first quarter 2008 results - ocbc bank · 2008 results presentation 7 may 2008. 2 agenda •...
TRANSCRIPT
1
First Quarter 2008 Results
Presentation
7 May 2008
2
Agenda
• Results Overview
• Performance Trends
• Results of Key Subsidiaries
• In Summary
Appendix: Update on CDOs
2
3
Core Net Profit Fell 10% YoY, Grew 8% QoQ
4284
425(142)
(1)(13)(12)593
(485)1,077
464613S$m
4Q07
(4)18
(10)(19)(90)n.m.
-(11)
21-
(26)26
+/(-)%
YoY
8510460Core Net Profit(11)(156)(126)Tax & Minority Interests
4508638Net Interest Income
45647622Reported Net Profit
233162Associates & JVs
n.m.137162Divestment Gains/Tax Refunds 1/
(159)(0.3)8Allowances-(12)(12)Amortisation of Intangibles
(1)662589Operating Profit(12)(352)(426)Operating Expenses
(6)1,0141,015Total Income(19)506377Non-Interest Income
+/(-)%S$mS$m
QoQ1Q071Q08
1/ Net divestment gains of S$156m in 1Q08 and S$90m in 1Q07, and tax refunds of S$6m in 1Q08, S$4m in 4Q07 and S$47m in 1Q07.
3
4
Key Financial Ratios- Based on Core Earnings
11.5
11.2
116.1
1.7
80.3
45.0
43.0
2.14
%4Q07
101.6115.3Allowances/NPLs
15.912.2ROE
16.312.6Cash ROE
78.979.7Loans-to-Deposits Ratio
49.937.1Non-Interest Income/ Total Income
2.7
34.7
2.04
%1Q07
%
1.6NPL Ratio
42.0Cost-to-Income Ratio
2.17Net Interest Margin
1Q08
4
5
Agenda
• Results Overview
• Performance Trends
• Results of Key Subsidiaries
• In Summary
Appendix: Update on CDOs
5
6
Continued Uptrend in Net Interest Income and Margins
6
2.00%2.10%
2.17%2.04%
2.13% 2.07% 2.14% 2.17%
508
558 565613
638
1,794
638
2,244
2006 2007 1Q08 1Q07 2Q07 3Q07 4Q07 1Q08
Net interest margin
Net interest income (S$m)
7
Non-Interest Income Impacted by Lower Insurance Profits and Trading Losses
7
46.4%49.9%
46.9% 46.0%44.7%
37.1% 37.1%
43.0%Non-interest
income/Total income
Non-interest income(S$m)
Divestment gains Excluding divestment gains
506
493
544
377
544
167
921,448
1,944
1,944
598 92
167
598
481 464
2,0362,045
377
2006 2007 1Q08 1Q07 2Q07 3Q07 4Q07 1Q08
8
Life Assurance Profits Impacted by MTM Investment Losses and Lower Discount Rate on Insurance Liabilities
8
2183025394(30)- Non-participating Fund
5564201511- Investment-linked Fund
376509991807Total life assurance profit
26
S$m
1Q07
143
S$m
2007
1037126- Participating Fund
S$mS$mS$mLife assurance profit from:
20064Q071Q08
Loss in GEH’s non-par fund due to:MTM losses on investments due to debt and equity market volatilityIncrease in long term insurance contract liabilities due to a decline in the discount rate
GEH’s underlying life assurance business remains healthy:Gross premium income up 28% YoYNew business premiums up 51% YoYNew business embedded value up 18% YoY
9
Fee Income Increased 19% YoY, 5% QoQ
20.2%18.8%
17.5%
20.9%
18.4%19.3%
20.9% 20.7%
178
217 211 202 212
597
808
212
2006 2007 1Q08 1Q07 2Q07 3Q07 4Q07 1Q08
Fee income/Total income
Fee income(S$m)
Excluding divestment gains
9
10
Operating Expenses Fell by 12% QoQ
200 231 247 267 249
6987 71
83
98 108143
99
7874
722946
249
277
301
78
433
99
332
1,680
1,331
426
426
485
427416
352
2006 2007 1Q08 1Q07 2Q07 3Q07 4Q07 1Q08
Operating Expenses
(S$m)
Cost-to-Income Ratio
