Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2015 Earnings Presentation
52 slides from Oversea-chinese Banking's earnings presentation, Feb 17, 2016
Slide 1: 2015 Full Year Results Presentation
2015 Full Year Results Presentation 17 February 2016 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 FY15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income Note: - Certain comparative figures have been restated to conform with the current period’s present
Slide 3: FY15 Highlights
FY15 Highlights Core net profit increased 13% YoY to a new record of S$3.90 billion • Net interest income rose 10% YoY to a record high Core net profit and core ROE • Non-interest income grew 10% YoY, driven by higher fee, trading and investment income 13.2% 12.3%1/ • Great Eastern’s (“GEH”) underly
Slide 4: Full year core net profit rose 13% YoY to S$3.90b
Full year core net profit rose 13% YoY to S$3.90b FY15 FY14 YoY OCBC Group S$m S$m +/(-)% Net interest income 5,189 4,736 10 Non-interest income 3,533 3,213 10 Total income 8,722 7,949 10 Operating expenses (3,664) (3,258) 12 Operating profit 5,058 4,691 8 Amortisation of intangibles (98) (74) 32 Al
Slide 5: 4Q15 net profit increased 21% YoY to S$960m
4Q15 net profit increased 21% YoY to S$960m 4Q15 4Q14 YoY 3Q15 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,341 1,277 5 1,317 2 Non-interest income 960 762 26 775 24 Total income 2,301 2,039 13 2,092 10 Operating expenses (974) (922) 6 (900) 8 Operating profit 1,327 1,117 19 1,192
Slide 6: Full year core net profit before GEH contribution grew 20% YoY to S$3.26b
Full year core net profit before GEH contribution (“banking operations”) grew 20% YoY to S$3.26b FY15 FY14 YoY Banking Operations S$m S$m +/(-)% Net interest income 5,099 4,668 9 Non-interest income 2,477 2,078 19 Total income 7,576 6,746 12 Operating expenses (3,446) (3,049) 13 Operating profit 4,1
Slide 7: 4Q15 net profit before GEH contribution up 26% YoY to S$780m
4Q15 net profit before GEH contribution up 26% YoY to S$780m 4Q15 4Q14 YoY 3Q15 QoQ Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,312 1,259 4 1,294 1 Non-interest income 677 482 41 634 7 Total income 1,989 1,741 14 1,928 3 Operating expenses (916) (866) 6 (849) 8 Operating profi
Slide 8: Agenda
Agenda Results Overview FY15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income 8
Slide 9: Earnings well-diversified across key geographies and main businesses
Earnings well-diversified across key geographies and main businesses FY15 PBT FY15 PBT by Business1/ by Geography PBT Rest of the Group OCBC Other Asia S$4,825m World Wing Hang Pacific YoY: +10% 2% Greater 2% Singapore 8% China S$2,665m 20% YoY: +3% Insurance (within which OCBC Malaysia 18% Wing Han
Slide 10: Net interest income rose 10% YoY to a new high
Net interest income rose 10% YoY to a new high – 2015 NIM stable from a year ago; 4Q NIM rose 7bp YoY and 8bp QoQ Net interest 1.64% 1.68% 1.67% 1.70% 1.70% 1.74% 1.68% 1.67% 1.62% 1.67% 1.66% margin 5,189 4,736 1,317 1,341 1,277 1,282 1,246 1,249 Net interest 3,883 1,126 income 1,087 (S$m) 2013 201
Slide 11: Non-interest income grew 10% YoY, driven by higher fee, trading and investment income
Non-interest income grew 10% YoY, driven by higher fee, trading and investment income Non- interest 41.4% 42.4% 43.0% 40.7% 42.3% 41.7% 40.4% 40.5% 39.1% 37.4% 37.1% income / Total income 3,533 939 960 3,213 859 850 781 800 801 174 2,738 762 775 272 930 237 3642/ 259 98 215 756 223 232 195 2/ 26 78
