Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2008 Earnings Presentation
40 slides from Oversea-chinese Banking's earnings presentation, Feb 18, 2009
Slide 1: 2008 Final Results Presentation
2008 Final Results Presentation 18 February 2009 1
Slide 2: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 22
Slide 3: 2008 reported net profit fell 16%; core net profit down 21%
2008 reported net profit fell 16%; core net profit down 21% FY08 FY07 YoY S$m S$m +/(-)% Net Interest Income 2,783 2,244 24 Non-Interest Income 1,458 1,944 (25) Total Income 4,241 4,188 1 Operating Expenses (1,854) (1,680) 10 Operating Profit 2,387 2,508 (5) Amortisation of Intangibles (47) (47) - A
Slide 4: Fourth quarter earnings impacted by weaker non-interest income and higher allowances
Fourth quarter earnings impacted by weaker non-interest income and higher allowances 4Q08 4Q07 YoY 3Q08 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 783 613 28 684 15 Non-Interest Income 259 464 (44) 462 (44) Total Income 1,042 1,077 (3) 1,146 (9) Operating Expenses (463) (484) (4) (492) (6) Op
Slide 5: Excluding GEH – FY08 operating profit grew 13%, core net profit declined 7%
Excluding GEH – FY08 operating profit grew 13%, core net profit declined 7% Excluding GEH FY08 FY07 YoY S$m S$m +/(-)% Net Interest Income 2,707 2,166 25 Non-Interest Income 1,052 1,209 (13) Total Income 3,759 3,375 11 Operating Expenses (1,702) (1,555) 10 Operating Profit 2,057 1,820 13 Allowances
Slide 6: Excluding GEH – 4Q08 operating profit up 21% YoY, down 3% QoQ
Excluding GEH – 4Q08 operating profit up 21% YoY, down 3% QoQ Excluding GEH 4Q08 4Q07 YoY 3Q08 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 765 589 30 664 15 Non-Interest Income 130 252 (49) 282 (54) Total Income 895 841 6 946 (5) Operating Expenses (415) (445) (7) (454) (8) Operating Profit 48
Slide 7: Key Financial Ratios - based on core earnings
Key Financial Ratios - based on core earnings FY08 FY07 4Q08 3Q08 4Q07 % % % % % Net Interest Margin 2.27 2.10 2.47 2.18 2.14 Non-Interest Income/ Total 34.4 46.4 24.9 40.3 43.0 Income Cost-to-Income Ratio 43.7 40.1 44.5 43.0 45.0 Loans-to-Deposits Ratio 84.8 80.3 84.8 84.4 80.3 NPL Ratio 1.5 1.7 1.
Slide 8: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 88
Slide 9: Continued growth in net interest income and improvement in margins
Continued growth in net interest income and improvement in margins 2.47% 2.27% 2.24% Net 2.13% 2.14% 2.17% 2.18% interest 2.10% 2.04% 2.07% margin 2.00% 783 2,783 678 684 638 2,244 613 558 566 1,794 508 Net interest income (S$m) 2006 2007 2008 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 99
Slide 10: Non-interest income fell due to lower insurance, investment and trading income
Non-interest income fell due to lower insurance, investment and trading income 49.9% 46.4% 46.9% 46.0% 44.7% 43.0% 40.3% Non-interest 34.4% 37.1% 34.6% income/ 2,045 2,037 Total income 24.9% 93 598 1,644 598 1,944 186 544 93 493 481 1,448 464 462 505 167 378 Non-interest 1,458 18 income 377 (S$m) 36
Slide 11: GEH's life assurance profits impacted by weak markets
