Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q3 2016 Earnings Presentation
51 slides from Oversea-chinese Banking's earnings presentation, Oct 27, 2016
Slide 1: Third Quarter 2016 Results Presentation
Third Quarter 2016 Results Presentation 27 October 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 accep
Slide 2: Agenda
Agenda Results Overview 3Q16 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP Note: - Certain comparative figures have been restated to conform with the current period’s presentation - Amounts less than S$0.5m
Slide 3: 3Q16 Highlights
3Q16 Highlights Net profit grew 5% YoY and 6% QoQ to S$943m, underpinned by non-interest income growth • Net interest income declined 6% YoY from lower loan volumes and Net profit and ROE margin compression • Non-interest income grew, driven by banking and insurance operations 12.6% 11.2% 10.8% 10.5
Slide 4: 3Q16 net profit increased 5% YoY and 6% QoQ to S$943m
Group performance 3Q16 net profit increased 5% YoY and 6% QoQ to S$943m 3Q16 3Q15 YoY 2Q16 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,234 1,317 (6) 1,260 (2) Non-interest income 970 775 25 788 23 Total income 2,204 2,092 5 2,048 8 Operating expenses (953) (900) 6 (932) 2 Operatin
Slide 5: 9M16 net profit declined 9% YoY to S$2.68b
Group performance 9M16 net profit declined 9% YoY to S$2.68b 9M16 9M15 YoY OCBC Group S$m S$m +/(-)% Net interest income 3,801 3,848 (1) Non-interest income 2,511 2,573 1/ (2) Total income 6,312 6,421 (2) Operating expenses (2,807) (2,691) 4 Operating profit 3,505 3,730 (6) Amortisation of intangibl
Slide 6: 3Q16 net profit before GEH contribution (Banking Operations) at S$783m
Bank performance 3Q16 net profit before GEH contribution (“Banking Operations”) at S$783m 3Q16 3Q15 YoY 2Q16 QoQ Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,209 1,294 (7) 1,235 (2) Non-interest income 706 634 11 625 13 Total income 1,916 1,928 (1) 1,861 3 Operating expenses (8
Slide 7: 9M16 net profit before GEH contribution fell 4% YoY
Bank performance 9M16 net profit before GEH contribution fell 4% YoY mainly as a result of increased allowances 9M16 9M15 YoY Banking Operations S$m S$m +/(-)% Net interest income 3,728 3,787 (2) Non-interest income 1,931 1,800 7 Total income 5,659 5,586 1 Operating expenses (2,643) (2,530) 4 Operat
Slide 8: Major subsidiaries contributed 33% to the Group's 9M16 earnings
Major subsidiaries Major subsidiaries contributed 33% to the Group’s 9M16 earnings Great Eastern Holdings OCBC Wing Hang Key metrics (S$ m) 3Q16 YoY 9M16 YoY Key metrics 3Q16 YoY 9M16 YoY Net profit Net profit contribution to 159 +232% 311 -32% contribution to 71 -2% 222 -4% Group Group (S$ m) Loans
Slide 9: Agenda
Agenda Results Overview 3Q16 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 9
Slide 10: Earnings well-diversified across key geographies and main businesses
Earnings Earnings well-diversified across key geographies and main businesses 9M16 PBT 9M16 PBT by Business1/ by Geography Others PBT OCBC Wing 3% Group Hang 2/ S$3,326m Greater YoY: -9% 8% China Insurance Singapore 14% S$1,691m 22% YoY: -16% (within which OCBC Wing Hang: 8%) 2/ Malaysia 11% S$606m
Slide 11: Net interest income down 6% YoY from lower loan volumes and margins
Net interest income Net interest income down 6% YoY from lower loan volumes and margins; QoQ NIM decline from compression in loan yields but up 3 basis points for 9M16 1.68% 1.68% 1.62% 1.67% 1.66% 1.74% 1.75% 1.68% 1.62% 1.67% Net interest margin 5,189 4,736 1,317 1,341 1,282 1,307 1,249 1,260 1,23