Slide 12: Fee income up 10% YoY to a record
Fee income up 10% YoY to a record, led by higher wealth management, brokerage and fund management fees +5% +10% YoY YoY -1% 1,643 QoQ 1,495 438 276 1,355 406 408 402 395 212 383 65 86 168 353 353 55 72 86 61 30 78 62 92 50 43 29 18 19 16 19 Fees and 556 16 25 commissions 558 146 (S$m) 515 150 137 13
Slide 13: Profit from life assurance declined 18% YoY
Profit from life assurance declined 18% YoY largely due to unrealised mark-to-market losses from GEH’s bond investment portfolio - 18% YoY +24% YoY 768 +281% QoQ 207 630 236 599 221 Profit from 199 38 life 164 183 190 174 54 174 assurance (S$m) 50 52 54 46 132 423 279 331 134 41 164 98 99 116 92 62
Slide 14: Operating expenses rose 12% YoY, mainly from OCBC Wing Hang
Operating expenses rose 12% YoY, mainly from OCBC Wing Hang. Excluding OCBC Wing Hang, operating expenses were up 5% YoY 42.0% Cost / 41.0% 42.0% 42.5% 45.2% 43.0% 42.3% 41.4% 41.3% Income 37.4% 38.5% 3,664 3,258 974 673 922 918 900 870 873 2,784 636 188 760 188 164 164 737 164 157 539 706 Operating
Slide 15: Net allowances for loans and other assets up 37% YoY
Net allowances for loans and other assets up 37% YoY 488 79 193 Net 357 allowances for loans 43 154 150 and other 266 232 10 assets 2 196 35 (S$m) 81 97 71 76 66 80 1 65 64 36 66 41 47 183 163 177 1 45 73 74 23 50 42 31 32 17 20 (2) (12) (1) 2013 2014 2015 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Net
Slide 16: Net specific allowances for loans were higher YoY
Net specific allowances for loans were higher YoY FY15 FY14 4Q15 4Q14 3Q15 S$m S$m S$m S$m S$m Allowances for new and 418 340 118 112 133 existing loans Write-backs1/ (133) (96) (29) (27) (50) Recoveries2/ (53) (48) (13) (14) (18) Net specific allowances 232 196 76 71 65 1/ Write-backs of specific a
Slide 17: Customer loans at year end up slightly YoY
Customer loans at year end up slightly YoY – Loans based on full year average balances 11% higher YoY 210 210 210 213 211 205 Loan growth 25 24 24 22 21 26 175 177 Rest of the World 23 24 YoY: -15% 59 56 QoQ: -7% 56 57 58 52 30 27 Greater China Customer 17 YoY: +1% 13 13 14 14 14 16 Loans (S$b) 13 Q
Slide 18: Customer loans continue to be well-diversified across geographies and industries
Customer loans continue to be well-diversified across geographies and industries Customer Loans by Geography Customer Loans by Industry As of 31 December 2015 As of 31 December 2015 Rest of the As of As of World Industry 31 Dec 2015 31 Dec 2014 Other Asia 5% Pacific S$b % S$b % 5% Housing loans 56 2
Slide 19: CASA deposits grew 10% YoY, with customer deposits flat at S$246b
CASA deposits grew 10% YoY, with customer deposits flat at S$246b – CASA ratio improved to 48.9% 250 246 252 246 246 237 24 21 22 20 27 27 199 201 25 26 113 112 111 106 Customer 109 105 Deposits (S$b) 80 80 43 43 40 42 42 39 33 34 S$120b S$114b S$113b S$120b +S$11b YoY S$106b S$110b S$94b S$95b 45.5
Slide 20: Group LDR stable at 84.5%; USD and RMB LDRs lower YoY
Group LDR stable at 84.5%; USD and RMB LDRs lower YoY 250 246 252 246 246 Others 237 25 22 22 IDR 25 22 24 213 5 210 5 210 5 210 5 12 211 6 RMB 199 201 205 5 14 12 10 14 13 13 15 16 18 25 16 HKD 14 5 5 24 25 6 24 175 21 177 21 5 21 10 22 10 5 10 9 7 8 9 5 5 23 MYR 6 13 6 25 23 13 5 4 5 4 24 26 26 26
Slide 21: Funding sources well-balanced
