Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q1 2011 Earnings Presentation
36 slides from Oversea-chinese Banking's earnings presentation, May 12, 2011
Slide 1: First Quarter 2011 Results Presentation
First Quarter 2011 Results Presentation 12 May 2011
Slide 2: Agenda
Agenda Results Overview Performance Trends Malaysia and Indonesia Subsidiaries Note: Amounts less than S$0.5 million are shown as “0”; NM denotes not meaningful 2
Slide 3: Highlights
Results Overview Highlights First quarter performance led by robust growth in loans, fee income and strong contribution from insurance • Good growth momentum quarter-on-quarter; year-on-year comparison impacted by decline in trading income and investment gains from the record highs in 1Q10 • Strong
Slide 4: 1Q11 core net profit of $596m up 18% QoQ, down 12% YoY
Results Overview 1Q11 core net profit of $596m up 18% QoQ, down 12% YoY 1Q11 1Q10 YoY 4Q10 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net Interest Income 784 704 11 769 2 Non-Interest Income 618 681 (9) 560 10 Total Income 1,402 1,385 1 1,329 6 Operating Expenses (581) (502) 16 (620)2/ (6) Operating P
Slide 5: Key ratios improved QoQ
Results Overview Key ratios improved QoQ 1Q11 4Q10 1Q10 Based on core earnings % % % Net Interest Margin 1.90 1.96 2.03 Non-Interest Income / Total Income 44.1 42.1 49.2 Costs / Income 41.5 46.6 36.2 Loans / Deposits 86.8 85.1 81.9 NPL 0.9 0.9 1.5 Allowances / NPAs 123.2 118.8 107.3 ROE 12.2 10.3 15
Slide 6: ROE improved QoQ to 12.2%
Results Overview ROE improved QoQ to 12.2% 15.3% Core 12.2% 12.1% 12.2% 12.0% 12.2% 10.9% ROE 10.3% 2,253 676 1,962 596 570 503 505 Core Net Profit (S$m) 596 676 1Q 545 2009 2010 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 6
Slide 7: Profit contribution by business and geography
Results Overview Profit contribution by business and geography 1Q11 PBT* 1Q11 PBT By Business By Geography Other Asia Greater Pacific Rest of the Others China 3% World Rest of 5% 1% 19% 12% Southeast Global Asia 4% Corporate 38% Banking Insurance 19% Malaysia 24% 63% Singapore 18% 13% Global Global
Slide 8: GEH: 1Q11 net profit contribution doubled QoQ, down 12% YoY
Results Overview GEH: 1Q11 net profit contribution doubled QoQ, down 12% YoY 1Q11 1Q10 YoY 4Q10 QoQ GEH Contribution S$m S$m +/(-)% S$m +/(-)% Total Income 221 247 (11) 160 38 Operating Expenses (40) (42) (4) (45) (10) Operating Profit 180 205 (12) 116 56 Amortisation of Intangibles (12) (12) - (12)
Slide 9: Results excluding GEH: 1Q11 core net profit up 6% QoQ, down 12% YoY
Results Overview Results excluding GEH: 1Q11 core net profit up 6% QoQ, down 12% YoY 1Q11 1Q10 YoY 4Q10 QoQ OCBC excluding GEH S$m S$m +/(-)% S$m +/(-)% Net Interest Income 773 686 13 752 3 Non-Interest Income 409 452 (10) 417 (2) Total Income 1,182 1,138 4 1,168 1 Operating Expenses (541) (460) 18
Slide 10: Net interest income increased 11% YoY and 2% QoQ
Performance Trends Net interest income increased 11% YoY and 2% QoQ – asset growth partially offset by lower margins 2.23% 1.98% 2.03% Net 1.96% 1.98% 1.96% interest 1.90% 1.90% margin 2,947 2,825 784 754 769 720 704 Net interest 784 income (S$m) 1Q 740 704 2009 2010 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 10
Slide 11: Net interest income adjusted for allowances increased 8% YoY and 2% QoQ
Performance Trends Net interest income adjusted for allowances increased 8% YoY and 2% QoQ 1.89% 1.89% 1.96% 1.91% 1.86% 1.83% 1.78% 1.78% Adjusted net interest 2,813 margin* 2,396 735 711 721 702 679 Adjusted net interest 735 income* (S$m) 679 1Q 543 2009 2010 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 * Allowa
Slide 12: Core non-interest income increased 10% QoQ
Core non-interest income increased 10% QoQ, Performance Trends propelled by growth in fee income and insurance income 49.2% 44.7% 44.1% 45.1% 44.1% 41.3% 41.8% 42.1% Non-interest income/ 2,378 681 Total income 621 618 1,990 560 658 234 516 141 116 489 110 174 Non-interest income 586 179 (S$m) 191 18
Slide 13: Fee income increased 23% YoY and 9% QoQ