Slide 12: Non-interest income rose 25% YoY
Non-interest income Non-interest income rose 25% YoY Non- 40.4% 40.5% 42.3% 44.0% 39.8% 40.7% 41.7% interest 37.1% 36.6% 38.5% income / Total income 3,533 960 970 939 3,213 859 781 174 788 199 775 272 753 930 2,511 237 3642/ 98 146 112 2/ 122 195 26 78 468 53 2421/ 552 65 101 163 70 196 163 364 266
Slide 13: 3Q16 wealth management income up 34% YoY and 21% QoQ
Wealth management 3Q16 wealth management income up 34% YoY and 21% QoQ; BOS’ AUM rose 20% YoY to US$62b Wealth Management Income1/ (S$m) Bank of Singapore Earning Asset Base (US$b) Dec 11 – 78 As % of Group income 65 68 Dec 15 57 16 CAGR: 52 14 13 14% 31% 28% 27% 28% 28% 40 11 26% 27% 25% 9 22% 23%
Slide 14: Fee income up 5% YoY, underpinned by strong growth in wealth management fees
Non-interest income Fee income up 5% YoY, underpinned by strong growth in wealth management fees +5% YoY +3% 1,643 QoQ 438 428 1,495 417 257 408 402 395 205 62 374 86 74 1,219 68 77 58 30 69 86 68 21 19 18 19 15 220 556 14 Fees and 50 146 558 136 135 commissions 137 137 135 (S$m) 126 397 174 51 39 4
Slide 15: Profit from life assurance up YoY and QoQ
Non-interest income Profit from life assurance up YoY and QoQ, driven by higher underwriting returns and positive investment performance +164% YoY 768 +52% QoQ 207 630 236 Profit from 199 38 life 164 assurance 164 50 (S$m) 355 132 423 45 108 331 41 164 138 116 83 62 46 84 112 57 47 35 27 138 135 1 1
Slide 16: Operating expenses tightly controlled, up only 4% in 9M16
Operating expenses Operating expenses tightly controlled, up only 4% in 9M16; 3Q16 cost-to-income ratio lower QoQ at 43.2% 42.0% 44.5% 43.0% 44.8% 45.5% 43.2% 41.0% 41.4% 41.3% 42.3% Cost / Income 3,664 3,258 974 953 673 918 923 932 873 900 2,807 636 188 160 166 164 164 162 737 488 157 Operating 619
Slide 17: 9M16 net allowances up 43% as allowances continued to be set aside
Allowances 9M16 net allowances up 43% as allowances continued to be set aside Net allowances for loans 488 and other 79 421 assets 193 (S$m) 357 43 167 166 150 43 3 12 232 196 250 35 76 99 88 99 80 64 1 65 28 47 163 177 45 74 128 50 56 52 64 20 32 8 (2) (1) 2014 2015 9M16 1Q15 2Q15 3Q15 4Q15 1Q16 2Q
Slide 18: Net specific allowances for loans were higher YoY
Allowances Net specific allowances for loans were higher YoY 3Q16 3Q15 2Q16 9M16 9M15 S$m S$m S$m S$m S$m Allowances for new and 154 133 90 380 301 existing loans Write-backs1/ (36) (50) (26) (88) (105) Recoveries2/ (19) (18) (12) (42) (40) Net specific allowances 99 65 52 250 156 1/ Write-backs of
Slide 19: Customer loans 2% lower YoY, but up 2% QoQ
Loans Customer loans 2% lower YoY, but up 2% QoQ led by trade-related loans and housing loans Loan growth Group 210 210 213 211 YoY: -2%; QoQ: +2% 208 205 209 22 In constant currency terms 24 24 21 22 24 22 YoY: flat; QoQ: +1% Rest of the world 57 59 56 52 49 49 YoY: +6% 58 QoQ: +7% Customer Loans (
Slide 20: Customer loans continue to be well-diversified across geographies and industries
Loans Customer loans continue to be well-diversified across geographies and industries Customer Loans by Geography Customer Loans by Industry As of 30 September 2016 As of 30 September 2016 As of As of Rest of the Industry 30-Sep-16 30-Sep-15 S$b % S$b % Other Asia World 59 28 56 26 6% Housing loans
Slide 21: Greater China customer loans stable QoQ; asset quality sound
