Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q1 2018 Earnings Presentation
44 slides from Oversea-chinese Banking's earnings presentation, May 7, 2018
Slide 1: First Quarter 2018 Results Presentation
First Quarter 2018 Results Presentation 7 May 2018 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 no
Slide 2: Agenda
Agenda Results Overview 1Q18 Group Performance Trends Major Accounting Policies Effective 1 January 2018 Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP Note: - Certain comparative figures have been restated to conform with the curren
Slide 3: 1Q18 Highlights
Group performance 1Q18 Highlights Net profit rose 29% YoY to S$1.11b; return on equity higher at 11.8% Earnings Net Interest Income: S$1.42b ➢ Robust YoY performance across the Group’s franchise (1Q17 : S$1.27b; +11%) Net profit (S$m) • Net interest income grew 11% YoY from sustained asset growth +2
Slide 4: 1Q18 Group Performance
Group performance 1Q18 Group Performance Net profit of S$1.11b was up 29% YoY and 8% QoQ 1Q18 4Q17 QoQ 1Q17 YoY OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,415 1,424 (1) 1,272 11 Non-interest income 918 1,214 (24) 850 8 Total income 2,333 2,638 (12) 2,122 10 Operating expenses (1,032)
Slide 5: 1Q18 Banking Operations Performance
Banking Ops performance 1Q18 Banking Operations Performance Net profit before GEH contribution (“Banking Operations”) 25% higher YoY at S$990m 1Q18 4Q17 QoQ 1Q17 YoY Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,397 1,403 - 1,248 12 Non-interest income 703 648 8 687 2 Total inco
Slide 6: Agenda
Agenda Results Overview 1Q18 Group Performance Trends Major Accounting Policies Effective 1 January 2018 Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 6
Slide 7: Performance by geography and business
Earnings Performance by geography and business Earnings well-diversified across key geographies and business segments 1Q18 Operating Profit 1Q18 Profit before Tax by Business1/ by Geography OCBC Wing Singapore Others S$697m Hang YoY: +38% 9% 6% Insurance 1Q18 Global 1Q18 Corporate / Malaysia 13% Inv
Slide 8: Net interest income
Net interest income Net interest income Net interest income rose 11% YoY, driven by robust asset growth and 5 bps rise in NIM Net interest 1.67% 1.67% 1.67% margin 1.65% 1.65% 1.66% (“NIM”) 1.62% 5,423 5,052 1,424 1,415 1,345 1,382 1,272 Net interest income (S$m) FY16 FY17 1Q17 2Q17 3Q17 4Q17 1Q18 8
Slide 9: Non-interest income
Non-interest income Non-interest income YoY non-interest income up 8% led by strong fee growth and higher insurance income; QoQ non-interest income reduced by 24% as the increase in fees was more than offset by lower insurance and investment income Non- 46.0% interest 43.1% 42.8% 42.8% 40.5% 40.0% 3
Slide 10: Wealth Management
Wealth management Wealth Management Wealth management income rose 22% YoY across key customer segments; BOS’ AUM grew 19% YoY to US$102b Wealth Management Income1/ 2/ (S$m) Bank of Singapore Earning Asset Base (US$b) As % of Group income Dec 14 – Dec 17 CAGR 23% 121 126 38% 33% 33% 97 22 24 32% 31%
Slide 11: Fees & Commissions
Non-interest income Fees & Commissions Fee income increased 11% YoY from broad-based growth across key segments 22.7% 20.9% 23.0% Fee income / 19.3% 20.5% 20.2% 18.6% Total income 1/ 1,953 299 1,638 536 94 492 488 491 481 290 75 Others 3/ 71 72 84 72 22 63 528 Investment 29 24 15 26 Banking 130 Fees
Slide 12: Operating expenses
