Oversea-chinese Banking Corporation Limited · SGX:O39
Oversea-chinese Banking — FY2009 Earnings Presentation
46 slides from Oversea-chinese Banking's earnings presentation, Feb 19, 2010
Slide 1: New Horizons II Report Card
Presentation to Media and Analysts New Horizons II Report Card 19 February 2010 1
Slide 2: Agenda
Agenda Recap - New Horizons II Highlights of Our Achievements in 2009 Customers Products Risk Management Productivity People Shareholder Value Overseas Expansion Appendix: Detailed Report Card 2
Slide 3: New Horizons II: Recap – Focused Overseas Expansion
New Horizons II: Recap Focused Overseas Expansion Shift emphasis from adding more country flags to deepening market penetration in Malaysia, Indonesia, China Selectively explore opportunities to establish strategic partnerships in Indochina Grow market share in the consumer and SME segments in
Slide 4: New Horizons II: Recap – Balanced Business Scorecard
New Horizons II: Recap Improving our performance through a Balanced Business Scorecard Customers Products Risk Management Productivity People Shareholder Value 4
Slide 5: Agenda
Agenda Recap - New Horizons II Highlights of Our Achievements in 2009 Customers Products Risk Management Productivity People Shareholder Value Overseas Expansion Appendix: Detailed Report Card 5
Slide 6: Customers – Consumers
Customers – Consumers +5% +11% • Total customers exceeded 2.6 million, with +10% growth from targeted segments and new +7% markets +2% • Leveraged customer insights to further strengthen differentiation Expanded Sunday Banking / Weekend Banking to total of 21 locations across S’pore and M’sia 2005
Slide 7: Customers – Businesses
Customers – Businesses • Sustained growth in SME customer base by +15% +10% 10% +15% +6% • Cross-sell ratio* declined 14% as asset +3% revenues growth of 17% outpaced non- asset revenues growth largely due to deposit earnings declining in the low interest rate environment and trade / FX market 2005
Slide 8: Product Innovation
Product Innovation • Innovation index lower at 5% as customers remained risk adverse • Continued recognition for our improved 84 80 product capabilities 78 61 66 Best SME Cash Management Solution Bank (The Asset) and Best Cash 2005 2006 2007 2008 2009 Management Bank in Singapore # of New Products
Slide 9: Risk Management
Risk Management S&P Moody’s Fitch • Adoption of Basel II since 1 Jan 2008 2009 A+ Aa1 AA- Pillar 1 2008 A+ Aa1 AA- – Refined and expanded internal ratings 2007 A+ Aa1 AA- framework. Adopted IRB approach for over 80%of credit portfolios 2006 A+ Aa3 AA- Pillar 2: 2005 A+ Aa3 AA- – Continued to imp
Slide 10: Productivity
Productivity 39.6% 41.1% 40.1% 43.7% • Productivity gains of 20% and unit cost 37.3% reduction of 6% across processing centres in Singapore and Malaysia • One more work stream hubbed into Malaysia; cumulative of 9 streams to-date 2005 2006 2007 2008 2009 with more than 70% of Singapore transactions
Slide 11: People
People +6% • Employee engagement score up for the +5% +5% 7th consecutive year since 2002 +1% +2% • Employee shareholding remained above 2005 2006 2007 2008 2009* 50% Employee Engagement Score Improvement • Average training days per staff was maintained at a high level, 52% above annual target 53% 5
Slide 12: Shareholder Value
Shareholder Value • Grew revenue faster than expenses 13.4% 12.2% • ROE increased from 9.9% to 12.2%, 11.4% 11.8% exceeding 12% target; driven by non- 9.9% interest income growth, lower costs, and stable credit costs • Core EPS grew by 29%, exceeding 10% growth target 2005 2006 2007 2008 2009 ROE ex
Slide 13: Overseas Expansion
Overseas Expansion Malaysia • Added 4 new OCBC Al Amin branches; total network of 34 branches Indonesia • Added 18 new branches; total network of 382 branches and 552 ATMs China 2,446 2,543 • Opened Chongqing branch and 31% Jiading (Shanghai suburb) sub- 1,878 28% 1,899 1,706 branch International 27
Slide 14: In a Nutshell
In a Nutshell • Good progress in most of our scorecard objectives despite challenging economic environment • Leveraged on our solid capital position and strong financial results to capture opportunities arising from the crisis • Continued focus on overseas expansion • Key shareholder value targets (
Slide 15: Agenda
Agenda Recap - New Horizons II Highlights of Our Achievements in 2009 Customers Products Risk Management Productivity People Shareholder Value Overseas Expansion Appendix: Detailed Report Card 15
Slide 16: Our Achievements – Consumers (continued)
Our Achievements – Consumers (continued) OUR ACTION PLANS PROGRESS 1. Focus on acquiring and doing • Healthy growth in number of customers in targeted more with customers segments and new markets B 5% growth in consumer customers, with 5% growth in S’pore and M’sia, and more than 100% in China B 8%
Slide 17: Our Achievements – Consumers (continued)
Our Achievements – Consumers (continued) OUR ACTION PLANS PROGRESS 2. Deepen and deploy customer • Mighty Savers program extended to Indonesia and insights into new and enhanced M’sia; continued strong growth in S’pore with total Value Propositions balances exceeded $250m • Customer base for FairPri
