Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q2 2018 Earnings Presentation
47 slides from Oversea-chinese Banking's earnings presentation, Aug 6, 2018
Slide 1: Second Quarter 2018 Results Presentation
Second Quarter 2018 Results Presentation 6 August 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 accept
Slide 2: Agenda
Agenda Results Overview 2Q18 & 1H18 Group Performance Trends 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 current period’s presentation. - Amounts less than
Slide 3: 2Q18 Highlights
Group performance 2Q18 Highlights Net profit rose 16% YoY to a record S$1.21b; return on equity higher at 12.6% Net Interest Income: S$1.45b; +8% Continuing to deliver stable & sustainable growth Higher Returns (2Q17 : S$1.35b) Year-on-Year Non-interest Income: S$1.02b; +2% ➢ Net profit for banking
Slide 4: 2Q18 Group Performance
Group performance 2Q18 Group Performance Record net profit of S$1.21b, up 9% QoQ and 16% YoY 2Q18 1Q18 QoQ 2Q17 YoY OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,450 1,415 2 1,345 8 Non-interest income 1,024 918 12 1,006 2 Total income 2,474 2,333 6 2,351 5 Operating expenses (1,035) (1
Slide 5: 2Q18 Banking Operations Performance
Banking Ops performance 2Q18 Banking Operations Performance Net profit before GEH contribution (“Banking Operations”) rose 19% YoY; Exceeded S$1b for the first time, driven by broad-based income growth 2Q18 1Q18 QoQ 2Q17 YoY Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,430 1,39
Slide 6: 1H18 Group Performance
Group performance 1H18 Group Performance Net profit increased 22% YoY to S$2.32b 1H18 1H17 YoY OCBC Group S$m S$m +/(-)% Net interest income 2,865 2,617 9 Non-interest income 1,942 1,856 5 Total income 4,807 4,473 7 Operating expenses (2,067) (1,966) 5 Operating profit 2,740 2,507 9 Amortisation of
Slide 7: 1H18 Banking Operations Performance
Banking Ops performance 1H18 Banking Operations Performance Net profit for Banking Operations up 22% YoY to S$2.00b 1H18 1H17 YoY Banking Operations S$m S$m +/(-)% Net interest income 2,827 2,570 10 Non-interest income 1,435 1,387 3 Total income 4,262 3,958 8 Operating expenses (1,976) (1,840) 7 Ope
Slide 8: Agenda
Agenda Results Overview 2Q18 & 1H18 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 8
Slide 9: Performance by geography and business
Earnings Performance by geography and business Earnings well-diversified across key geographies and business segments 1H18 Operating Profit 1H18 Profit before Tax by Business1/ by Geography OCBC Wing Others Singapore Hang S$1,571m YoY: +28% 5% 9% Global 1H18 Corporate / 1H18 Insurance Greater Malays
Slide 10: Net interest income
Net interest income Net interest income 2Q18 NII rose 8% YoY from robust asset growth and improved NIM; Higher NIM largely driven by increased loan and placement yields in Singapore and Malaysia 1.67% 1.67% 1.66% 1.67% 1.67% 1.67% 1.65% 1.65% Net interest 1.62% margin (“NIM”) 5,423 5,052 1,424 1,450
Slide 11: Non-interest income
Non-interest income Non-interest income Non-interest income in 2Q18 increased 12% QoQ and 2% YoY to S$1.02b 46.0% Non- 43.1% 42.8% 42.8% interest 40.5% 40.4% 40.0% 41.4% 39.3% income / Total income 4,105 1,214 1,036 1,024 3,437 917 1,006 310 918 649 850 233 291 234 Life & General 561 206 Insurance 8
Slide 12: Wealth Management
Wealth management Wealth Management 2Q18 wealth management income rose 5% QoQ and 3% YoY; BOS’ AUM up 14% YoY at US$102b from continued net new money inflows Wealth Management Income1/ 2/ (S$m) Bank of Singapore Earning Asset Base (US$b) As % of Group income Dec 14 – Dec 17 CAGR 23% 121 126 38% 33%
Slide 13: Fees & Commissions