Operating expenses Operating expenses Expenses declined 4% QoQ as a result of effective cost management 44.6% 42.4% 45.9% 44.2% Cost / 42.2% 41.4% 40.8% Income 4,042 3,788 1,075 1,032 973 993 1,001 778 678 223 176 179 179 198 Others Operating expenses 793 763 210 194 Property & (S$m) 192 195 195 equ
Slide 13: Allowances under SFRS(I) 9 and revised MAS 612
Allowances Allowances under SFRS(I) 9 and revised MAS 612 The Group complied with SFRS(I) 9 and revised MAS 612 requirements effective 1 January 2018 As at 31 Dec 2017 As at 1 Jan 2018 As at 31 Mar 2018 RLAR RLAR S$0.34b S$0.35b With effect from 1 January 2018, SFRS(I) 9 requires the Group to calcul
Slide 14: Allowances
Allowances Allowances Allowances lower QoQ and YoY 726 671 -93% YoY Allowances for loans and other -93% QoQ assets (S$m) 168 169 156 178 12 FY16 FY17 1Q17 2Q17 3Q17 4Q17 1Q18 Allowances for loans and other assets (S$m) Allowances for impaired loans 1/ 484 1,407 108 105 138 1,055 13 - Allowances for
Slide 15: Customer loans
Loans Customer loans Loans expanded 10% YoY to S$247b across most industries and key markets In constant ccy terms +10% YoY +12% YoY +4% QoQ +5% QoQ 247 232 237 Rest of the world 225 229 QoQ: +4% 32 YoY: +14% 30 31 28 29 Greater China QoQ: +6% 63 Customer 57 59 YoY: +16% 54 56 Loans (S$b) Indonesia
Slide 16: Customer loans
Loans Customer loans Loan portfolio remained well-diversified Customer Loans by Geography Customer Loans by Industry Rest of the World Other Asia Others 1/ Pacific 8% 11% Mar 18 Housing loans Mar 18 Manufacturing 5% 6% 12% 7% 26% 6% Singapore Mar 17 Mar 17 6% 42% General 27% 43% commerce 12% Greater
Slide 17: Greater China Customer Loans
Loans Greater China Customer Loans Loans up 16% YoY and 6% QoQ; NPL ratio remained low at 0.4% 0.6% 0.6% NPL ratio 0.5% 0.4% 0.4% 63 59 56 57 4 54 4 2 3 Macao 4 2 2 4 2 2 Taiwan Customer 32 Loans to Hong Kong 30 Greater 30 31 28 China Offshore 2/ (S$b) China 1/ 18 20 14 14 15 6 6 6 5 5 Mar 17 Jun 17
Slide 18: Asset quality
Asset quality Asset quality NPL ratio fell QoQ to 1.4%; NPA balances lower at S$3.45b compared to the previous quarter 1.5% 1.4% NPL ratio 1.3% 1.3% 1.3% 3,468 3,452 53 47 2,983 2,870 2,920 652 684 61 55 Debt securities / 60 334 Contingent liabilities 374 365 232 247 Rest of the 304 World NPLs 307 3
Slide 19: NPL Ratio & Non-Performing Assets
Asset quality NPL Ratio & Non-Performing Assets NPL ratio fell QoQ mainly from a decline in the oil and gas NPL ratio; new NPA formation lower QoQ and YoY NPL ratio NPAs 1.45% 1Q18 4Q17 1Q17 1.38% S$m S$m S$m 1.25% 1.25% 1.26% Opening balance 3,468 2,983 2,886 0.59% 0.91% 0.85% 0.62% 0.63% New NPAs
Slide 20: Customer deposits
Deposits Customer deposits Customer deposits rose 2% QoQ and 9% YoY 49.9% 50.9% 50.5% 49.2% CASA ratio 47.1% 284 289 265 264 268 26 29 18 22 25 118 Others 124 115 108 108 Fixed Deposits Customer Deposits Savings Deposits (S$b) 52 Current Account 50 51 51 53 S$135b S$135b S$140b S$136b S$132b 82 84 8
Slide 21: Loans-to-Deposits Ratio
Funding Loans-to-Deposits Ratio Group LDR at 84.4%, as compared to 83.6% the year before Group 85.2% 85.3% 83.6% 84.4% LDR1/ 82.5% 284 289 Others 265 264 268 26 27 IDR 24 247 9 23 23 237 8 7 RMB 229 232 8 225 8 8 8 8 7 8 29 29 27 HKD 24 20 21 23 26 8 26 26 8 5 7 8 7 5 22 24 MYR 6 5 5 22 22 22 34 Cus
Slide 22: Funding & Liquidity
Funding Funding & Liquidity Well-diversified funding mix; customer deposits accounted for 79% of total funding; LCR and NSFR comfortably above regulatory guidelines at 149% and 106% respectively Funding Composition as of 31 Mar 2018 Wholesale Funding by Currency as of 31 Mar 2018 Others 7% By Maturi
