Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q2 2015 Earnings Presentation
49 slides from Oversea-chinese Banking's earnings presentation, Jul 31, 2015
Slide 1: Second Quarter 2015 Results Presentation
Second Quarter 2015 Results Presentation 31 July 2015 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 2Q15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP In closing Appendix: Wealth management income Note: - Certain comparative figures have been restated to conform with the current period’s pres
Slide 3: 2Q15 Highlights
2Q15 Highlights Quarterly net profit crossed S$1 billion for the first time, driven by record net interest income and non-interest income • Net interest income up 14% YoY on asset growth. Net interest Net profit and ROE margin of 1.67%, 5 bps higher QoQ, from increased customer 14.8% loan spreads; 3
Slide 4: 2Q15 net profit rose 14% YoY to S$1.05b
2Q15 net profit rose 14% YoY to S$1.05b 2Q15 2Q14 YoY 1Q15 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,282 1,126 14 1,249 3 Non-interest income 939 850 10 859 9 Total income 2,221 1,976 12 2,108 5 Operating expenses (918) (760) 21 (873) 5 Operating profit 1,303 1,216 7 1,235 6 Amo
Slide 5: 1H15 core net profit grew 12% YoY to a new high of S$2.04b
1H15 core net profit grew 12% YoY to a new high of S$2.04b 1H15 1H14 YoY 2H14 HoH OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 2,531 2,213 14 2,523 - Non-interest income 1,798 1,650 9 1,563 15 Total income 4,329 3,863 12 4,086 6 Operating expenses (1,791) (1,466) 22 (1,792) - Operating p
Slide 6: 2Q15 net profit before GEH contribution up 14% YoY to S$818m
2Q15 net profit before GEH contribution (“banking operations”) up 14% YoY to S$818m 2Q15 2Q14 YoY 1Q15 QoQ Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,262 1,109 14 1,230 3 Non-interest income 588 548 7 578 2 Total income 1,851 1,657 12 1,808 2 Operating expenses (862) (710) 21
Slide 7: 1H15 core net profit before GEH contribution grew 14% YoY
1H15 core net profit before GEH contribution grew 14% YoY 1H15 1H14 YoY 2H14 HoH Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 2,492 2,181 14 2,487 - Non-interest income 1,166 1,055 11 1,023 14 Total income 3,658 3,236 13 3,510 4 Operating expenses (1,682) (1,367) 23 (1,681) - Ope
Slide 8: Agenda
Agenda Results Overview 2Q15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP In closing Appendix: Wealth management income 8
Slide 9: Earnings remained well-diversified across businesses and geographies
Earnings remained well-diversified across businesses and geographies 1H15 PBT 1H15 PBT by Business1/ by Geography PBT Rest of the Group Other Asia S$2,537m OCBC Pacific World Greater YoY: +10% Wing Hang 8% China 2% 2% Singapore 19% S$1,447m (within which OCBC YoY: +4% Wing Hang: 8%) Malaysia S$402m
Slide 10: Net interest income rose 14% YoY
Net interest income rose 14% YoY – NIM was 3bps lower YoY, 5bps higher QoQ Net interest 1.64% 1.68% 1.64% 1.70% 1.70% 1.68% 1.67% 1.62% 1.67% margin 4,736 1,277 1,282 3,883 1,246 1,249 Net interest 1,126 income 1,087 (S$m) 2,531 2,213 1H 1,873 2013 2014 1H15 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 10