GEH’s life assurance profits impacted by weak markets FY08 FY07 4Q08 3Q08 4Q07 Life assurance profit from: S$m S$m S$m S$m S$m - Participating Fund 102 143 27 26 71 - Non-participating Fund 130 302 67 103 94 - Investment-linked Fund 68 64 21 16 15 Total life assurance profit 300 509 115 145 180 Life
Slide 12: Fee income fell by 4% for the year
Fee income fell by 4% for the year 20.7% 20.2% 20.9% 19.5% 19.3% 18.8% 18.4% 17.5% 18.2% 17.4% Fee income/ Total income 15.3% 808 774 217 211 212 202 202 199 597 178 159 Fee income (S$m) 2006 2007 2008 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 Excluding divestment gains 12 12
Slide 13: Expenses increased 10% in FY08, fell 4% YoY in 4Q08
Expenses increased 10% in FY08, fell 4% YoY in 4Q08; BAU expenses up 7% for the year 45.0% 45.5% 44.5% 43.7% 43.0% 42.0% 41.1% 40.8% Cost-to- 40.1% Income 39.6% Ratio 1,854 1,680 34.7% 485 492 473 463 469 416 427 426 1,331 433 132 143 122 117 352 99 340 98 108 332 301 86 83 74 81 94 87 71 78 277 Ope
Slide 14: Full year core operating profit down 5%
Full year core operating profit down 5% Operating Profit 2,601 2,573 before allowances 2,508 93 (S$m) 186 598 2,508 754 756 2,387 93 634 167 654 621 661 593 584 1,911 579 589 565 2006 2007 2008 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 Divestment gains 14 14
Slide 15: Significant increase in allowances for loans and other assets
Significant increase in allowances for loans and other assets Allowances for 447 loans and other assets (S$m) 243 156 36 39 55 2 0.3 13 (16) (8) 2006 2007 2008 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 15 15
Slide 16: Allowances details
Allowances details FY08 FY07 4Q08 3Q08 4Q07 S$m S$m S$m S$m S$m Specific allowances/ 165 (108) 159 30 (5) (write-back) for loans Portfolio allowances for 20 - 11 9 - loans Allowances for CDOs 87 231 15 4 10 Allowances/(write-back) for 175 (87) 58 113 8 other assets Total net allowances 447 36 243 15
Slide 17: Movements in specific allowances for loans
Movements in specific allowances for loans* FY08 FY07 4Q08 3Q08 4Q07 S$m S$m S$m S$m S$m Allowances for new and 434 300 222 71 76 existing NPLs Write-backs 1/ (207) (351) (51) (34) (71) Recoveries 2/ (62) (57) (12) (7) (10) Net Specific Allowances/ 165 (108) 159 30 (5) (Write-backs) * Excludes CDOs
Slide 18: Bank's CDO portfolio
Bank’s CDO portfolio FY08 Cumulative Basis Investment Change (S$m) as at from Allowances MTM Negative Fair Allowances MTM Negative Fair 31 Dec 08 30 Sep 08 Losses^ Value Adj. to Losses^ Value Adj. to Equity Equity ABS CDOs 252 (6) 40 - - 252 - - Corporate 201 (156) * 47 49 39 47 66 70 CDOs Total CDO
Slide 19: Full year ROE at 9.9%
Full year ROE at 9.9% 15.9% 15.4% 13.4% ROE 11.8% 11.5% 12.2% 11.2% 11.3% 9.9% 10.3% 2,071 6.7% 2,002 104 1,749 647 622 89 47 559 174 532 1,878 90 156 518 463 1,443 510 428 425 38 402 460 26 Net Profit 425 425 (S$m) 381 396 301 1,486 51 250 2006 2007 2008 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 Dive
Slide 20: Earnings contribution by segments
Earnings contribution by segments FY08 PBT by Business Segment FY08 PBT by Geography Insurance Other Asia Rest of the 12% Other Pacific World ASEAN 2% 1% Global 4% Treasury 25% Global Consumer Financial Services 36% Malaysia 27% Singapore Global 66% Corporate Banking 45% FY08 Core Profit Before Tax
