004, including GEH transaction and expansion into Indonesia through Bank NISP • Through active capital management, GEH & NISP acquisitions completed with little dilution to shareholders –
Oversea-Chinese Banking — FY2004 Earnings Presentation on 6ix