Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2010 Earnings Presentation
40 slides from Oversea-chinese Banking's earnings presentation, Feb 18, 2011
Slide 1: 2010 Final Results Presentation
2010 Final Results Presentation 18 February 2011
Slide 2: Agenda
Agenda Results Overview Performance Trends Malaysia and Indonesia Subsidiaries In Summary Note: Amounts less than S$0.5 million are shown as “0”; NM denotes not meaningful 2
Slide 3: Full year net profit up 15%
Results Overview Full year net profit up 15% FY10 FY09 YoY S$m S$m +/(-)% Net Interest Income 2,947 2,825 4 Non-Interest Income 2,378 1,990 20 Total Income 5,325 4,815 11 Operating Expenses (2,254) (1,796) 25 Operating Profit 3,071 3,019 2 Amortisation of Intangibles (55) (47) 18 Allowances (134) (4
Slide 4: Fourth quarter net profit down 11% QoQ
Results Overview Fourth quarter net profit down 11% QoQ mainly as a result of lower insurance income and one-time merger costs 4Q10 4Q09 YoY 3Q10 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 769 687 12 754 2 Non-Interest Income 560 497 13 621 (10) Total Income 1,329 1,184 12 1,375 (3) Operating
Slide 5: Key financial ratios
Results Overview Key financial ratios FY10 FY09 4Q10 3Q10 4Q09 % % % % % Net Interest Margin 1.98 2.23 1.96 1.98 2.08 Non-Interest Income / Total Income 44.7 41.3 42.1 45.1 42.0 Cost-to-Income Ratio 42.3 37.3 46.6 41.7 39.4 Loans-to-Deposits Ratio 85.1 80.4 85.1 86.5 80.4 NPL Ratio 0.9 1.7 0.9 1.1 1
Slide 6: Record full-year net profit, with ROE of 12.1%
Results Overview Record full-year net profit, with ROE of 12.1% 14.9% 15.3% 12.2% 12.1% 12.0% 12.0% ROE 11.6% 10.9% 10.8% 10.3% 9.9% 2,253 1,962 676 1,749 570 263 545 502 503 505 466 450 Net profit (S$m) 1,486 2008 2009 2010 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Divestment Gains and Tax Refunds No
Slide 7: Earnings contribution by segments
Results Overview Earnings contribution by segments FY10 PBT* FY10 PBT By Business Segment By Geography Global Asia Pacific Consumer Other Others 3% Financial ASEAN Services 2% 14% 16% Malaysia Insurance 27% 17% 36% Global Corporate 68% Singapore Banking Global Treasury 17% * Pretax profit before joi
Slide 8: GEH: Full year contribution down 2%
Results Overview GEH: Full year contribution down 2%, contributing 18% of Group net profit FY10 FY09 YoY S$m S$m +/(-)% Total Income 774 758 2 Operating Expenses (159) (116) 36 Operating Profit 615 642 (4) Amortisation of Intangibles (47) (47) - Allowances (4) (16) (74) Associates & JVs (6) (6) (4)
Slide 9: GEH: Fourth quarter contribution impacted by interest rate movements
Results Overview GEH: Fourth quarter contribution impacted by interest rate movements 4Q10 4Q09 YoY 3Q10 QoQ S$m S$m +/(-)% S$m +/(-)% Total Income 160 190 (15) 234 (31) Operating Expenses (45) (6) 652 (36) 23 Operating Profit 116 184 (37) 198 (41) Amortisation of Intangibles (12) (12) - (12) - Allo
Slide 10: Results excluding GEH – Full year net profit up 19%
Results Overview Results excluding GEH – Full year net profit up 19% FY10 FY09 YoY S$m S$m +/(-)% Net Interest Income 2,875 2,760 4 Non-Interest Income 1,676 1,297 29 Total Income 4,551 4,057 12 Operating Expenses (2,095) (1,680) 25 Operating Profit 2,456 2,377 3 Amortisation of Intangibles (8) 0 NM
Slide 11: Results excluding GEH – Fourth quarter net profit up 15% YoY
