Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q2 2014 Earnings Presentation
44 slides from Oversea-chinese Banking's earnings presentation, Aug 5, 2014
Slide 1: Second Quarter 2014 Results Presentation
Second Quarter 2014 Results Presentation 5 August 2014 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 accept
Slide 2: Agenda
Agenda Results Overview 2Q14 Performance Trends Appendix: Financial Highlights of Malaysian and Indonesian Subsidiaries Note: Amounts less than S$0.5 million are shown as “0”; “nm” denotes not meaningful; 2 Figures may not sum to stated totals because of rounding
Slide 3: 2Q14 Highlights
2Q14 Highlights Quarterly earnings at new high, driven by healthy business momentum • Record total income up 26% YoY, on broad-based growth • Net interest income 17% higher YoY from strong asset growth • Net interest margin of 1.70% up 6 basis points YoY and stable QoQ • Non-interest income grew 40%
Slide 4: 2Q14 net profit up 54% YoY to S$921m – a new quarterly record
2Q14 net profit up 54% YoY to S$921m – a new quarterly record 2Q14 2Q13 YoY 1Q14 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,126 961 17 1,087 4 Non-interest income 850 606 40 800 6 Total income 1,976 1,567 26 1,887 5 Operating expenses (760) (718) 6 (706) 8 Operating profit 1,216
Slide 5: 1H14 net profit rose 41% YoY to a new high of S$1.82b
1H14 net profit rose 41% YoY to a new high of S$1.82b 1H14 1H13 YoY 2H13 HoH OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 2,213 1,873 18 2,010 10 Non-interest income 1,650 1,282 29 1,456 13 Total income 3,863 3,155 22 3,466 11 Operating expenses (1,466) (1,390) 5 (1,393) 5 Operating prof
Slide 6: 2Q14 net profit before GEH contribution grew 21% YoY to S$720m
2Q14 net profit before GEH contribution (“banking operations”) grew 21% YoY to S$720m 2Q14 2Q13 YoY 1Q14 QoQ Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,109 944 18 1,072 3 Non-interest income 548 518 6 507 8 Total income 1,657 1,462 13 1,579 5 Operating expenses (710) (660) 8
Slide 7: 1H14 net profit before GEH contribution up 28% YoY and 29% HoH
1H14 net profit before GEH contribution up 28% YoY and 29% HoH 1H14 1H13 YoY 2H13 HoH Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 2,181 1,839 19 1,979 10 Non-interest income 1,055 923 14 893 18 Total income 3,236 2,762 17 2,872 13 Operating expenses (1,367) (1,282) 7 (1,322) 3 O
Slide 8: Key ratios improved
Key ratios improved % 2Q14 2Q13 1Q14 1H14 1H13 Net interest margin 1.70 1.64 1.70 1.70 1.64 Non-interest income / Total income 43.0 38.6 42.4 42.7 40.6 Cost / Income 38.5 45.8 37.4 38.0 44.1 Loans / Deposits 87.2 89.2 87.0 87.2 89.2 NPL Ratio 0.7 0.7 0.7 0.7 0.7 Allowances / NPAs 149.1 143.9 145.0 1
Slide 9: 2Q14 ROE increased to 14.8%
2Q14 ROE increased to 14.8% 14.9% 14.9% 14.8% 12.5% 12.7% 11.9% 11.6% 11.7% Core ROE 1/ 9.9% 2,825 2,768 899 921 Core net 759 profit (S$m) 715 696 1,820 597 1H 1,438 1,293 2012 2013 1H14 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 1/ Quarterly figures annualised 9
Slide 10: PBT breakdown at a glance
PBT breakdown at a glance 1H14 PBT 1H14 PBT by Business1/ by Geography PBT Other Rest of Group Asia the World S$2,297m Pacific 4% YoY: +38% Insurance Global Corporate / Greater 2% Singapore China S$1,387m 22% Investment YoY: +49% Banking 11% Malaysia Indonesia 4% S$427m Global 44% YoY: -6% Treasury
Slide 11: Agenda
Agenda Results Overview 2Q14 Performance Trends Appendix: Financial Highlights of Malaysian and Indonesian Subsidiaries 11
Slide 12: Net interest income rose 17% YoY to a new high; NIM improved 6 bps
Net interest income rose 17% YoY to a new high; NIM improved 6 bps 1.77% 1.70% Net interest 1.64% 1.70% 1.70% 1.64% 1.64% 1.63% 1.64% margin 3,883 1,126 3,748 1,087 1,031 961 978 Net interest 912 income (S$m) 2,213 1H 1,882 1,873 2012 2013 1H14 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 12