40.1%40.8%
39.6%
45.0%42.0%
42.0%41.1%
34.7%
Staff Costs Property & Equipment Others Excluding divestment gains
10
11
Core Operating Profit down 11% YoY
589
92167
662
2,509
1,911
589
92598
167
756
593620634
754
756
2,6012,508
2006 2007 1Q08 1Q07 2Q07 3Q07 4Q07 1Q08
Operating Profit before allowances
(S$m)
Divestment gains
11
12
Net Write-Back on Allowance from Loan Recoveries, Repayments and Upgrades
13
(8)
39
(16)
0.32
36
(8)
2006 2007 1Q08 1Q07 2Q07 3Q07 4Q07 1Q08
Allowances for loans and other
assets (S$m)
12
13
No Further Allowances for CDOs in 1Q08
(3)(5)(6)Specific allowances/ (write-back) for loans
13
8
10
S$m
4Q07
--Allowances for CDOs
0.3
3
S$m
1Q07
S$m
(8)Total net allowances/(write-back)
(1)Allowances/(write-back) for other assets
1Q08
13
1414
ROE Improved QoQ to 12.2%
425 425460
518510
15690532
47 6
38
460
1,4431,878
156
559
104
460
647
463428
622
622
2,071
2,002
2006 2007 1Q08 1Q07 2Q07 3Q07 4Q07 1Q08
15.9%11.8%
12.2%12.2%
11.2%
15.4%
11.5%13.4%
13.0%12.1%
13.8%12.2% 13.0%
Net Profit(S$m)
ROE(%)
Divestment gains Excluding divestment gains/ tax refundsTax Refunds Core ROE excluding Bank of Ningbo surplus
15
Earnings Contribution by Segments
Insurance & Others
5%
Treasury21%
Consumer Banking
31%
Business Banking
43%
Singapore65%
Malaysia27%
Other ASEAN
2%
Other Asia Pacific
6%
1Q08 Profit Before Tax & MI : S$586m(excluding divestment gains)
1Q08 Profit Before Tax & MI : S$586m(excluding divestment gains)
1Q08 PBT by Business Segment 1Q08 PBT by Geography
15
16
Broad-based Loans Growth of 19% YoY, 4% QoQ
Loans (S$bn)
40.5 41.3 42.8 45.3 46.9
11.9 13.013.7
15.4 16.2
12.311.511.010.9
12.1
63.3
72.868.0
65.3
Mar-07 Jun-07 Sep-07 Dec-07 Mar-08InternationalMalaysiaSingapore
Note: Loans by geography are based on where the credit exposure resides
16
75.4
17
Deposits up 19% YoY, 5% QoQ
Loans-to-deposits
51.8 53.3 57.2 58.8 60.5
11.7 13.012.9 13.0 14.19.9 11.611.6 12.5 13.378.0
82.2 85.7 88.892.9
Mar-07 Jun-07 Sep-07 Dec-07 Mar-08
Deposits (S$bn)
77.4% 79.7%
77.8% 76.8% 76.7%79.8% 79.1%
80.3%78.9% 77.6%
15.0%
25.0%
35.0%
45.0%
55.0%
65.0%
75.0%
85.0%
Current AccountSavings DepositsFixed Deposits Others Including FRNs and ECPs
17
18
NPL Ratio Improves to 1.6%
InternationalMalaysiaSingapore
869 749 617 512 456
658621
581548 519
239244
286294 349
1,7661,614
1,4841,354 1,325
Mar-07 Jun-07 Sep-07 Dec-07 Mar-08
NPL Ratio
NPLs(S$m)
1.6%1.7%
2.4%2.1%
2.7%
18
19
Allowance Coverage of 115%
47% 44% 43% 45% 43%
102% 104% 107%116% 115%
Mar-07 Jun-07 Sep-07 Dec-07 Mar-08
Specific Allowances / NPLs
Total Allowances / NPLs
19
20
Capital Ratios Improved Marginally Following Basel II Adoption
13.1 12.5 11.9 11.5 12.8
2.3 2.10.9 0.9
0.713.5
14.612.8
15.4
12.4
Mar-07 Jun-07 Sep-07 Dec-07 Mar-08
99,381
11,431
92,849
11,051
87,846
11,049
81,878
10,738
89,645Risk Weighted Assets
11,530Tier-1 Capital(S$m)
(%)
Tier 1 CAR
Total CAR
Tier 2 CAR
20
Note: Capital ratios for March 2008 are computed based on Basel II framework and in accordance with revised MAS Notice 637. Prior to 2008, capital ratios are based on Basel I framework.