Slide 23: Capital
Capital Capital Capital position remained strong and comfortably above regulatory requirements Capital Adequacy Ratios (%) Basel III transitional arrangements 1/ Basel III 1/ 17.2 16.5 16.1 16.2 15.8 Total CAR 14.9 14.2 13.9 14.0 14.2 13.9 Tier 1 CAR 13.3 13.0 13.1 Common Equity Tier 1 CAR Proforma
Slide 24: Agenda
Agenda Results Overview 1Q18 Group Performance Trends Major Accounting Policies Effective 1 January 2018 Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 24
Slide 25: Major accounting policies effective 1 Jan 2018
Accounting policies Major accounting policies effective 1 Jan 2018 • With effect from 1 January 2018, Singapore-incorporated companies listed on the Singapore Exchange (“SGX”) are required to apply a new financial reporting framework, Singapore Financial Reporting Standards (International) (“SFRS(I)
Slide 26: Effect of adopting SFRS(I) 1 and change in accounting policy for GEH
Accounting policies Effect of adopting SFRS(I) 1 and change in accounting policy for GEH 4Q17 4Q17 1Q17 1Q17 after before Difference after before Difference OCBC Group restatement restatement restatement restatement S$m S$m S$m S$m S$m S$m Net interest income 1,424 1,424 - 1,272 1,272 - Non-interest
Slide 27: Impact on adoption of SFRS(I)
Accounting policies Impact on adoption of SFRS(I) SFRS(I) 1 First Time Adoption of Singapore Financial Reporting Standards (International) • The Group has elected the optional exemption to reset its cumulative foreign currency translation reserves (“FCTR”) for all foreign operations to nil at the da
Slide 28: Agenda
Agenda Results Overview 1Q18 Group Performance Trends Major Accounting Policies Effective 1 January 2018 Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 28
Slide 29: Subsidiaries’ Performance
Major subsidiaries Subsidiaries’ Performance All major subsidiaries’ earnings up YoY and contributed 32% to the Group’s profit Key Metrics 1Q18 1Q17 YoY Net profit 1/ S$153m +68% S$91m NBEV S$101m S$111m -9% Great Eastern Holdings 43.6% NBEV margin +4.0ppt 39.6% TWNS S$231m S$280m -17% Net profit HK
Slide 30: 1Q18 Great Eastern Holdings’ performance
Great Eastern 1Q18 Great Eastern Holdings’ performance Net profit contribution rose 80% YoY to S$123m 1Q18 4Q17 QoQ 1Q17 YoY GEH S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 172 278 (38) 57 204 - Operating profit 1/ 159 163 (2) 121 32 - Non-operating (loss) / profit 2/ (5) 84 (106) (82)
Slide 31: GEH: Operating Profit
Great Eastern GEH: Operating Profit Operating profit up 32% YoY mainly driven by higher investment income and lower claims +32% YoY 163 159 158 158 600 Operating 502 profit from 121 insurance business (S$m) FY16 FY17 1Q17 2Q17 3Q17 4Q17 1Q18 Note: - Operating Profit (net of tax) is defined as premiu
Slide 32: GEH: Non-operating profit
Great Eastern GEH: Non-operating profit Non-operating loss at S$5m as gains from equities were more than offset by widening credit spreads Non-operating 113 profit/(loss) 84 85 from insurance business (S$m) 27 (5) (46) (82) FY16 FY17 1Q17 2Q17 3Q17 4Q17 1Q18 Note: - Non-operating profit / loss (net
Slide 33: GEH: Total weighted new sales
Great Eastern GEH: Total weighted new sales TWNS at S$231m, lower YoY as 1Q17 saw comparatively stronger bancassurance sales 1,313 -17% 19 YoY 471 5 1,078 1/ 353 15 121 371 306 280 5 5 256 TWNS 5 75 231 (S$m) 73 7 Emerging markets 84 940 70 344 Malaysia 691 226 Singapore 203 167 154 FY16 FY17 1Q17 2