Results Overview Results excluding GEH – Fourth quarter net profit up 15% YoY 4Q10 4Q09 YoY 3Q10 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 752 668 13 735 2 Non-Interest Income 417 327 27 406 3 Total Income 1,168 995 17 1,141 2 Operating Expenses* (575) (460) 25 (537) 7 Operating Profit 593 5
Slide 12: Net interest income rose 4% for the year
Performance Trends Net interest income rose 4% for the year - growth in interest earning assets moderated by narrower margins 2.42% 2.27% 2.23% 2.29% 2.16% Net 2.08% 1.98% 2.03% 1.96% 1.98% 1.96% interest margin 2,947 2,783 2,825 754 769 740 720 710 704 689 687 Net interest income (S$m) 2008 2009 20
Slide 13: Net interest income adjusted for allowances shows steady uptrend
Performance Trends Net interest income adjusted for allowances shows steady uptrend; adjusted NIM stable 1.90% 1.89% 1.89% 1.95% 2.00% 1.96% 1.91% 1.85% 1.86% 1.83% 1.78% Adjusted net interest 2,813 margin* 2,396 702 711 721 2,336 679 637 606 610 543 Adjusted net interest income* (S$m) 2008 2009 201
Slide 14: Non-interest income up 20% for the year
Performance Trends Non-interest income up 20% for the year 49.2% 45.1% 44.7% 45.1% 41.3% 41.0% 42.0% 41.8% 42.1% Non-interest 34.4% 36.3% income/ 2,378 681 Total income 607 621 1,990 658 560 234 119 516 141 1,644 494 497 489 110 174 Non-interest 186 99 128 income 586 392 135 191 (S$m) 182 106 636^ 2
Slide 15: Full year fee income grew 36%
Performance Trends Full year fee income grew 36%, led by wealth management, loan and trade activities and investment banking 994 260 155 252 256 226 37 774 39 41 80 730 39 26 12 129 194 189 192 26 126 51 30 35 16 Fee and 31 54 155 401 9 commission 22 11 103 income 30 97 106 (S$m) 309 95 13 319 79 79
Slide 16: Other non-interest income increased 35% in 2010
Performance Trends Other non-interest income increased 35% in 2010 from higher trading income and investment gains 658 234 54 10 489 67 174 213 * 119 13 87 144 141 Other non- 14 128 47 58 43 15 interest 15 110 income 99 36 (S$m) 17 44 15 35 157 391 23 344 54 135 112 114 94 66 78 82 61 26 39 43 2008
Slide 17: GEH: Total weighted new sales grew 20% in 2010
Performance Trends GEH: Total weighted new sales grew 20% in 2010 238 749 724 189 190 601 248 172 163 95 290 48 83 133 70 258 128 112 80 Total 45 weighted 68 new sales 59 (S$m) 492 119 123 384 106 330 103 81 73 51 57 2008 2009 2010 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Singapore Malaysia Other Asi
Slide 18: GEH: New business embedded value up 30% in 2010
Performance Trends GEH: New business embedded value up 30% in 2010 43% 43% New business 42% 42% 42% 41% 41% embedded 39% value/Total 38% weighted new 35% 35% sales 305 102 264 235 78 77 129 39 68 New business 109 60 58 embedded 104 34 54 33 value (S$m) 43 24 34 22 25 21 58 153 164 128 43 40 36 34 31
Slide 19: Wealth management businesses contributed 25% of Group revenue
Performance Trends Wealth management businesses contributed 25% of Group revenue 28.6% As % of 26.5% Group 24.7% revenue 21.3% 18.9% 1,317 1,197 1,027 Wealth management 858 802 revenue* (S$m) 2006 2007 2008 2009 2010 * Comprises the consolidated revenue from insurance, asset management, stockbroking
Slide 20: Operating expenses rose 25% in 2010
Performance Trends Operating expenses rose 25% in 2010, driven by consolidation of Bank of Singapore, stepping up of investments, and higher business volumes 46.6% 45.2% 43.7% 43.2% Cost-to-income 42.3% 41.7% Ratio 39.4% 37.3% 37.4% 36.2% 2,254 620* 30.7% 573 1,854 564 559 Operating 1,796 502 177 ex
Slide 21: Full year operating profit up 2%
