Oversea-chinese Banking Corporation Limited · SGX:O39

Oversea-chinese Banking — Q1 2014 Earnings Presentation

38 slides from Oversea-chinese Banking's earnings presentation, Apr 30, 2014

  1. Slide 1: First Quarter 2014 Results Presentation

    First Quarter 2014 Results Presentation 30 April 2014 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

  2. Slide 2: Agenda

    Agenda Results Overview 1Q14 Performance Trends Appendix: Financial Highlights of Malaysian and Indonesian Subsidiaries Note: Amounts less than S$0.5 million are shown as “0”; “nm” denotes not meaningful; 2 Figures may not sum to stated totals because of rounding

  3. Slide 3: 1Q14 Highlights

    1Q14 Highlights Broad-based income growth and cost discipline drove net profit up 29% YoY and 26% QoQ • Total income up 19% YoY • Net interest income grew YoY to a new quarterly record, from robust asset growth and higher margins • Fee and commission income at a new high • Operating profits from Mal

  4. Slide 4: 1Q14 net profit up 29% YoY to S$899m – a new quarterly record

    1Q14 net profit up 29% YoY to S$899m – a new quarterly record 1Q14 1Q13 YoY 4Q13 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,087 912 19 1,031 5 Non-interest income 800 676 18 679 18 Total income 1,887 1,588 19 1,710 10 Operating expenses (706) (672) 5 (713) (1) Operating profit 1,

  5. Slide 5: 1Q14 net profit before GEH contribution grew 34% YoY to S$708m

    1Q14 net profit before GEH contribution (“banking operations”) grew 34% YoY to S$708m 1Q14 1Q13 YoY 4Q13 QoQ Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,072 895 20 1,017 5 Non-interest income 507 405 25 434 17 Total income 1,579 1,300 21 1,451 9 Operating expenses (657) (622)

  6. Slide 6: Key ratios remained healthy

    Key ratios remained healthy % 1Q14 1Q13 4Q13 Net interest margin 1.70 1.64 1.64 Non-interest income / Total income 42.4 42.6 39.7 Cost / Income 37.4 42.3 41.7 Loans / Deposits 87.0 87.0 85.7 NPL Ratio 0.7 0.7 0.7 Allowances / NPAs 145.0 149.0 134.2 ROE 14.9 11.7 11.9 Cash ROE 15.2 12.0 12.2 6

  7. Slide 7: 1Q14 ROE of 14.9%

    1Q14 ROE of 14.9% 14.9% 12.5% 12.7% 11.9% 11.6% 11.7% Core ROE 1/ 9.9% 2,825 2,768 899 Core net 759 profit (S$m) 715 696 597 2012 2013 1Q13 2Q13 3Q13 4Q13 1Q14 1/ Quarterly figures annualised 7

  8. Slide 8: PBT breakdown at a glance

    PBT breakdown at a glance 1Q14 PBT 1Q14 PBT by Business1/ by Geography PBT Other Rest of Group Asia the World S$1,143m Pacific 3% YoY: +28% Insurance Global Corporate / Greater 2% Singapore China S$686m 21% Investment YoY: +29% Banking 12% Malaysia Indonesia 5% S$204m Global 45% YoY: -10% Treasury a

  9. Slide 9: Agenda

    Agenda Results Overview 1Q14 Performance Trends Appendix: Financial Highlights of Malaysian and Indonesian Subsidiaries 9

  10. Slide 10: Net interest income up 19% YoY to a new record; NIM improved 6 bps YoY

    Net interest income up 19% YoY to a new record; NIM improved 6 bps YoY 1.77% Net interest 1.64% 1.70% 1.64% 1.64% 1.63% 1.64% margin 1,087 3,883 3,748 1,031 961 978 912 Net interest income (S$m) 2012 2013 1Q13 2Q13 3Q13 4Q13 1Q14 10

  11. Slide 11: Non-interest income up 18% YoY, from broad-based growth across all key categories

    Non-interest income up 18% YoY, from broad-based growth across all key categories Non- interest 44.3% income / 43.6% 41.4% 42.6% 42.4% 38.6% 39.7% Total income 2,897 2,738 800 779 838 679 756 676 223 606 280 Non- 215 56 205 interest income 701 485 (S$m) 149 196 142 109 107 160 120 54 38 28 26 25 1,3