Performance Trends Fee income increased 23% YoY and 9% QoQ, led by wealth management and investment banking 994 279 260 256 155 252 47 226 37 80 39 41 730 29 39 26 12 26 126 16 Fee and 54 401 commission 103 99 income 97 106 (S$m) 95 319 279 169 42 47 46 42 41 29 39 166 99 189 50 54 62 42 37 48 65 62
Slide 14: GEH: Profit from life assurance more than doubled QoQ
Performance Trends GEH: Profit from life assurance more than doubled QoQ, as Non-Par Fund profit recovered 514 437 125 94 156 146 150 26 24 27 Profit from life assurance 292* 240 (S$m) 69 105 66 92 150 99 27 26 18 16 92 19 96 104 24 25 33 31 23 31 2009 2010 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 Participatin
Slide 15: GEH: Underlying insurance business is strong, new sales up 33% YoY
Performance Trends GEH: Underlying insurance business is strong, with total weighted new sales up 33% YoY 238 724 190 601 177 163 95 290 133 70 258 56 Weighted 80 45 new business premiums (S$m) 177 123 384 106 108 330 56 81 73 108 2009 2010 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 Singapore Malaysia Emerging m
Slide 16: GEH: New business embedded value up 30% YoY
Performance Trends GEH: New business embedded value up 30% YoY 43% 43% New business 42% 42% 42% 42% 41% embedded 39% value/Total weighted new sales 305 102 235 77 75 129 39 68 New business embedded 58 104 value 33 32 (S$m) 34 22 164 75 58 128 40 40 32 34 31 40 2009 2010 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11
Slide 17: Other non-interest income declined 33% QoQ
Performance Trends Other non-interest income declined 33% QoQ, reflecting lower net trading income 658 234 54 10 489 67 174 213 13 87 141 Other non- 47 58 15 interest 116 110 income 15 (S$m) 17 44 25* 157 391 54 344 114 116 15 82 76 25* 39 76 2009 2010 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 Trading income Ne
Slide 18: Wealth management revenue increased 21% QoQ
Performance Trends Wealth management revenue increased 21% QoQ 27.0% 27.1% 27.0% 26.1% As % of 24.7% 23.5% Group 21.9% revenue 21.3% 1,317 373 378 361 1,027 312 271 Wealth management revenue* (S$m) 378 362 361 1Q 2009 2010 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 * Comprises the consolidated revenue from insur
Slide 19: Operating expenses decreased 6% QoQ
Performance Trends Operating expenses decreased 6% QoQ 46.6% 45.2% Cost-to-income 42.3% 41.5% 41.7% 41.5% Ratio 37.3% 2,254 36.2% 620 573 31 581 564 559 1,796 Operating 502 146 120 expenses 132 137 452 (S$m) 407 117 110 100 104 107 349 96 581 1,283 327 332 336 351 995 120 289 110 351 2009 2010 1Q11
Slide 20: Core operating profit increased 16% QoQ
Performance Trends Core operating profit increased 16% QoQ Core operating profit before allowances 3,019 3,071 (S$m) 883 802 821 709 677 821 1Q 934 883 2009 2010 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 20
Slide 21: Net allowances remained low
Performance Trends Net allowances remained low Net allowances 429 for loans and other assets (S$m) 134 1Q 197 49 43 48 49 25 18 25 2009 2010 1Q11 1Q10 2Q10 3Q10 4Q10 1Q11 21
Slide 22: Breakdown of allowances
Performance Trends Breakdown of allowances 1Q11 4Q10 1Q10 S$m S$m S$m Specific allowances for loans 12 25 5 Portfolio allowances for loans 30 34 30 Allowances for other assets (Write-back) 7 (11) (10) Total net allowances 49 48 25 Specific loan allowances/ 4 10 2 average loans (bps)* * Annualised 22
Slide 23: Movement in specific allowances for loans
Performance Trends Movement in specific allowances for loans 1Q11 4Q10 1Q10 S$m S$m S$m Allowances for new and existing NPLs 50 99 68 Write-backs 1/ (24) (56) (54) Recoveries 2/ (14) (18) (9) Net Specific Allowances 12 25 5 1/ Write-backs of specific allowances for existing NPLs due to settlements a
Slide 24: Loan growth of 23% YoY and 4% QoQ
Performance Trends Loan growth of 23% YoY and 4% QoQ Non-bank loans (S$bn) 110.9 106.4 101.8 95.5 90.4 31.5 29.3 27.6 25.8 23.6 17.1 17.8 16.8 16.6 16.2 60.0 61.6 53.1 57.4 50.7 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Singapore Malaysia International Loans by geography are based on where the credit risks