Performance Trends Full year operating profit up 2% Operating profit before allowances 3,019 3,071 (S$m) 934* 883 2,573 802 186 754 718 709 677 614^ 2,387 2008 2009 2010 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 Divestment gains * Includes S$201m non-recurring gains from GEH ^ Includes GLC loss of S$2
Slide 22: Sustained low net allowances as asset quality remains stable
Performance Trends Sustained low net allowances as asset quality remains stable 447 Net allowances 429 for loans and other assets (S$m) 197 134 104 77 52 43 48 25 18 2008 2009 2010 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 22
Slide 23: Breakdown of allowances
Performance Trends Breakdown of allowances FY10 FY09 4Q10 3Q10 4Q09 S$m S$m S$m S$m S$m Specific allowances for loans 57 241 25 16 61 Portfolio allowances for loans 98 23 34 29 11 Allowances for CDOs (Write-back) (26) 86 (18) (0) (1) Allowances for other assets (Write-back) 5 79 7 (2) 6 Total net al
Slide 24: Movement in specific allowances for loans
Performance Trends Movement in specific allowances for loans FY10 FY09 4Q10 3Q10 4Q09 S$m $m S$m S$m S$m Allowances for new and existing NPLs 298 478 99 77 118 Write-backs 1/ (192) (188) (56) (49) (44) Recoveries 2/ (49) (48) (18) (11) (13) Net Specific Allowances 57 241 25 16 61 1/ Write-backs of s
Slide 25: Broad-based loan growth of 29% YoY
Performance Trends Broad-based loan growth of 29% YoY (23% excluding Bank of Singapore) and 5% QoQ Non-bank loans (S$bn) 106.4 101.8 95.5 90.4 29.3 82.3 27.6 80.4 79.2 78.7 25.8 23.5 18.0 18.5 17.5 17.5 17.1 16.8 16.6 16.2 14.7 14.7 15.3 14.5 57.4 60.0 50.7 53.1 47.7 47.0 46.7 48.5 Mar-09 Jun-09 Sep
Slide 26: Diversified loan book
Performance Trends Diversified loan book Customer Loans by Geography* Customer Loans by Sector As at 31 December 2010 As at 31 December 2010 Agriculture, mining & Transport, quarrying storage & Others Comm Others 12% 3% 6% 6% Building & Greater Construction China 10% 17% Housing Loans Indonesia 6% 2
Slide 27: Customer deposits increased 23% YoY
Performance Trends Customer deposits increased 23% YoY, led by growth of 53% in current account deposits and 18% in savings deposits 85.3% 86.5% 85.1% 81.9% 83.7% Loans-to- 80.3% 79.7% 80.4% 85.0% deposits 75.0% 123.3 112.3 116.0 65.0% 108.5 100.6 96.6 96.9 92.4 31.7 55.0% 26.6 28.5 23.6 17.4 18.4 2
Slide 28: NPL ratio continued to improve
Performance Trends NPL ratio continued to improve 2.0% 1.8% 1.8% 1.7% NPL ratio 1.5% 1.3% 1.1% 1,785 0.9% 1,633 202 1,583 210 1,448 1,402 181 64 1,316 467 83 56 1,170 1,208 479 395 386 323 292 55 213 253 NPAs* 199 568 (S$m) 521 560 582 562 567 494 478 548 447 423 416 434 401 368 318 Mar-09 Jun-09 Se
Slide 29: 64% of NPAs in substandard category
Performance Trends 64% of NPAs in “substandard” category – typically well-collateralised or no overdues 2.0% 1.8% 1.8% NPL ratio 1.7% 1.5% 1.3% 1.1% 0.9% 1,785 1,633 1,583 238 283 1,448 1,402 234 1,316 241 250 1,208 676 1,170 261 610 224 212 NPAs 714 451 (S$m) 500 414 217 292 871 779 636 739 756 652
Slide 30: Inflow of new NPAs significantly lower in 2010
Performance Trends Inflow of new NPAs significantly lower in 2010, offset by recoveries and upgrades FY10 FY09 4Q10 3Q10 4Q09 S$m S$m S$m S$m S$m NPAs - Opening Balance 1,448 1,348 1,170 1,316 1,583 New NPAs 691 1,231 325 119 232 Net Recoveries/Upgrades (704) (609) (211) (228) (261) Write-offs (227)
Slide 31: Healthy allowance coverage ratios