  12. Slide 12: Fee income grew 12% YoY; driven by loan-related, trade-related and wealth management

    Fee income grew 12% YoY; driven by growth in loan- related, trade-related and wealth management income + 12% YoY + 3% QoQ 347 352 353 1,355 341 316 42 50 1,198 168 42 44 39 24 37 15 16 157 92 17 91 128 132 Fees and 515 139 112 136 commissions (S$m) 482 44 39 168 43 40 41 146 412 105 109 103 116 96 3

  13. Slide 13: Profit from life assurance driven by continued in-force business growth

    Profit from life assurance driven by continued in-force business growth + 2% YoY + 11% 692 QoQ 125 599 240 174 40 Profit from 178 183 life assurance 165 (S$m) 43 52 423 54 279 153 16 98 102 38 88 144 146 47 34 41 32 23 2012 2013 1Q13 2Q13 3Q13 4Q13 1Q14 (63) Participating fund Non-participating fund

  14. Slide 14: Other non-interest income up 63% YoY from higher trading and investment income

    Other non-interest income up 63% YoY from higher trading and investment income as well as disposal gains + 63% 701 YoY 70 + 84% QoQ Other non- 116 interest income 485 196 (S$m) 65 13 149 158 16 84 1/ 120 109 107 515 14 43 19 16 50 22 43 262 99 90 69 56 47 2012 2013 1Q13 2Q13 3Q13 4Q13 1Q14 Net gains

  15. Slide 15: Wealth management income up 10% YoY, contributing 30% to total Group income

    Wealth management income up 10% YoY, contributing 30% to total Group income 32.7% 32.1% 27.6% 29.1% 30.3% 28.4% As % of 22.8% Group revenue 1,927 564 572 1,836 520 486 Wealth 357 management income (S$m) 2012 2013 1Q13 2Q13 3Q13 4Q13 1Q14 Note: Comprises the consolidated income from insurance, asset

  16. Slide 16: Disciplined cost management, operating expenses up 5% YoY

    Disciplined cost management, operating expenses up 5% YoY Cost / 42.0% 45.8% Income 40.6% 42.3% 41.7% 38.8% 37.4% 2,784 2,695 718 713 706 672 681 539 554 140 161 137 126 112 530 491 133 136 132 125 137 Operating expenses (S$m) 1,650 1,715 445 433 437 421 415 2012 2013 1Q13 2Q13 3Q13 4Q13 1Q14 Staff

  17. Slide 17: Net allowances up YoY but lower QoQ, credit cost remained low at 5 bps

    Net allowances up YoY but lower QoQ, credit cost remained low at 5 bps Net 271 266 allowances 8 2 for loans and other assets 81 (S$m) 115 94 83 3 183 68 11 42 148 26 41 21 1 2 72 2 49 45 23 17 17 (3) 2012 2013 1Q13 2Q13 3Q13 4Q13 1Q14 Specific loan 8 5 1 3 10 6 5 allowances/ avg. loans Specific allo

  18. Slide 18: Net specific allowances higher YoY but lower QoQ

    Net specific allowances higher YoY but lower QoQ 1Q14 1Q13 4Q13 S$m S$m S$m Allowances for new and 54 49 83 existing NPLs Write-backs1/ (20) (26) (45) Recoveries2/ (11) (21) (12) Net specific allowances 23 2 26 1/ Write-backs of specific allowances for existing NPLs due to settlements and repayments

  19. Slide 19: Loans growth 18% YoY and 3% QoQ, across key geographies

    Loans growth 18% YoY and 3% QoQ, across key geographies Loan growth Group YoY: +18% QoQ: +3% 175 170 Rest of the 159 162 World 23 YoY: +26% 149 21 QoQ: +9% 19 21 19 30 Greater China 27 YoY: +74% 20 24 QoQ: +9% 17 12 12 13 12 Indonesia 11 Customer YoY: +16% Loans (S$b) 25 24 25 27 QoQ: +7% 24 Malaysi

  20. Slide 20: Diversified loan book across geographies and sectors

    Diversified loan book across geographies and sectors Customer Loans by Geography Customer Loans by Industry As of 31 March 2014 As of 31 March 2014 Rest of the As of As of World Industry 31 Mar 2014 31 Mar 2013 Other Asia 8% S$b % S$b % Pacific Housing loans 43 24 39 27 5% Singapore Professionals &