Slide 11: Non-interest income grew 10% YoY, mainly from higher fees and net gains
Non-interest income grew 10% YoY, mainly from higher fees and net gains from investment securities Non- interest 41.4% 41.5% 42.4% 43.0% 40.7% 42.3% 40.4% 39.1% 37.4% income / Total income 3,213 939 2,738 850 859 930 800 801 174 762 756 259 237 242 1/ 223 215 232 195 2/ 1,798 223 364 31 23 65 97 1/
Slide 12: Fee income increased 24% YoY to a new high
Fee income increased 24% YoY to a new high, with robust growth across all major fee segments + 24% YoY + 11% QoQ 1,495 438 1,355 212 406 395 168 383 65 86 55 353 353 92 61 30 62 50 43 29 19 16 Fees and 16 25 558 833 commissions 515 146 (S$m) 126 150 137 145 49 132 132 172 62 168 283 49 46 39 39 49 1
Slide 13: Profit from life assurance decreased 40% YoY
Profit from life assurance decreased 40% YoY, arising from unrealised mark-to-market losses of bond and equity investments - 40% 768 YoY - 33% 207 QoQ 599 221 Profit from 199 life 183 190 174 54 174 assurance (S$m) 50 52 54 331 46 132 423 279 92 134 41 98 99 116 92 173 57 146 138 67 32 33 36 37 33 3
Slide 14: Operating expenses were 21% higher YoY
Operating expenses were 21% higher YoY; excluding OCBC Wing Hang, expenses were 7% higher YoY 42.0% 41.4% 45.2% Cost / 41.0% 42.5% 41.4% 41.3% Income 37.4% 38.5% 3,258 2,784 636 922 918 870 873 539 760 188 164 619 164 157 706 Operating 530 1,791 147 179 expenses 137 158 193 172 (S$m) 321 137 132 351
Slide 15: Asset quality remained sound; net allowances were 23% higher YoY
Asset quality remained sound; net allowances were 23% higher YoY 357 Net allowances for loans 266 2 and other 196 154 assets 81 10 (S$m) 144 97 71 66 80 1 64 183 92 36 66 163 41 47 1 73 45 23 52 42 31 32 17 20 (2) (1) (12) 2013 2014 1H15 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 Specific allowances/ Allowances
Slide 16: Customer loans grew 18% YoY
Customer loans grew 18% YoY – Customer loans up 2% QoQ in constant currency terms Loan growth Group: YoY: +18% QoQ: unchanged 210 210 2101/ 205 Excl. currency effects: YoY: +16% 25 24 24 QoQ: +2% 26 175 177 Rest of the World 23 24 YoY: unchanged 56 57 58 QoQ: unchanged 52 30 27 Greater China Custome
Slide 17: Customer loans remained diversified across geographies and industries
Customer loans remained diversified across geographies and industries Customer Loans by Geography Customer Loans by Industry As of 30 June 2015 As of 30 June 2015 As of As of Rest of the 30 Jun 2015 30 Jun 2014 Industry World Other Asia S$b % S$b % Pacific 7% Housing loans 55 26 44 25 4% (within whi
Slide 18: Customer deposits were 22% higher YoY; CASA deposits grew 19% YoY
Customer deposits were 22% higher YoY; CASA deposits grew 19% YoY 246 250 246 237 24 21 27 27 199 201 25 26 113 112 Customer 109 105 Deposits (S$b) 80 80 S$113b 40 42 42 +S$18b YoY 39 33 34 S$114b CASA ratio: S$106b S$110b 46.0% S$94b S$95b 45.5% 44.5% 44.6% CASA ratio 47.3% 47.2% 66 70 72 71 excl.