Non-interest income Fees & Commissions Growth across all major product segments drove 5% YoY increase in fee income 21.9% 22.7% 23.0% 21.0% 19.3% 20.5% 20.9% 20.2% Fee income / 18.6% Total income 1/ 1,953 299 1,638 536 518 94 492 481 488 491 290 75 77 72 72 Others 3/ 63 71 84 22 528 31 24 26 Investm
Slide 14: Operating expenses
Operating expenses Operating expenses 2Q18 costs flat QoQ; CIR improved QoQ and YoY to 41.9% 44.6% 42.4% 45.9% 44.2% Cost / 43.0% 42.2% 41.4% 40.8% 41.9% Income 4,042 3,788 1,075 1,032 1,035 993 1,001 778 973 678 223 176 200 179 179 198 Others 793 Operating 763 210 194 Property & 195 202 expenses 19
Slide 15: Total cumulative allowances
Allowances Total cumulative allowances Allowances met requirements set out in SFRS(I) 9 and the revised MAS 612 2,800 2,695 454 RLAR 353 With effect from 1 January 2018, SFRS(I) 9 requires the Group to calculate credit loss allowances using Allowances for non- a forward-looking expected credit loss
Slide 16: Allowances
Allowances Allowances Allowances in 2Q18 of S$21m were higher QoQ but lower YoY 726 671 -87% YoY Allowances for loans and other +81% QoQ assets (S$m) 168 169 156 178 337 1H 255 33 12 21 FY16 FY17 1H18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Allowances for loans and other assets (S$m) Allowances for impaired l
Slide 17: Customer loans
Loans Customer loans Loan growth momentum continued into 2Q18; up 2% QoQ and 10% YoY to S$252b In constant ccy terms +10% YoY +11% YoY +2% QoQ +1% QoQ 252 247 232 237 225 229 33 Rest of the world 32 31 QoQ: +3% 29 30 28 YoY: +12% 63 65 Greater China 57 59 QoQ: +4% 54 56 Customer YoY: +17% Loans (S$b
Slide 18: Customer loans
Loans Customer loans Loan portfolio remained well-diversified Customer Loans by Geography Customer Loans by Industry Rest of the World 1/ Other Asia Others Pacific Housing loans 8% Manufacturing 12% Jun 18 Jun 18 5% 6% 13% 26% 7% Singapore 6% Jun 17 Jun 17 6% 41% General 27% commerce 13% 42% 12% S$2
Slide 19: Greater China Customer Loans
Loans Greater China Customer Loans Loans up 4% QoQ and 17% YoY; NPL ratio declined QoQ and YoY to 0.3% 0.6% 0.6% 0.5% NPL ratio 0.4% 0.4% 0.3% 65 63 59 4 56 57 4 2 54 4 2 3 4 2 2 4 2 2 Macao 32 32 Taiwan Customer 30 30 31 loans to 28 Hong Kong Greater China Offshore 2/ (S$b) China 1/ 20 21 14 14 15
Slide 20: Asset quality
Asset quality Asset quality Portfolio quality remained sound, NPL ratio flat QoQ at 1.4% 1.5% 1.4% 1.4% 1.3% 1.3% 1.3% NPL ratio 3,468 3,452 3,514 53 47 43 Debt securities / 2,983 Contingent liabilities 2,870 2,920 652 684 773 61 55 Rest of the 60 334 World NPLs 374 365 232 247 222 Greater China 304
Slide 21: NPL Ratio & Non-Performing Assets
Asset quality NPL Ratio & Non-Performing Assets NPL ratio stable and new NPA formation fell QoQ and YoY NPL ratio NPAs 1.45% 1.38% 1.38% 1.25% 1.25% 1.26% 2Q18 1Q18 2Q17 S$m S$m S$m 0.91% Opening balance 3,452 3,468 2,870 0.62% 0.59% 0.63% 0.85% 0.86% New NPAs 277 297 445 Net recoveries/ (144) (274)
Slide 22: Customer deposits
Deposits Customer deposits Customer deposits increased 1% QoQ and 10% YoY to S$290b; CASA ratio improved QoQ to 47.7% 50.9% 50.5% 49.9% 49.2% CASA ratio 47.1% 47.7% 289 290 284 265 264 268 26 29 27 18 22 25 Others Customer deposits 118 124 125 Fixed Deposits 115 108 108 (S$b) Savings Deposits Curren
Slide 23: Loans-to-Deposits Ratio
Funding Loans-to-Deposits Ratio Group LDR higher QoQ and YoY at 85.9% 85.2% 85.3% 85.9% Group 83.6% 84.4% LDR 1/ 82.5% 289 290 284 265 264 268 Others 26 27 29 247 252 IDR 24 9 9 23 23 237 8 7 8 229 232 8 RMB 225 8 8 8 28 8 7 8 29 29 27 28 24 8 HKD 20 21 23 26 8 26 26 8 5 5 7 8 7 5 22 24 23 5 MYR 5 2
Slide 24: Funding & Liquidity