Slide 18: Our Achievements – Consumers (continued)
Our Achievements – Consumers (continued) OUR ACTION PLANS PROGRESS 3. Refresh OCBC’s Branding through • Another 1,367 staff were trained in Building Emotional Service Excellence and Engagement (BEE) skills across S’pore and M’sia, and Convenience another 305 service leaders trained to be service coa
Slide 19: Our Achievements – Consumers (continued)
Our Achievements – Consumers (continued) OUR ACTION PLANS PROGRESS 3. Refresh OCBC’s Branding through • Increased Premier Centers to 12 in S’pore and 17 in M’sia Service Excellence and • Expanded OCBC Al-Amin network in M’sia from 1 to 5 Convenience (cont’d) branches • Increased self-service termina
Slide 20: Our Achievements – Consumers (continued)
Our Achievements – Consumers (continued) OUR ACTION PLANS PROGRESS 3. Refresh OCBC’s Branding through • Rolled out quarterly customer satisfaction survey in China Service Excellence and • Established a Fair Dealing Framework and Committee to Convenience (cont’d) further promote fair dealing in our b
Slide 21: Our Achievements – Consumers (continued)
Our Achievements – Consumers (continued) OUR ACTION PLANS PROGRESS • Selected 2009 Accolades • Service Excellence Award by SPRING Singapore • Best Retail Bank in S’pore by The Asian Banker • Best Contact Centre of the year - Gold Award by Contact Centre Association of Singapore for 3rd consecutive y
Slide 22: Our Achievements – Consumers (continued)
Our Achievements – Consumers (continued) OUR ACTION PLANS PROGRESS 4. Leverage our Great Eastern / Lion • Maintained No. 1 position in Bancassurance Global partnership to cross-sell more • Contributed 33% of Great Eastern’s total new sales products • Contributed 16% of Lion Global’s retail sales Sus
Slide 23: Our Achievements – Businesses
Our Achievements – Businesses OUR ACTION PLANS PROGRESS 1. Grow our current strong large • 20% growth in total revenues from large corporate business corporate position (S’pore and M‘sia) 2. Expand our customer base and • 10% growth in number of SME customers grow market share in the SME • Establish
Slide 24: Our Achievements – Businesses (continued)
Our Achievements – Businesses (continued) OUR ACTION PLANS PROGRESS • Another 116 staff trained in Building Emotional Engagement (BEE) skills across S’pore and M’sia • 11 recipients (1 STAR, 5 Gold, 5 Silver) for Excellent Service Awards (EXSA); our staff also won the Super Star Award for the bankin
Slide 25: Our Achievements – Businesses (continued)
Our Achievements – Businesses (continued) OUR ACTION PLANS PROGRESS • Launched innovative products and services for SMEs in S’pore and M’sia (cont’d): B Launched Business TradeEase, a new trade program for emerging businesses which include hassle free application process and fast turnaround for trad
Slide 26: Our Achievements – Product Innovation
Our Achievements – Product Innovation OUR ACTION PLANS PROGRESS 1. Strive to build “best in class” • Best SME Cash Mgmt Solution Bank in S’pore (The Asset) products • Best Cash Mgmt Bank in S’pore (FinanceAsia) • Best Mobile Payments & Authorisation Solution of the Year in SE Asia (Alpha SE Asia) •
Slide 27: Our Achievements – Product Innovation (continued)
Our Achievements – Product Innovation (continued) OUR ACTION PLANS PROGRESS 2. Add to our SME Cash management • Launched various new products / services to better meet capabilities and enhance our trade SME customers’ needs finance services / solutions with increasing focus on supporting our Singapo
Slide 28: Our Achievements – Product Innovation (continued)
Our Achievements – Product Innovation (continued) OUR ACTION PLANS PROGRESS 2. Add to our SME Cash management • Launched various new products / services to better meet capabilities and enhance our trade SME customers’ needs (cont’d) finance services / solutions with Malaysia increasing focus on supp
Slide 29: Our Achievements – Product Innovation (continued)
Our Achievements – Product Innovation (continued) OUR ACTION PLANS PROGRESS 2. Add to our SME Cash management • Continued growth in Velocity@ocbc usage capabilities and enhance our trade B Singapore: No. of corporate customers increased finance services / solutions with 31%, transaction volume up 15
Slide 30: Our Achievements – Product Innovation (continued)
Our Achievements – Product Innovation (continued) OUR ACTION PLANS PROGRESS 4. Expand Lion Global to become • Won 14 Singapore Edge-Lipper Fund Awards; named the globally recognised top tier Asia- Best Fund Group over 3 years for Mixed Assets for 4th based fund manager consecutive year • Won 3 overs
Slide 31: Our Achievements – Product Innovation (continued)
Our Achievements – Product Innovation (continued) OUR ACTION PLANS PROGRESS 5. Be the bank of choice for treasury • Ranked top 3 in all SGD denominated categories by Asia instruments in selected currencies Risk Corporate Survey 2009 (cont’d) Ö No. 2 in Currency Derivatives - Vanilla and Structured H