Slide 19: Group LDR was 84.3%; USD LDR was lower YoY and QoQ
Group LDR was 84.3%; USD LDR was lower YoY and QoQ 246 250 246 237 Others 25 25 22 24 IDR 210 5 210 5 210 5 199 201 205 5 14 12 RMB 14 13 13 15 16 14 5 5 24 25 HKD 175 21 177 21 5 21 10 22 10 5 9 10 5 5 13 6 13 6 26 26 25 MYR 4 4 24 26 28 29 5 5 5 26 7 24 6 26 6 23 23 23 Customer 23 23 21 USD Loans
Slide 20: Sources of funding were well-diversified
Sources of funding were well-diversified – Customer deposits accounted for 76% of total funding Funding Composition as of 30 Jun 2015 Wholesale Funding by Currency as of 30 Jun 2015 By Maturity: Others ≤ 1 year 64% Current Bank deposits account Others 10% > 1 year 36% 6% 5% AUD and savings Customer
Slide 21: Asset quality remained sound; NPL ratio remained low at 0.7%
Asset quality remained sound with high allowance coverage; NPL ratio remained low at 0.7% NPL ratio 0.7% 0.7% 0.7% 0.7% 0.6% 0.6% 1,494 1,373 1,379 34 1,317 148 1,230 1,215 35 33 38 179 39 43 242 159 215 300 251 202 246 169 185 NPAs 103 95 92 88 (S$m) 87 98 53 474 522 572 507 536 535 388 385 207 207
Slide 22: Capital ratios remained strong and comfortably above regulatory requirements
Capital ratios remained strong and comfortably above regulatory requirements 17.4 15.6 15.9 16.1 15.5 15.5 CAR 2.7 (% of RWA) 1.2 2.1 2.0 2.3 2.0 Tier 2 capital Common Equity Tier 1 / Tier 1 capital 14.4 14.7 13.8 14.1 13.2 13.5 Proforma Common Equity 11.0 11.3 10.1 10.6 10.7 11.2 Tier 1 capital 1/
Slide 23: Interim dividend of 18 cents per share was declared
Interim dividend of 18 cents per share was declared – Scrip Dividend Scheme would be applicable 36.0 33.0 34.0 30.0 30.0 28.0 Net DPS 18.0 17.0 17.0 (cents) 15.0 15.0 14.0 18.0 Final net dividend Interim net 18.0 18.0 dividend 15.0 15.0 16.0 17.0 14.0 2009 2010 2011 2012 2013 2014 1H15 Net Dividends
Slide 24: Agenda
Agenda Results Overview 2Q15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP In closing Appendix: Wealth management income 24
Slide 25: GEH: 2Q15 earnings contribution up 14% YoY
GEH: 2Q15 earnings contribution up 14% YoY 2Q15 2Q14 YoY 1Q15 QoQ GEH S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 141 230 (39) 207 (32) - Operating profit 1/ 132 143 (7) 151 (12) - Non-operating profit/(loss) 2/ (9) 72 (112) 41 (121) - Others 18 15 16 15 15 Profit from Shareholders’ Fun
Slide 26: GEH: 1H15 earnings contribution increased 5% YoY
GEH: 1H15 earnings contribution increased 5% YoY 1H15 1H14 YoY 2H14 HoH GEH S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 348 424 (18) 390 (11) - Operating profit 1/ 283 286 (1) 305 (7) - Non-operating profit/(loss) 2/ 32 106 (69) 40 (18) - Others 33 32 3 46 (28) Profit from Shareholders’
Slide 27: GEH: Operating profit 7% lower YoY
GEH: Operating profit 7% lower YoY, as prior year profit benefitted from a release of tax provisions - 7% YoY - 12% QoQ 591 560 24 16 156 149 151 170 143 143 9 3 142 4 7 4 132 41 4 37 44 Operating 1/ profit from 43 46 33 insurance business 283 (S$m) 7 280 275 74 77 69 79 67 63 66 145 122 122 31 31 3
Slide 28: GEH: Non-operating loss in 2Q15
GEH: Non-operating loss in 2Q15 resulted from unrealised mark-to-market losses of bond and equity investments 145 Non-operating profit/(loss) from insurance business 72 (S$m) 41 32 33 26 14 (11) 2013 2014 1H15 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 2013 (9) Note: Non-operating profit / loss (net of tax) main
Slide 29: GEH: Total weighted new sales down 4% YoY
