Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — Q2 2006 Earnings Presentation
36 slides from Oversea-chinese Banking's earnings presentation, Aug 14, 2006
Slide 1: Second Quarter 2006 Results
Presentation to Media and Analysts Second Quarter 2006 Results 14 August 2006
Slide 2: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Interim Report Card 2
Slide 3: Results at a Glance - Quarterly
Results at a Glance - Quarterly 2Q06 2Q05 YoY 1Q06 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 435 407 7 395 10 Non-Interest Income 845 291 190 348 143 - Fee Income 141 126 12 140 1 Total Income 1,280 698 83 743 72 Operating Expenses (349) (283) 23 (308) 13 Operating Profit 931 415 124 435 114
Slide 4: Results at a Glance – Half Year
Results at a Glance – Half Year 1H06 1H05 YoY 2H05 HoH S$m S$m +/(-)% S$m +/(-)% Net Interest Income 830 770 8 828 - Non-Interest Income 1,193 604 98 685 74 - Fee Income 282 248 14 259 9 Total Income 2,023 1,374 47 1,513 34 Operating Expenses (657) (535) 23 (610) 8 Operating Profit 1,366 839 63 903
Slide 5: Results Adjusted to Exclude Divestment Gains
Results Adjusted to Exclude Divestment Gains 1H06* 1H05 YoY Half Year S$m S$m +/(-)% Total Income 1,507 1,374 10 of which: Non-Interest Income 677 604 12 Operating Profit 851 839 1 Net Profit 632 602 5 2Q06* 2Q05 YoY 1Q06 QoQ Quarterly S$m S$m +/(-)% S$m +/(-)% Total Income 764 698 9 743 3 Of which:
Slide 6: Key Financial Ratios – Excluding Divestment Gains
Key Financial Ratios – Excluding Divestment Gains 1H06 1H05 2Q06 1Q06 2Q05 % % % % % Net Interest Margin 1.94 1.80 2.00 1.89 1.82 Non-Interest Income/ 44.9 44.0 43.1 46.8 41.8 Total Income Cost-to-Income Ratio 43.6 38.9 45.6 41.5 40.5 Loans-to-Deposits Ratio 81.7 85.6 81.7 84.6 85.6 NPL Ratio 3.6 4.
Slide 7: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Interim Report Card 7
Slide 8: Higher Net Interest Income and Improved Margins
Higher Net Interest Income and Improved Margins 2.00% Net 1.91% 1.94% 1.90% 1.89% 1.84% interest 1.78% 1.82% 1.83% margin 1,597 1,518 435 407 413 414 395 Net 830 363 interest income (S$m) 2004 2005 1H06 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 8
Slide 9: Average Yield and Cost of Funds Analysis
Average Yield and Cost of Funds Analysis Interest Interest Rate Ave Bal Second Quarter 2006 Inc / Exp Ave Rate YoY QoQ S$bn S$m % bps bps Customer loans 54.8 758 5.54 +105 +40 Placements with Banks 16.8 188 4.49 +168 +59 Securities/ Others 15.8 154 3.92 +56 +2 Interest Earning Assets 87.4 1,100 5.05
Slide 10: Non-Interest Income Boosted by Divestment Gains
Non-Interest Income Boosted by Divestment Gains Non- 46.3% 46.8% 46.8% interest 44.7% 44.9% 43.7% 41.8% 43.1% income/ 39.1% Total income 1,289 1,193 1,108 845 132 516 975 Non- interest 516 income (S$m) 677 364 348 312 291 321 329 2004 2005 1H06 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 Gains from divestment of
Slide 11: Steady Growth in Fee Income
Steady Growth in Fee Income Fee 18.9% 18.6% 18.7% 18.5% income/ 18.0% 18.1% 17.8% Total 17.6% income 16.5% 507 464 140 141 126 131 128 122 Fee 282 income (S$m) 2004 2005 1H06 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 Excluding divestment gains 11
Slide 12: Higher Expenses Partly Due to Accelerated Depreciation Charges and Write-offs
Higher Expenses Partly Due to Accelerated Depreciation Charges and Write-offs 43.6% 41.5% Cost-to- 45.6% 40.5% 40.5% 40.1% Income 39.6% 39.6% Ratio 37.3% 1,145 988 278 349 226 312 308 283 298 233 657 93 252 Operating 216 81 77 67 71 Expenses 170 (S$m) 57 76 56 61 66 61 138 51 634 546 160 165 165 170
Slide 13: Operating Profit
