Third Quarter 2016 Results Presentation 27 October 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 3Q16 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - 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; 2 - “na” denotes not applicable; - Figures may not sum to stated totals because of rounding
3Q16 Highlights Net profit grew 5% YoY and 6% QoQ to S$943m, underpinned by non-interest income growth • Net interest income declined 6% YoY from lower loan volumes and Net profit and ROE margin compression • Non-interest income grew, driven by banking and insurance operations 12.6% 11.2% 10.8% 10.5% • Wealth management income further increased; contributing 28% of Group total income 12.8% 12.8% 11.4% 11.4% • Great Eastern’s (“GEH”) insurance business remained robust; NBEV Earnings was higher, NBEV margin rose with stronger sales of higher margin -9% products YoY 2,943 • Operating expenses were modestly higher at 4% for 9M16; 3Q16 cost- 2,684 to-income ratio lower QoQ at 43.2% +5% YoY • Net allowances 10% above previous year 943 902 • Customer loans 2% lower from a year ago, but grew 2% QoQ Assets and • CASA made up more than 50% of total customer deposits liabilities • NPL ratio at 1.2%; coverage ratios remained healthy • Capital position strong; CET1 and Tier 1 at 15.1% and 15.6% respectively, Total CAR at 17.6%. Fully-loaded CET1 higher YoY and 9M15 9M16 3Q15 3Q16 Capital and QoQ at 12.8% liquidity • Leverage ratio of 8.4% well above the 3% minimum requirement Net profit (S$m) • Average all-currency Liquidity Coverage Ratio (“LCR”) was 133% ROE (%) Fully loaded CET1 CAR (%) 3
Group performance 3Q16 net profit increased 5% YoY and 6% QoQ to S$943m 3Q16 3Q15 YoY 2Q16 QoQ OCBC Group S$m S$m +/(-)% S$m +/(-)% Net interest income 1,317 (6) 1,260 (2) 1,234 Non-interest income 775 25 788 23 970 Total income 2,092 5 2,048 8 2,204 Operating expenses (900) 6 (932) 2 (953) Operating profit 1,251 1,192 5 1,116 12 Amortisation of intangibles (25) (3) (24) – (23) Allowances (150) 10 (88) 89 (166) Associates 99 7 103 3 105 Tax & non-controlling interest (“NCI”) (214) 5 (222) 1 (224) Net profit 943 902 5 885 6 4
Group performance 9M16 net profit declined 9% YoY to S$2.68b 9M16 9M15 YoY OCBC Group S$m S$m +/(-)% Net interest income 3,848 (1) 3,801 Non-interest income 2,573 1/ (2) 2,511 Total income 6,421 (2) 6,312 Operating expenses (2,691) 4 (2,807) Operating profit 3,505 3,730 (6) Amortisation of intangibles (73) (1) (72) Allowances (294) 43 (421) Associates 289 9 314 Tax & non-controlling interest (“NCI”) (709) (9) (642) Net profit 2,684 2,943 (9) 1/ 9M15 included a realised gain of S$136m from the sale of an investment in GEH’s equity portfolio 5
Bank performance 3Q16 net profit before GEH contribution (“Banking Operations”) at S$783m 3Q16 3Q15 YoY 2Q16 QoQ Banking Operations S$m S$m +/(-)% S$m +/(-)% Net interest income 1,294 (7) 1,235 (2) 1,209 Non-interest income 634 11 625 13 706 Total income 1,928 (1) 1,861 3 1,916 Operating expenses (849) 6 (880) 2 (896) Operating profit 1,020 1,079 (6) 981 4 Allowances (136) 18 (84) 91 (161) Associates 106 4 105 5 110 Amortisation, tax & NCI (195) (5) (194) (4) (186) 854 (8) 808 (3) Net profit from banking operations 783 48 232 78 105 GEH net profit contribution 159 OCBC Group net profit 943 902 5 885 6 6
Bank performance 9M16 net profit before GEH contribution fell 4% YoY mainly as a result of increased allowances 9M16 9M15 YoY Banking Operations S$m S$m +/(-)% Net interest income 3,787 (2) 3,728 Non-interest income 1,800 7 1,931 Total income 5,586 1 5,659 Operating expenses (2,530) 4 (2,643) Operating profit 3,016 3,056 (1) Allowances (280) 46 (409) Associates 302 7 324 Amortisation, tax & NCI (594) (6) (558) 2,484 (4) Net profit from banking operations 2,373 459 (32) 1/ GEH net profit contribution 311 OCBC Group net profit 2,684 2,943 (9) 1/ 9M15 included a realised gain of S$136m from the sale of an investment in GEH’s equity portfolio. OCBC Group’s share of net profit after tax and NCI amounted to S$105m 7