Slide 13: Non-interest income grew 40% YoY, from broad-based growth
Non-interest income grew 40% YoY, from broad- based growth across all key categories Non- interest 43.6% 42.7% 42.6% 44.3% 42.4% income / 41.4% 38.6% 39.7% 43.0% Total income 2,897 850 2,738 800 779 838 679 756 676 259 223 606 280 Non- 215 56 205 interest 485 1,650 income 701 164 (S$m) 149 196 142 1
Slide 14: Fee income 2% higher YoY, boosted by wealth management and trade
Fee income 2% higher YoY, boosted by wealth management and trade-related income growth + 2% YoY stable QoQ 347 352 353 353 1,355 341 316 42 50 43 1,198 168 42 44 39 24 37 16 25 157 92 15 17 91 128 132 132 Fees and 515 139 112 136 commissions 706 (S$m) 482 93 41 44 39 39 168 43 40 264 41 146 78 412 1
Slide 15: Profit from life assurance rose to S$220m
Profit from life assurance rose to S$220m, largely from higher mark-to-market gains in the Non- Participating Fund nm YoY + 21% 692 QoQ 125 599 240 220 174 40 Profit from life assurance 403 178 183 54 165 (S$m) 43 52 423 106 54 279 153 102 16 134 232 98 38 88 144 146 47 65 34 41 32 33 23 2012 2013 1
Slide 16: Other non-interest income growth of 10% YoY largely from higher trading income
Other non-interest income growth of 10% YoY largely from higher trading income + 10% 701 YoY 70 - 16% QoQ Other non- 116 interest income 485 196 (S$m) 65 13 164 360 149 17 158 30 16 841/ 14 120 109 107 98 14 43 515 19 16 50 22 43 133 262 99 232 90 69 56 47 2012 2013 1H14 1Q13 2Q13 3Q13 4Q13 1Q14 2Q1
Slide 17: Wealth management income increased 61% YoY
Wealth management income increased 61% YoY, contributing 29% to total Group income 32.7% 29.6% 32.1% 30.3% 27.6% 29.1% 28.4% 29.0% As % of 22.8% Group income 1,927 564 572 573 1,836 520 486 Wealth 1,145 357 management income (S$m) 1H 860 877 2012 2013 1H14 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 Note: Compris
Slide 18: Operating expenses remained well-managed, up 6% YoY
Operating expenses remained well-managed, up 6% YoY Cost / 42.0% 45.8% Income 40.6% 42.3% 41.7% 38.0% 38.8% 37.4% 38.5% 2,784 760 2,695 718 713 706 672 681 539 147 554 140 161 137 126 112 137 530 491 133 136 132 125 137 Operating 1,466 expenses (S$m) 284 269 1,715 445 476 1,650 421 433 415 437 913 2
Slide 19: Net allowances lower YoY; credit quality remained sound
Net allowances lower YoY; credit quality remained sound Net 271 266 allowances 8 2 for loans and other assets 81 (S$m) 115 107 94 83 3 68 66 183 59 11 148 42 26 36 41 1 21 2 72 59 49 45 23 2 42 17 17 (3) 2012 2013 1H14 (11) 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 (12) Specific loan 8 5 7 1 3 10 6 5 8 allowanc
Slide 20: Net specific allowances higher YoY
Net specific allowances higher YoY mainly from increase in allowances for new and existing NPLs 2Q14 2Q13 1Q14 1H14 1H13 S$m S$m S$m S$m S$m Allowances for new and 71 51 54 125 100 existing NPLs Write-backs1/ (23) (28) (20) (43) (54) Recoveries2/ (12) (12) (11) (23) (33) Net specific allowances 36 1
Slide 21: Customer loans grew 12% YoY and 1% QoQ
Customer loans grew 12% YoY and 1% QoQ Loan growth Group YoY: +12% QoQ: +1% 175 177 170 Rest of the 159 162 World 23 24 YoY: +27% 149 21 QoQ: +4% 19 21 19 30 27 Greater China 27 YoY: +36% 20 24 QoQ: -7% 17 13 12 12 13 12 Indonesia 11 Customer YoY: +9% Loans (S$b) 25 27 28 QoQ: +2% 25 24 24 Malaysia
Slide 22: Customer loan book remained diversified across geographies and sectors
Customer loan book remained diversified across geographies and sectors Customer Loans by Geography Customer Loans by Industry As of 30 June 2014 As of 30 June 2014 Rest of the As of As of World Industry 30 Jun 2014 30 Jun 2013 Other Asia 9% S$b % S$b % Pacific Housing loans 44 25 41 25 5% Singapore
