Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q3 2015 Earnings Presentation
50 slides from Oversea-chinese Banking's earnings presentation, Oct 28, 2015
Slide 1: Third Quarter 2015 Results Presentation
Third Quarter 2015 Results Presentation 28 October 2015 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 accep
Slide 2: Agenda
Agenda Results Overview 3Q15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income Note: - Certain comparative figures have been restated to conform with the current period’s present
Slide 3: 3Q15 Highlights
3Q15 Highlights Core net profit up 7% YoY to S$902m, driven by a 25% increase in earnings from banking operations • Net interest income rose 6% YoY on asset growth. Net interest Core net profit and core ROE margin 2bps lower YoY and relatively unchanged QoQ at 1.66% • Fees and commissions stable YoY
Slide 4: 3Q15 core net profit increased 7% YoY to S$902m
3Q15 core net profit increased 7% YoY to S$902m 3Q15 3Q14 YoY 2Q15 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,317 1,246 6 1,282 3 Non-interest income 775 801 (3) 939 (17) Total income 2,092 2,047 2 2,221 (6) Operating expenses (900) (870) 3 (918) (2) Operating profit 1,192 1,177
Slide 5: 9M15 core net profit rose 11% YoY to S$2.94b
9M15 core net profit rose 11% YoY to S$2.94b 9M15 9M14 YoY OCBC Group S$m S$m +/(-)% Net interest income 3,848 3,459 11 Non-interest income 2,573 2,451 5 Total income 6,421 5,910 9 Operating expenses (2,691) (2,336) 15 Operating profit 3,730 3,574 4 Amortisation of intangibles (73) (42) 73 Allowance
Slide 6: 3Q15 core net profit before GEH contribution grew 25% YoY to S$854m
3Q15 core net profit before GEH contribution (“banking operations”) grew 25% YoY to S$854m 3Q15 3Q14 YoY 2Q15 QoQ Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,294 1,228 5 1,262 3 Non-interest income 634 542 17 588 8 Total income 1,928 1,770 9 1,851 4 Operating expenses (849) (8
Slide 7: 9M15 core net profit before GEH contribution up 18% YoY to S$2.48b
9M15 core net profit before GEH contribution up 18% YoY to S$2.48b 9M15 9M14 YoY Banking Operations S$m S$m +/(-)% Net interest income 3,787 3,409 11 Non-interest income 1,800 1,596 13 Total income 5,586 5,006 12 Operating expenses (2,530) (2,182) 16 Operating profit 3,056 2,823 8 Allowances (280) (
Slide 8: Agenda
Agenda Results Overview 3Q15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income 8
Slide 9: Earnings well-diversified across key geographies and main businesses
Earnings well-diversified across key geographies and main businesses 9M15 PBT 9M15 PBT by Business1/ by Geography PBT Rest of the Group OCBC Other Asia S$3,652m Wing Hang Pacific World YoY: +8% Greater 2% 2% China Singapore 8% S$2,006m 20% (within which OCBC YoY: -1% Wing Hang: 8%) Insurance Malaysi
Slide 10: Net interest income was 6% higher YoY
Net interest income was 6% higher YoY – NIM declined 2 bps YoY but stable QoQ Net interest 1.64% 1.68% 1.65% 1.70% 1.70% 1.68% 1.67% 1.62% 1.67% 1.66% margin 4,736 1,317 1,277 1,282 3,883 1,246 1,249 3,848 Net interest 1,126 income 1,087 (S$m) 3,459 9M 2,851 2013 2014 9M15 1Q14 2Q14 3Q14 4Q14 1Q15 2
Slide 11: Non-interest income was 3% lower YoY
