OCBC Bank: Third Quarter Results Presentation 2017

Transcription

1. Third Quarter 2017 Results Presentation 26 October 2017 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.
2. Agenda Results Overview 3Q17 & 9M17 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.
3. Group performance 3Q17 Highlights Net profit for the quarter rose 12 % YoY to S$1.1b; ROE at 11.4% Earnings Net profit (S$m) GEH 943 Net Interest Income: S$1.4b (3Q16 : S$1.2b) +12% YoY Non-interest Income: S$1.0b -2% QoQ (3Q16 : S$1.0b) 1,083 1,057 Operating Expenses: S$1.0b 233 194 (3Q16 : S$1.0b) 159 Allowances: S$0.2b Banking operations  • All major subsidiaries’ local currency earnings up YoY • GEH’s net profit contribution increased 22% YoY • Wealth management income up 18% YoY • Private banking AUM grew 53% YoY and 6% QoQ to US$95b  Good cost discipline with cost-to-income ratio at 42.4%; expenses up only 1% QoQ while YoY increase included Barclays WIM costs  Overall credit quality healthy. New NPA formation eased with NPL ratio unchanged at 1.3%. Coverage ratios maintained above 100%  Customer loans and deposits up 11% and 8% YoY respectively; LDR at 85.3%  Stable funding base, mainly comprising customer deposits, of which CASA deposits made up 50.5%  Optimised level of capital, translating into good shareholder return on equity  Strong liquidity and funding position (3Q16 : S$0.2b) 783 850 863 Net Profit: S$1.1b Strong income growth across core markets and businesses (3Q16 : S$0.9b) ROE: 11.4% 3Q16 2Q17 3Q17 (3Q16 : 10.8%) Customer Loans: S$232b Assets and liabilities (3Q16 : S$209b) Customer Deposits: S$268b (3Q16 : S$247b) CET1 ratio: 13.1% (3Q16 : 15.1%) Capital and liquidity Leverage ratio: 7.6% (3Q16 : 8.4%) All-currency LCR: 147% (3Q16 : 133%) 3
4. Group performance 3Q17 Group Performance Net profit increased 12 % YoY to S$1.1b 3Q17 2Q17 QoQ 3Q16 YoY S$m S$m +/(-)% S$m +/(-)% 1,382 1,345 3 1,234 12 978 1,053 (7) 970 1 2,360 2,398 (2) 2,204 7 (1,001) (992) 1 (953) 5 1,359 1,406 (3) 1,251 9 (26) (27) (2) (23) 7 Allowances (156) (169) (8) (166) (6) Associates 127 119 6 105 21 Tax & non-controlling interest (“NCI”) (247) (246) 1 (224) 10 Net profit 1,057 1,083 (2) 943 12 OCBC Group Net interest income Non-interest income Total income Operating expenses Operating profit Amortisation of intangibles 4
5. Group performance 9M17 Group Performance Nine months net profit rose 16 % YoY to S$3.1b 9M17 9M16 YoY S$m S$m +/(-)% Net interest income 3,999 3,801 5 Non-interest income 3,008 2,511 20 Total income 7,007 6,312 11 (2,967) (2,807) 6 4,040 3,505 15 (78) (72) 9 Allowances (493) (421) 17 Associates 361 314 15 Tax & NCI (717) (642) 12 Net profit 3,113 2,684 16 OCBC Group Operating expenses Operating profit Amortisation of intangibles 5
6. Banking Ops performance 3Q17 Banking Operations Performance Third quarter net profit before GEH contribution (“Banking Operations”) rose 2% QoQ and 10% YoY to S$863m 3Q17 2Q17 QoQ 3Q16 YoY S$m S$m +/(-)% S$m +/(-)% 1,360 1,322 3 1,209 12 674 700 (4) 706 (5) Total income 2,034 2,022 1 1,916 6 Operating expenses (946) (929) 2 (896) 6 Operating profit 1,088 1,093 – 1,020 7 Allowances (149) (166) (10) (161) (7) Associates 131 123 6 110 19 (207) (201) 3 (186) 11 Net profit from banking operations 863 850 2 783 10 GEH net profit contribution 194 233 (17) 159 22 1,057 1,083 (2) 943 12 Banking Operations Net interest income Non-interest income Amortisation, tax & NCI OCBC Group net profit 6