  21. Slide 21: Customer deposits grew 18% YoY and 2% QoQ; CASA deposits up 9% YoY

    Customer deposits grew 18% YoY and 2% QoQ; CASA deposits up 9% YoY Loans / 89.2% 88.4% 87.0% 85.7% 87.0% Deposits 196 199 181 176 23 25 169 17 19 15 Customer 82 80 Deposits 71 72 67 (S$b) 32 33 32 32 33 S$94b +S$8b YoY S$91b +S$3b QoQ S$86b S$89b S$90b 46.6% CASA ratio: 54 51.1% 57 50.1% 57 49.3% 59

  22. Slide 22: NPAs fell 6% QoQ; NPL ratio remained low at 0.7%

    NPAs fell 6% QoQ; NPL ratio remained low at 0.7% 0.8% NPL ratio 0.7% 0.7% 0.7% 0.7% 1,338 1,304 25 1,230 1,177 65 1,119 39 26 28 525 NPAs 516 448 (S$m) 449 420 532 407 472 529 536 264 230 256 194 207 Mar13 Jun13 Sep13 Dec13 Mar14 Singapore Malaysia International Debt securities / NPLs NPLs NPLs Cont

  23. Slide 23: NPAs lower QoQ mainly from lower new NPAs formation

    NPAs lower QoQ mainly from lower new NPAs formation 1Q14 1Q13 4Q13 S$m S$m S$m NPAs – Opening balance 1,304 1,172 1,338 New NPAs 185 122 237 New recoveries/upgrades (228) (144) (212) Write-offs (31) (31) (59) NPAs – Closing balance 1,230 1,119 1,304 23

  24. Slide 24: Allowance coverage ratios remained strong

    Allowance coverage ratios remained strong 450.00% 396% Total 400.00% allowances/ Unsecured 350% 350.00% NPAs 329% 310% 294% 300.00% 250.00% 200.00% Total 150.00% allowances/ NPAs 149% 144% 145% 130% 134% 100.00% 50.00% 0.00% Mar13 Jun13 Sep13 Dec13 Mar14 24

  25. Slide 25: Strong capital adequacy ratios, comfortably above regulatory requirements

    Strong capital adequacy ratios, comfortably above regulatory requirements 18.1 CAR 16.8 16.3 1.9 16.1 15.6 (% of RWA) 1.9 1.8 1.8 1.2 Tier 2 capital Common Equity Tier 1 / Tier 1 capital 16.2 14.9 14.3 14.5 14.4 Mar13 Jun13 Sep13 Dec13 Mar14 CET1 capital (S$m) 22,794 22,146 21,036 21,884 22,765 Tier

  26. Slide 26: GEH: 1Q14 earnings contribution of S$190m

    GEH: 1Q14 earnings contribution of S$190m 1Q14 1Q13 YoY 4Q13 QoQ GEH Contribution S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 194 187 4 175 11 - Operating profit 1/ 143 131 9 135 6 - Non-operating profit/(loss) 2/ 33 38 (13) 15 118 - Others 3/ 17 18 (4) 24 (31) Profit from Shareholders’

  27. Slide 27: GEH: Operating profit from insurance business up 9% YoY

    GEH: Operating profit from insurance business up 9% YoY on better performance from the Singapore Non- participating and Malaysia Investment-linked Funds +9% YoY 560 16 155 502 143 19 139 135 142 131 31 7 7 5 99 4 32 43 Operating 35 44 profit from insurance business 280 89 (S$m) 264 60 63 67 67 119 1

  28. Slide 28: GEH: Non-operating profit of S$33m from unrealised mark-to-market gains

    GEH: Non-operating profit of S$33m from unrealised mark-to-market gains as long-term interest rates rose, while credit and swap spreads narrowed -13% YoY Non-operating 161 profit/(loss) from insurance business (S$m) 91 38 33 15 2012 2013 1Q13 2Q13 3Q13 4Q13 1Q14 (11) (156) Note: Non-operating profit

  29. Slide 29: GEH: Total weighted new sales rose 12% YoY

    GEH: Total weighted new sales rose 12% YoY on broad-based growth across distribution channels in Singapore and Malaysia +12% YoY 1,044 34 307 9 275 824 261 330 7 30 8 115 226 77 202 8 Weighted 293 80 new 10 61 business premiums 58 (S$m) 680 191 183 502 173 157 134 2012 2013 1Q13 2Q13 3Q13 4Q13 1Q14