Non-interest income was 3% lower YoY as a decline in insurance income more than offset higher trading income – 17% lower QoQ as prior quarter included realised gain from sale of an investment in GEH’s equity portfolio Non- interest 41.4% 42.4% 43.0% 40.7% 42.3% 40.4% 40.1% 39.1% 37.4% 37.1% income /
Slide 12: Fee income of S$408m, stable YoY
Fee income of S$408m, stable YoY Stable YoY -7% QoQ 1,495 438 1,355 212 406 408 1,241 395 168 383 65 86 55 353 353 72 92 197 61 30 62 50 43 29 18 67 19 16 Fees and 16 25 558 commissions 515 146 (S$m) 150 137 137 421 145 132 132 172 62 168 168 46 49 57 39 39 49 412 467 129 135 388 116 114 126 111 124
Slide 13: Profit from life assurance was 64% lower YoY
Profit from life assurance was 64% lower YoY, attributable to unrealised mark-to-market losses of bond and equity investments - 64% 768 YoY - 53% 207 QoQ 599 221 Profit from 199 life 183 190 174 54 174 assurance (S$m) 393 50 52 54 46 132 423 127 279 134 41 98 99 116 92 62 167 57 35 146 138 100 32 33
Slide 14: Operating expenses well-controlled, up 3% YoY and 2% lower QoQ
Operating expenses well-controlled, up 3% YoY and 2% lower QoQ 42.0% 41.9% 45.2% Cost / 41.0% 42.5% 41.4% 41.3% 43.0% Income 37.4% 38.5% 3,258 2,784 636 2,691 922 918 900 870 873 539 485 760 188 164 164 619 164 157 706 Operating 530 531 147 179 137 158 193 172 180 expenses (S$m) 137 132 2,003 1,715
Slide 15: Net allowances for loans and other assets up 56% YoY
Net allowances for loans and other assets up 56% YoY – Additional portfolio allowances set side; net specific allowances flat YoY 357 Net allowances 294 for loans 266 and other 2 36 196 154 150 assets 81 10 (S$m) 35 156 97 71 66 80 1 64 65 183 36 66 163 41 47 1 73 45 102 23 42 50 31 20 32 17 (2) (1)
Slide 16: Net specific allowances for loans unchanged YoY
Net specific allowances for loans unchanged YoY 3Q15 3Q14 2Q15 9M15 9M14 S$m S$m S$m S$m S$m Allowances for new and 133 100 90 301 225 existing loans Write-backs1/ (50) (23) (32) (105) (66) Recoveries2/ (18) (11) (11) (40) (34) Net specific allowances 65 66 47 156 125 1/ Write-backs of specific allo
Slide 17: Customer loans grew 4% YoY and 1% QoQ
Customer loans grew 4% YoY and 1% QoQ Loan growth Group: YoY: +4% QoQ: +1% 210 210 210 213 205 Excl. currency effects: 22 YoY: +2% 25 24 24 QoQ: Unchanged 26 175 177 Rest of the World 23 24 YoY: -14% 56 57 58 59 QoQ: -8% 52 30 27 Greater China Customer YoY: +14% 13 13 14 14 14 16 Loans (S$b) 13 QoQ:
Slide 18: Customer loans well-diversified across geographies and industries
Customer loans continue to be well-diversified across geographies and industries Customer Loans by Geography Customer Loans by Industry As of 30 September 2015 As of 30 September 2015 Rest of the As of As of World Industry 30 Sep 2015 30 Sep 2014 Other Asia 5% S$b % S$b % Pacific 5% Housing loans 56
Slide 19: Customer deposits grew 6% YoY and 2% QoQ
Customer deposits grew 6% YoY and 2% QoQ – CASA deposits increased 13% YoY, with the CASA ratio at 47.5% 250 246 252 246 237 24 21 22 27 27 199 201 25 26 113 112 111 Customer 109 105 Deposits (S$b) 80 80 42 43 40 42 39 33 34 S$120b S$114b S$113b +S$14b YoY S$106b S$110b S$94b S$95b 45.5% 46.0% CASA
Slide 20: Group LDR at 83.5%; USD and RMB LDRs further improved QoQ
Group LDR at 83.5%; USD and RMB LDRs further improved QoQ 250 246 252 246 Others 237 25 22 22 IDR 25 5 24 210 210 5 210 5 213 12 RMB 205 5 199 201 5 14 14 12 13 13 15 16 18 25 HKD 14 5 5 24 25 6 175 21 177 21 5 21 10 22 10 5 10 9 9 5 5 23 MYR 6 13 6 25 13 4 4 24 26 26 28 26 29 30 5 5 5 26 7 24 6 26