7. Banking Ops performance 9M17 Banking Operations Performance Nine months net profit for Banking Operations increased 6 % YoY to S$2.5b Banking Operations 9M17 9M16 YoY S$m S$m +/(-)% Net interest income 3,931 3,728 5 Non-interest income 2,061 1,931 7 Total income 5,992 5,659 6 (2,786) (2,643) 5 Operating profit 3,206 3,016 6 Allowances (479) (409) 17 Associates 371 324 14 Amortisation, tax & NCI (592) (558) 6 Net profit from banking operations 2,506 2,373 6 607 311 96 3,113 2,684 16 Operating expenses GEH net profit contribution OCBC Group net profit 7
8. Major subsidiaries Subsidiaries ’ Performance Major subsidiaries contributed 39% to the Group’s 9M17 net profit Key Metrics Net profit Net Profit Contribution to the Group Great Eastern Holdings 9M16 12% Group’s 9M17 net profit: S$3.1b NBEV margin TWNS 19% 9M17 NBEV Net profit 8% 5% 8% OCBC Wing Hang Loans Deposits 8% 5% 67% 7% 61% OCBC NISP S$733m S$394m S$341m S$315m 40.4% 43.5% S$843m S$725m +86% +8% -3.1ppt +16% HKD1,826m HKD1,453m +26% HKD175b HKD160b +9% HKD210b HKD199b +6% IDR1,669b IDR1,358b +23% Loans IDR103t IDR88t +17% Deposits IDR115t IDR95t +20% Net profit RM707m RM647m +9% Loans Deposits Note: Further details on the subsidiaries are set out in the Appendix. “ppt” denotes percentage points. YoY 9M16 Net profit Rest of OCBC Group OCBC Malaysia 9M17 RM69b RM68b RM72b RM73b +2% Flat 8
9. Agenda Results Overview 3Q17 & 9M17 Group Performance Trends Appendix: Performance of Major Subsidiaries - Great Eastern Holdings - OCBC Wing Hang - OCBC Malaysia - OCBC NISP 9
10. Earnings Profit before tax Earnings well-diversified across key geographies and business segments 9M17 PBT by Business1 / 9M17 PBT by Geography OCBC Wing Hang 2/ Singapore S$2.1b Others YoY: +23% 8% 9M17 Insurance 8% 22% 14% 9M16 33% Global Corporate / Investment Banking 4% Greater China within which OCBC Wing Hang: 8% 2/ (9M16: 8%) 9M17 20% Malaysia S$596m 3% 22% 9M16 43% 12% 11% Global Treasury and Markets Indonesia 6% 6% 51% 23% YoY: -2% Indonesia S$229m YoY: +17% 18% 16% Malaysia 26% Global Consumer / Private Banking 54% Singapore Greater China S$762m YoY: +6% Others S$165m YoY: +41% 1/ Operating profit after allowances and amortisation. Excludes the Others segment, which comprises mainly property holding, investment holding, items not attributable to the business segments, as well as the offset of China operations which is reported in both the business segments and OCBC Wing Hang. 2/ This included OCBC Bank (China) from mid July 2016. 10
11. Net interest income Net interest income 3Q17 NII up 3 % QoQ and 12% YoY, driven by asset growth and higher NIM Net interest margin (“NIM”) 1.67% 1.67% 5,189 5,052 1.64% 1.75% 1,307 1.68% 1.62% 1.63% 1.62% 1.65% 1,345 1,260 1,234 1,251 1,272 3Q16 4Q16 1Q17 1.66% 1,382 Net interest income (S$m) 9M 3,848 3,801 3,999 2015 2016 9M17 1Q16 2Q16 2Q17 3Q17 11
12. Non-interest income Non-interest income 3Q17 non-interest income rose 1 % YoY Noninterest income / Total income 40.5% 40.5% 44.0% 42.9% 36.6% 3,533 42.5% 43.4% 38.5% Noninterest income (S$m) 1,053 3,008 970 228 429 552 529 276 122 193 192 417 127 101 2015 Fees & commissions 649 727 1,643 41.4% 3,437 136 781 43.9% 1,638 2016 Dividends & rental income 1,461 9M17 Trading income 753 122 34 788 199 146 112 53 123 49 163 417 428 420 1Q16 2Q16 3Q16 4Q16 238 96 158 140 36 47 118 45 481 492 488 1Q17 2Q17 3Q17 122 40 278 91 162 374 Net gains from investment securities and others 211 182 68 978 977 926 Life & General Insurance 89 Realised gain from the sale of an investment in GEH’s equity portfolio 12