Slide 21: Loans up 12% YoY, flat QoQ
Loans up 12% YoY, flat QoQ 81.3 81.3 78.4 75.4 72.8 68.0 18.5 17.7 Loans 65.3 17.2 63.3 16.2 (S$bn) 15.4 13.7 11.9 13.0 13.6 14.3 12.7 12.1 12.3 11.0 11.5 10.9 46.9 48.4 49.2 49.3 42.8 45.3 40.5 41.3 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Singapore Malaysia International Note: Loans
Slide 22: Diversified loans
Diversified loans Loans by Geography Loans by Sector Transport, storage & Others Others Comm Greater 8% 8% 7% China Building & Construction 8% 21% Indonesia Housing 5% Loans 24% Singapore Malaysia Manufacturing 61% 8% 18% Professionals Non-Bank Financial & Individuals Institutions, General 9% Invt/H
Slide 23: Property exposure – resilient portfolios
Property exposure – resilient portfolios Singapore Development Project Loans Average LTVs are 54% for residential projects and 59% for commercial projects; only 2% of the book has LTV of more than 80% Diversified portfolio with about 70% residential and 30% commercial Development project finan
Slide 24: Deposits up 6% YoY; better mix with lower-cost deposits
Deposits up 6% YoY; better mix with higher proportion of lower-cost deposits 83.3% 84.4% 84.8% 78.9% 80.3% 79.7% 85.0% 77.4% 77.6% Loans-to- 75.0% deposits 94.7 94.1 92.9 92.4 65.0% 88.8 82.2 85.7 78.0 15.8 13.3 14.2 16.1 55.0% 11.6 12.5 11.6 9.9 14.1 14.7 15.1 12.9 13.0 16.1 45.0% 11.7 13.0 35.0% D
Slide 25: NPL ratio increased in 4Q08 but remains lower than end-2007
NPL ratio increased in 4Q08 but remains lower than end-2007 2.7% 2.4% NPL Ratio 2.1% 1.7% 1.6% 1.5% 1.4% 1,766 1.3% 1,614 239 1,484 244 1,354 1,325 1,348 1,232 286 1,204 658 294 349 621 320 457 NPLs 365 581 (S$m) 548 519 470 456 496 869 749 617 512 456 442 383 395 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08
Slide 26: Allowance coverage at 125%
Allowance coverage at 125% 128% 125% 122% 116% 115% 107% 102% 104% Total Allowances / NPLs 52% 47% 45% 47% 44% 43% 43% 44% Specific Allowances / NPLs Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 26 26
Slide 27: Strong Tier 1 ratio of 14.9% and core Tier 1 of 11.0%
Strong Tier 1 ratio of 14.9% and core Tier 1 of 11.0% 15.1% 14.7% 13.6% 0.2% (% of RWA) 13.5% 0.3% Total CAR 12.4% 0.7% 1.3% 0.9% Tier 2 Capital Tier 1 preference 10.2% 11.4% 11.0% 10.6% 11.0% shares 14.4% 14.9% Core Tier 1 – 12.8% 12.3% adjusted 11.5% common equity (S$m) Dec-07 Mar-08 Jun-08 Sep-08
Slide 28: Full year dividend unchanged
Full year dividend unchanged 28.0 28.0 23.0 Net DPS (cents) 18.4 14.0 14.0 12.0 12.7 9.6 Final Net Dividend 6.3 14.0 14.0 11.0 8.8 6.3 Interim Net Dividend 2004 2005* 2006 2007 2008 (S$m) Net Dividends 403 574 709 864 868 Core Net Profit 1,051 1,298 1,443 1,878 1,486 Dividend Payout Ratio 38% 44% 49
Slide 29: Scrip dividend scheme to be reactivated
Scrip dividend scheme to be reactivated Shareholders can elect to receive FY08 final dividend in shares instead of cash Scheme was previously approved by shareholders in 1996 – to be updated in line with current SGX scrip dividend rules Issue price for scrip to be set at a 10% discount to refe
Slide 30: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • In Summary 30 30