Slide 21: Funding sources well-balanced
Funding sources well-balanced – Customer deposits made up 77% of funding composition Funding Composition as of 30 Sep 2015 Wholesale Funding by Currency as of 30 Sep 2015 By Maturity: ≤ 1 year 57% Current Bank deposits Others account Others 5% AUD 11% > 1 year 43% and savings 6% 5% Customer deposits
Slide 22: Asset quality resilient; NPL ratio remained low at 0.9%
Asset quality resilient; coverage ratios at comfortable levels; NPL ratio remained low at 0.9% 0.7% 0.7% 0.7% 0.7% 0.9% 0.6% 0.6% NPL ratio 1,932 70 135 1,494 207 1,373 1,379 34 1,317 1,230 1,215 35 33 148 305 38 179 39 43 242 159 NPAs 215 (S$m) 300 251 202 246 169 185 92 88 103 699 95 98 53 87 474
Slide 23: NPAs increased YoY
NPAs increased YoY – Higher new NPAs largely from a few large corporate accounts associated with the oil and gas services industry 3Q15 3Q14 2Q15 9M15 9M14 S$m S$m S$m S$m S$m NPAs – Opening balance 1,494 1,215 1,379 1,317 1,304 New NPAs 720 349 484 1,509 763 New recoveries/upgrades (227) (153) (310
Slide 24: Capital position remained strong and well above regulatory requirements
Capital position remained strong and well above regulatory requirements 17.4 16.1 16.6 15.6 15.5 15.9 15.5 CAR 2.7 2.1 (% of RWA) 1.2 2.1 2.0 2.3 2.0 Tier 2 capital Common Equity Tier 1 / Tier 1 capital 14.4 14.7 13.8 14.1 14.5 13.2 13.5 Proforma 11.4 11.2 Common Equity 11.0 11.3 10.1 10.6 10.7 Tier
Slide 25: Agenda
Agenda Results Overview 3Q15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income 25
Slide 26: GEH: 3Q15 earnings contribution of S$48m
GEH: 3Q15 earnings contribution of S$48m 3Q15 3Q14 YoY 2Q15 QoQ GEH S$m S$m +/(-)% S$m +/(-)% Profit from insurance business 71 183 (61) 141 (50) - Operating profit 1/ 130 149 (13) 132 (2) - Non-operating profit/(loss) 2/ (79) 14 (657) (9) (793) - Others 20 20 2 18 15 Profit from Shareholders’ Fund
Slide 27: GEH: 9M15 earnings contribution of S$459m
GEH: 9M15 earnings contribution of S$459m 9M15 9M14 YoY GEH S$m S$m +/(-)% Profit from insurance business 419 607 (31) - Operating profit 1/ 412 435 (5) - Non-operating profit/(loss) 2/ (46) 120 (139) - Others 53 52 3 Profit from Shareholders’ Fund 255 3/ 144 78 Profit from operations 675 751 (10) A
Slide 28: GEH: Operating profit 13% lower YoY
GEH: Operating profit 13% lower YoY, largely arising from weaker MYR against SGD and higher claims - 13% 591 YoY 560 24 - 2% 16 QoQ 156 149 151 170 143 143 9 3 142 4 7 4 132 130 412 41 4 5 13 37 44 Operating 1/ profit from 43 46 33 101 28 insurance business (S$m) 280 275 77 69 79 213 67 63 66 68 122
Slide 29: GEH: Non-operating loss in 3Q15 from unrealised mark-to-market losses
GEH: Non-operating loss in 3Q15 primarily from unrealised mark-to-market losses from widening credit spreads and lower equity prices 145 Non-operating profit/(loss) from insurance business 72 (S$m) 41 33 26 14 (11) (9) (46) (79) 2013 2014 9M15 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Note: Non-operating p
Slide 30: GEH: Total weighted new sales grew 33% YoY
GEH: Total weighted new sales grew 33% YoY, mainly driven by strong sales in Singapore +33% 989 YoY 33 899 28 276 278 266 8 295 664 9 Weighted 26 216 new 206 200 201 71 8 108 197 business 196 6 7 8 9 premiums 51 (S$m) 68 68 57 68 680 576 186 442 157 162 132 125 135 120 2013 2014 9M15 1Q14 2Q14 3Q14
