Second Quarter 2019 Results Presentation 2 August 2019 Disclaimer: This presentation should be read as an overview of OCBC’s current business activities and operating environment which may contain statements relating to OCBC’s growth strategy and future business aspirations. These statements involve risks and uncertainties and 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 2Q19 & 1H19 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - Bank OCBC NISP 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”; - “nm” denotes not meaningful; - “ na ” denotes not applicable; 2 - Figures may not sum to stated totals because of rounding.
Group performance 2Q19 Highlights Net profit rose 1% YoY to S$1.22b, driven by record earnings from the Group’s banking franchise Interim dividend per share increased 25% or 5 cents YoY to 25 cents Key Highlights Sustainable Earnings ➢ Profit from banking operations rose 7% YoY to S$1.09b Total income Net interest margin S$2,618m 1.79% ➢ Net interest income up 10% YoY to a new high +6% YoY +12bps YoY ➢ NIM rose 12bps YoY and 3bps QoQ to 1.79% Net profit Return on equity ➢ Wealth management income at S$751m S$1,223m 11.5% +1% YoY (FY18: 11.5%) • Private banking AUM grew 9% YoY to US$111b • Net wealth management fees rose 7% YoY Strong Balance Sheet and ➢ Cost-to-income ratio at 44.0% Capital Position ➢ Sustained customer loans growth Customer loans Customer deposits ➢ CASA deposits increased 3% YoY S$263b S$297b +4% YoY +2% YoY ➢ Credit costs for total loans at 15bps for the quarter NPL ratio CET1 CAR ➢ CET1 CAR at 14.4% 14.4% 1.5% ➢ Interim dividend at 25 cents per share, up from 20 +1.2ppt YoY +0.1ppt YoY cents a year ago All-currency LCR NSFR 151% 109% +13ppt YoY +1ppt YoY 3
Group performance 2Q19 Group Performance Net profit grew 1% YoY to S$1.22b 2Q19 2Q18 YoY 1Q19 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,588 1,450 10 1,534 4 Non-interest income 1,030 1,024 1 1,142 (10) Total income 2,618 2,474 6 2,676 (2) Operating expenses (1,151) (1,035) 11 (1,095) 5 Operating profit 1,467 1,439 2 1,581 (7) Associates 146 112 30 170 (14) Operating profit before allowances 1,613 1,551 4 1,751 (8) Allowances (111) (21) 412 (249) (56) Amortisation, tax & non-controlling (279) (321) (13) (271) 3 interests (“NCI”) Net profit 1,223 1,209 1 1,231 (1) 4
Banking Ops performance 2Q19 Banking Operations Performance Net profit from Banking Operations rose 7% YoY and 15% QoQ to a new high of S$1.09b 2Q19 2Q18 YoY 1Q19 QoQ Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,560 1,430 9 1,510 3 Non-interest income 788 732 8 699 13 Total income 2,348 2,162 9 2,208 6 Operating expenses (1,075) (1,004) 7 (1,015) 6 Operating profit 1,274 1,158 10 1,193 7 Associates 150 115 30 176 (15) Operating profit before allowances 1,424 1,274 12 1,369 4 Allowances (111) (24) 371 (248) (55) Amortisation, tax & NCI (227) (238) (5) (179) 27 Net profit from banking operations 1,086 1,012 7 942 15 GEH net profit contribution 137 197 (31) 290 (53) OCBC Group net profit 1,223 1,209 1 1,231 (1) 5
Group performance 1H19 Group Performance Net profit grew 6% YoY to a record S$2.45b 1H19 1H18 YoY OCBC Group S$m S$m +/(-)% Net interest income 3,122 2,865 9 Non-interest income 1,942 12 2,172 Total income 5,294 4,807 10 Operating expenses (2,246) (2,067) 9 Operating profit 3,048 2,740 11 Associates 316 237 33 Operating profit before allowances 3,364 2,977 13 Allowances (360) (33) 976 Amortisation, tax & NCI (550) (623) (12) Net profit 2,454 2,321 6 6
Banking Ops performance 1H19 Banking Operations Performance Banking Operations’ net profit was up 1% YoY at S$2.03b 1H19 1H18 YoY Banking Operations S$m S$m +/(-)% Net interest income 3,070 2,827 9 Non-interest income 1,487 1,435 4 Total income 4,557 4,262 7 Operating expenses (2,090) (1,976) 6 Operating profit 2,467 2,286 8 Associates 326 243 34 Operating profit before allowances 2,793 2,529 10 Allowances (359) (36) 901 Amortisation, tax & NCI (405) (492) (18) Net profit from banking operations 2,028 2,001 1 GEH net profit contribution 426 320 33 OCBC Group net profit 2,454 2,321 6 7
Agenda Results Overview 2Q19 & 1H19 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - Bank OCBC NISP 8