Funding Funding & Liquidity Customer deposits accounted for 78% of total funding; all-currency LCR and NSFR at 138% and 108% respectively, comfortably above regulatory guidelines Funding Composition as of 30 Jun 2018 Wholesale Funding by Currency as of 30 Jun 2018 By Maturity: Customer deposits Curr
Slide 25: Capital
Capital Capital Capital position remained strong and comfortably above regulatory requirements Capital Adequacy Ratios Basel III transitional arrangements 1/ (“CAR”) (%) Basel III 1/ 17.2 16.5 16.1 16.2 15.8 15.9 Total CAR 14.9 14.2 13.9 14.0 14.2 14.3 13.9 Tier 1 CAR 13.3 13.0 13.1 Common Equity Ti
Slide 26: Dividends
Dividends Dividends Interim dividend increased to 20 cents per share; Scrip Dividend Scheme would be applicable 42% 39% 43% Dividend payout 38% 37% 36% ratio 36.0 36.0 36.0 37.0 34.0 18.0 18.0 18.0 19.0 17.0 Net DPS (cents) 20.0 Final net dividend Interim net dividend 18.0 18.0 18.0 18.0 20.0 17.0 2
Slide 27: Agenda
Agenda Results Overview 2Q18 & 1H18 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 27
Slide 28: Subsidiaries’ Performance
Major subsidiaries Subsidiaries’ Performance Major subsidiaries contributed 31% to the Group’s profit Key Metrics 1H18 1H17 YoY Net profit 1/ S$391m +21% S$322m TWNS S$558m +4% Great Eastern S$536m Holdings S$240m NBEV Flat S$240m NBEV margin 43.1% 44.7% -1.6ppt Net profit HKD1,334m +36% HKD978m HKD
Slide 29: 2Q18 Great Eastern Holdings’ performance
Great Eastern 2Q18 Great Eastern Holdings’ performance Net profit contribution grew 61% QoQ and 3% YoY to S$197m 2Q18 1Q18 QoQ 2Q17 YoY GEH S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 201 172 17 199 1 - Operating profit 1/ 153 159 (4) 158 (3) - Non-operating profit / (loss) 2/ 19 (5) 47
Slide 30: 1H18 Great Eastern Holdings’ performance
Great Eastern 1H18 Great Eastern Holdings’ performance Net profit contribution rose 23% YoY to S$320m 1H18 1H17 YoY GEH S$m S$m +/(-)% Profit from insurance business 373 255 46 - Operating profit 1/ 312 279 12 - Non-operating profit / (loss) 2/ 14 (55) 125 - Others 47 32 49 Profit from Shareholders’
Slide 31: GEH: Operating Profit
Great Eastern GEH: Operating Profit 2Q18 operating profit from insurance business was S$153m -3% YoY 163 159 158 158 153 600 Operating 502 profit from 121 insurance business (S$m) 312 FY16 FY17 1H18 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 Note: - Operating Profit (net of tax) is defined as premiums less claim
Slide 32: GEH: Non-operating profit
Great Eastern GEH: Non-operating profit 2Q18 non-operating profit at S$19m from MTM gains in the equities portfolio, favourable interest rate movement and narrowing of swap spreads Non-operating 113 profit/(loss) from insurance 85 84 business (S$m) 27 19 14 (5) (46) (82) FY16 FY17 1H18 1Q17 2Q17 3Q1
Slide 33: GEH: Total weighted new sales
Great Eastern GEH: Total weighted new sales 2Q18 TWNS rose 28% YoY to S$327m, driven by higher sales from agency and bancassurance channels in Singapore 1,313 +28% YoY 19 471 5 1/ 1,078 353 15 121 371 327 306 6 280 5 TWNS 5 256 91 (S$m) 5 75 231 Emerging markets 558 73 7 13 84 Malaysia 940 161 70 34
Slide 34: GEH: New business embedded value
Great Eastern GEH: New business embedded value 2Q18 NBEV up 8% YoY at S$140m, driven by higher contribution from Malaysia 50.3% NBEV 43.6% 43.1% 40.8% 43.6% 42.7% 41.4% 39.6% margin 37.9% (NBEV / Total weighted new sales) 543 179 6 2 470 1/ 5 140 210 129 69 2 125 157 2 2 111 1 101 61 50 48 2 Emergin
Slide 35: 2Q18 OCBC Wing Hang’s performance
OCBC Wing Hang 2Q18 OCBC Wing Hang’s performance Net profit grew 13% QoQ and 43% YoY to HKD708m 2Q18 1Q18 QoQ 2Q17 YoY OCBC Wing Hang HKD m HKD m +/(-)% HKD m +/(-)% Net interest income 1,177 1,210 (3) 1,021 15 Non-interest income 463 232 100 314 48 Total income 1,640 1,442 14 1,335 23 Operating exp
Slide 36: 1H18 OCBC Wing Hang’s performance
