Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q3 2008 Earnings Presentation
35 slides from Oversea-chinese Banking's earnings presentation, Nov 5, 2008
Slide 1: Third Quarter 2008 Results Presentation
Third Quarter 2008 Results Presentation 5 November 2008 1
Slide 2: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 22
Slide 3: Third Quarter Core Net Profit down 7% YoY, up 4% QoQ
Third Quarter Core Net Profit down 7% YoY, up 4% QoQ 3Q08 3Q07 YoY 2Q08 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 684 566 21 678 1 Non-Interest Income 462 481 (4) 360 29 Total Income 1,146 1,047 9 1,038 10 Operating Expenses (492) (426) 15 (473) 4 Operating Profit 654 621 5 565 16 Amortisati
Slide 4: Core Net Profit for Nine Months fell 15% YoY
Core Net Profit for Nine Months fell 15% YoY 9M08 9M07 YoY S$m S$m +/(-)% Net Interest Income 2,000 1,631 23 Non-Interest Income 1,198 1,480 (19) Total Income 3,198 3,111 3 Operating Expenses (1,391) (1,195) 16 Operating Profit 1,807 1,916 (6) Amortisation of Intangibles (35) (35) - Allowances (203)
Slide 5: Excluding GEH, Nine Months Operating Profit Grew 11%, Core Net Profit Marginally Higher
Excluding GEH, Nine Months Operating Profit Grew 11%, Core Net Profit Marginally Higher Excluding GEH 9M08 9M07 YoY S$m S$m +/(-)% Net Interest Income 1,941 1,577 23 Non-Interest Income 922 957 (4) Total Income 2,863 2,534 13 Operating Expenses (1,287) (1,109) 16 Operating Profit 1,576 1,425 11 (All
Slide 6: Key Financial Ratios - Based on Core Earnings
Key Financial Ratios - Based on Core Earnings 3Q08 2Q08 3Q07 9M08 9M07 % % % % % Net Interest Margin 2.18 2.24 2.07 2.20 2.08 Non-Interest Income/ Total 40.3 34.6 46.0 37.5 47.6 Income Cost-to-Income Ratio 43.0 45.5 40.8 43.5 38.4 Loans-to-Deposits Ratio 84.4 83.3 77.6 84.4 77.6 NPL Ratio 1.3 1.4 2.
Slide 7: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 77
Slide 8: Net Interest Income up 21% YoY, 1% QoQ
Net Interest Income up 21% YoY, 1% QoQ 2.20% 2.24% 2.13% 2.14% 2.17% 2.18% 2.10% 2.07% Net 2.00% 2.04% interest margin 678 684 2,244 638 613 2,000 558 566 1,794 508 Net interest income (S$m) 2006 2007 9M08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 88
Slide 9: Non-Interest Income: Nine months' performance affected by weak insurance profits
Non-Interest Income: Nine months’ performance affected by weak insurance profits in first half; 3Q08 benefitted from a rebound in insurance 49.9% 46.4% 46.9% 46.0% 44.7% 43.0% Non-interest 37.5% 40.3% income/ 37.1% Total income 34.6% 2,045 2,036 92 598 598 544 1,944 1,384 92 493 481 1,448 186 464 46
Slide 10: GEH: Recovery in Non-Par Fund Profits
GEH: Recovery in Non-Par Fund Profits 3Q08 2Q08 3Q07 9M08 9M07 Life assurance profit from: S$m S$m S$m S$m S$m - Participating Fund 26 24 23 75 72 - Non-participating Fund 103 (11) 65 63 208 - Investment-linked Fund 16 20 19 48 49 Total life assurance profit 145 33 107 185 329 GEH’s Singapore non-
Slide 11: Fee Income Sustained Despite Weak Financial Markets
Fee Income Sustained Despite Weak Financial Markets 20.7% 20.2% 20.9% 19.5% 19.3% 19.2% 18.8% 18.4% 17.5% Fee income/ 17.4% Total income 808 217 211 212 202 202 199 597 614 178 Fee income (S$m) 2006 2007 9M08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Excluding divestment gains 11 11
Slide 12: One third of 9M08 expense increase due to overseas expansion
One third of 9M08 expense increase due to overseas expansion (China), business volume- related costs, and PacMas consolidation 45.0% 45.5% 43.5% 42.0% 43.0% 41.1% 40.8% Cost-to- 40.1% 39.6% Income Ratio 34.7% 1,680 492 485 473 1,391 416 427 426 1,331 433 132 143 122 352 99 351 98 108 332 301 86 83 7