Funding sources well-balanced – Customer deposits made up 78% of funding composition Funding Composition as of 31 Dec 2015 Wholesale Funding by Currency as of 31 Dec 2015 By Maturity: Others ≤ 1 year 54% Current account Others Bank deposits AUD 11% > 1 year 46% and savings 6% 4% 8% Customer deposits
Slide 22: NPL ratio flat QoQ at 0.9%
NPL ratio flat QoQ at 0.9% – Coverage for NPAs maintained at comfortable levels 0.7% 0.7% 0.7% 0.7% 0.9% 0.9% 0.6% 0.6% NPL ratio 2,039 1,932 70 70 110 135 207 1,494 207 1,373 1,379 34 1,317 400 1,230 1,215 35 33 148 305 38 179 NPAs 39 43 242 159 215 (S$m) 300 251 202 246 169 185 92 88 103 699 707 9
Slide 23: NPAs increased YoY, mainly from oil and gas services accounts
NPAs increased YoY, mainly from the classification of a few large corporate accounts associated with the oil and gas services sector FY15 FY14 4Q15 4Q14 3Q15 S$m S$m S$m S$m S$m NPAs – Opening balance 1,317 1,304 1,932 1,373 1,494 New NPAs 1,950 936 395 230 766 New recoveries/upgrades (961) (748) (2
Slide 24: Capital position remained strong and well above regulatory requirements
Capital position remained strong and well above regulatory requirements 17.4 16.6 16.8 15.6 15.9 16.1 15.5 15.5 CAR 2.7 2.1 2.0 (% of RWA) 1.2 2.1 2.0 2.3 2.0 Tier 2 capital Common Equity Tier 1 / Tier 1 capital 14.4 14.7 13.8 14.1 14.5 14.8 13.2 13.5 11.8 Proforma 11.4 11.2 Common Equity 11.0 11.3
Slide 25: Final dividend of 18 cents per share proposed
Final dividend of 18 cents per share proposed – Scrip Dividend Scheme would be applicable 36.0 36.0 33.0 34.0 30.0 30.0 28.0 Net DPS 18.0 18.0 17.0 17.0 (cents) 15.0 15.0 14.0 Final net dividend Interim net 18.0 18.0 dividend 15.0 15.0 16.0 17.0 14.0 2009 2010 2011 2012 2013 2014 2015 Net Dividends
Slide 26: Agenda
Agenda Results Overview FY15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income 26
Slide 27: GEH: Full year earnings contribution of S$639m
GEH: Full year earnings contribution of S$639m FY15 FY14 YoY GEH S$m S$m +/(-)% Profit from insurance business 661 814 (19) - Operating profit 1/ 582 591 (2) - Non-operating profit 2/ 3 145 (98) - Others 76 78 (1) Profit from Shareholders’ Fund 267 3/ 180 49 Profit from operations 928 994 (7) Allowa
Slide 28: GEH: 4Q15 earnings contribution of S$180m
GEH: 4Q15 earnings contribution of S$180m 4Q15 4Q14 YoY 3Q15 QoQ GEH S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 241 207 17 71 239 - Operating profit 1/ 169 156 9 130 31 - Non-operating profit/(loss) 2/ 49 26 92 (79) 162 - Others 23 26 (9) 20 15 Profit from Shareholders’ Fund 13 37 (66)
Slide 29: GEH: Operating profit stable YoY
GEH: Operating profit stable YoY as underlying insurance growth was offset by currency translation effects, mainly weaker MYR against SGD +9% -2% YoY YoY +31% QoQ 591 582 560 169 24 14 16 2 156 131 149 151 143 143 9 3 30 142 170 4 Operating 7 4 132 130 profit from 37 41 4 5 1/ 44 insurance 43 46 33
Slide 30: GEH: Non-operating profit decreased YoY
GEH: Non-operating profit decreased YoY largely due to unrealised mark-to-market losses from bond and equity investments in 3Q15 145 Non-operating profit/(loss) from insurance business 72 (S$m) 49 41 33 26 14 3 (11) (9) (79) 2013 2014 2015 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Note: Non-operating
Slide 31: GEH: Total weighted new sales 8% higher YoY
GEH: Total weighted new sales 8% higher YoY, supported by broad-based growth across all markets +8% YoY +10% 996 975 YoY 33 906 39 29 307 282 280 13 313 268 8 301 9 Weighted 217 113 207 201 202 73 new 8 110 198 business 6 7 8 9 premiums 52 (S$m) 70 70 58 69 680 624 576 186 182 157 162 132 125 135 12