Slide 31: GEH: Full year contribution
GEH: Full year contribution GEH’s Contribution to FY08^ FY07 YoY OCBC’s Results S$m S$m +/(-)% Total Income 483 813 (41) Operating Expenses (152) (125) 21 Operating Profit 331 688 (52) Amortisation of Intangibles (47) (47) 0 Allowances (55) (5) n.m. Associates & JVs (11) 6 (290) Tax & Minority Inter
Slide 32: GEH: Quarterly contribution
GEH: Quarterly contribution GEH’s Contribution to 4Q08^ 4Q07 YoY 3Q08 QoQ OCBC’s Results S$m S$m +/(-)% S$m +/(-)% Total Income 147 236 (37) 200 (26) Operating Expenses (48) (39) 21 (38) 25 Operating Profit 99 197 (49) 162 (38) Amortisation of Intangibles (12) (12) 0 (12) 0 Allowances (40) (4) 833 (
Slide 33: OCBC Malaysia: Full year results
OCBC Malaysia: Full year results FY08 FY07 YoY Audited Results* RM m RM m +/(-)% Net Interest Income 995 867 15 Islamic Banking Income 113 82 39 Non-Interest Income 432 357 21 Total Income 1,540 1,305 18 Operating Expenses (598) (542) 10 Operating Profit 942 763 23 (Allowances)/Write-back (103) (45)
Slide 34: OCBC Malaysia: Quarterly results
OCBC Malaysia: Quarterly results 4Q08 4Q07 YoY 3Q08 QoQ Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 262 233 12 254 3 Islamic Banking Income 32 23 39 28 14 Non-Interest Income 120 92 30 81 48 Total Income 414 348 19 363 14 Operating Expenses (158) (163) (3) (153) 3 Operating P
Slide 35: OCBC Malaysia: Financial ratios
OCBC Malaysia: Financial ratios FY08 FY07 4Q08 3Q08 4Q07 % % % % % Net Interest Margin 2.54 2.51 2.61 2.57 2.58 Non-Interest Income / 28.1 27.4 29.0 22.4 26.4 Total Income Cost-to-Income Ratio 38.8 41.6 38.2 42.1 46.9 Loans-to-Deposits Ratio 83.2 85.2 83.2 90.5 85.2 Gross NPL Ratio 3.9 4.0 3.9 3.2 4
Slide 36: Bank OCBC NISP: Full year results
Bank OCBC NISP: Full year results FY08 FY07 YoY RP bn RP bn +/(-)% Audited Results* Net Interest Income 1,401 1,178 19 Non Interest Income 471 336 40 Expenses (1,238) (1,048) 18 Operating Profit 634 466 36 Allowances (181) (117) 55 Net Profit 317 250 27 * Bank NISP’s contribution to Group net profit
Slide 37: Bank OCBC NISP: Quarterly results
Bank OCBC NISP: Quarterly results 4Q08 4Q07 YoY 3Q08 QoQ RP bn RP bn +/(-)% RP bn +/(-)% Unaudited Results* Net Interest Income 390 306 27 356 9 Non Interest Income 193 88 117 95 103 Expenses (342) (303) 12 (302) 13 Operating Profit 241 91 164 148 63 Allowances (112) (30) 277 (34) 225 Net Profit 90
Slide 38: Bank OCBC NISP: Financial ratios
Bank OCBC NISP: Financial ratios FY08 FY07 4Q08 3Q08 4Q07 % % % % % Net Interest Margin 5.40 4.99 5.23 5.62 4.97 Non-Interest Income / Total 25.2 22.2 33.2 20.9 22.4 Income Cost-to-Income Ratio 64.9 67.9 58.5 67.1 76.8 Loans-to-Deposits Ratio 76.7 89.1 76.7 94.9 89.1 Gross NPL Ratio 2.72 2.53 2.72 2
Slide 39: In Summary
In Summary • Robust net interest income and relatively resilient fee income • Other non-interest income impacted by severe market and economic conditions especially during 4th quarter • 2009 expected to remain challenging • No change in strategic direction • We will manage expenses more tightly and
Slide 40: 2008 Final Results Thank You
2008 Final Results __________________ Thank You 40
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