Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2006 Earnings Presentation
30 slides from Oversea-chinese Banking's earnings presentation, Feb 22, 2007
Slide 1: 2006 Final Results
Presentation to Media and Analysts 2006 Final Results 22 February 2007
Slide 2: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Conclusion 2
Slide 3: Full Year Net Profit Up 54%
Full Year Net Profit Up 54% FY06 FY05 YoY S$m S$m +/(-)% Net Interest Income 1,794 1,597 12 Non-Interest Income 2,045 1,289 59 - Fee Income 597 507 18 Total Income 3,840 2,887 33 Operating Expenses (1,331) (1,145) 16 Operating Profit 2,508 1,742 44 Amortisation of Intangibles (44) (40) 10 Allowances
Slide 4: 4th Quarter Net Profit Up 49% YoY
4th Quarter Net Profit Up 49% YoY 4Q06 4Q05 YoY 3Q06 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 491 414 18 473 4 Non-Interest Income 495 364 36 357 39 - Fee Income 161 128 25 155 4 Total Income 986 778 27 831 19 Operating Expenses (342) (312) 10 (333) 3 Operating Profit 644 466 38 498 29 Amor
Slide 5: Strong Underlying Performance, Record Core Earnings
Strong Underlying Performance, Record Core Earnings Excluding Divestment Gains* FY06 FY05 YoY S$m S$m +/(-)% Total Income 3,242 2,887 12 of which: Non-Interest Income 1,448 1,289 12 Operating Profit 1,911 1,742 10 Net Profit 1,443 1,298 11 4Q06 4Q05 YoY 3Q06 QoQ S$m S$m +/(-)% S$m +/(-)% Total Incom
Slide 6: Key Financial Ratios – Excluding Divestment Gains
Key Financial Ratios – Excluding Divestment Gains FY06 FY05 4Q06 3Q06 4Q05 % % % % % Net Interest Margin 2.00 1.84 2.03 2.06 1.90 Non-Interest Income/ 44.7 44.7 45.7 43.0 46.8 Total Income Cost-to-Income Ratio 41.1 39.6 37.9 40.0 40.1 Loans-to-Deposits Ratio 79.0 86.0 79.0 82.6 86.0 NPL Ratio 3.0 4.
Slide 7: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Conclusion 7
Slide 8: Steady Improvement in Net Interest Income and Interest Margins
Steady Improvement in Net Interest Income and Interest Margins 2.06% 2.03% 2.00% 2.00% Net 1.91% 1.90% 1.89% 1.84% interest 1.78% 1.82% 1.83% margin 1,794 1,597 1,518 491 473 435 407 413 414 395 Net 363 interest income (S$m) 2004 2005 2006 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 8
Slide 9: Non-Interest Income Boosted by Higher Fee & Commission, Insurance and Forex Income
Non-Interest Income Boosted by Higher Fee & Commission, Insurance and Forex Income 46.3% 46.8% 46.8% 44.7% 44.7% Non- 41.8% 43.7% 43.1% 43.0% 45.7% interest 39.1% income/ 2,045 Total 598 845 income 495 1,289 1,448 83 515 412 1,108 364 348 357 Non- 132 interest 321 income 975 312 (S$m) 291 329 2004 2
Slide 10: Steady Growth in Fee Income
Steady Growth in Fee Income 18.6% 18.9% 18.5% 18.7% 18.4% Fee 17.6% 18.0% 18.1% 17.8% 17.8% income/ 16.5% Total income 597 161 507 155 464 140 141 131 128 126 122 Fee income (S$m) 2004 2005 2006 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Excluding divestment gains 10
Slide 11: Wealth Management Sales Affected by Flat Yield Curve