Performance Trends Healthy allowance coverage ratios of 119% of total NPAs and 271% of unsecured NPAs 400% Total allowances/Unsecured NPAs 350% 350% 288% 300% 271% 266% 249% 250% 221% 212% 188% 200% Total allowances/NPAs 150% 126% 112% 119% 109% 103% 102% 107% 97% 100% Specific allowances/NPAs 50% 4
Slide 32: Tier 1 ratio of 16.3% and Core Tier 1 of 12.5%
Performance Trends Tier 1 ratio of 16.3% and Core Tier 1 of 12.5% 17.6% (% of RWA) 16.4% 16.3% 1.3% Total CAR 0.5% 15.2% 15.5% 1.0% 0.3% 0.8% Tier 2 capital Tier 1 preference shares 12.0% 15.9% 10.8% 11.6% 12.5% 16.3% 15.3% 11.5% 15.2% Core Tier 1 (adjusted 14.4% common equity) Dec-09 Mar-10 Jun-10
Slide 33: Dividend per share increased to 30 cents
Performance Trends Dividend per share increased to 30 cents 30.0 28.0 28.0 28.0 23.0 15.0 Net DPS (cents) 14.0 14.0 14.0 12.0 Final net dividend 14.0 14.0 14.0 15.0 11.0 Interim net dividend 2006 2007 2008 2009 2010 Net Dividends (S$m) 709 864 868 897 994 Core Net Profit (S$m) 1,443 1,878 1,486 1,96
Slide 34: OCBC Malaysia: Full year net profit up 16%
Malaysia and Indonesia Subsidiaries OCBC Malaysia: Full year net profit up 16% FY10 FY09 YoY RM m RM m +/(-)% Net Interest Income 1,131 1,036 9 Islamic Banking Income 158 144 10 Non-Interest Income 448 415 8 Total Income 1,736 1,595 9 Operating Expenses (656) (597) 10 Operating Profit 1,081 998 8 Al
Slide 35: OCBC Malaysia: Fourth quarter net profit up 29% YoY
Malaysia and Indonesia Subsidiaries OCBC Malaysia: Fourth quarter net profit up 29% YoY, down 6% QoQ 4Q10 4Q09 YoY 3Q10 QoQ RM m RM m +/(-)% RM m +/(-)% Net Interest Income 292 262 11 294 (1) Islamic Banking Income 38 55 (31) 39 (2) Non-Interest Income 82 85 (4) 125 (34) Total Income 412 402 2 458 (
Slide 36: OCBC Malaysia: Key financial ratios
Malaysia and Indonesia Subsidiaries OCBC Malaysia: Key financial ratios FY10 FY09 4Q10 3Q10 4Q09 % % % % % Net Interest Margin 2.42 2.35 2.42 2.55 2.24 Non-Interest Income / 25.8 26.0 19.9 27.3 21.1 Total Income Cost-to-Income Ratio 37.8 37.4 41.3 37.3 42.5 Loans-to-Deposits Ratio 81.7 76.5 81.7 83.
Slide 37: Bank OCBC NISP: Full year net profit down 26%
Malaysia and Indonesia Subsidiaries Bank OCBC NISP: Full year net profit down 26% as a result of one-time merger costs FY10 FY09 YoY RP bn RP bn +/(-)% Net Interest Income 1,807 1,726 5 Non Interest Income 482 497 (3) Total Income 2,289 2,223 3 Operating Expenses (1,482) (1,377) 8 Operating Profit 8
Slide 38: Bank OCBC NISP: Quarterly loss due to merger costs
Malaysia and Indonesia Subsidiaries Bank OCBC NISP: Quarterly loss due to merger costs 4Q10 4Q09 YoY 3Q10 QoQ RP bn RP bn +/(-)% RP bn +/(-)% Net Interest Income 454 441 3 465 (2) Non-Interest Income 122 108 13 130 (6) Total Income 577 549 5 595 (3) Operating Expenses (350) (348) 1 (398) (12) Operat
Slide 39: Bank OCBC NISP: Key financial ratios
Malaysia and Indonesia Subsidiaries Bank OCBC NISP: Key financial ratios FY10 FY09 4Q10 3Q10 4Q09 % % % % % Net Interest Margin 5.14 5.53 4.81 5.17 5.52 Non-Interest Income / Total Income 21.0 22.4 21.6 21.8 20.4 Cost-to-Income Ratio 64.8 61.9 60.6 66.9 62.8 Loans-to-Deposits Ratio 78.0 72.4 78.0 78
Slide 40: In Summary
In Summary • Healthy full year performance led by strong growth in non-interest income and significantly lower credit costs • Robust and well-balanced loan growth momentum throughout the year, gaining market share in Singapore • Acquisition of Bank of Singapore and continued investments in capabilit
Oversea-Chinese Banking — FY2010 Earnings Presentation on 6ix