Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q1 2016 Earnings Presentation
46 slides from Oversea-chinese Banking's earnings presentation, Apr 29, 2016
Slide 1: First Quarter 2016 Results Presentation
First Quarter 2016 Results Presentation 29 April 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 1Q16 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: 1Q16 Highlights
1Q16 Highlights Net profit of S$856m was 14% lower YoY; operating profit from banking operations up 3% YoY • Banking operations – Operating profit up 3% YoY, driven by increased Core net profit and core ROE net interest income, higher non interest income and cost discipline • Insurance operations –
Slide 4: 1Q16 net profit decreased 14% YoY to S$856m
1Q16 net profit decreased 14% YoY to S$856m 1Q16 1Q15 YoY 4Q15 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,307 1,249 5 1,341 (3) Non-interest income 753 859 (12) 960 (22) Total income 2,060 2,108 (2) 2,301 (10) Operating expenses (923) (873) 6 (974) (5) Operating profit 1,137 1,23
Slide 5: 1Q16 operating profit before GEH contribution up 3% YoY
1Q16 operating profit before GEH contribution (Banking Operations) up 3% YoY; however net profit fell 4% as a result of increased allowances 1Q16 1Q15 YoY 4Q15 QoQ Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,284 1,230 4 1,312 (2) Non-interest income 599 578 4 677 (12) Total in
Slide 6: Agenda
Agenda Results Overview 1Q16 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income 6
Slide 7: Earnings well-diversified across key geographies and main businesses
Earnings well-diversified across key geographies and main businesses 1Q16 PBT 1Q16 PBT by Business1/ by Geography PBT OCBC Group Wing Hang S$1,052m Others YoY: -15% Greater 0.4% 7% China Singapore Insurance 21% S$575m 10% YoY: -18% (within which Global OCBC Wing Malaysia Treasury Hang: 7%) S$190m 11
Slide 8: Net interest income rose 5% YoY, driven by 13 bps improvement in NIM
Net interest income rose 5% YoY, driven by 13 bps improvement in NIM Net interest 1.75% 1.67% 1.74% margin 1.68% 1.67% 1.62% 1.66% 5,189 4,736 1,317 1,341 1,282 1,307 1,249 Net interest income (S$m) 2014 2015 1Q15 2Q15 3Q15 4Q15 1Q16 8
Slide 9: Non-interest income fell 12% YoY, mainly due to lower fee and insurance income
Non-interest income fell 12% YoY, mainly due to lower fee and insurance income 40.4% 40.5% 40.7% 42.3% 41.7% Non- 37.1% 36.6% interest income / Total 3,533 960 income 939 3,213 859 781 174 775 272 753 930 237 364 2/ 98 122 1952/ 26 78 242 1/ 552 65 101 Non- 70 196 163 364 123 interest 193 62 122 inc
Slide 10: Fee income down 5% YoY
Fee income down 5% YoY, from decline in wealth management, trade-related and investment banking fees -5% YoY -7% 1,643 QoQ 438 1,495 276 408 402 395 212 65 374 86 72 61 30 78 86 74 19 18 19 556 14 Fees and 146 commissions 558 137 137 (S$m) 135 126 219 172 62 49 57 52 51 467 506 129 135 124 118 109 2
Slide 11: Profit from life assurance declined 58% YoY and 65% QoQ
Profit from life assurance declined 58% YoY and 65% QoQ, as a result of unrealised mark-to-market losses from bond and equity investments under its Non-participating Fund -58% YoY 768 -65% QoQ 207 630 236 Profit from 199 38 life 164 assurance 50 (S$m) 132 423 331 41 164 83 116 57 62 47 35 1 138 135
Slide 12: Operating expenses rose 6% YoY, but declined 5% QoQ
Operating expenses rose 6% YoY, but declined 5% QoQ 44.8% 42.0% 43.0% 42.3% 41.0% 41.4% 41.3% Cost / Income 3,664 3,258 974 673 918 923 900 873 636 188 164 164 162 737 157 Operating 619 206 183 179 180 expenses 172 (S$m) 2,254 2,003 575 556 580 578 544 2014 2015 1Q15 2Q15 3Q15 4Q15 1Q16 Staff costs
Slide 13: Net allowances for loans and other assets higher YoY but lower QoQ
