Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2009 Earnings Presentation
42 slides from Oversea-chinese Banking's earnings presentation, Feb 19, 2010
Slide 1: 2009 Final Results Presentation
2009 Final Results Presentation 19 February 2010 1
Slide 2: Agenda
Agenda • Results Overview • Performance Trends • Malaysia & Indonesia Subsidiaries • In Summary 2
Slide 3: Full year core net profit rose 32%; reported net profit up 12%
Full year core net profit rose 32%; reported net profit up 12% FY09 FY08 YoY S$m S$m +/(-)% Net Interest Income 2,825 2,783 2 Non-Interest Income 1/ 1,990 1,458 37 Total Income 4,815 4,241 14 Operating Expenses (1,796) (1,854) (3) Operating Profit 3,019 2,387 26 Amortisation of Intangibles (47) (47)
Slide 4: Fourth quarter's core net profit up 101% YoY and 12% QoQ
Fourth quarter’s core net profit up 101% YoY and 12% QoQ 4Q09 4Q08 YoY 3Q09 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 687 783 (12) 689 - Non-Interest Income 1/ 497 259 92 392 27 Total Income 1,184 1,042 14 1,081 10 Operating Expenses (466) (463) 1 (467) - Operating Profit 718 579 24 614 17 A
Slide 5: Key financial ratios - Based on core earnings
Key financial ratios - Based on core earnings FY09 FY08 4Q09 3Q09 4Q08 % % % % % Net Interest Margin 2.23 2.27 2.08 2.16 2.47 Non-Interest Income/ Total 41.3 34.4 42.0 36.3 24.9 Income Cost-to-Income Ratio 37.3 43.7 39.4 43.2 44.5 Loans-to-Deposits Ratio 80.4 84.8 80.4 79.7 84.8 NPL Ratio 1.7 1.5 1.
Slide 6: ROE improves to 12.2%; full year core earnings at historic high
ROE improves to 12.2%; full year core earnings at historic high 14.9% 13.4% 12.2% 12.2% 12.0% 11.6% ROE 9.9% 11.3% 10.3% 10.8% 2,071 6.7% 1,962 193 1,749 622 263 545 162 502 466 450 425 402 44 6 Net Profit 1,878 (S$m) 301 1,486 51 460 381 396 250 2007 2008 2009 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q0
Slide 7: Earnings contribution by segments
Earnings contribution by segments FY09 PBT by Business Segment FY09 PBT by Geography Other Asia Global Others Other Pacific Consumer 10% ASEAN 2% Financial Services 5% 21% Insurance 20% Malaysia 31% Singapore 63% Global Global Corporate Treasury Banking 21% 28% Note: Pretax profit before joint incom
Slide 8: GEH Contribution: Strong rebound in 2009, accounting for 21% of Group net profit
GEH Contribution: Strong rebound in 2009, accounting for 21% of Group net profit GEH’s Contribution to FY09* FY08^ YoY OCBC’s Results S$m S$m +/(-)% Total Income 758 483 57 Operating Expenses (116) (152) (23) Operating Profit 642 331 94 Amortisation of Intangibles (47) (47) - Allowances (16) (55) (7
Slide 9: Results excluding GEH: Full year core earnings up 17%
Results excluding GEH: Full year core earnings up 17% Excluding GEH FY09 FY08 YoY S$m S$m +/(-)% Net Interest Income 2,760 2,707 2 Non-Interest Income 1,297 1,052 23 Total Income 4,057 3,759 8 Operating Expenses (1,680) (1,702) (1) Operating Profit 2,377 2,057 16 Allowances (413) (392) 5 Associates
Slide 10: GEH: Quarterly contribution
GEH: Quarterly contribution GEH’s Contribution to 4Q09 4Q08* YoY 3Q09^ QoQ OCBC’s Results S$m S$m +/(-)% S$m +/(-)% Total Income 190 147 29 57 230 Operating Expenses (6) (48) (88) (36) (84) Operating Profit 184 99 85 21 776 Amortisation of Intangibles (12) (12) - (12) - Allowances (9) (40) (76) (2)
Slide 11: Results excluding GEH: 4Q09 core earnings up 89% YoY, down 1% QoQ