Slide 32: GEH: New business embedded value 3% higher YoY
GEH: New business embedded value 3% higher YoY; NBEV margin lower YoY at 39.5% 44.2% 43.7% 40.3% 41.4% 39.5% 40.3% 40.4% 40.2% 38.0% 38.2% 39.6% NBEV margin (NBEV / Total 401 122 weighted 8 375 385 5 113 1 new sales) 6 2 102 126 2 135 92 46 130 88 82 2 44 82 2 80 32 1 1 1 32 NBEV 23 31 28 29 (S$m) 2
Slide 33: OCBC Wing Hang: Full year net profit at HK$2.03b
OCBC Wing Hang: Full year net profit at HK$2.03b FY15 FY14 2/ YoY OCBC Wing Hang HK$m HK$m +/(-)% Net interest income 3,774 1,705 121 Non-interest income 1,079 393 175 Total income 4,854 2,098 131 Operating expenses (2,350) (1,130) 108 Operating profit 2,503 968 159 Allowances (146) (177) (17) Assoc
Slide 34: OCBC Wing Hang: 4Q15 net profit up YoY
OCBC Wing Hang: 4Q15 net profit up YoY 4Q15 4Q14 YoY 3Q15 QoQ OCBC Wing Hang HK$m HK$m +/(-)% HK$m +/(-)% Net interest income 935 949 (1) 978 (4) Non-interest income 290 183 59 222 31 Total income 1,226 1,132 8 1,200 2 Operating expenses (594) (638) (7) (592) - Operating profit 632 494 28 607 4 Allo
Slide 35: OCBC Wing Hang: NIM up YoY and non-interest income share higher
OCBC Wing Hang: NIM up YoY and proportion of non- interest income to total income higher at 22.2% Net profit (HK$m) Net interest income (HK$m) Net interest margin 1.73% 1.76% 1.68% 1.77% 1.72% 1.72% 1.81% 1.78% 2,028 3,774 +18% 949 910 951 978 935 YoY 756 -5% 1,705 QoQ 540 513 490 2014 1/ 2015 3Q141
Slide 36: OCBC Wing Hang: CASA ratio improved to 30.7%; NPL ratio at 0.6%
OCBC Wing Hang: CASA ratio improved to 30.7%; NPL ratio at 0.6% Gross Loans (HK$b) Deposits (HK$b) NPL Ratio Loans / Deposits 1/ 80.5% 81.7% 82.1% 0.6% 0.6% 77.5% 78.9% 78.4% 0.3% 0.4% 0.4% 0.4% 196 200 200 202 189 188 157 161 158 152 154 154 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Sep14 Dec14 Mar15 Jun
Slide 37: Greater China customer loans up 1% YoY but 5% lower QoQ
Greater China customer loans up 1% YoY but 5% lower QoQ 59 56 57 58 56 52 4 4 4 4 4 2 3 2 2 1 2 1 26 29 29 30 24 29 Customer Loans to Greater Macau China (S$b) Taiwan Hong Kong 17 17 16 17 17 Offshore 2/ 15 China 1/ 7 8 7 6 6 6 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15 Note: Customer loans to Greater Chin
Slide 38: Asset quality of Greater China book remained sound
Asset quality of Greater China book remained sound; NPL ratio remained low at 0.4% Total 288% 285% 275% 356% allowances/ 191% 200% 240% 241% NPAs NPL ratio 0.3% 0.3% 0.3% 0.3% 0.4% 0.3% 0.3% 0.4% 244 241 202 185 169 Greater China 159 NPAs (S$m) 107 102 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Dec15
Slide 39: OCBC Malaysia: Full year net profit up 6% YoY
OCBC Malaysia: Full year net profit up 6% YoY FY15 FY14 YoY OCBC Malaysia RM m RM m +/(-)% Net interest income 1,367 1,372 - Islamic Financing Income 514 467 10 Non-interest income 595 473 26 Total income 2,476 2,312 7 Operating expenses (1,014) (942) 8 Operating profit 1,462 1,370 7 Allowances (294
Slide 40: OCBC Malaysia: 4Q15 net profit grew 15% YoY
OCBC Malaysia: 4Q15 net profit grew 15% YoY 4Q15 4Q14 YoY 3Q15 QoQ OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 338 359 (6) 353 (4) Islamic Financing Income 130 127 3 131 (1) Non-interest income 173 119 45 143 21 Total income 641 605 6 627 2 Operating expenses (260) (246) 6 (259) -
Slide 41: OCBC Malaysia: Net interest and Islamic financing income grew 2% YoY