Slide 25: Loan book remains diversified across geographies and sectors
Performance Trends Loan book remains diversified across geographies and sectors Customer Loans by Geography* Customer Loans by Sector As at 31 March 2011 As at 31 March 2011 Agriculture, mining & Transport, storage & Others quarrying Comm Others 12% 3% 9% 6% Building & Construction Greater China 11%
Slide 26: Customer deposits increased 16% YoY, CASA ratio improved to 48.5%
Performance Trends Customer deposits increased 16% YoY and 2% QoQ, CASA ratio improved to 48.5% 83.7% 86.5% 85.1% 86.8% Loans-to- 81.9% 85.0% deposits 75.0% 123.3 126.0 116.0 112.3 65.0% 108.5 55.0% 58.6 56.6 56.9 45.0% 57.5 55.6 35.0% 26.1 25.6 23.8 24.7 25.0% Deposits 22.7 CASA ratio: (S$bn) 45.9%
Slide 27: NPL ratio remained low
Performance Trends NPL ratio remained low NPL ratio 1.5% 1.3% 1.1% 0.9% 0.9% 1,402 1,316 83 56 1,170 1,208 1,191 323 55 292 213 ** 215 253 199 243 562 567 NPAs* 494 (S$m) 478 463 434 401 368 318 270 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Singapore NPLs Malaysia NPLs International NPLs Debt securities/Co
Slide 28: 64% of NPAs in the substandard category
Performance Trends 64% of NPAs in the “substandard” category – typically well-collateralised or no overdues 1,402 1,316 250 1,170 1,208 1,191 261 212 172 224 500 217 252 414 292 NPAs (S$m) 779 767 652 641 654 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Substandard NPAs Doubtful NPAs Loss NPAs 28
Slide 29: New NPAs significantly lower in 1Q 2011
Performance Trends New NPAs significantly lower in 1Q 2011, offset by lower net recoveries and upgrades 1Q11 4Q10 1Q10 S$m S$m S$m NPAs - Opening Balance 1,208 1,170 1,448 New NPAs 135 325 123 Net Recoveries/Upgrades (129) (211) (111) Write-offs (23) (76) (58) NPAs - Closing Balance 1,191 1,208 1,40
Slide 30: Allowance coverage ratios of 123% of total NPAs
Performance Trends Allowance coverage ratios of 123% of total NPAs and 272% of unsecured NPAs 400% Total allowances/Unsecured NPAs 350% 350% 288% 300% 271% 272% 266% 250% 200% Total allowances/NPAs 150% 126% 123% 112% 119% 107% 100% 50% 0% Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 30
Slide 31: Capital ratios remained strong, Tier 1 ratio of 15.5%
Performance Trends Capital ratios remained strong, Tier 1 ratio of 15.5% and Core Tier 1 of 12% 17.6% 17.3% (% of RWA) 16.3% Total CAR 15.5% 1.3% 15.2% 1.8% 1.0% 0.3% 0.8% Tier 2 capital Tier 1 preference shares 11.6% 11.5% 12.5% 16.3% 12.0% Core Tier 1 (adjusted 10.8% 15.3% 15.2% 15.5% 14.4% common
Slide 32: OCBC Malaysia: Net profit up 15% QoQ, down 11% YoY
Malaysia and Indonesia Subsidiaries OCBC Malaysia: Net profit up 15% QoQ, down 11% YoY 1Q11 1Q10 YoY 4Q10 QoQ RM m RM m +/(-)% RM m +/(-)% Net Interest Income 289 264 9 292 (1) Islamic Banking Income 44 42 7 38 16 Non-Interest Income 118 139 (15) 82 45 Total Income 452 445 2 412 10 Operating Expense
Slide 33: OCBC Malaysia: Key ratios remain strong
Malaysia and Indonesia Subsidiaries OCBC Malaysia: Key ratios remain strong 1Q11 4Q10 1Q10 % % % Net Interest Margin 2.39 2.42 2.27 Non-Interest Income / Total Income 26.2 19.9 31.2 Costs / Income 37.4 41.3 32.3 Loans / Deposits 83.7 81.7 80.3 NPL 2.6 2.8 3.6 Loan Growth (YoY) 10.9 10.4 7.0 Deposit
Slide 34: Bank OCBC NISP: Significant turnaround in net profit QoQ
Malaysia and Indonesia Subsidiaries Bank OCBC NISP: Significant turnaround in net profit QoQ 1Q11 1Q10 YoY 4Q10 QoQ RP bn RP bn +/(-)% RP bn +/(-)% Net Interest Income 535 489 9 504 6 Non-Interest Income 126 141 (11) 148 (15) Total Income 661 630 5 652 1 Operating Expenses (419) (385) 9 (376) 11 Ope
Slide 35: Bank OCBC NISP: Key ratios
Malaysia and Indonesia Subsidiaries Bank OCBC NISP: Key ratios 1Q11 4Q10 1Q10 % % % Net Interest Margin 5.05 4.65 5.31 Non-Interest Income / Total Income 20.0 22.7 22.4 Cost-to-Income Ratio 63.9 57.7 61.0 Loans-to-Deposits Ratio 83.5 80.0 78.9 Gross NPL Ratio 1.9 2.0 3.3 Loan Growth (YoY) 29.2 31.5
Slide 36: First Quarter 2011 Results - Thank You
First Quarter 2011 Results Thank You
Oversea-Chinese Banking — Q1 2011 Earnings Presentation on 6ix