Results excluding GEH: 4Q09 core earnings up 89% YoY, down 11% QoQ Excluding GEH 4Q09 4Q08 YoY 3Q09 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 668 765 (13) 674 (1) Non-Interest Income 327 130 154 350 (6) Total Income 995 895 11 1,024 (3) Operating Expenses (460) (415) 11 (431) 7 Operating Pro
Slide 12: Agenda
Agenda • Results Overview • Performance Trends • Malaysia & Indonesia Subsidiaries • In Summary 12
Slide 13: Net interest income up 2% for the year, interest margins narrowed
Net interest income up 2% for the year, interest margins narrowed due to lower gapping income and low interest rates 2.47% 2.42% 2.27% 2.24% 2.29% 2.23% Net 2.17% 2.18% 2.16% interest 2.10% 2.08% margin 2,783 2,825 783 740 710 689 687 2,244 678 684 638 Net interest income (S$m) 2007 2008 2009 1Q08 2
Slide 14: Net interest income and margin: Uptrend over past years
Net interest income and margin: Uptrend over past 7 years 2.27% 2.23% 2.10% Net 2.00% interest 1.90% 1.91% 1.84% margin 2,783 2,825 CAGR for 2,244 Reported NII: 12.0% 1,794 1,597 1,518 1,435 Net interest income (S$m) 2003 2004 2005 2006 2007 2008 2009 14
Slide 15: Net interest income and margin adjusted for allowances
Net interest income and margin adjusted for allowances* show healthy trend through the cycle 2.07% 2.00% 1.90% 1.89% Adjusted 1.81% 1.82% net interest margin 1.60% 2,336 2,396 2,208 1,792 CAGR for 1,585 Adjusted 1,441 NII: 12.1% 1,210 Adjusted net interest income (S$m) 2003 2004 2005 2006 2007 2008
Slide 16: Net interest income and margin adjusted for allowances
Net interest income and margin adjusted for allowances* 2.18% 2.07% 2.05% Adjusted 1.95% 2.01% 1.90% 1.89% net interest 1.86% margin 1.75% 1.71% 1.69% 2,396 2,336 2,208 646 623 637 606 610 528 540 543 Adjusted net interest income (S$m) 2007 2008 2009 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 * Allowan
Slide 17: Core non-interest income up 37% for the year, led by recovery in insurance profits
Core non-interest income up 37% for the year, led by recovery in insurance profits and strong trading results 46.4% 45.1% 41.3% 40.3% 41.0% 42.0% 34.4% 37.1% 36.3% Non-interest 34.6% income/ 2,037 1,990 24.9% Total income 93 607 1,644 411 562 544 186 155 494 497 462 167 392* 275 378 86 143 152 849 5
Slide 18: GEH's life assurance profits recovered to 2007 levels
GEH’s life assurance profits recovered to 2007 levels FY09* FY08 FY07 4Q09 3Q09 4Q08 Life assurance profit from: S$m S$m S$m S$m S$m S$m - Participating Fund 96 102 143 20 20 27 - Non-participating Fund 506 130 302 74 163 67 - Investment-linked Fund 125 68 64 34 26 21 Total life assurance profit 727
Slide 19: Expenses reduced by 3% in 2009 as a result of disciplined cost management
Expenses reduced by 3% in 2009 as a result of disciplined cost management 45.5% 43.7% 43.0% 44.5% 43.2% 42.0% 40.1% 39.4% Cost-to- 37.3% 37.4% Income Ratio 1,854 30.7% 1,796 1,680 492 473 463 467 466 469 450 452 426 433 413 132 122 117 122 114 99 127 340 88 349 301 86 81 94 88 87 78 85 89 Operating
Slide 20: Full year core operating profit up 26%
Full year core operating profit up 26% Operating Profit before allowances 3,019 (S$m) 934 2,601 2,573 93 186 756 754 718 654 167 614 583 579 18 2,508 2,387 589 565 2007 2008 2009 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 Divestment gains Note: 1Q09 includes S$201m non-recurring gains from GEH; 3Q09 in
Slide 21: Net allowances peaked in 4Q08
Net allowances peaked in 4Q08 Allowances for loans and other 447 429 assets (S$m) 243 197 156 104 77 55 52 36 (8) 2007 2008 2009 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09 21