GEH: Total weighted new sales down 4% YoY, mainly from lower sales of single premium Participating products in Singapore - 4% 1,018 YoY 33 930 28 305 289 8 325 Weighted 221 213 207 119 207 204 new 8 6 business 7 8 9 premiums 56 411 75 75 63 (S$m) 75 17 680 138 576 157 162 132 125 135 120 256 2013 20
Slide 30: GEH: New business embedded value declined YoY
GEH: New business embedded value declined YoY – Lower margin in Singapore as a result of a shift in channel mix; and in Malaysia, from downward adjustments to account for changes in tax regulations NBEV 44.2% 43.7% 40.5% 41.5% 40.4% 40.3% 40.7% 40.3% margin 38.2% (NBEV / Total weighted 412 new sales
Slide 31: OCBC Wing Hang: 2Q15 earnings up 10% QoQ
OCBC Wing Hang: 2Q15 earnings up 10% QoQ 1H15 2Q15 1Q15 QoQ OCBC Wing Hang HK$m HK$m HK$m +/(-)% Net interest income 1,861 951 910 5 Non-interest income 568 288 279 3 Total income 2,429 1,239 1,189 4 Operating expenses (1,164) (595) (569) 5 Operating profit 1,264 644 620 4 Allowances (78) (34) (44)
Slide 32: OCBC Wing Hang: Net interest income rose 5% QoQ
OCBC Wing Hang: Net interest income rose 5% QoQ, non-interest income 3% higher QoQ Net profit (HK$m) Net interest income (HK$m) Net Interest/ financing margin 1.73% 1.72% 1.68% 1.77% 1.72% 1.72% 1,861 1,705 949 910 951 1,030 756 +31% +10% 540 490 2014 1/ 1H15 3Q14 1/ 4Q14 1Q15 2Q15 694 412 Non-inter
Slide 33: OCBC Wing Hang: Loans down 2% QoQ; NPL ratio low at 0.4%
OCBC Wing Hang: Loans down 2% QoQ; deposits up 1% QoQ; NPL ratio remained low at 0.4% Gross Loans (HK$b) Deposits (HK$b) NPL Ratio Loans / Deposits 1/ 78.9% 80.5% 78.4% 0.3% 0.4% 0.4% 0.4% 77.5% 196 200 200 202 157 161 158 152 Sep14 Dec14 Mar15 Jun15 Sep14 Dec14 Mar15 Jun15 CASA 27.4% 27.1% 26.6% 28
Slide 34: Greater China customer loans grew 110% YoY
Greater China customer loans grew 110% YoY 58 57 56 4 52 4 4 2 2 3 1 1 26 29 29 24 30 Customer 27 Loans to 0 1 0 Macau Greater China 1 7 (S$b) 7 Taiwan Hong Kong 17 17 16 17 Offshore2/ 17 15 China1/ 7 8 7 6 4 4 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Note: Customer loans to Greater China is based on whe
Slide 35: Asset quality of Greater China book strong
Asset quality of Greater China book strong; NPL ratio remained low at 0.3% Total 288% 285% 275% 356% allowances/ 191% 200% NPAs 0.3% 0.3% 0.3% 0.3% 0.4% 0.3% NPL ratio 202 185 169 159 110 NPAs 94 76 (S$m) 107 102 118 OCBC Wing Hang OCBC Group 107 102 (excluding OCBC 93 91 92 Wing Hang) 41 Mar14 Jun1
Slide 36: OCBC Malaysia: 2Q15 net profit declined 3% YoY
OCBC Malaysia: 2Q15 net profit declined 3% YoY 2Q15 2Q14 YoY 1Q15 QoQ OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 348 335 4 329 6 Islamic Financing Income 123 109 13 130 (5) Non-interest income 143 121 18 135 6 Total income 614 565 9 594 3 Operating expenses (252) (232) 9 (243) 4
Slide 37: OCBC Malaysia: 1H15 net profit 2% higher YoY
OCBC Malaysia: 1H15 net profit 2% higher YoY 1H15 1H14 YoY 2H14 HoH OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 676 663 2 710 (5) Islamic Financing Income 253 215 18 252 - Non-interest income 279 241 16 231 21 Total income 1,208 1,119 8 1,193 1 Operating expenses (495) (448) 10 (4
Slide 38: OCBC Malaysia: Net interest income and Islamic financing income climbed 6% YoY
OCBC Malaysia: Total net interest income and Islamic financing income climbed 6% YoY, non- interest income 18% higher YoY Net interest income and Non-interest income (RM m) Islamic financing income (RM m) Net Interest/ Non-int. income/ financing margin Total income 2.20% 2.11% 2.16% 2.02% 2.07% 2.18