Slide 23: Customer deposits up 14% YoY and 1% QoQ
Customer deposits up 14% YoY and 1% QoQ, supported by 7% YoY growth in CASA deposits Loans / 89.2% 88.4% 87.0% 87.0% 87.2% Deposits 85.7% 199 201 196 176 181 26 23 25 169 17 19 15 Customer 80 82 80 Deposits 71 72 (S$b) 67 33 32 33 34 32 32 S$95b +S$7b YoY S$91b S$94b +S$1b QoQ S$86b S$89b S$90b 46.6
Slide 24: Asset quality sound; NPL ratio remained low at 0.7%
Asset quality sound; NPL ratio remained low at 0.7% 0.8% NPL ratio 0.7% 0.7% 0.7% 0.7% 0.7% 1,338 1,304 25 1,230 1,215 1,177 65 1,119 39 43 26 28 525 NPAs 516 448 430 (S$m) 449 420 532 407 472 529 536 535 264 230 256 194 207 207 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Singapore Malaysia International De
Slide 25: NPAs lower QoQ
NPAs lower QoQ 2Q14 2Q13 1Q14 1H14 1H13 S$m S$m S$m S$m S$m NPAs – Opening balance 1,230 1,119 1,304 1,304 1,172 New NPAs 227 253 185 412 375 New recoveries/upgrades (183) (140) (228) (411) (284) Write-offs (59) (55) (31) (90) (86) NPAs – Closing balance 1,215 1,177 1,230 1,215 1,177 25
Slide 26: Allowance coverage ratios remained healthy
Allowance coverage ratios remained healthy 450.00% 423% 396% Total 400.00% allowances/ Unsecured 350% 350.00% NPAs 329% 310% 294% 300.00% 250.00% 200.00% Total 150.00% allowances/ NPAs 149% 144% 145% 149% 130% 134% 100.00% 50.00% 0.00% Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 26
Slide 27: Strong capital adequacy ratios, well-positioned to meet regulatory requirements
Strong capital adequacy ratios, well-positioned to meet regulatory requirements 18.1 17.4 CAR 16.8 16.3 1.9 16.1 15.6 (% of RWA) 1.9 2.7 1.8 1.8 1.2 Tier 2 capital Common Equity Tier 1 / Tier 1 capital 16.2 14.9 14.3 14.5 14.4 14.7 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 CET1 capital (S$m) 22,794 22,146
Slide 28: Interim dividend increased to 18 cents per share
Interim dividend increased to 18 cents per share Net DPS 34.0 (cents) 33.0 30.0 30.0 28.0 28.0 17.0 17.0 15.0 15.0 14.0 14.0 18.0 Final net dividend Interim net dividend 17.0 18.0 15.0 15.0 16.0 14.0 14.0 2008 2009 2010 2011 2012 2013 1H14 Net Dividends (S$m) 868 898 994 1,024 1,133 1,167 628 Core N
Slide 29: GEH: 2Q14 earnings contribution of S$202m
GEH: 2Q14 earnings contribution of S$202m 2Q14 2Q13 YoY 1Q14 QoQ GEH Contribution S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 230 18 nm 194 19 - Operating profit 1/ 143 155 (8) 143 - - Non-operating profit/(loss) 2/ 72 (156) 146 33 116 - Others 3/ 15 19 (19) 17 (10) Profit from Sharehol
Slide 30: GEH: 1H14 earnings contribution
GEH: 1H14 earnings contribution 1H14 1H13 YoY 2H13 HoH GEH Contribution S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 424 205 107 428 (1) - Operating profit 1/ 286 286 - 274 4 - Non-operating profit/(loss) 2/ 106 (117) 190 106 (1) - Others 3/ 32 36 (12) 48 (34) Profit from Shareholders’ F
Slide 31: GEH: Operating profit supported by in-force business growth and lower claims
GEH: Operating profit supported by in-force business growth and lower claims; but lower YoY from larger release of tax provisions a year ago -8% YoY stable 560 QoQ 16 155 502 143 143 19 139 135 142 131 31 7 4 7 5 99 4 32 43 46 Operating 35 44 profit from 286 insurance business 11 280 89 (S$m) 264 88
Slide 32: GEH: Non-operating profit of S$72m due to mark-to-market gains
GEH: Non-operating profit of S$72m due to mark-to- market gains from favourable interest rate movements and narrowing of credit and swap spreads Non-operating 161 profit/(loss) from insurance business 106 (S$m) 91 72 38 33 15 2012 2013 1H14 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 (11) (156) Note: Non-operatin
Slide 33: GEH: Total weighted new sales of S$220m