Slide 22: Breakdown of allowances
Breakdown of allowances – Specific loan allowances remained relatively low through the current cycle, at 21 bps in 2008 and 29 bps in 2009 FY09 FY08 4Q09 3Q09 4Q08 S$m S$m S$m S$m S$m Specific allowances for loans 241 165 61 49 159 Portfolio allowances for loans 23 20 11 5 11 Allowances for CDOs/(wr
Slide 23: Movement in specific allowances for loans
Movement in specific allowances for loans FY09 FY08 4Q09 3Q09 4Q08 S$m S$m S$m S$m S$m Allowances for new and existing NPLs 478 434 118 117 222 Write-backs 1/ (188) (207) (44) (51) (51) Recoveries 2/ (48) (62) (13) (17) (12) Net Specific Allowances/ 241 165 61 49 159 (Write-backs) 1/ Write-backs of
Slide 24: Loans grew 1% YoY, 5% QoQ
Loans grew 1% YoY, 5% QoQ 81.3 81.3 82.3 80.4 79.2 78.4 78.7 75.4 18.5 17.7 18.5 18.0 17.5 17.2 17.5 Loans 16.2 (S$bn) 13.6 14.3 14.7 15.3 12.7 14.7 14.5 12.3 46.9 48.4 49.2 49.3 47.7 47.0 46.7 48.5 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Singapore Malaysia International Note: Loans
Slide 25: Diversified loans
Diversified loans Loans by Geography* Loans by Sector Agriculture, mining & Transport, quarrying Others storage & Others 2% Greater 8% Comm 8% 7% China 9% Building & Construction 19% Indonesia 5% Housing Loans Singapore 26% Malaysia 59% 19% Manufacturing 7% Professionals & Individuals Non-Bank Finan
Slide 26: NPLs and NPL ratio peaked in June 2009
NPLs and NPL ratio peaked in June 2009 2.1% 1.8% 1.8% NPL Ratio 1.7% 1.6% 1.5% 1.4% 1.3% 1,785 1,633 1,583 157 1,448 1,348 209 155 1,325 31 1,232 1,204 468 113 166 395 386 137 479 262 156 205 314 232 568 NPAs (S$m) 495 561 614 450 474 521 434 592 455 440 382 394 424 472 417 Mar-08 Jun-08 Sep-08 Dec-
Slide 27: Majority of NPAs are in Substandard category
Majority of NPAs are in Substandard category – typically well collateralised and/or no overdues 2.1% NPL Ratio 1.8% 1.8% 1.7% 1.6% 1.5% 1.4% 1,785 1.3% 1,633 1,583 238 1,448 1,325 1,348 283 234 1,232 1,204 241 286 262 676 274 269 714 610 451 NPAs 458 (S$m) 393 415 615 871 739 756 581 565 636 519 471
Slide 28: New NPAs increased in 4Q09 but were offset by recoveries, upgrades and write-offs
New NPAs increased in 4Q09 but were offset by recoveries, upgrades and write-offs NPAs FY09 FY08 4Q09 3Q09 4Q08 S$m S$m S$m S$m S$m Opening Balance (excluding CDOs) 1,239 1,268 1,458 1,658 1,089 New NPAs 1,231 873 232 158 343 Net Recoveries/Upgrades (609) (779) (142) (183) (169) Write-offs (419) (12
Slide 29: Allowance coverage at 102% of total NPAs and 249% of unsecured NPAs
Allowance coverage at 102% of total NPAs and 249% of unsecured NPAs 295% 280% 287% 240% 249% Total Allowances / Unsecured NPAs 212% 221% 188% Total Allowances / NPAs 122% 128% 125% 115% 109% 97% 103% 102% Specific Allowances / NPAs 43% 44% 47% 52% 49% 42% 40% 33% Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 J
Slide 30: AFS Portfolio – Fair value reserves increased by S$378m QoQ
AFS Portfolio – Fair value reserves increased by S$378m QoQ Dec-09 Sep-09 Dec-08 S$m S$m S$m Available-for-Sale Securities Corporate Debt Securities 7,425 7,152 7,563 Equities & investment funds 2,723 2,430 1,621 Government Securities 12,615 13,698 12,703 - Singapore 9,394 10,186 8,693 - Others 3,22
Slide 31: Customer deposits grew 7% YoY, 4% QoQ; increasing share of low-cost deposits
Customer deposits grew 7% YoY, 4% QoQ; increasing share of low-cost deposits 84.4% 84.8% 85.3% 83.3% 79.7% 80.3% 79.7% 80.4% 85.0% Loans-to- 75.0% deposits 100.6 94.7 96.6 96.9 92.9 92.4 94.1 92.4 65.0% 18.4 20.8 13.3 14.2 15.8 16.1 17.4 16.1 55.0% 14.1 14.7 15.1 16.1 17.7 19.6 20.9 21.8 45.0% 35.0%