OCBC Wing Hang 1H18 OCBC Wing Hang’s performance Net profit up 36% YoY to HKD1.33b 1H18 1H17 YoY OCBC Wing Hang HKD m HKD m +/(-)% Net interest income 2,387 1,990 20 Non-interest income 695 589 18 Total income 3,082 2,579 19 Operating expenses (1,519) (1,422) 7 Operating profit 1,563 1,157 35 Write-
Slide 37: OCBC Wing Hang: Revenue
OCBC Wing Hang OCBC Wing Hang: Revenue 2Q18 net interest income rose 15% YoY and NIM at 1.56%; non-interest income 48% higher YoY Net interest income (HKD m) Non-interest income (HKD m) Net interest Non-int. income/ margin Total income 33.9% 28.2% 1.67% 1.57% 1.59% 24.4% 24.8% 22.5% 22.1% 23.5% 17.6
Slide 38: OCBC Wing Hang: Loans & Deposits
OCBC Wing Hang OCBC Wing Hang: Loans & Deposits Loans and deposits grew 14% and 10% YoY respectively; NPL ratio lower at 0.4% Gross Loans (HKD b) Deposits (HKD b) NPL ratio Loans / Deposits 1/ 0.9% 72.3% 74.8% 74.8% 0.8% 0.8% 71.7% 71.8% 70.3% 0.5% 0.5% 0.4% 189 190 180 222 219 217 171 205 164 166 1
Slide 39: 2Q18 OCBC Malaysia’s Performance
OCBC Malaysia 2Q18 OCBC Malaysia’s Performance Operating profit increased 3% QoQ and 1% YoY 2Q18 1Q18 QoQ 2Q17 YoY OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 375 359 4 345 9 Islamic banking income 1/ 116 105 10 115 1 Non-interest / finance income 137 151 (9) 164 (16) Total income
Slide 40: 1H18 OCBC Malaysia’s Performance
OCBC Malaysia 1H18 OCBC Malaysia’s Performance Operating profit rose 1% YoY 1H18 1H17 YoY OCBC Malaysia RM m RM m +/(-)% Net interest income 734 691 6 Islamic banking income 1/ 221 226 (2) Non-interest / finance income 288 292 (1) Total income 1,243 1,209 3 Operating expenses (570) (540) 6 Operating
Slide 41: OCBC Malaysia: Revenue
OCBC Malaysia OCBC Malaysia: Revenue 2Q18 net interest/finance income grew 5% QoQ, driven by 7bps increase in NIM Net interest/finance income (RM m) Non-interest/finance income1/ (RM m) Net interest/ Non-interest/finance finance margin income/ Total income 1.96% 1.92% 1.93% 1.98% 2.03% 2.10% 29.4% 3
Slide 42: OCBC Malaysia: Loans & Deposits
OCBC Malaysia OCBC Malaysia: Loans & Deposits Customer loans rose QoQ to RM68b, NPL ratio declined to 2.0%; deposits at RM73b Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 2.3% 2.3% 2.2% 94.2% 92.4% 92.7% 94.2% 93.3% 2.1% 2.1% 2.0% 88.9% 74 75 71 71 72 73 71 69 69 68 68 67 Mar 17 Jun
Slide 43: 2Q18 OCBC NISP’s performance
OCBC NISP 2Q18 OCBC NISP’s performance Net profit increased 19% YoY and 1% QoQ to IDR672b 2Q18 1Q18 QoQ 2Q17 YoY OCBC NISP IDR b IDR b +/(-)% IDR b +/(-)% Net interest income 1,596 1,551 3 1,515 5 Non-interest income 194 386 (50) 422 (54) Total income 1,790 1,937 (8) 1,937 (8) Operating expenses (86
Slide 44: 1H18 OCBC NISP’s performance
OCBC NISP 1H18 OCBC NISP’s performance Net profit rose 18% YoY to IDR1.34t 1H18 1H17 YoY OCBC NISP IDR b IDR b +/(-)% Net interest income 3,147 2,928 7 Non-interest income 580 763 (24) Total income 3,727 3,691 1 Operating expenses (1,751) (1,651) 6 Operating profit 1,976 2,040 (3) Allowances (212) (
Slide 45: OCBC NISP: Revenue
OCBC NISP OCBC NISP: Revenue 2Q18 net interest income increased 3% QoQ and 5% YoY 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% 4.15% 4.31% 4.24% 4.08% 20.8% 20.0% 21.8% 19.9% 19.5% 18.9% 19.9% 15.6% 10.9% 6,03
Slide 46: OCBC NISP: Loans & Deposits
OCBC NISP OCBC NISP: Loans & Deposits Loans grew 16% YoY to IDR117t, NPL ratio at 1.8%; deposits rose 13% YoY to IDR121t Gross Loans (IDR t) Deposits (IDR t) NPL Ratio Loans / Deposits 94.3% 93.4% 96.7% 1.9% 1.9% 1.9% 1.8% 1.8% 89.8% 91.1% 1.7% 85.9% 117 111 121 121 103 106 115 113 101 110 106 94 Ma
Slide 47: Thank You
Second Quarter 2018 Results Thank You
Oversea-Chinese Banking — Q2 2018 Earnings Presentation on 6ix