Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q2 2007 Earnings Presentation
40 slides from Oversea-chinese Banking's earnings presentation, Aug 8, 2007
Slide 1: Second Quarter 2007 Results
Presentation to Media and Analysts Second Quarter 2007 Results 8 August 2007
Slide 2: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Interim Report Card 2
Slide 3: Second Quarter Core Net Profit up 65% YoY
Second Quarter Core Net Profit up 65% YoY 2Q07 2Q06 YoY 1Q07 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 558 435 28 508 10 Non-Interest Income 493 329 50 506 (3) Total Income 1,050 764 37 1,014 4 Operating Expenses (416) (349) 19 (352) 18 Operating Profit 634 416 53 662 (4) Amortisation of Int
Slide 4: First Half Core Net Profit up 63% YoY
First Half Core Net Profit up 63% YoY 1H07 1H06 YoY 2H06 HoH S$m S$m +/(-)% S$m +/(-)% Net Interest Income 1,065 830 28 964 11 Non-Interest Income 999 677 47 770 30 Total Income 2,064 1,507 37 1,734 19 Operating Expenses (768) (657) 17 (675) 14 Operating Profit 1,296 851 52 1,060 22 Amortisation of
Slide 5: Key Financial Ratios – Based on Core Earnings
Key Financial Ratios – Based on Core Earnings 1H07 1H06 2Q07 1Q07 2Q06 % % % % % Net Interest Margin 2.09 1.94 2.13 2.04 2.00 Non-Interest Income/ 48.4 44.9 46.9 49.9 43.1 Total Income Cost-to-Income Ratio 37.2 43.6 39.6 34.7 45.6 Loans-to-Deposits Ratio 77.4 81.7 77.4 78.9 81.7 NPL Ratio 2.4 3.6 2.
Slide 6: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Interim Report Card 6
Slide 7: Strong Net Interest Income Trends, Improved Interest Margin
Strong Net Interest Income Trends, Improved Interest Margin 2.09% 2.13% 2.06% 2.03% 2.04% 2.00% 2.00% Net 1.84% 1.89% interest margin 1,794 558 1,597 508 491 473 435 1,065 395 Net interest income (S$m) 2005 2006 1H07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 7
Slide 8: Strong Non-interest Income in 2Q07 despite Lower Gains from Investment Securities
Strong Non-interest Income in 2Q07 despite Lower Gains from Investment Securities 48.4% 49.9% Non- 46.8% 45.7% 46.9% interest 44.7% 44.7% 43.1% 43.0% income/ Total income 2,045 845 598 598 1,289 1,448 92 493 515 1,091 Non- 495 506 interest 92 83 income (S$m) 348 357 412 999 329 2005 2006 1H07 1Q06 2
Slide 9: Record Fee Income
Record Fee Income 20.7% Fee 19.1% 18.9% 18.5% 18.7% 18.4% income/ 17.6% 17.8% 17.5% Total 217 income 597 178 507 161 155 395 140 141 Fee income (S$m) 2005 2006 1H07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 Excluding divestment gains 9
Slide 10: Higher Expenses from Increased Staff Costs and Higher Business Volumes
Higher Expenses from Increased Staff Costs and Higher Business Volumes 45.6% Cost-to- 41.5% Income 41.1% 39.6% 40.0% 39.6% Ratio 37.2% 37.9% 1,331 34.7% 416 1,145 332 349 342 352 333 98 278 308 768 87 87 83 Operating 277 89 68 87 Expenses 233 181 83 62 69 (S$m) 69 64 156 722 231 634 193 200 170 179
Slide 11: 2Q07 Core Operating Profit up 53% YoY
2Q07 Core Operating Profit up 53% YoY Operating Profit before allowances (S$m) 2,508 598 931 754 92 1,742 644 634 1,910 515 662 83 1,389 498 561 92 435 416 1,296 2005 2006 1H07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 Divestment gains 11
Slide 12: Net Write-back of Allowances due to Loan Recoveries
Net Write-back of Allowances due to Loan Recoveries Allowances for loans and other 12 12 assets (S$m) 2 3 0.3 (5) (7) (15) (16) 2005 2006 1H07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 12
Slide 13: Core Net Profit Sustained; ROE Remains Above 15%
Core Net Profit Sustained; ROE Remains Above 15% 15.6% 15.9% 15.4% ROE 13.8% (%) 11.8% 12.3% 11.4% 10.8% 10.4% 647 47 2,002 90 532 795 510 559 510 518 482 77 1,298 Net Profit 1,443 1,179 379 (S$m) 432 90 318 1,028 314 2005 2006 1H07 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 Divestment gains Tax Refunds Excludin
Slide 14: Earnings Contribution by Segments