Slide 39: OCBC Malaysia: Loans increased 12% YoY; NPL ratio 2.1%
OCBC Malaysia: Loans increased 12% YoY and deposits grew 8% YoY; NPL ratio lower YoY at 2.1% Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 88.0% 87.2% 88.7% 87.2% 89.0% 2.3% 2.3% 86.5% 2.2% 2.1% 2.0% 1.9% 70 71 72 75 76 68 67 64 65 61 62 59 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Mar14 J
Slide 40: OCBC NISP: 2Q15 net profit increased 25% YoY
OCBC NISP: 2Q15 net profit increased 25% YoY 2Q15 2Q14 YoY 1Q15 QoQ OCBC NISP Rp b Rp b +/(-)% Rp b +/(-)% Net interest income 968 898 8 981 (1) Non-interest income 242 194 25 201 21 Total income 1,210 1,092 11 1,182 2 Operating expenses (686) (643) 7 (649) 6 Operating profit 524 449 16 533 (2) Allo
Slide 41: OCBC NISP: 1H15 net profit up 16% YoY
OCBC NISP: 1H15 net profit up 16% YoY 1H15 1H14 YoY 2H14 HoH OCBC NISP Rp b Rp b +/(-)% Rp b +/(-)% Net interest income 1,949 1,805 8 1,940 - Non-interest income 443 422 5 321 38 Total income 2,392 2,227 7 2,261 6 Operating expenses (1,335) (1,256) 6 (1,234) 8 Operating profit 1,057 971 9 1,027 3 Al
Slide 42: OCBC NISP: Net interest income rose 8% YoY
OCBC NISP: Net interest income rose 8% YoY, non-interest income increased 25% YoY Net interest income (Rp b) Non-interest income (Rp b) Non-int. income/ Net interest margin Total income 4.11% 4.15% 4.13% 4.09% 4.17% 4.20% 3.71% 3.82% 3.60% 21.9% 18.5% 20.1% 17.8% 18.9% 20.0% 3,745 16.6% 17.0% 8.9% 3
Slide 43: OCBC NISP: Loans grew 13% YoY; deposits 19% higher YoY
OCBC NISP: Loans grew 13% YoY; deposits 19% higher YoY Gross Loans (Rp t) Deposits (Rp t) NPL Ratio Loans / Deposits 100.8% 1.3% 1.4% 1.3% 93.6% 1.1% 1.1% 91.5% 0.8% 84.6% 87.3% 83.6% 82 85 74 79 68 70 73 66 67 71 64 63 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 CASA 36.
Slide 44: Agenda
Agenda Results Overview 2Q15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP In closing Appendix: Wealth management income 44
Slide 45: Earnings were increasingly diversified with expanded geographical network
Earnings were increasingly diversified with expanded geographical network 4,372 FY14 PBT 11% CAGR + 13% PBT by 6% S$251m YoY geography (S$m) 3,646 12% S$524m 1,301 3,567 5% 4% 5% 4% S$185m 7% 1,154 6% FY10 PBT 2,880 2,917 4% 5% 6% 19% 2% 19% S$833m 1% 4% 11% S$62m 2% S$34m 7% 22% 3% 4% S$58m 4% 26%
Slide 46: Diversified growth was achieved via a prudent, stable platform
Diversified growth was achieved via a prudent, stable platform Diversified earnings Prudent risk management 14.8% NPL ratio 13.2% 13.4% 0.7% 0.7% S$m 0.6% 1,048 921 993 Allowances / NPAs 166% 149% 153% 2Q14 1Q15 2Q15 Jun 14 Mar 15 Jun 15 Net profit ROE Stable funding base Sound capital position 87.2
Slide 47: Agenda
Agenda Results Overview 2Q15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP In closing Appendix: Wealth management income 47
Slide 48: Wealth management income at a new record
Wealth management income at a new record, supported by growth in private banking and insurance business Wealth Management Income 1/ (S$m) Bank of Singapore Earning Asset Base (US$b) As % of Group income 65 68 29.1% 27.9% 29.5% 30.3% 29.0% 31.2% 5-year 26.1% 26.3% 27.6% 57 13 CAGR 52 14 (Dec 10- 11 D
Slide 49: Second Quarter 2015 Results Thank You
Second Quarter 2015 Results Thank You
Oversea-Chinese Banking — Q2 2015 Earnings Presentation on 6ix