Slide 32: Our Achievements – Product Innovation (continued)
Our Achievements – Product Innovation (continued) OUR ACTION PLANS PROGRESS 6. Be one of the top 3 banks in the • Maintained No. 1 position in Bancassurance for the 9th Combined Singapore/ Malaysia consecutive year market for Wealth Management, • 12% and 8% growth in deposits for S’pore and M’sia Cr
Slide 33: Our Achievements – Risk Management
Our Achievements – Risk Management OUR ACTION PLANS PROGRESS 1. Execute our Basel ll implementation • Refined and expanded internal ratings framework, with plan in line with regulatory guidelines over 80% of credit portfolios adopting the internal rating based (IRB) approach. Received regulatory app
Slide 34: Our Achievements – Risk Management (continued)
Our Achievements – Risk Management (continued) OUR ACTION PLANS PROGRESS 3. Dynamic risk portfolio management, • Exercised effective portfolio oversight and management, collection strategies to keep Net SP with total net allowances contained at a lower level than and NPL under control in the in 2008
Slide 35: Our Achievements – Productivity
Our Achievements – Productivity OUR ACTION PLANS PROGRESS 1. Continue to drive for productivity • Productivity gains of 20% and unit cost reductions of 6% gains and unit cost reduction while across all S’pore & M’sia processing centres amid enhancing service quality challenging operating environment
Slide 36: Our Achievements – People
Our Achievements – People OUR ACTION PLANS PROGRESS 1. Build people resources with a focus on • Another 34 employees given cross-border assignments diversity, cross border management to / from Singapore, Malaysia, Indonesia, China, Japan, skills and competencies to support our UK, Vietnam and Hong K
Slide 37: Our Achievements – People
Our Achievements – People OUR ACTION PLANS PROGRESS 3. Sustain minimum of 5 man-days of • Average training days per staff maintained at high level training on average for all employees (52% above annual target) • Implemented virtual classroom to increase global reach of training programs. • Launched
Slide 38: Our Achievements – People (continued)
Our Achievements – People (continued) OUR ACTION PLANS PROGRESS 5. Maintain share-ownership schemes • Changed Employee Share Purchase Plan to an annual to enable all our employees to basis so that (i) new employees do not have to wait for easily own OCBC Shares 2 years before they can take part in t
Slide 39: Our Achievements – Shareholder Value
Our Achievements – Shareholder Value OUR ACTION PLANS PROGRESS 1. Grow revenues faster than expenses • Core revenue grew 14%, expenses fell 3% (excluding GEH, revenue rose 8%, expenses declined 1%) 2. Deliver 10% EPS growth per annum • Core EPS increased by 29% 3. Achieve and sustain ROE of above •
Slide 40: Our Achievements – Shareholder Value (continued)
Our Achievements – Shareholder Value (continued) OUR ACTION PLANS PROGRESS 6. Continue to divest non-core assets at • Acquired ING Asia Private Bank for US$1,446m or the right time and invest the gains in S$2,024m, and renamed it Bank of Singapore, a wholly- core financial services growth owned priv
Slide 41: Our Achievements – Overseas Expansion (Indonesia) (continued)
Our Achievements – Overseas Expansion (Indonesia) (continued) OUR ACTION PLANS PROGRESS 1. Work with OCBC NISP to become a • Revamped the Small Business Banking Model Top Tier Nationwide bank focused on • Added 3 more Premier Banking Centres and provided SMEs and Consumers OCBC NISP’s Premier Bankin
Slide 42: Our Achievements – Overseas Expansion (Indonesia) (continued)
Our Achievements – Overseas Expansion (Indonesia) (continued) OUR ACTION PLANS PROGRESS 3. Expand our geographical branch • Added 18 branches and 15 ATMs to the network coverage • Soft-launched the Internet Banking platform; public launch scheduled in early 2010 • Work is in progress to enable OCBC
Slide 43: Our Achievements – Overseas Expansion (China)
Our Achievements – Overseas Expansion (China) OUR ACTION PLANS PROGRESS 1. Leverage on strategic partnerships in • Acquired a 19.99% stake in South China Trust Company China to grow our retail and SME Limited, which will allow OCBC China to further expand its customer businesses through different pr
Slide 44: Our Achievements – Overseas Expansion (China)
Our Achievements – Overseas Expansion (China) OUR ACTION PLANS PROGRESS 4. Develop our customer portfolio based • Increased retail mortgage outstandings 5-fold on defined business value • Grew retail customer base by over 115% by building up propositions for both corporate and distribution channels
Slide 45: Our Achievements – Overseas Expansion (Vietnam)
Our Achievements – Overseas Expansion (Vietnam) OUR ACTION PLANS PROGRESS 1. Work with VP Bank to build • 2 senior OCBC executives seconded to VP Bank, and Capabilities in Customer and Product several VP Bank staff also underwent short term training solutions in OCBC in the areas of Treasury, Intern
Slide 46: Thank You
Thank You &) ocBc Bank
Oversea-Chinese Banking — FY2009 Earnings Presentation on 6ix