Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2007 Earnings Presentation
33 slides from Oversea-chinese Banking's earnings presentation, Feb 21, 2008
Slide 1: 2007 Final Results Presentation to Media and Analysts
Presentation to Media and Analysts 2007 Final Results 21 February 2008 1
Slide 2: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Conclusion 22
Slide 3: Full Year Core Net Profit up 30%
Full Year Core Net Profit up 30% FY07 FY06 YoY S$m S$m +/(-)% Net Interest Income 2,244 1,794 25 Non-Interest Income 1,944 1,448 34 Total Income 4,188 3,242 29 Operating Expenses (1,680) (1,331) 26 Operating Profit 2,509 1,911 31 Amortisation of Intangibles (46) (44) 6 Allowances (36) (2) n.m. Assoc
Slide 4: Core Net Profit Sustained in 4th quarter
Core Net Profit Sustained in 4th quarter 4Q07 4Q06 YoY 3Q07 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 613 491 25 565 9 Non-Interest Income 464 413 12 481 (4) Total Income 1,077 903 19 1,047 3 Operating Expenses (485) (342) 42 (427) 14 Operating Profit 593 561 6 620 (4) Amortisation of Intang
Slide 5: Key Financial Ratios - Based on Core Earnings
Key Financial Ratios - Based on Core Earnings FY07 FY06 4Q07 3Q07 4Q06 % % % % % Net Interest Margin 2.10 2.00 2.14 2.07 2.03 Non-Interest Income/ 46.4 44.7 43.0 46.0 45.7 Total Income Cost-to-Income Ratio 40.1 41.1 45.0 40.8 37.9 Loans-to-Deposits Ratio 80.3 79.0 80.3 77.6 79.0 NPL Ratio 1.7 3.0 1.
Slide 6: Bank's CDO Portfolio
Bank’s CDO Portfolio (S$m) Investment FY07 Allowance/ Cumulative Adj. to Amount (a) MTM Loss Fair Value Reserves (taken to P&L) (taken to Equity) Total CDOs 618 (244) (31) - ABS CDOs 260 (226)(b) - - Corporate CDOs 358 (18)(c) (31) (a) Based on 31 December 2007 US$/S$ exchange rate (b) Allowances of
Slide 7: Great Eastern's CDO Exposure
Great Eastern’s CDO Exposure • Outstanding investment portfolio of S$154m (MTM basis) as at 31 Dec 07: ¾ S$13m under shareholders’ funds ¾ S$141m under life funds (out of total life fund assets of S$42bn) ¾ Includes S$16m ABS CDOs with US sub-prime exposure • Shareholder funds’ CDOs: S$5m MTM loss c
Slide 8: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Conclusion 88
Slide 9: Strong Net Interest Income Trends, Improved Margins
Strong Net Interest Income Trends, Improved Margins 2.10% 2.13% 2.14% 2.06% 2.03% 2.04% 2.07% 2.00% 2.00% 1.84% 1.89% Net 2,244 interest 613 margin 565 558 1,794 508 491 1,597 473 435 395 Net interest income (S$m) 2005 2006 2007 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 99
Slide 10: Core Non-Interest Income Grew 34% in FY07
Core Non-Interest Income Grew 34% in FY07 49.9% 46.4% 46.8% 45.7% 46.9% 46.0% 44.7% 44.7% 43.1% 43.0% Non-interest 43.0% income/ Total income 845 2,045 2,036 598 92 598 515 1,944 92 1,289 1,448 495 493 481 464 506 83 Non-interest 348 357 413 income (S$m) 329 2005 2006 2007 1Q06 2Q06 3Q06 4Q06 1Q07 2
Slide 11: Fee Income Increased 35% in FY07
Fee Income Increased 35% in FY07 20.7% 20.2% 19.3% 18.9% 18.5% 18.7% 18.4% 18.8% Fee income/ 17.6% 17.8% 17.5% Total income 808 217 211 202 597 178 155 161 507 140 141 Fee income (S$m) 2005 2006 2007 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 Excluding divestment gains 11 11
Slide 12: 41% of Expense Increase due to Overseas Expansion and Costs