Earnings Contribution by Segments PBT by Business Segment PBT by Geography Other Asia Pacific Others Insurance 4% 1% & Others Other 25% ASEAN 5% Consumer Banking 24% Malaysia 25% Singapore Treasury Business 65% 13% Banking 38% 1H2007 Profit Before Tax: S$1,309m 1H2007 Profit Before Tax: S$1,309m (ex
Slide 15: Loans Growth of 12% YoY, 3% QoQ
Loans Growth of 12% YoY, 3% QoQ Loans (S$bn) 65.3 63.3 61.1 59.4 58.1 56.6 13.0 11.9 11.2 9.6 10.3 8.8 10.9 11.0 9.8 10.1 10.4 9.6 38.9 39.5 40.5 41.3 38.1 38.6 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Singapore Malaysia International 15
Slide 16: Deposits Up 20% YoY, 5% QoQ
Deposits Up 20% YoY, 5% QoQ 84.6% 81.7% 82.6% 85.0% Loans-to-deposits 79.0% 78.9% 77.4% 83.2% 80.0% 81.2% 75.0% 77.8% 77.8% 76.8% 65.0% 82.2 75.1 78.0 68.7 69.6 55.0% 64.5 11.6 10.0 9.9 9.5 9.2 13.0 9.0 11.2 11.7 45.0% 10.8 10.6 Deposits 11.0 50.2 51.8 53.2 (S$bn) 45.4 46.7 41.1 35.0% 25.0% 15.0% Ma
Slide 17: NPL Ratio at 2.4%
NPL Ratio at 2.4% NPL Ratio 4.1% 3.6% 3.3% 3.0% 2,346 2.7% 2,096 2.4% 258 1,966 NPLs 1,829 1,766 290 (S$m) 262 1,614 701 226 239 683 244 673 652 658 621 1,387 1,123 1,031 951 869 749 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Singapore Malaysia International 17
Slide 18: Allowances Coverage at 104%
Allowances Coverage at 104% 102% 104% 101% 97% 94% 88% Total Allowances / NPLs 46% 48% 48% 48% 47% 44% Specific Allowances / NPLs Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 18
Slide 19: Strong Capital Position
Strong Capital Position (%) 17.9 Total CAR 17.0 15.8 15.8 15.4 4.2 14.6 3.9 Tier 2 CAR 2.9 2.7 2.3 2.1 Tier 1 CAR 13.1 13.7 12.9 13.1 13.1 12.5 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 (S$m) Tier-1 Capital 9,268 9,881 9,575 10,057 10,738 11,049 Risk Weighted 70,545 72,136 74,024 76,514 81,878 87,84
Slide 20: Interim Net Dividend of 14 cents – up 27% over 1H06
Interim Net Dividend of 14 cents – up 27% over 1H06 23.0 18.4 Net DPS (cents) 12.0 12.6 9.6 7.7 6.3 14.0 Final Net Dividend 4.0 11.0 8.8 6.3 Interim Net Dividend 3.7 2003* 2004 2005* 2006 1H07 (S$m) Net Dividends 234 403 574 709 432 Core Net Profit 828 1,051 1,298 1,443 1,028 Dividend Payout 28% 38%
Slide 21: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Interim Report Card 21
Slide 22: OCBC Malaysia: Quarterly Results
OCBC Malaysia: Quarterly Results 2Q07 2Q06 YoY 1Q07 QoQ Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 216 186 16 202 7 Islamic Banking Income 20 13 54 18 7 Non Interest Income 78 65 20 96 (18) Total Income 314 264 19 316 (1) Operating Expenses (131) (99) 32 (109) 20 Operating P
Slide 23: OCBC Malaysia: Half-Year Results
OCBC Malaysia: Half-Year Results 1H07 1H06 YoY 2H06 HoH Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 418 352 18 396 5 Islamic Banking Income 38 25 49 26 43 Non Interest Income 174 138 26 145 21 Total Income 630 516 22 567 11 Operating Expenses (240) (190) 26 (227) 5 Operating
Slide 24: OCBC Malaysia: Financial Ratios
OCBC Malaysia: Financial Ratios 1H07 1H06 2Q07 1Q07 2Q06 Unaudited Results* % % % % % Net Interest Margin 2.53 2.56 2.50 2.56 2.60 Non-Interest Income / 27.6 26.7 25.0 30.4 24.6 Total Income Cost-to-Income Ratio 38.0 36.8 41.7 34.5 37.5 RM Loans-to-Deposits Ratio 78.0 82.7 78.0 78.1 82.7 Gross NPL R
Slide 25: GEH: Quarterly Contribution
GEH: Quarterly Contribution GEH’s Contribution to 2Q07 2Q06 ^ YoY 1Q07 QoQ OCBC’s Results S$m S$m % S$m % Total Income 204 149 37 192 6 Operating Expenses (28) (31) (9) (29) (1) Operating Profit 175 118 48 163 7 Amortisation of Intangibles (12) (11) 10 (12) - Associates & JVs - - n.m. 11 (97) Tax (2
Slide 26: GEH Contributed 23% of Core Net Profit in 1H07
GEH Contributed 23% of Core Net Profit in 1H07 GEH’s Contribution to 1H07 1H06^ YoY 2H06 HoH OCBC’s Results S$m S$m % S$m % Total Income 395 290 36 369 7 Operating Expenses (57) (58) (1) (43) 31 Operating Profit 338 233 45 325 4 Amortisation of Intangibles (23) (21) 11 (23) 2 Associates & JVs 11 (1)
Slide 27: Bank NISP: Quarterly Results