Slide 34: GEH: New business embedded value
Great Eastern GEH: New business embedded value NBEV at S$101m; NBEV margin rose to 43.6% from 39.6% a year ago driven by improved product mix 50.3% NBEV margin 43.6% 43.6% 41.4% 40.8% (NBEV / Total 39.6% 37.9% weighted new sales) 543 179 6 2 470 1/ 5 210 129 69 125 157 2 111 2 1 101 50 48 2 Emerging
Slide 35: 1Q18 OCBC Wing Hang’s performance
OCBC Wing Hang 1Q18 OCBC Wing Hang’s performance Net profit up 8% QoQ and 29% YoY to HKD626m 1Q18 4Q17 QoQ 1Q17 YoY OCBC Wing Hang HKD m HKD m +/(-)% HKD m +/(-)% Net interest income 1,210 1,160 4 970 25 Non-interest income 232 248 (7) 275 (16) Total income 1,442 1,408 2 1,245 16 Operating expenses
Slide 36: OCBC Wing Hang: Revenue
OCBC Wing Hang OCBC Wing Hang: Revenue Net interest income increased 25% YoY and NIM rose 5 bps; non-interest income at HKD232m Net interest income (HKD m) Non-interest income (HKD m) Net interest Non-int. income/ margin Total income 24.4% 24.8% 23.5% 33.9% 1.67% 1.61% 22.1% 17.6% 16.1% 1.57% 1.56%
Slide 37: OCBC Wing Hang: Loans & Deposits
OCBC Wing Hang OCBC Wing Hang: Loans & Deposits Loans and deposits grew 16% and 13% YoY respectively; NPL ratio lower YoY at 0.5% Gross Loans (HKD b) Deposits (HKD b) NPL ratio Loans / Deposits 1/ 0.9% 72.3% 74.8% 0.8% 0.8% 71.7% 71.8% 70.3% 0.5% 0.5% 189 180 222 219 171 205 164 166 194 197 Mar 17 J
Slide 38: 1Q18 OCBC Malaysia’s Performance
OCBC Malaysia 1Q18 OCBC Malaysia’s Performance Net profit rose up QoQ and YoY to RM244m 1Q18 4Q17 QoQ 1Q17 YoY OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 359 359 - 346 4 Islamic banking income 1/ 105 116 (9) 111 (5) Non-interest / finance income 151 187 (19) 128 18 Total income 6
Slide 39: OCBC Malaysia: Revenue
OCBC Malaysia OCBC Malaysia: Revenue Net interest/finance income up slightly YoY; NIM increased 7bps to 2.03%; non-interest/finance income rose 20% YoY Net interest/finance income (RM m) Non-interest/finance income1/ (RM m) Net interest/ Non-interest/finance finance margin income/ Total income 1.96%
Slide 40: OCBC Malaysia: Loans & Deposits
OCBC Malaysia OCBC Malaysia: Loans & Deposits Customer loans at RM67b, with NPL ratio relatively stable at 2.2%; deposits up 5% YoY Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 2.3% 2.3% 2.2% 2.1% 2.1% 94.2% 92.4% 92.7% 94.2% 88.9% 71 69 71 71 72 74 75 69 68 67 Mar 17 Jun 17 Sep 17
Slide 41: 1Q18 OCBC NISP’s performance
OCBC NISP 1Q18 OCBC NISP’s performance Net profit increased 18% YoY and 31% QoQ to IDR663b 1Q18 4Q17 QoQ 1Q17 YoY OCBC NISP IDR b IDR b +/(-)% IDR b +/(-)% Net interest income 1,551 1,574 (1) 1,413 10 Non-interest income 386 367 5 341 13 Total income 1,937 1,941 - 1,754 10 Operating expenses (885) (
Slide 42: OCBC NISP: Revenue
OCBC NISP OCBC NISP: Revenue Net interest income was 10% YoY higher while non-interest income rose 13% Net interest income (IDR b) Non-interest income (IDR b) Net interest Non-int. income/ margin Total income 4.62% 4.47% 4.67% 4.48% 4.41% 4.31% 4.24% 20.8% 20.0% 21.8% 19.9% 19.5% 18.9% 19.9% 6,039 1
Slide 43: OCBC NISP: Loans & Deposits
OCBC NISP OCBC NISP: Loans & Deposits Loans grew 17% YoY, NPL ratio lower at 1.7%; deposits 10% higher compared to the previous year Gross Loans (IDR t) Deposits (IDR t) NPL Ratio Loans / Deposits 1.9% 1.9% 1.9% 94.3% 93.4% 91.1% 1.8% 1.7% 89.8% 85.9% 111 106 121 101 103 115 113 110 94 106 Mar 17 Ju
Slide 44: First Quarter 2018 Results Thank You
First Quarter 2018 Results Thank You
Oversea-Chinese Banking — Q1 2018 Earnings Presentation on 6ix