Net allowances for loans and other assets higher YoY but lower QoQ 488 79 Net allowances 193 357 for loans 167 and other 43 150 12 assets 232 (S$m) 196 35 76 99 80 64 1 65 47 163 177 45 74 50 56 20 32 (2) (1) 2014 2015 1Q15 2Q15 3Q15 4Q15 1Q16 Net specific allowances/ Impairment charges/ (write- Por
Slide 14: Net specific allowances for loans were higher YoY
Net specific allowances for loans were higher YoY 1Q16 1Q15 4Q15 S$m S$m S$m Allowances for new and 136 78 118 existing loans Write-backs1/ (26) (23) (29) Recoveries2/ (11) (10) (13) Net specific allowances 99 45 76 1/ Write-backs of specific allowances for existing NPLs due to settlements and repay
Slide 15: Customer loans up 1% YoY in constant currency terms
Customer loans up 1% YoY in constant currency terms as growth in corporate and consumer loans more than offset a drop in trade loans Loan growth 210 210 213 211 208 Group YoY: -1%; QoQ: -1% 24 24 22 21 22 In constant currency terms YoY: +1%; QoQ: flat 59 56 52 Rest of the world 57 58 YoY: -11% QoQ:
Slide 16: Customer loans well-diversified across geographies and industries
Customer loans continue to be well-diversified across geographies and industries Customer Loans by Geography Customer Loans by Industry As of 31 March 2016 As of 31 March 2016 As of As of Rest of the Industry 31-Mar-16 31-Mar-15 World 5% S$b % S$b % Other Asia Housing loans 57 28 55 26 Pacific 5% Pr
Slide 17: Oil & Gas and Commodities exposure
Oil & Gas and Commodities exposure Oil & Gas Commodities 2/ As of 31 March 2016 S$b S$b Total exposure 1/ 14.1 14.2 Of which: On-balance sheet exposure 12.4 11.9 % of total customer loans 6% 6% % NPL of total customer loans 0.43% 0.10% Offshore services sector • Offshore services sector made up 45%
Slide 18: Customer deposits lower against weaker loan demand; CASA ratio improved
Customer deposits lower against weaker loan demand. CASA deposits grew 5% YoY, offset by reductions in fixed deposits – CASA ratio improved to 49.3% 250 246 252 246 242 24 21 22 20 17 113 112 111 106 106 Customer Deposits (S$b) 43 43 44 42 42 S$119b +S$6b YoY S$120b S$120b -S$1b QoQ S$114b S$113b 47
Slide 19: Group LDR stable at 84.7%
Group LDR stable at 84.7% 250 246 252 246 242 Others 25 22 22 IDR 22 22 5 210 5 210 5 213 12 211 6 208 RMB 14 12 6 10 9 15 16 18 25 16 HKD 25 24 17 5 24 5 6 7 7 23 10 10 9 8 23 7 MYR 26 25 23 24 28 29 30 29 28 Customer 23 23 21 21 22 USD Loans and 65 78 72 67 71 Customer Deposits 53 51 51 49 46 (S$b
Slide 20: Funding sources well-balanced
Funding sources well-balanced – Customer deposits made up 78% of funding composition Funding Composition as of 31 Mar 2016 Wholesale Funding by Currency as of 31 Mar 2016 By Maturity: Others ≤ 1 year 52% Current Bank deposits 11% account Others AUD > 1 year 48% and savings 6% 4% Customer deposits 10
Slide 21: NPL rose to 1.0%. Coverage for NPAs remained at healthy levels
NPL rose to 1.0%. Coverage for NPAs remained at healthy levels 0.9% 0.9% 1.0% 0.6% 0.7% NPL ratio 2,221 2,039 67 1,932 187 70 70 110 185 135 207 1,494 207 1,379 461 34 400 33 148 305 NPAs 179 159 (S$m) 202 246 103 717 699 707 474 522 516 545 604 388 385 Mar15 Jun15 Sep15 Dec15 Mar16 Singapore Malays
Slide 22: NPAs increased YoY to S$2.2b
NPAs increased YoY to S$2.2b, mainly from the classification of a number of large corporate accounts associated with the oil & gas support services sector 1Q16 1Q15 4Q15 S$m S$m S$m NPAs – Opening balance 2,039 1,317 1,932 New NPAs 497 236 395 Net recoveries/upgrades (232) (139) (200) Write-offs (83
Slide 23: Capital position remained strong and well above regulatory requirements