13. Wealth management Wealth Management 3Q17 wealth management income grew 18 % YoY across consumer banking, private banking and insurance operations; BOS’ AUM rose 53% YoY and 6% QoQ to US$95b Wealth Management Income1/ (S$m) Bank of Singapore Earning Asset Base (US$b) As % of Group income Dec 12 – Dec 16 CAGR 17% 32% 27% 28% 27% 23% 2,354 30% 32% 33% 31% 25% 789 724 2,273 627 65 68 11 14 13 43 46 51 55 Dec 12 Dec 13 Dec 14 Dec 15 52 57 9 22 18 79 95 741 644 520 Loans Dec 16 Sep 17 AUM Great Eastern Embedded Value3/ (S$m) 482 Dec 12 – Dec 16 CAGR 8% 2,253 9M 117 97 2/ 1,742 1,629 2015 2016 9M17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 8,605 9,214 Dec 12 Dec 13 10,436 11,001 11,694 Dec 14 Dec 15 Dec 16 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. 2/ 9M15 included a realised gain of S$136m from the sale of an investment in GEH’s equity portfolio. 13 3/ An actuarial embedded value is a commonly used technique to estimate the economic value of the existing business of a life insurance company.
14. Non-interest income Fees & Commissions 3Q17 fee income rose 14% YoY from broad-based income growth across the Group’s business segments Fee income / Total income 20.9% 18.8% 19.3% 1,643 1,638 257 290 1,461 86 63 227 68 556 Fees and commissions (S$m) 533 396 18.2% 20.3% 19.3% 134 164 20.5% 20.7% 481 492 488 72 84 24 15 123 137 137 43 44 47 215 215 205 1Q17 2Q17 3Q17 420 71 74 71 29 15 21 13 136 135 374 77 14 174 21.4% 428 417 68 19.4% 135 126 39 43 44 40 570 2015 636 588 2016 9M17 Wealth management1/ 126 150 155 157 1Q16 2Q16 3Q16 4Q16 Brokerage & Fund Management Loan, Trade & Guarantees Investment Banking Others2/ 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. 14
15. Operating expenses Operating expenses Expenses grew only 1 % QoQ as a result of ongoing cost discipline Cost / Income 42.0% 3,664 673 737 44.6% 44.8% 45.5% 43.2% 45.1% 43.3% 41.4% 42.4% 953 973 992 1,001 932 981 923 160 166 191 179 178 198 162 183 189 186 205 192 195 195 1,829 578 583 601 585 602 619 608 9M17 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 29,705 29,207 29,161 42.3% 3,788 678 2,967 763 Operating expenses (S$m) 555 583 2,254 2015 2,347 2016 Staff costs Headcount (period end) Others Property & equipment 30,017 30,068 29,760 29,792 15
16. Allowances Allowances 3Q17 net allowances down QoQ & YoY; specific allowances largely set aside for restructured loans exhibiting ongoing weakness and for decline in collateral valuations 726 305 70 Net allowances for loans and other assets (S$m) 27 493 41 488 79 167 12 484 232 352 99 166 3 88 235 168 21 99 169 5 105 108 28 177 172 100 56 52 138 64 43 39 4Q16 1Q17 8 2015 2016 9M17 Portfolio allowances 1Q16 2Q16 Net specific allowances/ (write-backs) 156 15 3Q16 59 3 2Q17 3Q17 Impairment charges/ (writebacks) for other assets As a % of avg. loans (bps) 1/ Net specific 11 loan allowances 23 21 19 10 19 44 20 19 24 Total loan allowances 2/ 31 27 30 12 31 52 27 29 24 666 514 136 90 154 286 149 173 192 19 Net specific loan allowances (S$m) Allowances for new & 418 existing loans Write-backs3/ (133) (126) (116) (26) (26) (36) (38) (31) (53) (32) Recoveries4/ Net specific loan allowances (53) (56) (46) (11) (12) (19) (13) (10) (15) (22) 232 484 352 99 52 99 235 108 105 138 1/ 2/ 3/ 4/ Figures are computed on an annualised basis. Total loan allowances include net specific allowances and portfolio allowances. Write-backs of specific allowances for existing NPLs due to settlements and repayments. Recoveries of loans that had been written off. 16