Slide 13: Core Operating Profit up 5% YoY, 16% QoQ
Core Operating Profit up 5% YoY, 16% QoQ Operating Profit 2,601 before allowances 2,508 92 (S$m) 598 2,509 754 756 1,993 92 634 167 654 186 621 662 593 584 1,911 1,807 589 565 2006 2007 9M08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 Divestment gains 13 13
Slide 14: Allowances for Loans and Other Assets
Allowances for Loans and Other Assets Allowances for 203 loans and other assets (S$m) 156 55 36 39 13 2 0.3 (8) (16) 2006 2007 9M08 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 14 14
Slide 15: Higher Allowances were mainly for Debt Securities
Higher Allowances were mainly for Debt Securities 3Q08 2Q08 3Q07 9M08 9M07 S$m S$m S$m S$m S$m Specific allowances/ 30 (18) (82) 5 (103) (write-back) for loans Portfolio allowances for 9 - - 9 - loans Allowances for CDOs 4 67 221 71 221 Allowances/(write-back) for 113 6 (100) 118 (95) other assets T
Slide 16: Movements in Specific Allowances for Loans
Movements in Specific Allowances for Loans* 3Q08 2Q08 3Q07 9M08 9M07 S$m S$m S$m S$m S$m Allowances for new and 71 69 72 211 222 existing NPLs Write-backs 1/ (34) (58) (138) (157) (279) Recoveries 2/ (7) (28) (15) (49) (47) Net Specific Allowances/ 30 (18) (82) 5 (103) (Write-backs) * Excludes CDOs
Slide 17: Bank's CDO Portfolio
Bank’s CDO Portfolio 3Q08 Impact Cumulative Basis Investment (S$m) as at Allowances MTM Negative Fair Allowances MTM Negative Fair 30 Sep 08 Losses^ Value Adj. to Losses^ Value Adj. to Equity Equity ABS CDOs 258 - - - 258 - - Corporate 357 4 24 38 32 45 71 CDOs Total CDOs 615 4 24 38 290 45 71 ^ Mar
Slide 18: Year to Date ROE at 11.6%
Year to Date ROE at 11.6% 13.8% 15.9% 13.0% 11.8% 15.4% 12.2% 12.1% 12.1% ROE 10.7% 11.6% 13.4% 11.6% 11.5% 11.2% 12.2% 11.3% 2,071 10.3% 2,002 104 647 622 47 559 1,449 90 532 1,878 38 156 174 518 463 1,443 510 428 425 38 402 460 26 Net Profit 425 425 6 (S$m) 381 396 1,237 2006 2007 9M08 1Q07 2Q07 3
Slide 19: Earnings Contribution by Segments
Earnings Contribution by Segments 9M08 PBT by Business Segment 9M08 PBT by Geography Insurance & Other Asia Rest of the Others Pacific World 5% Other Global 4% 1% ASEAN Treasury 3% 14% Global Consumer Financial Malaysia Services 25% 34% Global Singapore Corporate 67% Banking 47% 9M08 Profit Before T
Slide 20: Broad-based Loans Growth of 20% YoY, 4% QoQ
Broad-based Loans Growth of 20% YoY, 4% QoQ 81.3 78.4 75.4 72.8 68.0 18.5 Loans 65.3 17.2 63.3 16.2 (S$bn) 15.4 13.7 11.9 13.0 12.7 13.6 12.1 12.3 11.0 11.5 10.9 46.9 48.4 49.2 42.8 45.3 40.5 41.3 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Singapore Malaysia International Note: Loans by geogra
Slide 21: Deposits up 11% YoY, 2% QoQ
Deposits up 11% YoY, 2% QoQ 83.3% 84.4% 78.9% 80.3% 79.7% 85.0% 77.4% 77.6% Loans-to- 75.0% deposits 92.9 92.4 94.7 65.0% 88.8 82.2 85.7 78.0 15.8 13.3 14.2 55.0% 11.6 12.5 11.6 9.9 14.1 14.7 15.1 12.9 13.0 45.0% 11.7 13.0 35.0% Deposits 57.2 58.8 60.5 59.2 59.5 25.0% 51.8 53.2 (S$bn) 15.0% Mar-07 J
Slide 22: NPL Ratio Improves to 1.3%
NPL Ratio Improves to 1.3% 2.7% 2.4% NPL Ratio 2.1% 1.7% 1.6% 1.4% 1,766 1.3% 1,614 239 1,484 244 1,354 1,325 1,232 1,204 286 658 294 349 621 320 365 NPLs 581 (S$m) 548 519 470 456 869 749 617 512 456 442 383 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Singapore Malaysia International 22 22
Slide 23: Allowance Coverage Increased to 128%
Allowance Coverage Increased to 128% 128% 122% 116% 115% 107% 102% 104% Total Allowances / NPLs 47% 45% 47% 44% 43% 43% 44% Specific Allowances / NPLs Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 23 23