GEH: Total weighted new sales of S$220m as Singapore sales normalised after recapture of a high volume of maturing policies in 2013 -16% YoY 1,046 - 3% 32 307 QoQ 9 275 826 261 333 7 29 8 116 226 220 78 202 7 6 Weighted 295 81 new 10 62 business 82 premiums 446 59 (S$m) 13 680 144 191 183 502 173 15
Slide 34: GEH: Increase in new business embedded value margins
GEH: Increase in new business embedded value margins, brought about by a positive shift in product and channel mix in Singapore NBEV 45.1% 42.2% 42.3% 41.7% margin 40.5% 39.7% 40.6% 39.8% 39.5% (NBEV / Total weighted new sales) 424 128 8 2 348 110 106 6 148 2 99 2 45 89 2 80 35 2 NBEV 134 39 (S$m) 2
Slide 35: OCBC Malaysia: Net interest income and Islamic financing income up 12% YoY
OCBC Malaysia: Total net interest income and Islamic financing income up 12% YoY, non-interest income decreased 30% YoY Net interest income and Non-interest income (RM m) Islamic financing income (RM m) Net Interest/ Non-int. income/ financing margin Total income 2.32% 2.18% 2.21% 30.3% 27.3% 2.13%
Slide 36: OCBC Malaysia: Loans expanded 16% YoY; NPL ratio improved to 2.2%
OCBC Malaysia: Loans expanded 16% YoY and 3% QoQ; NPL ratio improved to 2.2% Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 88.6% 89.4% 88.0% 85.6% 86.4% 87.2% 2.3% 2.3% 2.3% 2.2% 2.1% 1.8% 70 67 61 63 58 60 59 61 54 56 50 52 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Mar13 Jun13 Sep13 Dec13
Slide 37: OCBC NISP: Net interest income increased 16% YoY
OCBC NISP: Net interest income increased 16% YoY, non-interest income 11% lower YoY Net interest income (Rp b) Non-interest income (Rp b) Non-int. income/ Net interest margin Total income 4.17% 4.11% 4.11% 4.23% 4.33% 4.00% 4.13% 4.09% 3.87% 24.6% 21.9% 21.9% 23.6% 22.4% 20.1% 19.0% 19.1% 17.8% 3,13
Slide 38: OCBC NISP: Loans grew 15% YoY; NPL ratio higher at 1.1%
OCBC NISP: Loans grew 15% YoY; NPL ratio higher at 1.1% Gross Loans (Rp t) Deposits (Rp t) NPL Ratio Loans / Deposits 1.1% 100.8% 98.0% 97.0% 0.8% 0.7% 0.7% 0.7% 0.8% 92.5% 91.5% 90.2% 66 64 64 71 61 69 57 63 63 54 59 58 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 Mar13 Jun13 Sep13 Dec13 Mar14 Jun14 CASA Ra
Slide 39: Agenda
Agenda Results Overview 2Q14 Performance Trends Appendix: Financial Highlights of Malaysian and Indonesian Subsidiaries 39
Slide 40: OCBC Malaysia: 2Q14 net profit 10% lower YoY
OCBC Malaysia: 2Q14 net profit 10% lower YoY 2Q14 2Q13 YoY 1Q14 QoQ OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 335 307 9 328 2 Islamic Financing Income 109 89 22 106 3 Non-interest income 121 173 (30) 120 1 Total income 565 569 (1) 554 2 Operating expenses (232) (219) 6 (216) 7 O
Slide 41: OCBC Malaysia: 1H14 net profit declined 9% YoY
OCBC Malaysia: 1H14 net profit declined 9% YoY 1H14 1H13 YoY 2H13 HoH OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 663 626 6 647 2 Islamic Financing Income 215 172 25 197 9 Non-interest income 241 276 (13) 269 (10) Total income 1,119 1,074 4 1,113 1 Operating expenses (448) (419) 7
Slide 42: OCBC NISP: 2Q14 net profit increased 1% YoY
OCBC NISP: 2Q14 net profit increased 1% YoY 2Q14 2Q13 YoY 1Q14 QoQ OCBC NISP RP b RP b +/(-)% RP b +/(-)% Net interest income 898 776 16 907 (1) Non-interest income 194 217 (11) 228 (15) Total income 1,092 993 10 1,135 (4) Operating expenses (643) (547) 18 (613) 5 Operating profit 449 446 1 522 (14)
Slide 43: OCBC NISP: 1H14 net profit up 18% YoY
OCBC NISP: 1H14 net profit up 18% YoY 1H14 1H13 YoY 2H13 HoH OCBC NISP RP b RP b +/(-)% RP b +/(-)% Net interest income 1,805 1,485 22 1,654 9 Non-interest income 422 385 10 494 (15) Total income 2,227 1,870 19 2,148 4 Operating expenses (1,256) (1,068) 18 (1,147) 9 Operating profit 971 802 21 1,001
Slide 44: Second Quarter 2014 Results Thank You
Second Quarter 2014 Results Thank You
Oversea-Chinese Banking — Q2 2014 Earnings Presentation on 6ix