OCBC Malaysia: Total net interest income and Islamic financing income grew 2% YoY, non-interest income 26% higher Net interest income and Non-interest income (RM m) Islamic financing income (RM m) Net Interest/ Non-int. income/ financing margin Total income 2.20% 2.11% 2.16% 2.02% 2.07% 2.18% 27.0%
Slide 42: OCBC Malaysia: Loans climbed 9% YoY and deposits grew 3%
OCBC Malaysia: Loans climbed 9% YoY and deposits grew 3%; NPL ratio at 2.1% Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 92.1% 93.3% 88.0% 87.2% 86.5% 88.7% 87.2% 89.0% 2.3% 2.2% 2.3% 2.0% 2.1% 2.0% 2.1% 1.9% 70 71 72 75 76 75 73 68 70 70 67 64 65 61 62 59 Mar14 Jun14 Sep14 Dec14 Ma
Slide 43: OCBC NISP: Full year net profit up 13% YoY
OCBC NISP: Full year net profit up 13% YoY FY15 FY14 YoY OCBC NISP Rp b Rp b +/(-)% Net interest income 4,419 3,745 18 Non-interest income 854 743 15 Total income 5,273 4,488 18 Operating expenses (2,818) (2,490) 13 Operating profit 2,455 1,998 23 Allowances (454) (221) 105 Non Op Income / (Expenses
Slide 44: OCBC NISP: 4Q15 net profit rose 13% YoY
OCBC NISP: 4Q15 net profit rose 13% YoY 4Q15 4Q14 YoY 3Q15 QoQ OCBC NISP Rp b Rp b +/(-)% Rp b +/(-)% Net interest income 1,303 973 34 1,167 12 Non-interest income 316 226 40 95 235 Total income 1,619 1,199 35 1,262 28 Operating expenses (778) (610) 28 (705) 11 Operating profit 841 589 43 557 51 All
Slide 45: OCBC NISP: Net interest income 18% higher YoY; NIM at 4.07%
OCBC NISP: Net interest income 18% higher YoY; NIM at 4.07% Net interest income (Rp b) Non-interest income (Rp b) Non-int. income/ Net interest margin Total income 4.67% 4.11% 4.15% 4.07% 4.13% 4.09% 4.17% 4.20% 4.15% 3.82% 3.60% 21.9% 20.1% 18.9% 20.0% 19.6% 4,419 16.6% 16.2% 17.8% 17.0% 1,303 8.9%
Slide 46: OCBC NISP: Loans grew 26% YoY, NPL stable at 1.3%
OCBC NISP: Loans grew 26% YoY, NPL remained stable at 1.3%; deposits up 20%, with CASA ratio at 41.4% Gross Loans (Rp t) Deposits (Rp t) NPL Ratio Loans / Deposits 1.3% 1.4% 1.3% 1.3% 1.3% 100.8% 98.0% 1.1% 1.1% 91.5% 93.6% 89.7% 0.8% 83.6% 84.6% 87.3% 86 91 82 85 87 74 82 79 68 70 73 66 67 71 64 63
Slide 47: Agenda
Agenda Results Overview FY15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income 47
Slide 48: Earnings base reflected a diversified regional presence
Earnings base reflected a diversified regional presence in Singapore, Malaysia, Indonesia and Greater China 4,825 FY15 PBT 4% S$185m 13% CAGR 4,372 PBT by 6% geography 20% S$968m 18% (S$m) 3,646 12% YoY 3,567 5% 4% 4% S$200m 4% 1,172 7% 6% 2,917 4% 4% FY11 PBT 5% 17% S$807m 19% 995 S$114m 4% 19% S$1
Slide 49: Earnings growth supported by stable and prudent operating platform
Earnings growth supported by stable and prudent operating platform Diversified earnings Prudent risk management 0.9% 0.9% 13.2% 1/ 0.8% 12.5% 12.3% 0.7% 11.6% NPL ratio 0.6% 11.1% S$m 3,903 3,451 Allowances 539% 417% 2,825 2,768 326% 333% 310% / Unsecured 2,280 NPAs 171% 142% 134% Allowances 107% 12
Slide 50: Agenda
Agenda Results Overview FY15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income 50
Slide 51: Wealth management income up 6% YoY to a record S$2.35b
Wealth management income up 6% YoY to a record S$2.35b Wealth Management Income1/ (S$m) Bank of Singapore Earning Asset Base (US$b) As % of Group income 65 68 29% 28% 30% 29% 31% Dec 11- 27% 26% 26% 28% 27% 57 13 Dec 15 22% 52 14 CAGR: 11 14% 40 9 8 2,354 Loans 51 55 2,216 693 43 46 32 AUM 1,927 612
Slide 52: 2015 Full Year Results Thank You
2015 Full Year Results Thank You
Oversea-Chinese Banking — FY2015 Earnings Presentation on 6ix