17. Loans Customer loans Broad-based YoY growth of 11 % across most industry segments and key markets In constant ccy terms +11% YoY +2% QoQ 208 22 Customer Loans (S$b) 52 205 22 49 225 229 232 220 28 29 30 26 209 24 49 54 54 56 57 20 19 28 28 17 17 17 18 19 29 29 28 28 28 88 89 91 94 96 96 98 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 +12% YoY +2% QoQ Rest of the world QoQ: +1% 1/ YoY: +25% Greater China QoQ: +3% YoY: +16% Indonesia QoQ: -1% YoY: +14% Malaysia QoQ: Flat YoY: -1% Singapore QoQ: +2% YoY: +8% Note: Customer loans by Geography based on where the credit risks reside, which may be different from the borrower’s country of residence or the booking location of the loans. 1/ The 25% YoY increase in customer loans from the “rest of the world” category was mainly from United Arab Emirates, Australia, United States of America and United Kingdom. 17
18. Loans Customer loans Loans portfolio well-diversified across geographies and industries Customer Loans by Geography Other Asia Pacific Customer Loans by Industry 27 % Rest of the World Sep 17 6% 25% 24% Singapore Manufacturing 6% S$232b Sep 17 43% 42% General commerce 14% 13% Sep 16 12% 6% 11% 12% 12%12% 11% Professionals &5% individuals 5% 12% 4% 5% Indonesia Malaysia 3% 4% Housing loans 15% 27% 28% S$232b 6% 12% 6% 12% 8% 8% 16% 6%13% Sep 16 Greater China 28% 1/ 17% 12% 7% 5% Others 16% 13% 16% 15% Building & construction FIs, investment & holding cos Note: Customer loans by Geography based on where the credit risks reside, which may be different from the borrower’s country of residence or the booking location of the loans. 1/ Comprising the “Transport, storage & communication”, “Agriculture, mining & quarrying” and “Others” industry groupings. 18
19. Loans Greater China Customer Loans Loans up QoQ and YoY ; sound asset quality and coverage ratios maintained 260% Total allowances/ NPAs NPL ratio 148% 157% 0.7% 0.7% 0.7% 184% 171% 0.6% 0.6% 0.4% 52 4 2 Customer Loans to Greater China (S$b) 137% 49 49 4 2 4 2 54 54 4 2 4 2 56 4 2 185% 0.5% 57 3 2 Macau Taiwan 27 26 27 29 28 30 31 Hong Kong Offshore 2/ China 1/ 13 12 12 14 14 14 15 6 5 5 5 6 6 6 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Jun 17 Sep 17 Note: Customer loans to Greater China is based on where the credit risks reside, which may be different from the borrower’s country of residence or the booking location of the loans. 1/ Relates to loans that are booked in China, where credit risks reside. 2/ Relates to loans that are booked outside of China, but with credit risks traced to China. 19
20. Loans Oil & Gas exposure NPL ratio 1/ 0.43% 0.45% 0.53% 0.61% 0.62% 0.59% 0.63% Total O&G exposure remained relatively stable QoQ 17.1 15.8 14.1 14.3 1.7 1.7 14.1 15.8 16.0 2.2 2.5 2.1 2.4 (S$b) 17 1.9 0.2 16 12.4 12.6 12.2 13.4 15.0 13.6 13.5 6% of total customer loans 0.1 -0.2 15 (S$b) 0.1 14 13 16.0 15.8 12 0.9 0.9 1.1 1.3 1.4 1.4 1.5 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 11 10 On-balance sheet exposure Off-balance sheet exposure Jun 17 FX impact OSV 2/ Traders Others Sep 17 NPLs • Approximately a third (33%) of oil & gas NPLs are being serviced; pro-active steps taken to restructure loans based on stress-test results • Oil & gas offshore support vessels (“OSV”) sector made up S$5.7b or 42% of oil & gas on-balance sheet exposure as at 30 September 2017, of which 24% are classified as NPLs 1/ % NPL over total customer loans. 2/ Others includes exposure to names involved in other O&G activities such as exploration and production (including integrated oil majors) and refining. 20