Bank NISP: Quarterly Results 2Q07 2Q06 YoY 1Q07 QoQ Unaudited Results* RP bn RP bn +/(-)% RP bn +/(-)% Net Interest Income 291 211 38 263 11 Non Interest Income 87 38 126 96 (9) Expenses (253) (164) 54 (221) 14 Operating Profit 125 85 46 138 (9) Allowances (45) (15) 193 (23) 98 Net Profit 59 50 18 8
Slide 28: Bank NISP: Half-Year Results
Bank NISP: Half-Year Results 1H07 1H06 YoY 2H06 HoH Unaudited Results* RP bn RP bn +/(-)% RP bn +/(-)% Net Interest Income 554 411 35 492 13 Non Interest Income 183 75 143 139 31 Expenses (474) (323) 47 (408) 16 Operating Profit 263 164 61 224 17 Allowances (68) (11) n.m. (45) 50 Net Profit 141 104
Slide 29: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Interim Report Card 29
Slide 30: Broad-based Growth Across Business Units
Broad-based Growth Across Business Units (S$m) Group Consumer Banking Group Business Banking 661 611 581 536 524 474 463 425 334 350 297 246 1H06 2H06 1H07 1H06 2H06 1H07 Group Treasury 226 172 131 130 Core Revenue 89 87 Core Pretax Profit 1H06 2H06 1H07 30
Slide 31: Broad-based Growth Across Geographies
Broad-based Growth Across Geographies (S$m) Malaysia Singapore 446 397 350 322 1,352 231 267 1,118 998 1H06 2H06 1H07 847 689 555 International 266 220 159 140 60 76 1H06 2H06 1H07 1H06 2H06 1H07 Core Revenue Core Pretax Profit 31
Slide 32: Continued Growth in Customer Franchise
Continued Growth in Customer Franchise Singapore & Malaysia consumer customer base +3% YTD, SME customers +6% (Singapore +11%) Recent initiatives achieved good response and underscore our differentiation strategy Full Service Sunday Banking extended to 10 branches Launched supermarket bankin
Slide 33: Branch Transformation
Branch Transformation New branch design unveiled in July 07, offering customers higher level of service, interaction and convenience Outcome of extensive research and customer surveys 89 branches in Singapore and Malaysia to be transformed by end-2008 33
Slide 34: Malaysia – Sustained Growth
Malaysia – Sustained Growth Continues to sustain double-digit net profit growth Double digit loans growth expected for full year Opened Bukit Damansara branch in KL, increasing branch network to 29 Sunday banking to be extended to more branches Introduced contract financing for large infra
Slide 35: Indonesia – Rapid Network and Business Expansion
Indonesia – Rapid Network and Business Expansion Bank NISP sustains earnings and loans growth of above 30% Rapid network and headcount expansion continues 26 offices (to 285) and 51 ATMs (to 397) added in 1H07 Staff strength +29% YoY to 5,000 2Q07 rights issue raised Rp 702 bn, raising CAR
Slide 36: China Local Incorporation
China Local Incorporation Wholly-owned subsidiary OCBC China officially opened 1 Aug; registered capital of RMB 3.5bn (S$700m) Long term goal is to build China as a major growth engine To offer RMB commercial and retail banking products & services, focusing on mass affluent individuals, foreig
Slide 37: Strategic Partnership in China & Vietnam
Strategic Partnership in China & Vietnam Bank of Ningbo • BoN listed on 19 July 2007 on Shenzhen Stock Exchange • 12.2% stake (250m shares @ RMB 2.28 cost) diluted to 10.0% post- IPO • Current share price @ RMB 29.77 implies significant mark-to-market gains of RMB 6,870m (S$1.37bn). MTM gains at pre
Slide 38: Addendum: CDO Exposure
Addendum: CDO Exposure • To-date, no losses or ratings downgrades for any of the CDO investments of OCBC Bank and GEH, as well as CDOs under management by Lion Capital • Due to low liquidity in CDO market, portfolio has been marked down by US$33m in fair value reserves (s/h equity) as at Jun 07 (a)
Slide 39: Addendum: CDOs under Management
Addendum: CDOs under Management (b) CDOs managed on behalf of ILP policyholders / other investors Entity CDO Fund of which: Remarks Size ABS CDOs GEH – S$400m in Nil Risks borne by ILP ILP ILPs policyholders. Funds Funds managed by Lion Capital. Lion S$5.7bn ** out S$1.5bn, with CDOs originated and
Slide 40: Second Quarter 2007 Results Thank You
Second Quarter 2007 Results Thank You
Oversea-Chinese Banking — Q2 2007 Earnings Presentation on 6ix