Slide 32: Tier 1 and core Tier 1 ratios strengthened by one percentage point YoY
Tier 1 and core Tier 1 ratios strengthened by one percentage point YoY, to 15.9% and 12.0% respectively; pro-forma core Tier 1 of 10.7% post-IAPB 15.8% 15.9% 16.4% 15.1% 15.2% 0.5% 15.0% 0.7% 0.5% (% of RWA) 0.2% 0.5% Total CAR Tier 2 Capital Tier 1 preference shares 15.9% 11.0% 14.9% 11.2% 15.1% 11
Slide 33: Full year dividend unchanged; 46% payout for 2009
Full year dividend unchanged; 46% payout for 2009 is in line with target minimum of 45% 28.0 28.0 28.0 23.0 Net DPS (cents) 18.4 14.0 14.0 14.0 12.0 9.6 Final Net Dividend 14.0 14.0 14.0 11.0 8.8 Interim Net Dividend 2005* 2006 2007 2008 2009 (S$m) Net Dividends 574 709 864 868 897 Core Net Profit 1
Slide 34: Agenda
Agenda • Results Overview • Performance Trends • Malaysia & Indonesia Subsidiaries • In Summary 34
Slide 35: OCBC Malaysia: Earnings marginally lower
OCBC Malaysia: Earnings marginally lower, as 2008 had higher recoveries and writebacks of allowances FY09 FY08 YoY Audited Results* RM m RM m +/(-)% Net Interest Income 1,036 995 4 Islamic Banking Income 144 113 27 Non-Interest Income 415 432 (4) Total Income 1,595 1,540 4 Operating Expenses (597) (
Slide 36: OCBC Malaysia: Quarterly results
OCBC Malaysia: Quarterly results 4Q09 4Q08 YoY 3Q09 QoQ Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 262 262 - 269 (2) Islamic Banking Income 55 32 75 28 100 Non-Interest Income 85 120 (29) 92 (8) Total Income 402 414 (3) 389 4 Operating Expenses (171) (158) 8 (146) 17 Operati
Slide 37: OCBC Malaysia: Financial ratios
OCBC Malaysia: Financial ratios FY09 FY08 4Q09 3Q09 4Q08 % % % % % Net Interest Margin 2.35 2.54 2.24 2.37 2.61 Non-Interest Income / 26.0 28.1 21.1 23.7 29.0 Total Income Cost-to-Income Ratio 37.4 38.8 42.5 37.5 38.2 Loans-to-Deposits Ratio 76.5 83.2 76.5 78.8 83.2 Gross NPL Ratio 3.8 3.9 3.8 3.8 3
Slide 38: Bank OCBC NISP: Full year results
Bank OCBC NISP: Full year results FY09 FY08 YoY RP bn RP bn +/(-)% Audited Results* Net Interest Income 1,726 1,401 23 Non Interest Income 497 471 6 Expenses (1,377) (1,238) 11 Operating Profit 846 634 33 Allowances (237) (181) 31 Net Profit 436 317 38 * Bank OCBC NISP’s contribution to Group net pr
Slide 39: Bank OCBC NISP: Quarterly results
Bank OCBC NISP: Quarterly results 4Q09 4Q08 YoY 3Q09 QoQ RP bn RP bn +/(-)% RP bn +/(-)% Unaudited Results* Net Interest Income 441 390 13 456 (3) Non Interest Income 108 193 (44) 110 (2) Expenses (348) (342) 2 (346) 1 Operating Profit 201 241 (17) 220 (9) Allowances (32) (112) (71) (13) 146 Net Pro
Slide 40: Bank OCBC NISP: Financial ratios
Bank OCBC NISP: Financial ratios FY09 FY08 4Q09 3Q09 4Q08 % % % % % Net Interest Margin 5.53 5.40 5.52 6.17 5.23 Non-Interest Income / Total 22.4 25.2 20.4 19.7 33.2 Income Cost-to-Income Ratio 62.0 66.2 62.8 61.0 58.7 Loans-to-Deposits Ratio 72.4 76.7 72.4 76.5 76.7 Gross NPL Ratio 3.2 2.7 3.2 3.9
Slide 41: In Summary
In Summary • Record core earnings in a challenging environment • Recovery in insurance and trading income from depressed levels; effective cost management • Prudent risk management contained credit losses and NPLs • Strong results demonstrate resilience and strengths of our customer relationships, p
Slide 42: Final Results – Thank You
2009 Final Results Thank You 42
Oversea-Chinese Banking — FY2009 Earnings Presentation on 6ix