Loans Greater China customer loans stable QoQ; asset quality and coverage ratios remained sound 356% 275% 240% 241% 260% Total 137% 148% allowances/ NPAs 0.7% 0.7% 0.4% 0.3% 0.3% 0.4% 0.4% NPL ratio 57 58 59 56 4 4 4 2 4 52 2 2 2 49 49 4 Macau 2 4 4 Customer 2 2 Loans to Taiwan Greater 29 29 30 29 C
Slide 22: Oil & Gas and Commodities exposure
Loans Oil & Gas and Commodities exposure Oil & Gas Commodities As of 30 Sep 2016 S$b S$b 2/ Total exposure 1/ 14.1 15.3 Of which: On-balance sheet exposure 12.2 12.9 % of total customer loans 6% 6% % NPL of total customer loans 0.53% 0.13% (Jun 16: 0.45%) (Jun 16: 0.16%) Oil & Gas • Pro-active steps
Slide 23: UK and European exposure minimal, less than 3% of total assets
Loans UK and European exposure minimal, less than 3% of total assets Loans1/ Other Assets 2/ As of 30 Sep 2016 S$b S$b Total on-balance sheet 6.0 4.1 exposure Of which: UK 4.5 2.3 Rest of Europe 1.5 1.8 1/ Loans: • Loans are primarily extended to corporates, which are network customers from Asia • A
Slide 24: Customer deposits at S$247b; CASA deposits up 4% YoY
Deposits Customer deposits at S$247b; CASA deposits up 4% YoY and made up over 50% of total deposits 250 246 252 246 246 247 242 24 21 22 20 17 16 17 111 106 106 108 108 113 112 Customer Deposits (S$b) S$124b 43 43 44 44 46 +S$5b YoY 42 42 +S$3b QoQ S$120b S$121b S$114b S$113b S$120b S$119b CASA rat
Slide 25: Group LDR at 83.1%
Funding Group LDR at 83.1% 250 252 246 246 246 247 242 25 22 22 22 20 19 213 5 22 7 Others 210 5 210 5 12 211 6 208 7 209 6 205 8 7 14 12 10 9 IDR 15 16 18 25 16 18 24 17 23 5 24 5 25 6 7 24 23 17 RMB 10 10 9 8 7 7 7 6 5 23 23 6 24 23 HKD 26 25 24 28 29 30 29 28 28 28 MYR Customer 23 21 21 21 23 22
Slide 26: Funding sources well-diversified
Funding Funding sources well-diversified – Customer deposits accounted for 78% of funding composition Funding Composition as of 30 Sep 2016 Wholesale Funding by Currency as of 30 Sep 2016 By Maturity: Customer deposits Others ≤ 1 year 59% Current 78% Bank deposits 13% account Others AUD > 1 year 41%
Slide 27: NPL ratio at 1.2%; coverage ratios remained healthy
Asset quality NPL ratio at 1.2%; coverage ratios remained healthy 1.0% 1.1% 1.2% 0.7% 0.9% 0.9% NPL ratio 0.6% 2,585 2,488 108 2,221 131 376 2,039 67 372 1,932 187 70 70 110 185 340 135 207 355 1,494 207 1,379 461 NPAs 34 400 622 33 148 305 (S$m) 179 653 159 202 246 103 707 717 699 614 441 474 522 5
Slide 28: Excluding oil & gas NPLs, the NPL ratio was relatively stable
Asset quality Excluding oil & gas NPLs, the NPL ratio was relatively stable over the past quarters 1.19% 1.14% 1.04% 0.93% 0.88% 0.45% 0.53% NPL ratio 0.43% 0.39% 0.35% 0.70% 0.66% 0.54% 0.61% 0.53% Sep15 Dec15 Mar16 Jun16 Sep16 Non-oil & gas NPL ratio Oil & gas NPL ratio 28
Slide 29: NPAs increased slightly QoQ to S$2.59b
Asset quality NPAs increased slightly QoQ to S$2.59b 3Q16 3Q15 2Q16 9M16 9M15 S$m S$m S$m S$m S$m NPAs – Opening balance 2,488 1,494 2,221 2,039 1,317 New NPAs 497 766 924 1,909 1,555 Net recoveries/upgrades (328) (247) (567) (1,118) (761) Write-offs (72) (81) (90) (245) (179) NPAs – Closing balance
Slide 30: Capital position remained strong and comfortably above regulatory requirements
Capital Capital position remained strong and comfortably above regulatory requirements 17.3 17.5 17.6 16.6 16.8 16.1 Tier 1 Tier 1 CAR 15.5 2.2 Tier 1 2.0 2.0 (% of RWA) 2.1 Tier 1 2.0 Tier 1 CAR 0.5 CAR 2.0 Tier 1 0.5 CAR 0.6 2.0 Tier 1 CAR CAR 15.5 15.6 CAR 14.8 15.1 CAR 14.5 14.1 Tier 2 capital 1
Slide 31: Summary
