2015 Full Year Results Presentation 17 February 2016 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 no liability whatsoever with respect to the use of this document or its content.
Agenda Results Overview FY15 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 presentation - Amounts less than S$0.5m are shown as “0”; 2 - “nm” denotes not meaningful; - Figures may not sum to stated totals because of rounding
FY15 Highlights Core net profit increased 13% YoY to a new record of S$3.90 billion • Net interest income rose 10% YoY to a record high Core net profit and core ROE • Non-interest income grew 10% YoY, driven by higher fee, trading and investment income 13.2% 12.3% 1/ • Great Eastern’s (“GEH”) underlying insurance business grew with 10.6% 11.5% TWNS and NBEV up 8% and 3% YoY respectively • Profit from life assurance decreased 18% YoY, largely attributable +13% Earnings to unrealised losses from GEH’s bond investment portfolio YoY • Operating expenses increased 12% YoY. Before full year 3,903 consolidation of OCBC Wing Hang, operating expenses up 5% 3,451 +21% • Net allowances rose 37% YoY YoY • Net profit of OCBC Malaysia, OCBC NISP and OCBC Wing Hang 960 all increased, in local currency terms 791 • Average balances of customer loans increased 11% YoY. Before consolidation of OCBC Wing Hang, average balances up 3% Assets and • Customer deposits unchanged YoY; CASA ratio higher at 48.9% liabilities • NPL ratio at 0.9%; credit cost at a low 0.1%; coverage ratios at comfortable levels • Capital position sound; CET1 and Tier 1 at 14.8%, Total CAR at 2014 2015 4Q14 4Q15 16.8% Core net profit (S$m) Capital and • Leverage ratio of 8.0% well above the 3% minimum requirement Core ROE (%) liquidity guided by the Basel Committee 1/ The YoY decline in 2015 ROE was largely due • Average all-currency Liquidity Coverage Ratio (“LCR”) for 4Q15 to the enlarged share base, arising from the OCBC Rights Issue in September 2014 was 124% 3
Full year core net profit rose 13% YoY to S$3.90b FY15 FY14 YoY OCBC Group S$m S$m +/(-)% Net interest income 5,189 4,736 10 Non-interest income 3,533 3,213 10 Total income 8,722 7,949 10 Operating expenses (3,664) (3,258) 12 Operating profit 5,058 4,691 8 Amortisation of intangibles (98) (74) 32 Allowances (488) (357) 37 Associates & JVs 353 112 215 Tax & non-controlling interest (“NCI”) (922) (921) - Core net profit 3,903 3,451 13 One-off gain - 391 1/ (100) Net profit 3,903 3,842 2 1/ One-off gain of S$391m resulting from an accounting change to recognise the fair value gain on 4 the Group’s initial 15.3% AFS stake in Bank of Ningbo (“BON”), from fair value reserve to income, upon BON becoming a 20%-owned associated company
4Q15 net profit increased 21% YoY to S$960m 4Q15 4Q14 YoY 3Q15 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,341 1,277 5 1,317 2 Non-interest income 960 762 26 775 24 Total income 2,301 2,039 13 2,092 10 Operating expenses (974) (922) 6 (900) 8 Operating profit 1,327 1,117 19 1,192 11 Amortisation of intangibles (25) (32) (25) (23) - Allowances (193) (154) 25 (150) 29 Associates & JVs 63 64 99 (1) (36) Tax & NCI (212) (204) (214) 4 - Net profit 960 791 21 902 6 5
Full year core net profit before GEH contribution (“banking operations”) grew 20% YoY to S$3.26b FY15 FY14 YoY Banking Operations S$m S$m +/(-)% Net interest income 4,668 9 5,099 Non-interest income 2,078 19 2,477 Total income 6,746 12 7,576 Operating expenses (3,049) 13 (3,446) Operating profit 4,129 3,698 12 Allowances (356) 29 (460) Associates & JVs 122 203 371 Amortisation, tax & NCI (733) 6 (775) Core net profit 3,264 2,732 20 One-off gain - 391 1/ (100) Net profit from banking operations 3,264 3,123 5 719 (11) GEH net profit contribution 639 OCBC Group net profit 3,903 3,842 2 1/ One-off gain of S$391m resulting from an accounting change to recognise the fair value gain on 6 the Group’s initial 15.3% AFS stake in BON, from fair value reserve to income, upon BON becoming a 20%-owned associated company