Slide 24: Increased Tier 1 CAR to a Strong 14.4%
Increased Tier 1 CAR to a Strong 14.4% by adding non-dilutive preference capital 14.7 (% of RWA) 13.5 13.6 0.3 12.8 12.4 Total CAR 0.7 1.3 0.9 0.9 Tier 2 Capital Tier 1 Capital 10.5 10.2 11.4 11.0 10.6 Tier 1 preference 14.4 11.9 12.8 12.3 shares 11.5 Tier 1 adjusted ordinary equity Sep-07 Dec-07 Ma
Slide 25: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 25 25
Slide 26: GEH: Third Quarter Contribution
GEH: Third Quarter Contribution GEH’s Contribution to 3Q08 3Q07 YoY 2Q08 ^ QoQ OCBC’s Results S$m S$m +/(-)% S$m +/(-)% Total Income 200 181 10 71 182 Operating Expenses (38) (29) 33 (37) 3 Operating Profit 162 152 6 34 380 Amortisation of Intangibles (12) (12) 0 (12) 0 Allowances (12) (0) n.m. (0)
Slide 27: GEH: Nine Months Contribution
GEH: Nine Months Contribution GEH’s Contribution to 9M08^ 9M07 YoY OCBC’s Results S$m S$m +/(-)% Total Income 376 577 (35) Operating Expenses (104) (86) 22 Operating Profit 272 491 (45) Amortisation of Intangibles (35) (35) 0 Allowances (15) (0) n.m. Associates & JVs (5) 11 (148) Tax (47) (76) (38)
Slide 28: OCBC Malaysia: Quarterly Results
OCBC Malaysia: Quarterly Results 3Q08 3Q07 YoY 2Q08 QoQ Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 254 216 18 246 3 Islamic Banking Income 28 20 33 27 4 Non-Interest Income 81 91 (11) 82 (1) Total Income 363 327 11 355 2 Operating Expenses (153) (139) 10 (145) 6 Operating Pr
Slide 29: OCBC Malaysia: Nine Months Results
OCBC Malaysia: Nine Months Results 9M08 9M07 YoY Unaudited Results* RM m RM m +/(-)% Net Interest Income 733 634 16 Islamic Banking Income 81 58 40 Non-Interest Income 312 266 18 Total Income 1,126 958 18 Operating Expenses (440) (379) 16 Operating Profit 686 578 19 (Allowances)/Write-back (15) (31)
Slide 30: OCBC Malaysia: Financial Ratios
OCBC Malaysia: Financial Ratios 3Q08 2Q08 3Q07 9M08 9M07 % % % % % Net Interest Margin 2.57 2.51 2.41 2.51 2.49 Non-Interest Income / 22.4 23.1 27.8 27.7 27.8 Total Income Cost-to-Income Ratio 42.1 40.8 42.5 39.1 39.6 RM Loans-to-Deposits Ratio 90.5 87.1 84.4 90.5 84.4 Gross NPL Ratio 3.2 3.4 4.4 3.
Slide 31: Bank NISP: Quarterly Results
Bank NISP: Quarterly Results 3Q08 3Q07 YoY 2Q08 QoQ RP bn RP bn +/(-)% RP bn +/(-)% Unaudited Results* Net Interest Income 356 319 12 352 1 Non Interest Income 94 65 46 97 (3) Expenses (302) (271) 12 (288) 5 Operating Profit 148 113 32 162 (8) Allowances (34) (20) 74 (30) 15 Net Profit 80 66 22 93 (
Slide 32: Bank NISP: Nine Months Results
Bank NISP: Nine Months Results 9M08 9M07 YoY RP bn RP bn +/(-)% Unaudited Results* Net Interest Income 1.011 873 16 Non Interest Income 280 247 13 Expenses (898) (745) 21 Operating Profit 393 375 5 Allowances (70) (87) (20) Net Profit 227 206 10 * Bank NISP’s contribution to Group net profit was S$2
Slide 33: Bank NISP: Financial Ratios
Bank NISP: Financial Ratios 3Q08 2Q08 3Q07 9M08 9M07 % % % % % Net Interest Margin 5.61 5.38 5.43 5.46 5.00 Non-Interest Income / Total 20.9 21.7 16.8 21.6 22.1 Income Cost-to-Income Ratio 67.1 64.0 70.7 68.0 65.3 Loans-to-Deposits Ratio 94.9 95.0 91.0 94.9 91.0 Gross NPL Ratio 2.3 2.3 2.5 2.3 2.5 L
Slide 34: In Summary
In Summary • Core operating and core net profits improved over previous quarter despite significantly higher allowances • Global financial crisis is unprecedented in scale and impact • We will remain vigilant in managing our businesses and risks, while continuing to support our customers and investi
Slide 35: Thank You
Third Quarter 2008 Results ___________________________ Thank You 35
Oversea-Chinese Banking — Q3 2008 Earnings Presentation on 6ix