Slide 31: GEH: New business embedded value up 16% YoY
GEH: New business embedded value up 16% YoY in line with higher sales; 3Q15 margin lower YoY from shifts in product and channel mix in Singapore NBEV 44.1% 43.7% 40.3% 41.4% 40.4% 40.4% 40.2% margin 39.4% 38.0% 38.2% (NBEV / Total weighted 112 new sales) 399 2 8 372 102 6 2 91 87 123 82 2 44 81 2 79
Slide 32: OCBC Wing Hang: 3Q15 earnings significantly higher since acquisition
OCBC Wing Hang: 3Q15 earnings significantly higher since acquisition a year ago 9M15 3Q15 3Q14 2/ YoY 2Q15 QoQ OCBC Wing Hang HK$m HK$m HK$m +/(-)% HK$m +/(-)% Net interest income 2,839 978 756 29 951 3 Non-interest income 789 222 210 6 288 (23) Total income 3,628 1,200 966 24 1,239 (3) Operating ex
Slide 33: OCBC Wing Hang: Net interest income grew 29% YoY
OCBC Wing Hang: Net interest income grew 29% YoY, non-interest income up 6% YoY Net profit (HK$m) Net interest income (HK$m) Net interest margin 1.73% 1.76% 1.68% 1.77% 1.72% 1.72% 1.82% 1,543 2,839 +82% 949 951 978 YoY 910 756 1,705 -5% QoQ 540 513 490 2014 1/ 9M15 3Q14 1/ 4Q14 1Q15 2Q15 3Q15 412 N
Slide 34: OCBC Wing Hang: Loans up 2% YoY; CASA ratio improved to 30.4%
OCBC Wing Hang: Loans up 2% YoY; deposits declined YoY but CASA ratio improved to 30.4%; NPL ratio remained low at 0.6% Gross Loans (HK$b) Deposits (HK$b) NPL Ratio Loans / Deposits 1/ 80.5% 81.7% 0.6% 77.5% 78.9% 78.4% 0.3% 0.4% 0.4% 0.4% 196 200 200 202 189 157 161 158 152 154 Sep14 Dec14 Mar15 Ju
Slide 35: Greater China customer loans increased 14% YoY
Greater China customer loans increased 14% YoY 59 57 58 56 4 4 4 52 4 2 2 2 3 1 1 26 29 29 30 24 Customer 30 Loans to 0.2 27 Greater 1 Macau 0.3 China 1 (S$b) 7 Taiwan 7 Hong Kong 17 17 16 17 17 Offshore 2/ 17 15 China 1/ 7 8 7 6 6 4 4 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 Note: Customer loans t
Slide 36: Asset quality of Greater China book remained sound
Asset quality of Greater China book remained sound; NPL ratio relatively flat at 0.3% Total 288% 285% 275% 356% allowances/ 191% 200% 240% NPAs NPL ratio 0.3% 0.3% 0.3% 0.3% 0.4% 0.3% 0.3% 244 202 185 169 Greater China 159 NPAs (S$m) 107 102 Mar14 Jun14 Sep14 Dec14 Mar15 Jun15 Sep15 36 Note: NPAs co
Slide 37: OCBC Malaysia: 3Q15 net profit grew 4% YoY
OCBC Malaysia: 3Q15 net profit grew 4% YoY 3Q15 3Q14 YoY 2Q15 QoQ OCBC Malaysia RM m RM m +/(-)% RM m +/(-)% Net interest income 353 350 1 348 2 Islamic Financing Income 131 125 5 123 7 Non-interest income 143 113 28 143 - Total income 627 588 7 614 2 Operating expenses (259) (248) 5 (252) 3 Operati
Slide 38: OCBC Malaysia: 9M15 net profit 3% higher YoY
OCBC Malaysia: 9M15 net profit 3% higher YoY 9M15 9M14 YoY OCBC Malaysia RM m RM m +/(-)% Net interest income 1,029 1,013 2 Islamic Financing Income 384 341 13 Non-interest income 422 354 19 Total income 1,835 1,708 7 Operating expenses (754) (696) 8 Operating profit 1,081 1,012 7 Allowances (203) (
Slide 39: OCBC Malaysia: Net interest income and Islamic financing income up 2% YoY
OCBC Malaysia: Total net interest income and Islamic financing income increased 2% YoY, non- interest income rose 28% YoY Net interest income and Non-interest income (RM m) Islamic financing income (RM m) Net Interest/ Non-int. income/ financing margin Total income 2.20% 2.11% 2.16% 2.02% 2.07% 2.18