Summary • Results demonstrated strength of the Group’s diversified franchise – banking, wealth and insurance • Firm grip on cost management • Disciplined balance sheet growth • Prudent levels of provisioning • Strong capital and liquidity position 31
Slide 32: Agenda
Agenda Results Overview 3Q16 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 32
Slide 33: GEH: 3Q16 earnings contribution up YoY and QoQ
Great Eastern GEH: 3Q16 earnings contribution up YoY and QoQ 3Q16 3Q15 YoY 2Q16 QoQ GEH S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 173 71 142 118 46 - Operating profit 1/ 137 130 6 135 2 - Non-operating profit/(loss) 2/ 18 (79) 122 (36) 148 - Others 18 20 (10) 20 (7) Profit from Shareh
Slide 34: GEH: 9M16 earnings contribution of S$311m
Great Eastern GEH: 9M16 earnings contribution of S$311m 9M16 9M15 YoY GEH S$m S$m +/(-)% Profit from insurance business 382 419 (9) - Operating profit 1/ 392 412 (5) - Non-operating loss 2/ (61) (46) (32) - Others 51 53 (3) Profit from Shareholders’ Fund 107 255 3/ (58) Profit from operations 489 67
Slide 35: GEH: Operating profit increased 6% YoY
Great Eastern GEH: Operating profit increased 6% YoY largely driven by higher underwriting returns +6% YoY +2% QoQ 591 582 24 14 169 2 151 131 30 170 3 135 137 Operating 132 130 120 5 4 profit from 392 41 4 5 insurance 10 2 33 28 34 37 business (S$m) 112 41 323 1/ 275 109 79 66 65 66 68 179 48 122 1
Slide 36: GEH: Non-operating profit improved
Great Eastern GEH: Non-operating profit improved, from positive investment performance as a result of favourable financial market conditions 145 Non-operating profit/(loss) 49 from insurance 41 business (S$m) 18 3 (9) (36) (43) (61) (79) 2014 2015 9M16 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Note: Non-op
Slide 37: GEH: Total weighted new sales maintained at previous year's level
Great Eastern GEH: Total weighted new sales maintained at previous year’s level from strong quarterly sales performance flat YoY 975 906 38 28 307 12 313 732 267 267 302 11 9 245 4 Weighted 113 220 4 new 233 202 198 73 3 83 business 8 9 84 premiums 66 (S$m) 58 69 624 576 487 186 182 180 151 157 135
Slide 38: GEH: New business embedded value grew 29% YoY
Great Eastern GEH: New business embedded value grew 29% YoY; NBEV margin continued upward trend to 50.7%, a result of shift in product mix in Singapore and Malaysia 50.7% NBEV 44.2% 42.7% 41.4% 41.2% 42.6% margin 39.6% 39.3% 37.9% (NBEV / Total 36.7% weighted 135 new sales) 386 2 375 5 6 113 323 105
Slide 39: OCBC Wing Hang: 3Q16 profit 13% lower YoY and down 15% QoQ
OCBC Wing Hang OCBC Wing Hang: 3Q16 profit 13% lower YoY and down 15% QoQ 3Q16 3Q15 YoY 2Q16 QoQ OCBC Wing Hang HKD m HKD m +/(-)% HKD m +/(-)% Net interest income 976 978 - 885 10 Non-interest income 379 222 71 307 23 Total income 1,355 1,200 13 1,192 14 Operating expenses (767) (592) 29 (591) 30 O
Slide 40: OCBC Wing Hang: 9M16 net profit 6% lower YoY
OCBC Wing Hang OCBC Wing Hang: 9M16 net profit 6% lower YoY 9M16 9M15 YoY OCBC Wing Hang HKD m HKD m +/(-)% Net interest income 2,804 2,839 (1) Non-interest income 922 789 17 Total income 3,726 3,628 3 Operating expenses (1,953) (1,757) 11 Operating profit 1,773 1,872 (5) Allowances (110) (89) 23 As
Slide 41: OCBC Wing Hang: NIM stable QoQ; non-interest income up 71% YoY
OCBC Wing Hang OCBC Wing Hang: NIM stable QoQ; non-interest income up 71% YoY Net profit (HKD m) Net interest income (HKD m) Net interest margin 1.73% 1.76% 1.76% 1.72% 1.72% 1.81% 1.78% 1.83% 1.73% 1.73% -13% 3,774 YoY 2,028 2,804 951 978 935 943 976 -15% 910 885 QoQ 1,705 540 525 513 490 485 1,453