41% of Expense Increase due to Overseas Expansion, Business Volume-Related Costs and Performance Compensation 45.6% 45.0% 41.1% 41.5% 40.8% Cost-to- 39.6% 40.1% 40.0% 39.6% Income 37.9% Ratio 34.7% 1,680 485 416 427 1,331 433 143 1,145 349 333 342 352 108 98 332 308 301 278 87 87 83 74 68 89 87 71 2
Slide 13: Full Year Core Operating Profit up 31%
Full Year Core Operating Profit up 31% Operating Profit before allowances (S$m) 2,601 931 754 2,508 92 598 2,509 92 644 634 515 620 662 593 83 1,742 1,911 498 561 435 416 2005 2006 2007 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 Divestment gains 13 13
Slide 14: Allowances Remained Low
Allowances Remained Low Allowances for loans and other 36 39 assets (S$m) 12 12 13 2 3 0.3 (5) (7) (16) 2005 2006 2007 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 14 14
Slide 15: Healthy Loan Recoveries and Net Write-backs Kept Allowances Low
Healthy Loan Recoveries and Net Write-backs for Properties Kept Overall Allowances Low 2007 2006 4Q07 3Q07 4Q06 S$m S$m S$m S$m S$m Specific allowances/ (108) 21 (5) (82) 15 (write-back) for loans Allowances for CDOs 231 - 10 221 - Allowances/(write-back) for (87) (19) 8 (101) (3) other assets* Tota
Slide 16: Full Year ROE at 13.4% - Highest Since 1994
Full Year ROE at 13.4% - Highest Since 1994 15.9% 15.4% 13.8% 13.8% ROE 13.4% 12.3% (%) 11.4% 11.8% 10.8% 10.4% 12.2% 12.1% 2,071 647 11.5% 11.2% 104 2,002 47 795 559 90 532 510 481 510 518 463 1,298 1,878 77 428 38 1,443 379 432 425 425 Net Profit 318 (S$m) 314 2005 2006 2007 1Q06 2Q06 3Q06 4Q06 1Q
Slide 17: Earnings Contribution by Segments
Earnings Contribution by Segments PBT by Business Segment PBT by Geography Other Asia Insurance Pacific Others & Others Other 3% 1% 20% ASEAN 4% Consumer Banking 26% Malaysia* Treasury 27% 13% Singapore* Business 65% Banking 41% FY07 Profit Before Tax & MI : S$2,447m FY07 Profit Before Tax & MI : S$
Slide 18: Broad-based Loans Growth of 19% YoY, 7% QoQ
Broad-based Loans Growth of 19% YoY, 7% QoQ 72.8 68.0 65.3 63.3 61.1 15.4 Loans 58.1 59.4 56.6 13.7 (S$bn) 13.0 11.9 10.3 11.2 8.8 9.6 12.1 11.5 10.9 11.0 9.8 10.1 10.4 9.6 42.8 45.3 38.7 38.9 39.5 40.5 41.3 38.1 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Singapore Malaysia Internationa
Slide 19: Deposits up 18% YoY, 4% QoQ
Deposits up 18% YoY, 4% QoQ 84.6% 81.7% 82.6% 79.0% 78.9% 80.3% 85.0% 77.4% 77.6% 83.2% 80.0% 81.2% 79.8% 75.0% Loans-to- 77.8% 77.8% deposits 76.8% 76.7% 88.8 65.0% 85.7 82.2 78.0 75.1 12.5 55.0% 68.7 69.6 11.6 64.5 11.6 10.0 9.9 12.9 13.0 9.5 9.2 13.0 45.0% 9.0 11.2 11.7 10.8 10.6 11.0 35.0% Depos
Slide 20: NPL Ratio Improved Further to 1.7%
NPL Ratio Improved Further to 1.7% 4.1% 3.6% NPL Ratio 3.3% 3.0% 2.7% 2.4% 2.1% 2,346 1.7% 2,096 258 1,966 1,829 1,766 290 262 1,614 701 226 1,484 239 1,354 NPLs 683 244 673 286 (S$m) 652 658 294 621 581 548 1,387 1,123 1,031 951 869 749 617 512 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-0
Slide 21: Allowances Coverage Improved to 116%
Allowances Coverage Improved to 116% 116% 107% 102% 104% 101% 97% 94% 88% Total Allowances / NPLs 46% 48% 48% 48% 47% 44% 43% 45% Specific Allowances / NPLs Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 21 21
Slide 22: Capital Ratios Declined Due to RWA Growth and Tier 2 Amortisation
Capital Ratios Declined Due to RWA Growth and Amortisation of Tier 2 Capital (%) 17.9 Total CAR 17.0 15.8 15.8 15.4 4.2 14.6 3.9 2.9 2.7 2.3 12.8 Tier 2 CAR 2.1 12.4 0.9 0.9 Tier 1 CAR 13.1 13.7 12.9 13.1 13.1 12.5 11.9 11.5 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 (S$m) Tier-1 Capita