Operating Profit Operating Profit 1,742 before allowances 1,637 (S$m) 931 132 1,366 1,505 516 516 466 424 415 437 435 851 415 2004 2005 1H06 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 Gains from divestment of non-core assets 13
Slide 14: Continued Successes in Recovery Efforts Keeping Allowances Low
Continued Successes in Recovery Efforts Keeping Allowances Low Allowances for 77 loans and other assets (S$m) 24 12 12 (2) (7) (5) (12) (23) 2004 2005 1H06 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 14
Slide 15: First Half Core Net Profit Up 5%
First Half Core Net Profit Up 5% 12.1% 11.6% 11.4% 10.8% 10.4% 10.3% 10.6% 10.6% 10.7% ROE (%) 1,298 795 1,148 1,113 97 1,051 482 482 Net Profit (S$m) 355 341 298 304 318 632 314 0 2004 2005 1H06 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 Gains from divestment of non-core assets Excluding divestment gains 15
Slide 16: Earnings Contribution by Segments
Earnings Contribution by Segments Net Profit by Business Segment PBT by Geography Other Asia Insurance Pacific & Others Others Other 3% 1% 15% ASEAN 3% Treasury Consumer 12% Banking 26% Malaysia 27% Singapore Business 66% Banking 47% 1H2006 Net Profit After Tax: S$632m 1H2006 Profit before Tax: S$84
Slide 17: Loans Growth of 3% YoY
Loans Growth of 3% YoY Loans (S$bn) 58.1 56.5 57.0 57.2 56.6 53.6 9.1 9.2 8.8 9.6 9.2 7.6 9.2 9.8 9.7 9.6 9.8 8.8 37.1 38.2 38.1 38.3 38.1 38.6 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Singapore Malaysia International 17
Slide 18: Lower Loans-to-Deposits Ratio
Lower Loans-to-Deposits Ratio 87.4% 90.0% 86.1% 85.6% 86.0% 84.6% 81.7% Loans-to-deposits 85.7% 83.3% 83.7% 84.4% 83.2% 80.0% 80.0% 68.7 63.6 62.8 64.1 64.5 59.7 70.0% 9.5 8.2 8.6 9.1 9.0 7.0 10.8 11.2 11.4 11.4 11.0 11.0 60.0% Deposits 45.4 (S$bn) 38.9 40.4 40.4 40.5 41.1 50.0% 40.0% Mar-05 Jun-05
Slide 19: NPL Ratio Improved to 3.6%
NPL Ratio Improved to 3.6% NPL Ratio 4.8% 4.3% 4.2% 4.1% 4.1% 3.6% 2,705 2,592 2,467 2,392 224 2,346 286 2,096 267 269 NPLs 258 (S$m) 886 290 821 745 708 701 683 1,596 1,485 1,454 1,416 1,387 1,123 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Singapore Malaysia International 19
Slide 20: High Allowances Coverage
High Allowances Coverage 94% 87% 87% 88% 88% 84% Total Allowances / NPLs Specific Allowances / NPLs 49% 50% 48% 48% 48% 46% Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 20
Slide 21: Robust Capital Position
Robust Capital Position (%) Total CAR 17.7 17.3 17.9 16.6 17.0 14.7 4.2 4.4 4.1 3.9 Tier 2 CAR 4.1 4.0 13.3 13.2 13.1 13.7 12.5 Tier 1 CAR 10.7 (S$m) Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Tier-1 capital 9,138 7,853 9,008 9,302 9,268 9,881 Risk Weighted Assets 68,546 73,547 71,679 70,708 70,545 7
Slide 22: Interim Tax-Exempt Dividend of 11 cents – up 25% over 1H05
Interim Tax-Exempt Dividend of 11 cents – up 25% over 1H05 18.4 Net DPS (cents) 12.6 9.6 7.7 6.3 Final Net Dividend 4.0 11.0 8.8 6.3 Interim Net Dividend 3.7 (S$m) 2003* 2004 2005* 1H06 Net Dividends 234 403 574 340 Core Net Profit 828 1,051 1,298 632 Dividend Payout Ratio 28% 38% 44% 54% * Excludes
Slide 23: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Interim Report Card 23
Slide 24: OCBC Malaysia: Quarterly Results
OCBC Malaysia: Quarterly Results 2Q06 2Q05 YoY 1Q06 QoQ Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 187 155 21 166 13 Islamic Banking Income 12 11 9 13 (8) Non Interest Income 65 63 3 73 (11) Total Income 264 229 15 252 5 Operating Expenses (99) (88) 13 (91) 9 Operating Profi
Slide 25: OCBC Malaysia: Half-Year Results