Earnings Performance by business and geography Earnings well-diversified across key business segments and geographies 1H19 Operating Profit 1H19 Profit before Tax by Business 1/ by Geography OCBC Wing Others Hang Global 6% Corporate / 8% Greater 1H19 1H19 Investment China Insurance Banking 5% 19% 9% 19% 1H18 1H18 40% 21% 16% 40% 54% 4% 5% 9% Indonesia 57% 9% 16% Global 26% Treasury 13% Singapore and Markets Malaysia 24% Global Consumer / Private Banking 1/ Operating profit before allowances and amortisation. Excludes the Others segment, which comprises mainly property holding, investment holding and items not attributable to the business segments. 9
Net interest income Net interest income 2Q19 net interest income grew 10% YoY; NIM rose 12bps YoY and 3bps QoQ to 1.79%, driven by higher asset yields 1.78% 1.79% 1.76% Net interest 1.72% 1.72% margin 1.67% 1.67% 1.67% (“NIM”) 3,122 1,588 1,534 1,520 1,505 2,865 1,450 1,415 Net interest income (S$m) 1H18 1H19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 10
Non-interest income Non-interest income 2Q19 non-interest income up 1% YoY, largely led by higher fees and commissions and gains from sale of investment securities Non- 42.7% 41.4% 41.0% 40.8% interest 40.4% 39.3% 39.3% income / 35.3% Total income 1,142 2,172 1,039 1,030 1,024 1,942 464 276 918 188 225 234 830 440 Life & General 142 52 206 19 90 Insurance Non- 26 69 interest 247 Net gains from 478 43 213 286 285 192 193 income investment securities 94 (S$m) and others 93 65 39 71 54 80 37 9 34 Trading income 35 Dividends & rental income 1,054 1,017 536 522 518 502 Net fees & 495 474 commissions 1H18 1H19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 11
Wealth management Wealth Management (“WM”) Franchise 1H19 WM income up 12% at S$1.67b; BOS’ AUM grew 9% YoY and 3% QoQ to US$111b 34% 32% 31% 31% 31% 29% 29% As % of Group income 26% 1,672 1,488 921 761 748 751 727 Wealth management income 1/ (S$m) 607 1H18 1H19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 US$b Bank of Singapore’s AUM 102 111 102 102 105 102 108 111 Bank of Singapore’s EAB 126 135 126 126 129 125 131 135 1/ Wealth management income comprises the consolidated income from insurance, asset management, stockbroking and private banking subsidiaries, plus the Group's income from the sales of unit trusts, bancassurance products, structured deposits and other treasury products to consumer customers. 12
Non-interest income Net Fees & Commissions 2Q19 net fee income rose 5% QoQ to S$522m, driven by a rise in wealth management fees 1,054 1,017 536 153 522 518 151 502 495 474 53 74 52 78 79 78 73 22 79 Others 2/ 27 31 Net fees and 270 19 25 272 23 commissions 130 Investment Banking (S$m) 3/ 137 140 148 135 99 Loan, Trade & 138 82 54 Guarantees 41 45 41 40 Brokerage & Fund 41 Management 479 460 256 Wealth Management 1/ 239 223 221 217 193 1H18 1H19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 1/ Mainly comprising income from private banking, and sales of unit trusts, bancassurance products, structured deposits and other treasury products to consumer customers. 2/ “Others” includes credit card fees, service charges and other fee and commission income. 13 3/ Net of fee and commission expenses.
Operating expenses Operating expenses 2Q19 expenses up 5% QoQ mainly from a rise in staff costs associated with annual salary increments, higher headcount and sales-related variable compensation 45.9% 44.2% 44.0% 43.0% 42.4% 41.9% 42.0% 40.9% Cost-to- income ratio (“CIR”) 1,151 2,246 1,095 1,078 1,069 2,067 1,035 1,032 227 441 214 202 Others 218 176 376 200 Property & 211 415 204 Operating 216 equipment 194 200 396 202 expenses (S$m) Staff costs 713 1,390 677 662 660 1,295 651 633 1H18 1H19 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 Headcount (period end) 29,444 29,612 29,719 29,706 29,958 30,255 14
Allowances Total cumulative allowances 3,067 3,046 2,800 2,798 2,769 2,695 Regulatory Loss 674 675 Allowance Reserve 453 474 353 534 (“RLAR”) Total Allowances for 1,034 1,049 cumulative 1,055 non-impaired 1,115 1,130 1,014 allowances assets (S$m) Allowances for impaired assets 1,359 1,322 1,269 1,212 1,232 1,221 Mar 18 Jun 18 Sep 18 Dec 18 Mar 19 Jun 19 15
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