Slide 40: OCBC Malaysia: Loans grew 13% YoY; NPL ratio improved to 2.0%
OCBC Malaysia: Loans grew 13% YoY and deposits climbed 5% YoY; NPL ratio improved to 2.0% Gross Loans (RM b) Deposits (RM b) NPL Ratio Loans / Deposits 92.1% 88.0% 87.2% 86.5% 88.7% 87.2% 89.0% 2.3% 2.2% 2.3% 2.0% 2.1% 2.0% 1.9% 70 71 72 75 76 75 68 70 67 64 65 61 62 59 Mar14 Jun14 Sep14 Dec14 Mar15
Slide 41: OCBC NISP: 3Q15 net profit up 5% YoY
OCBC NISP: 3Q15 net profit up 5% YoY 3Q15 3Q14 YoY 2Q15 QoQ OCBC NISP Rp b Rp b +/(-)% Rp b +/(-)% Net interest income 1,167 967 21 968 21 Non-interest income 95 95 - 242 (61) Total income 1,262 1,062 19 1,210 4 Operating expenses (705) (624) 13 (686) 3 Operating profit 557 438 27 524 7 Allowances (
Slide 42: OCBC NISP: 9M15 net profit rose 12% YoY
OCBC NISP: 9M15 net profit rose 12% YoY 9M15 9M14 YoY OCBC NISP Rp b Rp b +/(-)% Net interest income 3,116 2,772 12 Non-interest income 538 517 4 Total income 3,654 3,289 11 Operating expenses (2,040) (1,880) 8 Operating profit 1,614 1,409 15 Allowances (201) (152) 32 Non Op Income / (Expenses) 0 0
Slide 43: OCBC NISP: Net interest income surged 21% YoY; NIM improved to 4.15%
OCBC NISP: Net interest income surged 21% YoY; NIM improved to 4.15% Net interest income (Rp b) Non-interest income (Rp b) Non-int. income/ Net interest margin Total income 4.11% 4.15% 4.13% 4.09% 4.17% 4.20% 4.15% 3.86% 3.82% 3.60% 21.9% 20.1% 18.9% 20.0% 1,167 16.6% 17.8% 17.0% 3,745 14.7% 8.9% 7.
Slide 44: OCBC NISP: Loans increased 23% YoY; CASA ratio rose to 39.3%
OCBC NISP: Loans increased 23% YoY while deposits were 15% higher YoY; CASA ratio rose to 39.3% Gross Loans (Rp t) Deposits (Rp t) NPL Ratio Loans / Deposits 1.3% 1.4% 1.3% 1.3% 1.1% 1.1% 100.8% 91.5% 93.6% 0.8% 89.7% 83.6% 84.6% 87.3% 91 82 85 74 82 79 68 70 73 66 67 71 64 63 Mar14 Jun14 Sep14 Dec1
Slide 45: Agenda
Agenda Results Overview 3Q15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income 45
Slide 46: Earnings base reflected a diversified regional presence
Earnings base reflected a diversified regional presence in Singapore, Malaysia, Indonesia and Greater China 4,372 FY14 PBT 11% CAGR PBT by 6% S$251m geography + 3% (S$m) 3,646 12% S$524m YoY 3,567 5% 4% 4% S$185m 7% 1,116 6% FY10 PBT 2,880 2,917 4% 1,080 2% 5% 19% S$833m 4% 1% 4% 5% S$62m 2% S$34m 7
Slide 47: Earnings growth supported by stable and prudent operating platform
Earnings growth supported by stable and prudent operating platform Diversified earnings Prudent risk management 13.4% NPL ratio 0.9% 13.1% 11.2% 0.7% 0.7% S$m 1,048 841 902 Allowances / NPAs 155% 153% 121% 3Q14 2Q15 3Q15 Sep14 Jun15 Sep15 Core net profit Core ROE Stable funding base Sound capital po
Slide 48: Agenda
Agenda Results Overview 3Q15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income 48
Slide 49: Wealth management income for first nine months up 4% YoY
Wealth management income for first nine months up 4% YoY Wealth Management Income 1/ (S$m) Bank of Singapore Earning Asset Base (US$b) As % of Group income 65 65 29.1% 27.9% 30.3% 29.0% 31.2% 5-year 27.1% 26.1% 26.3% 27.6% 57 CAGR 22.3% 52 14 13 (Dec 10- 11 Dec 14): 40 9 32 19% 8 2,216 Loans 6 52 46
Slide 50: Third Quarter 2015 Results Thank You
Third Quarter 2015 Results Thank You
Oversea-Chinese Banking — Q3 2015 Earnings Presentation on 6ix