Major subsidiaries Major subsidiaries contributed 33% to the Group’s 9M16 earnings OCBC Wing Hang Great Eastern Holdings Key metrics (S$ m) 3Q16 YoY 9M16 YoY Key metrics 3Q16 YoY 9M16 YoY Net profit Net profit contribution to 71 -2% 222 -4% contribution to 159 +232% 311 -32% Group (S$ m) Group Loans (HKD b) 160 +4% 160 +4% TWNS 267 - 732 +10% Deposits (HKD b) 199 +5% 199 +5% NBEV 135 +29% 323 +18% NIM (%) 1.73 -8bps 1.76 +1bps NPL ratio (%) 0.9 +0.3ppt 0.9 +0.3ppt NBEV margin (%) 50.7 +11.4ppt 44.2 +3.3ppt LDR (%) 80.6 -1.1ppt 80.6 -1.1ppt OCBC NISP OCBC Malaysia Key metrics 3Q16 YoY 9M16 YoY Key metrics 3Q16 YoY 9M16 YoY Net profit Net profit contribution to 66 -10% 215 -8% contribution to 36 +34% 128 +41% Group (S$ m) Group (S$ m) Loans (RM b) 68 -2% 68 -2% Loans (IDR t) 88 +7% 88 +7% Deposits (RM b) 74 -1% 74 -1% Deposits (IDR t) 95 +5% 95 +5% NIM* (%) 1.79 -21bps 1.91 -8bps NIM (%) 4.49 +34bps 4.63 +77bps NPL ratio (%) 2.1 - 2.1 - NPL ratio (%) 1.5 +0.2ppt 1.5 +0.2ppt LDR (%) 90.8 -0.8ppt 90.8 -0.8ppt LDR (%) 92.1 +2.4ppt 92.1 +2.4ppt Note: Further details on the subsidiaries are set out in the appendix 8 * Net interest/finance margin “bps” denotes basis points “ppt” denotes percentage points
Agenda Results Overview 3Q16 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 9
Earnings Earnings well-diversified across key geographies and main businesses 9M16 PBT 9M16 PBT by Geography by Business 1/ PBT Others OCBC Wing Group 3% S$3,326m Hang 2/ YoY: -9% Greater 8% China Insurance Singapore 14% S$1,691m 22% YoY: -16% (within which OCBC Wing 2/ Malaysia Hang: 8%) S$606m 11% 49 % YoY: -2% Global 42% Indonesia Treasury and 6% Indonesia Markets S$196m Global YoY: +38% Corporate / 20 % 25% Investment 18% 51% Greater China Banking Malaysia S$716m YoY: -3% Singapore Global Consumer / Others Private S$117m Banking YoY: -20% 1/ Operating profit after allowances and amortisation. Excludes the Others segment, which comprises mainly property holding, investment holding, items not attributable to the business segments, as well as the offset of OCBC Bank 10 (China) from mid July 2016 which is reported in both the various business segments and OCBC Wing Hang. 2/ This included OCBC Bank (China) from mid July 2016.
Net interest income Net interest income down 6% YoY from lower loan volumes and margins; QoQ NIM decline from compression in loan yields but up 3 basis points for 9M16 1.74% 1.75% 1.68% 1.67% 1.68% 1.66% 1.68% 1.67% 1.62% 1.62% Net interest margin 5,189 1,341 4,736 1,317 1,307 1,282 1,260 1,249 1,234 3,801 Net interest income (S$m) 3,848 3,459 9M 2014 2015 9M16 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 11
Non-interest income Non-interest income rose 25% YoY Non- 44.0% 40.5% 40.4% 42.3% 41.7% 40.7% interest 39.8% 38.5% 37.1% 36.6% income / Total income 3,533 970 960 939 3,213 859 199 781 788 174 775 272 753 930 2,511 237 98 2/ 146 112 364 2/ 122 195 26 78 468 53 242 1/ 65 552 101 163 196 163 70 123 266 364 Non- 123 193 62 122 68 interest 49 182 407 47 45 39 34 income 151 (S$m) 1,643 438 428 1,495 417 408 402 395 374 1,219 2014 2015 9M16 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 Fees & Dividends & Trading Net gains from Life & General commissions rental income income investment securities Insurance and others Note: Excludes non-core gains 12 1/ Includes a one-off gain of S$32m from the partial disposal of GEH’s stake in its China joint venture 2/ Includes a realised gain of S$136m from the sale of an investment in GEH’s equity portfolio
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