4Q15 net profit before GEH contribution up 26% YoY to S$780m 4Q15 4Q14 YoY 3Q15 QoQ Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,259 4 1,294 1 1,312 Non-interest income 482 41 634 7 677 Total income 1,741 14 1,928 3 1,989 Operating expenses (866) 6 (849) 8 (916) Operating profit 1,074 874 23 1,079 (1) Allowances (153) 18 (136) 33 (181) Associates & JVs 67 2 106 (35) 68 Amortisation, tax & NCI (167) 8 (195) (7) (181) 780 621 26 854 (9) Net profit from banking operations 169 6 48 275 180 GEH net profit contribution OCBC Group net profit 960 791 21 902 6 7
Agenda Results Overview FY15 Group Performance Trends Performance of Major Subsidiaries – Great Eastern Holdings – OCBC Wing Hang – OCBC Malaysia – OCBC NISP Summary Appendix: Wealth management income 8
Earnings well-diversified across key geographies and main businesses FY15 PBT FY15 PBT by Business 1/ by Geography PBT Rest of the Group OCBC S$4,825m Other Asia World Wing Hang YoY: +10% Pacific 2% Greater 2% Singapore 8% China S$2,665m YoY: +3% 20% Malaysia Insurance (within which OCBC 18% S$807m Wing Hang: 8% ) YoY: -3% 49 % Indonesia S$200m YoY: +8% 4% Global Indonesia 40% Corporate / Greater China 13% S$968m Investment Global 20 % YoY: +85% Banking Treasury 17 % and Others 21% Markets S$185m 55 % Malaysia YoY: -26% Global Consumer / Private Banking Singapore 1/ Operating profit after allowances and amortisation. Excludes the Others segment, which comprises mainly property holding, investment holding, items not attributable to the business 9 segments described above and portfolio allowances not attributed to specific business segments.
Net interest income rose 10% YoY to a new high – 2015 NIM stable from a year ago; 4Q NIM rose 7bp YoY and 8bp QoQ 1.68% 1.67% 1.74% Net interest 1.64% 1.70% 1.70% 1.68% 1.67% 1.67% 1.66% 1.62% margin 5,189 1,341 4,736 1,317 1,282 1,277 1,249 1,246 Net interest 3,883 1,126 income 1,087 (S$m) 2013 2014 2015 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 10
Non-interest income grew 10% YoY, driven by higher fee, trading and investment income Non- 43.0% interest 42.4% 42.3% 41.7% 41.4% 40.7% 40.4% 40.5% 39.1% 37.4% 37.1% income / Total income 3,533 960 939 3,213 859 850 781 800 801 174 775 272 762 2,738 930 237 98 2/ 259 364 215 223 2/ 195 26 756 78 232 1/ 242 65 552 31 23 196 1/ 70 97 163 Non- 223 364 113 93 123 133 193 62 interest 262 18 182 99 44 47 45 39 income 36 142 74 28 (S$m) 1,643 438 1,495 408 406 402 395 383 1,355 353 353 2013 2014 2015 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Fees & Dividends & Trading Net gains from Life & General commissions rental income income investment securities Insurance and others Note: Excludes non-core gains 1/ Includes a one-off gain of S$32m from the partial disposal of GEH’s stake in its China joint venture 11 2/ Includes a realised gain of S$136m from sale of an investment in GEH’s equity portfolio
Fee income up 10% YoY to a record, led by higher wealth management, brokerage and fund management fees +5% +10% YoY YoY -1% 1,643 QoQ 1,495 438 276 408 406 402 1,355 395 212 383 65 86 353 353 55 168 72 86 61 78 30 62 92 29 43 50 18 19 19 16 25 556 16 Fees and commissions 558 146 137 (S$m) 150 515 137 135 145 132 132 219 62 172 49 57 46 168 52 39 49 39 506 467 135 129 126 412 124 118 116 114 111 2013 2014 2015 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Wealth Brokerage & Fund Loan, Trade & Investment Others 2/ management 1/ Management Guarantees Banking 1/ Mainly comprising income from private banking, and sales of unit trusts, bancassurance 12 products, structured deposits and other treasury products to consumer customers 2/ Others includes credit card fees, service charges and other fee and commission income
Profit from life assurance declined 18% YoY largely due to unrealised mark-to-market losses from GEH’s bond investment portfolio - 18% +24% YoY YoY 768 +281% QoQ 630 207 236 599 221 Profit from 199 38 164 190 life 183 174 54 174 assurance 50 (S$m) 54 52 132 46 423 164 331 134 41 279 98 99 116 92 62 57 35 146 138 135 36 37 35 32 33 33 34 33 (6) 2013 2014 2015 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 Participating Fund Non-participating Fund Investment-linked Fund 13
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