Capital position remained strong and well above regulatory requirements 16.8 17.3 CAR 16.6 16.1 (% of RWA) 15.5 2.0 Tier 1 2.2 Tier 1 2.0 Tier 1 2.1 Tier 1 2.0 CAR CAR 0.5 CAR Tier 1 CAR 15.1 Tier 2 capital CAR 14.1 14.5 14.8 13.5 Additional Tier 1 capital Common Equity 14.5 14.8 14.6 13.5 14.1 Tier
Slide 24: Agenda
Agenda Results Overview 1Q16 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income 24
Slide 25: GEH: 1Q16 earnings contribution of S$73m
GEH: 1Q16 earnings contribution of S$73m 1Q16 1Q15 YoY 4Q15 QoQ GEH S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 91 207 (56) 241 (62) - Operating profit 1/ 120 151 (20) 169 (29) - Non-operating (loss) / profit 2/ (43) 41 (203) 49 (187) - Others 13 15 (12) 23 (43) Profit from Shareholders
Slide 26: GEH: Operating profit 20% lower YoY
GEH: Operating profit 20% lower YoY; largely due to higher claims and weakening of the Malaysia Ringgit against the Singapore Dollar in 1Q16 -20% YoY -29% QoQ 591 582 24 14 169 2 131 151 3 30 170 Operating 132 130 profit from 41 4 5 120 insurance 2 33 28 business (S$m) 41 323 1/ 275 110 79 66 68 48
Slide 27: GEH: Non-operating profit was negative
GEH: Non-operating profit was negative as widening of credit spreads and lower equity prices in 1Q16 led to unrealised mark-to-market losses in investment portfolio 145 Non-operating profit/(loss) from insurance business (S$m) 49 41 3 (9) (43) (79) 2014 2015 1Q15 2Q15 3Q15 4Q15 1Q16 Note: Non-operat
Slide 28: GEH: Total weighted new sales 9% higher YoY
GEH: Total weighted new sales 9% higher YoY, underpinned by higher sales in both Singapore and Malaysia +9% 988 YoY 919 38 28 312 12 327 271 315 9 Weighted 118 223 new 205 201 76 3 business 8 9 premiums 69 (S$m) 61 72 624 576 186 182 135 151 120 2014 2015 1Q15 2Q15 3Q15 4Q15 1Q16 Singapore Malaysia
Slide 29: GEH: New business embedded value stable YoY
GEH: New business embedded value stable YoY; NBEV margin higher QoQ but lower YoY at 38.0%, a result of channel and product mix shifts NBEV 42.7% 41.4% 41.3% margin 39.6% 39.4% 38.0% (NBEV / Total 36.7% weighted new sales) 391 381 5 114 6 107 0 2 136 142 84 86 44 85 1 35 1 2 NBEV 29 34 32 (S$m) 238
Slide 30: OCBC Wing Hang: 1Q16 net profit of HKD 479m, down 2%
OCBC Wing Hang: 1Q16 net profit of HKD 479m, down 2% – Higher NII offset by lower foreign exchange, brokerage and loan fees 1Q16 1Q15 YoY 4Q15 QoQ OCBC Wing Hang HKD m HKD m +/(-)% HKD m +/(-)% Net interest income 943 910 4 935 1 Non-interest income 236 279 (16) 290 (19) Total income 1,179 1,189 (1)
Slide 31: OCBC Wing Hang: NII up 4%, boosted by NIM improvement
OCBC Wing Hang: NII up 4%, boosted by 11 bps improvement in NIM Net profit (HKD m) Net interest income (HKD m) Net interest margin 1.73% 1.76% 1.72% 1.72% 1.81% 1.78% 1.83% 2,028 3,774 -2% 910 951 978 935 943 YoY -1% 1,705 QoQ 540 513 490 20141/ 2015 1Q15 2Q15 3Q15 4Q15 1Q16 485 479 Non-interest inc
Slide 32: OCBC Wing Hang: CASA ratio improved to 31.5%
OCBC Wing Hang: CASA ratio improved to 31.5%; NPL ratio remained low at 0.6% Gross Loans (HKD b) Deposits (HKD b) NPL Ratio Loans / Deposits 1/ 80.5% 81.7% 82.1% 80.7% 0.4% 0.4% 0.6% 0.6% 0.6% 78.4% 200 202 189 188 186 161 158 154 154 150 Mar15 Jun15 Sep15 Dec15 Mar16 Mar15 Jun15 Sep15 Dec15 Mar16 C
Slide 33: Greater China customer loans lower 9% YoY and 8% QoQ
Greater China customer loans lower 9% YoY and 8% QoQ 59 57 58 56 4 4 4 2 4 52 2 2 2 4 2 29 29 30 Customer 29 Loans to Greater 27 Macau China (S$b) Taiwan Hong Kong Offshore 2/ 16 17 17 15 China 1/ 13 7 6 6 6 6 Mar15 Jun15 Sep15 Dec15 Mar16 Note: Customer loans to Greater China is based on where the
Slide 34: Asset quality of Greater China book remained sound