Slide 42: OCBC Wing Hang: Loans higher at HKD160b; NPL ratio at 0.9%
OCBC Wing Hang OCBC Wing Hang: Loans higher at HKD160b; NPL ratio at 0.9%; CASA ratio improved YoY to 34.0% Gross Loans (HKD b) Deposits (HKD b) NPL ratio Loans / Deposits 1/ 0.9% 80.5% 78.4% 81.7% 82.1% 80.7% 81.5% 80.6% 0.6% 0.6% 0.6% 0.7% 0.4% 0.4% 161 158 160 154 154 - 200 202 199 150 189 188 18
Slide 43: OCBC Malaysia: 3Q16 net profit 7% lower YoY
OCBC Malaysia OCBC Malaysia: 3Q16 net profit 7% lower YoY 3Q16 3Q15 YoY 2Q16 QoQ OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 314 353 (11) 335 (6) Islamic banking income 1/ 116 131 (11) 119 (3) Non-interest/finance income 121 144 (16) 144 (16) Total income 551 628 (12) 598 (8) Oper
Slide 44: OCBC Malaysia: 9M16 net profit down 2% YoY
OCBC Malaysia OCBC Malaysia: 9M16 net profit down 2% YoY 9M16 9M15 YoY OCBC Malaysia RM m RM m +/(-)% Net interest income 980 1,029 (5) Islamic banking income 1/ 361 384 (6) Non-interest/finance income 403 425 (5) Total income 1,744 1,838 (5) Operating expenses (804) (757) 6 Operating profit 940 1,0
Slide 45: OCBC Malaysia: Net interest/finance income down 12% YoY
OCBC Malaysia OCBC Malaysia: Net interest/finance income down 12% YoY; Non-interest/finance income 14% lower Net interest/finance income (RM m) Non-interest/finance income1/ (RM m) Net interest/ Non-interest/finance finance margin income/ Total income 2.11% 1.99% 28.8% 1.91% 1.98% 1.97% 2.00% 2.01%
Slide 46: OCBC Malaysia: Loans and deposits declined; NPL ratio at 2.1%
OCBC Malaysia OCBC Malaysia: Loans and deposits declined 2% and 1% YoY respectively; NPL ratio at 2.1% Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 93.2% 91.6% 91.8% 89.7% 90.8% 2.1% 2.1% 2.1% 2.1% 2.1% 88.2% 1.9% 1.9% 86.0% 70 70 69 69 75 76 75 73 74 76 74 68 68 65 Mar15 Jun15 Sep1
Slide 47: OCBC NISP: 3Q16 net profit increased 37% YoY
OCBC NISP OCBC NISP: 3Q16 net profit increased 37% YoY 3Q16 3Q15 YoY 2Q16 QoQ OCBC NISP IDR b IDR b +/(-)% IDR b +/(-)% Net interest income 1,332 1,167 14 1,341 (1) Non-interest income 401 95 323 363 10 Total income 1,733 1,262 37 1,704 2 Operating expenses (806) (705) 14 (790) 2 Operating profit 92
Slide 48: OCBC NISP: 9M16 net profit rose 28% YoY
OCBC NISP OCBC NISP: 9M16 net profit rose 28% YoY 9M16 9M15 YoY OCBC NISP IDR b IDR b +/(-)% Net interest income 3,978 3,116 28 Non-interest income 1,100 538 105 Total income 5,078 3,654 39 Operating expenses (2,363) (2,040) 16 Operating profit 2,715 1,614 68 Allowances (916) (201) 356 Non Operating
Slide 49: OCBC NISP: Net interest income 14% higher YoY
OCBC NISP OCBC NISP: Net interest income 14% higher YoY; NIM higher YoY at 4.49% Net interest income (IDR b) Non-interest income (IDR b) Non-int. income/ Net interest margin Total income 4.63% 4.67% 4.79% 4.62% 4.49% 4.15% 4.07% 4.15% 3.82% 3.60% 21.7% 23.1% 21.3% 20.0% 19.6% 20.5% 4,419 16.6% 16.2%
Slide 50: OCBC NISP: Loans grew 7% YoY, NPL at 1.5%
OCBC NISP OCBC NISP: Loans grew 7% YoY, NPL at 1.5%; deposits up 5% YoY, with CASA ratio at 42.5% Gross Loans (IDR t) Deposits (IDR t) NPL Ratio Loans / Deposits 1.4% 1.4% 1.4% 1.5% 1.3% 1.3% 1.3% 98.0% 94.7% 89.7% 92.8% 92.1% 84.6% 87.3% 88 93 95 86 85 86 91 90 82 85 87 82 74 70 Mar 15 Jun 15 Sep 1
Slide 51: Third Quarter 2016 Results Thank You
Third Quarter 2016 Results Thank You
Oversea-Chinese Banking — Q3 2016 Earnings Presentation on 6ix