Slide 23: Full Year Dividend up 22%
Full Year Dividend up 22% 28.0 23.0 Net DPS (cents) 18.4 14.0 12.0 12.7 9.6 Final Net Dividend 7.6 6.3 14.0 4.0 11.0 8.8 6.3 Interim Net Dividend 3.6 2003* 2004 2005* 2006 2007 (S$m) Net Dividends 234 403 574 709 864 Core Net Profit 828 1,051 1,298 1,443 1,878 Dividend Payout Ratio 28% 38% 44% 49% 4
Slide 24: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Conclusion 24 24
Slide 25: GEH Contributed 24% of Core Net Profit
GEH Contributed 24% of Core Net Profit GEH’s Contribution to FY07 FY06 ^ 4Q07 3Q07 4Q06 ^ OCBC’s Results S$m S$m S$m S$m S$m Total Income 813 659 236 181 209 Operating Expenses (125) (101) (39) (29) (18) Operating Profit 688 558 196 153 192 Amortisation of Intangibles (46) (44) (12) (12) (12) Allowa
Slide 26: OCBC Malaysia: Full Year Results
OCBC Malaysia : Full Year Results FY07 FY06 YoY Audited Results* RM m RM m +/(-)% Net Interest Income 867 749 16 Islamic Banking Income 82 52 58 Non Interest Income 357 283 26 Total Income 1,305 1,084 20 Operating Expenses (542) (418) 30 Operating Profit 763 666 15 Allowances (45) (63) (28) Tax (206
Slide 27: OCBC Malaysia: Quarterly Results
OCBC Malaysia : Quarterly Results 4Q07 4Q06 YoY 3Q07 QoQ Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 233 198 18 216 8 Islamic Banking Income 23 15 60 20 15 Non-Interest Income 92 82 12 91 1 Total Income 348 294 18 327 6 Operating Expenses (163) (114) 43 (139) 17 Operating Pro
Slide 28: OCBC Malaysia: Financial Ratios
OCBC Malaysia : Financial Ratios FY07 FY06 4Q07 3Q07 4Q06 % % % % % Net Interest Margin 2.51 2.60 2.58 2.41 2.60 Non-Interest Income / 27.4 26.1 26.4 27.8 27.7 Total Income Cost-to-Income Ratio 41.6 38.5 46.9 42.5 38.9 RM Loans-to-Deposits Ratio 84.6 80.5 84.6 81.8 80.5 Gross NPL Ratio 4.0 5.5 4.0 4
Slide 29: Bank NISP: Full Year Results
Bank NISP : Full Year Results FY07 FY06 YoY Audited Results* RP bn RP bn +/(-)% Net Interest Income 1,178 905 30 Non Interest Income 336 215 56 Expenses (1,048) (733) 43 Operating Profit 466 387 20 Allowances (117) (57) 107 Net Profit 250 237 5 * Bank NISP’s contribution to Group net profit was S$26
Slide 30: Bank NISP: Quarterly Results
Bank NISP : Quarterly Results 4Q07 4Q06 YoY 3Q07 QoQ Unaudited Results* RP bn RP bn +/(-)% RP bn +/(-)% Net Interest Income 306 265 15 319 (4) Non Interest Income 88 82 7 64 37 Expenses (303) (232) 31 (271) 12 Operating Profit 91 116 (21) 112 (19) Allowances (30) (31) (4) (20) 50 Net Profit 44 66 (3
Slide 31: Bank NISP: Financial Ratios
Bank NISP : Financial Ratios FY07 FY06 4Q07 3Q07 4Q06 % % % % % Net Interest Margin 4.99 4.76 4.97 5.43 5.11 Non-Interest Income / Total 22.2 19.2 28.9 20.3 31.0 Income Cost-to-Income Ratio 67.9 64.2 76.8 70.7 66.6 Loans-to-Deposits Ratio 89.1 82.2 89.1 91.0 82.2 Gross NPL Ratio 2.53 2.49 2.53 2.51
Slide 32: In Summary
In Summary • Strong results amid market turmoil • Achieved multi-year high for core revenue and earnings growth, and ROE • Expense increase partly driven by investment in new markets and better performance • ABS CDO exposure 85% provided for, immaterial impact going forward • Economic outlook for 20
Slide 33: Thank You
2007 Final Results ___________________ Thank You 33
Oversea-Chinese Banking — FY2007 Earnings Presentation on 6ix