  30. Slide 30: GEH: New business embedded value up 11% YoY

    GEH: New business embedded value up 11% YoY in line with sales performance NBEV / Total 42.2% 41.7% weighted 40.5% 39.7% 40.6% 39.8% 39.5% new sales 423 128 8 2 348 109 106 6 147 2 2 44 89 80 35 2 NBEV 133 39 (S$m) 2 30 29 268 82 73 208 65 57 49 2012 2013 1Q13 2Q13 3Q13 4Q13 1Q14 Singapore Malaysia

  31. Slide 31: OCBC Malaysia: Total net interest income and Islamic financing income up 8% YoY

    OCBC Malaysia: Total net interest income and Islamic financing income up 8% YoY, non-interest income increased 14% YoY Net interest income and Non-interest income (RM m) Islamic financing income (RM m) Net Interest/ Non-int. income/ financing margin Total income 2.32% 2.18% 2.21% 30.3% 2.13% 2.20% 2

  32. Slide 32: OCBC Malaysia: Loans grew 18% YoY and 4% QoQ; NPL ratio at 2.3%

    OCBC Malaysia: Loans grew 18% YoY and 4% QoQ; NPL ratio at 2.3% Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 88.6% 89.4% 88.0% 85.6% 86.4% 2.3% 2.3% 2.3% 2.1% 1.8% 67 59 63 56 60 61 52 54 58 50 Mar13 Jun13 Sep13 Dec13 Mar14 Mar13 Jun13 Sep13 Dec13 Mar14 Note: Based on Bank Negara Ma

  33. Slide 33: OCBC NISP: Net interest income up 28% YoY, non-interest income up 36% YoY

    OCBC NISP: Net interest income up 28% YoY, non-interest income up 36% YoY Net interest income (Rp b) Non-interest income (Rp b) Non-int. income/ Net interest margin Total income 4.17% 4.11% 4.23% 4.33% 4.00% 4.13% 3.87% 24.6% 23.6% 21.9% 21.9% 22.4% 19.1% 20.1% 3,139 907 820 834 2,566 776 879 709 83

  34. Slide 34: OCBC NISP: Loans grew 18% YoY; NPL ratio remained low at 0.8%

    OCBC NISP: Loans grew 18% YoY; NPL ratio remained low at 0.8% Gross Loans (Rp t) Deposits (Rp t) NPL Ratio Loans / Deposits 100.8% 98.0% 97.0% 0.8% 0.7% 0.7% 0.7% 0.8% 92.5% 90.2% 64 64 69 61 57 63 63 54 59 58 Mar13 Jun13 Sep13 Dec13 Mar14 Mar13 Jun13 Sep13 Dec13 Mar14 CASA Ratio 47.3% 44.8% 44.8% 3

  35. Slide 35: Agenda

    Agenda Results Overview 1Q14 Performance Trends Appendix: Financial Highlights of Malaysian and Indonesian Subsidiaries 35

  36. Slide 36: OCBC Malaysia: 1Q14 net profit declined 8% YoY

    OCBC Malaysia: 1Q14 net profit declined 8% YoY 1Q14 1Q13 YoY 4Q13 QoQ OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 328 319 3 327 0 Islamic Financing Income 106 83 28 97 9 Non-interest income 119 104 14 155 (23) Total income 553 506 9 579 (4) Operating expenses (215) (201) 7 (230) (

  37. Slide 37: OCBC NISP: 1Q14 net profit increased 38% YoY

    OCBC NISP: 1Q14 net profit increased 38% YoY 1Q14 1Q13 YoY 4Q13 QoQ OCBC NISP RP b RP b +/(-)% RP b +/(-)% Net interest income 907 709 28 834 9 Non-interest income 228 168 36 241 (5) Total income 1,135 877 29 1,075 6 Operating expenses (613) (521) 18 (577) 6 Operating profit 522 356 47 498 5 Allowan

  38. Slide 38: First Quarter 2014 Results Thank You

    First Quarter 2014 Results Thank You

Oversea-Chinese Banking — Q1 2014 Earnings Presentation on 6ix