Asset quality of Greater China book remained sound; NPL ratio remained low at 0.4% Total 275% 356% 260% allowances/ 240% 241% NPAs NPL ratio 0.4% 0.3% 0.3% 0.4% 0.4% 244 241 218 202 Greater China NPAs 159 (S$m) Mar15 Jun15 Sep15 Dec15 Mar16 34 Note: NPAs comprise NPLs and classified debt securities/
Slide 35: OCBC Malaysia: 1Q16 net profit down 3% YoY
OCBC Malaysia: 1Q16 net profit down 3% YoY, but rose 1% QoQ 1Q16 1Q15 YoY 4Q15 QoQ OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 331 328 1 338 (2) Islamic banking income 1/ 126 130 (3) 130 (3) Non-interest/finance income 138 136 1 173 (20) Total income 595 594 - 641 (7) Operating ex
Slide 36: OCBC Malaysia: Net interest/finance income rose 1% YoY
OCBC Malaysia: Net interest/finance income rose 1% YoY; Non-interest/finance income down 3% YoY Net interest/finance income (RM m) Non-interest/finance income1/ (RM m) Net interest/ Non-interest/finance finance margin income/ Total income 2.11% 28.9% 1.99% 1.98% 1.97% 2.00% 2.01% 1.99% 26.0% 25.3% 2
Slide 37: OCBC Malaysia: Loans increased 6% YoY; NPL ratio at 2.1%
OCBC Malaysia: Loans increased 6% YoY and deposits dropped 1% YoY; NPL ratio at 2.1% Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 92.1% 93.2% 92.1% 87.2% 89.0% 2.1% 2.1% 2.1% 2.1% 1.9% 75 76 75 73 74 68 70 70 69 65 Mar15 Jun15 Sep15 Dec15 Mar16 Mar15 Jun15 Sep15 Dec15 Mar16 CASA 25.
Slide 38: OCBC NISP: 1Q16 net profit rose 23% YoY
OCBC NISP: 1Q16 net profit rose 23% YoY 1Q16 1Q15 YoY 4Q15 QoQ OCBC NISP IDR b IDR b +/(-)% IDR b +/(-)% Net interest income 1,423 981 45 1,303 9 Non-interest income 218 201 9 316 (31) Total income 1,641 1,182 39 1,619 1 Operating expenses (767) (649) 18 (778) (2) Operating profit 874 533 64 841 4 A
Slide 39: OCBC NISP: Net interest income 45% higher YoY
OCBC NISP: Net interest income 45% higher YoY; NIM increased to 5.23% Net interest income (IDR b) Non-interest income (IDR b) Non-int. income/ Net interest margin 5.23% Total income 4.67% 4.15% 4.07% 4.15% 3.82% 3.60% 20.0% 19.6% 4,419 16.6% 16.2% 17.0% 1,423 13.3% 1,303 7.5% 3,745 1,167 854 316 981
Slide 40: OCBC NISP: Loans grew 22% YoY, NPL at 1.4%
OCBC NISP: Loans grew 22% YoY, NPL recorded at 1.4%; deposits up 9%, while CASA ratio at 39.3% Gross Loans (IDR t) Deposits (IDR t) NPL Ratio Loans / Deposits 1.4% 1.3% 1.3% 1.3% 1.4% 98.0% 94.7% 87.3% 89.7% 84.6% 86 85 91 90 82 85 87 74 82 70 Mar 15 Jun 15 Sep 15 Dec 15 Mar 16 Mar 15 Jun 15 Sep 15
Slide 41: Agenda
Agenda Results Overview 1Q16 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income 41
Slide 42: 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$968m (S$m) 3,646 12% 3,567 1,236 -15% 5% 4% 4% S$200m 4% YoY 7% 6% 3% FY11 PBT 2,917 4% 5% 1,052 19% 17% S$807m 19% S$114m 4%
Slide 43: Stable operating platform supports prudent growth strategy
Stable operating platform supports prudent growth strategy Diversified earnings base Prudent risk management 0.9% 1.0% 13.2% 11.5% NPL ratio 0.6% S$m 10.1% 993 960 559% 856 Allowances 417% 384% / Unsecured NPAs 166% Allowances 120% 113% / NPAs 1Q15 4Q15 1Q16 Mar15 Dec15 Mar16 Core net profit Core RO
Slide 44: Agenda
Agenda Results Overview 1Q16 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income 44
Slide 45: Private banking income grew YoY, offset by fall in insurance contributions
Private banking income grew YoY, but offset by a fall in insurance contributions, which led to lower 1Q16 overall wealth management income Wealth Management Income1/ (S$m) Bank of Singapore Earning Asset Base (US$b) As % of Group income 68 71 65 31% Dec 11- 28% 27% 28% 57 14 27% 13 Dec15 22% 23% 52
Slide 46: First Quarter 2016 Results Thank You
First Quarter 2016 Results Thank You
Oversea-Chinese Banking — Q1 2016 Earnings Presentation on 6ix