Wealth Management Sales Affected by Flat Yield Curve 10,089 Sales* (S$m) 9,144 8,541 7,858 7,984 7,246 5,210 4,669 3,877 3,628 683 945 737 541 249 2002 2003 2004 2005 2006 Malaysia Singapore Total * Comprises sales of unit trusts, bancassurance products and structured deposits & notes 11
Slide 12: Expenses Rose 16% in FY06, and 10% excluding Bank NISP expenses and one-time charges
Expenses Rose 16% in FY06, and 10% excluding Bank NISP expenses and one-time charges 45.6% Cost-to- 41.1% 41.5% Income 40.5% 40.5% 40.1% 40.0% 39.6% 39.6% Ratio 37.9% 37.3% 1,331 1,145 332 349 342 988 333 278 298 312 308 283 79 226 277 252 89 87 Operating 81 77 233 67 71 Expenses (S$m) 216 59 91 64
Slide 13: Core Operating Profit at a Quarterly Record
Core Operating Profit at a Quarterly Record Operating Profit 2,508 before allowances (S$m) 598 931 644 1,742 1,910 83 1,637 515 132 561 498 466 1,505 437 435 423 415 416 2004 2005 2006 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Divestment gains 13
Slide 14: Allowances Remain Low as Loan Recoveries Continue
Allowances Remain Low as Loan Recoveries Continue Allowances for 77 loans and other assets (S$m) 24 12 12 12 2 3 (2) (7) (5) (23) 2004 2005 2006 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 14
Slide 15: Core Earnings up 11% in FY06; Improving ROE Trend
Core Earnings up 11% in FY06; Improving ROE Trend 13.8% 12.1% 11.6% 12.3% 11.4% 11.8% 10.8% 10.4% 10.3% 10.6% 10.7% ROE (%) 2,002 795 510 559 77 481 432 1,298 1,443 379 1,148 355 Net Profit 341 97 318 (S$m) 304 298 1,051 314 2004 2005 2006 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 Divestment gains Exc
Slide 16: Earnings Contribution by Segments
Earnings Contribution by Segments Net Profit by Business Segment PBT by Geography Other Asia Insurance Pacific Others & Others Other 2% 1% 20% ASEAN 4% Consumer Banking 26% Malaysia Treasury 10% 27% Singapore Business 66% Banking 44% FY06 Net Profit After Tax: S$1,443m FY06 Profit before Tax: S$1,87
Slide 17: Loans Growth of 7% YoY, 3% QoQ
Loans Growth of 7% YoY, 3% QoQ Loans (S$bn) 61.1 59.4 57.0 57.2 56.6 58.1 56.5 53.6 11.2 9.6 10.3 9.2 9.1 9.2 8.8 7.6 9.8 10.1 10.4 9.2 9.8 9.7 9.6 8.8 37.1 38.2 38.1 38.3 38.1 38.6 38.9 39.5 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Singapore Malaysia International 17
Slide 18: Deposits Up 17% YoY, 8% QoQ
Deposits Up 17% YoY, 8% QoQ 87.4% 90.0% 86.1% 85.6% 86.0% 84.6% 81.7% 82.6% 85.7% 79.0% Loans-to-deposits 83.7% 84.4% 83.3% 83.2% 80.0% 81.2% 77.8% 80.0% 75.1 68.7 69.6 63.6 62.8 64.1 64.5 70.0% 59.7 10.0 9.5 9.2 8.2 8.6 9.1 9.0 11.2 7.0 10.6 10.8 11.4 11.4 11.0 11.0 60.0% 11.2 50.2 Deposits 45.4 46
Slide 19: NPL Ratio Improved Further to 3%
NPL Ratio Improved Further to 3% NPL Ratio 4.8% 4.3% 4.2% 4.1% 4.1% 3.6% 3.3% 2,705 3.0% 2,592 2,467 2,392 224 2,346 286 267 269 2,096 NPLs 258 1,966 886 1,829 (S$m) 821 290 745 708 262 701 226 683 673 652 1,596 1,485 1,454 1,416 1,387 1,123 1,031 951 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06
Slide 20: Allowances Coverage Exceeds 100%
Allowances Coverage Exceeds 100% 101% 97% 94% 87% 87% 88% 88% 84% Total Allowances / NPLs Specific Allowances / NPLs 49% 50% 48% 48% 48% 48% 48% 46% Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 20