OCBC Malaysia: Half-Year Results 1H06 1H05 YoY 2H05 HoH Unaudited Results* RM m RM m +/(-)% RM m +/(-)% Net Interest Income 353 299 18 329 7 Islamic Banking Income 25 21 19 23 9 Non Interest Income 138 119 16 138 - Total Income 516 439 18 490 5 Operating Expenses (190) (171) 11 (199) (5) Operating P
Slide 26: OCBC Malaysia: Financial Ratios
OCBC Malaysia: Financial Ratios 1H06 1H05 2Q06 1Q06 2Q05 Unaudited Results* % % % % % Net Interest Margin 2.56 2.31 2.60 2.52 2.34 Non-Interest Income / 26.7 27.2 24.6 29.0 27.5 Total Income Cost-to-Income Ratio 36.8 39.0 37.5 36.1 38.4 RM Loans-to-Deposits Ratio 83 81 83 83 81 Gross NPL Ratio 6.0 6
Slide 27: GEH Contributed 19% of Group Net Profit
GEH Contributed 19% of Group Net Profit * GEH’s Contribution to 1H06^ 1H05 2Q06^ 1Q06 2Q05 OCBC’s Results S$m S$m S$m S$m S$m Total Income 290 258 149 141 130 Operating Expenses (58) (41) (31) (26) (20) Operating Profit 233 217 118 114 111 Amortisation of Intangibles (21) (20) (11) (10) (10) Tax (45
Slide 28: Bank NISP’s 2Q06 Results
Bank NISP’s 2Q06 Results 2Q06 2Q05 YoY 1Q06 QoQ Unaudited Results* RP bn RP bn +/(-)% RP bn +/(-)% Net Interest Income 210 185 13 201 4 Non Interest Income 35 (22) NM 40 (14) Expenses (161) (127) 27 (162) - Operating Profit 83 36 129 80 4 Allowances (15) (14) 9 4 NM Net Profit 50 1 NM 54 (8) Gross L
Slide 29: Agenda
Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries • Interim Report Card 29
Slide 30: First Half Performance in Summary
First Half Performance in Summary • Healthy, broad-based revenue growth of 10%; profits dampened by one-time expenses • Improved interest margins • Diversified non-interest revenue streams helped offset weakness in insurance income • Continued successes in recovering NPLs keeping allowances low • Re
Slide 31: Continued Growth in Customer Franchise and Product Capabilities
Continued Growth in Customer Franchise and Product Capabilities 9% revenue growth in Group Consumer Banking and Business Banking in 1H06 Singapore & Malaysia consumer customer base up 5% YTD SME profitability up; moderate SME loans growth YTD Singapore lending environment remains price compe
Slide 32: Continued Growth in Customer Franchise and Product Capabilities
Continued Growth in Customer Franchise and Product Capabilities Sustained focus on building our trade, cash management, credit card and treasury capabilities showing good results: ¾ Re-engineered/best-in-class trade finance processes contributing to higher volumes across trade products, driving tr
Slide 33: Malaysia – Sustained Growth
Malaysia – Sustained Growth • OCBC Malaysia’s 1H06 net profit up 13%; sustained growth in both consumer and business banking • Broad-based loan growth of 11% YoY and 5.2% YTD • Unit trust sales up 45% YoY in 1H06, but structured deposits sales hurt by higher interest rates • Islamic Banking financin
Slide 34: Indonesia – Growth Potential Remains Intact
Indonesia – Growth Potential Remains Intact • Macroeconomic conditions stabilising, but rising competition in consumer and SME banking • Bank NISP’s 1H06 net profit up 10% on both lending and fee- based growth • Loans recovered 9% in 2Q06, following contraction in 1Q06, while interest margins improv
Slide 35: China & Vietnam – Work in Progress with our Partners
China & Vietnam – Work in Progress with our Partners • 12.2% stake in Ningbo Commercial Bank completed in June 2006; structured training and development programme has commenced • 10% stake in VP Bank: in-principle approval obtained from Vietnam’s regulator. Final approval and transaction completion
Slide 36: Second Quarter 2006 Results
Second Quarter 2006 Results Thank You
Oversea-Chinese Banking — Q2 2006 Earnings Presentation on 6ix