Slide 21: Strong Capital Position
Strong Capital Position (%) Total CAR 17.9 17.3 17.0 15.8 15.8 4.1 4.2 Tier 2 CAR 3.9 2.9 2.7 13.2 13.1 13.7 12.9 13.1 Tier 1 CAR (S$m) Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Tier-1 capital 9,302 9,268 9,881 9,575 10,057 Risk Weighted Assets 70,708 70,545 72,136 74,024 76,514 21
Slide 22: Full Year Dividend Up 25%; Payout Increased from 44% to 49% of Core Earnings
Full Year Dividend Up 25%; Payout Increased from 44% to 49% of Core Earnings 23.0 18.4 Net DPS (cents) 12.0 12.6 9.6 7.7 6.3 Final Net Dividend 4.0 11.0 8.8 6.3 Interim Net Dividend 3.7 (S$m) 2003* 2004 2005* 2006 Net Dividends 234 403 574 709 Core Net Profit 828 1,051 1,298 1,443 Dividend Payout Ra
Slide 23: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Conclusion 23
Slide 24: OCBC Malaysia: Strong Operating Profit Growth
OCBC Malaysia: Strong Operating Profit Growth FY06 FY05 YoY Audited Results* RM m RM m +/(-)% Net Interest Income 749 627 19 Islamic Banking Income 52 45 16 Non Interest Income 283 257 10 Total Income 1,084 929 17 Operating Expenses (418) (370) 13 Operating Profit 666 559 19 Allowances (63)^ 26 n.m.
Slide 25: OCBC Malaysia: 4Q06 Financials
OCBC Malaysia: 4Q06 Financials 4Q06 4Q05 YoY 3Q06 QoQ Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 198 170 16 198 - Islamic Banking Income 15 14 7 12 25 Non Interest Income 82 65 26 63 30 Total Income 294 249 18 273 8 Operating Expenses (114) (100) (14) (113) 1 Operating Profi
Slide 26: OCBC Malaysia: Financial Ratios
OCBC Malaysia: Financial Ratios FY06 FY05 4Q06 3Q06 4Q05 % % % % % Net Interest Margin 2.60 2.39 2.60 2.67 2.55 Non-Interest Income / 26.1 27.7 27.7 23.1 26.0 Total Income Cost-to-Income Ratio 38.5 39.8 38.9 41.4 40.0 RM Loans-to-Deposits Ratio 80.5 85.0 80.5 83.7 85.0 Gross NPL Ratio 5.5 6.2 5.5 5.
Slide 27: GEH Contributed 22% of Group Net Profit
GEH Contributed 22% of Group Net Profit * GEH’s Contribution to FY06^ FY05 4Q06^ 3Q06 4Q05 OCBC’s Results S$m S$m S$m S$m S$m Total Income 659 523 209 160 139 Operating Expenses (101) (88) (18) (26) (23) Operating Profit 558 436 192 134 116 Amortisation of Intangibles (44) (40) (12) (11) (10) Tax (8
Slide 28: Bank NISP: Strong Underlying Revenue Growth
Bank NISP: Strong Underlying Revenue Growth FY06 FY05^ 4Q06 3Q06 4Q05^ Unaudited Results* RP bn RP bn RP bn RP bn RP bn Net Interest Income 904 714 267 228 185 Non-Interest Income 215 189 82 58 170 Expenses (731) (572) (232) (179) (171) Operating Profit 388 331 116 108 184 Allowances (57) (39) (31)
Slide 29: In Summary
In Summary • Healthy top-line growth across all our key geographical markets, improving steadily through the year • Both lending and fee-based businesses performed well, loans growth trending up, margins are steady • Asset quality continues to improve, allowances remain low, coverage ratios are stro
Slide 30: 2006 Final Results – Thank You
2006 Final Results Thank You &) OcBC Bank
Oversea-Chinese Banking — FY2006 Earnings Presentation on 6ix