21
Agenda
• Results Overview
• Performance Trends
• Results of Key Subsidiaries
• In Summary
Appendix: Update on CDOs
21
22
GEH First Quarter Contribution
117
(19)
(27)
11
0
(12)
164
(29)
192
S$m
1Q07
(75)
(66)
(9)
(122)
n.m.
0
(53)
1
(45)
+/(-)%
YoY
(75)11629Net Profit contribution
(32)(4)(3)Allowances
(50)(5)(2)Associates & JVs
(19)
(41)
(12)
196
(39)
236
S$m
4Q07
+/(-)%S$mOCBC’s Results
(7)
(25)
(12)
77
(29)
105
1Q08 ^
(66)Minority Interests
(40)Tax
0Amortisation of Intangibles
(61)Operating Profit
(27)Operating Expenses
(55)Total Income
QoQGEH’s Contribution to
^ 1Q08 include S$40m gains (S$28m net of tax and minorities) from divestment of Straits Trading shares
22
23
OCBC Malaysia: 1Q08 Results
21(14)(29)(24)(17)Allowances
5012141128181Net Profit
36(50)24(55)(68)Tax
4418529207266Operating Profit
(12)(163)31(109)(143)Operating Expenses
1834829316409Total Income
62925596149Non-Interest Income
1723501827Islamic Banking Income
-23315202233Net Interest Income
+/(-)%RM m+/(-)%RM mRM mUnaudited Results*
QoQ4Q07YoY1Q071Q08
* Based on Bank Negara Malaysia’s guidelines and Malaysia accounting standards
23
24
OCBC Malaysia: Financial Ratios
19.9
14.5
4.0
84.6
46.9
26.4
2.58
%
4Q07
23.1
11.5
5.3
78.1
34.5
30.4
2.56
%
1Q07
15.3Loans Growth (YoY)
36.3Non-Interest Income /Total Income
28.4ROE
3.7Gross NPL Ratio
%
83.6RM Loans-to-Deposits Ratio
35.0Cost-to-Income Ratio
2.46Net Interest Margin
1Q08
24
25
Bank NISP: 1Q08 Results
(34)
(75)
(41)
39
(8)
15
+/(-)%
YoY
44
(30)
91
(303)
88
306
RP bn
4Q07
(10)13882Operating Profit
2(221)(308)Expenses
(81)(23)(6)Allowances
248254Net Profit
09688Non Interest Income
(1)263302Net Interest Income
+/(-)%RP bnRP bn Unaudited Results*
QoQ1Q071Q08
* Bank NISP’s contribution to Group net profit was S$5m, S$5m and S$11m respectively in 1Q08, 4Q07 and 1Q07
25
26
Bank NISP: Financial Ratios
5.6
22.3
2.53
89.1
76.8
22.4
4.97
%
4Q07
13.9
37.6
2.84
80.7
61.6
26.7
4.40
%
1Q07
16.6Loans Growth (YoY)
22.5Non-Interest Income / Total Income
6.5ROE
2.56Gross NPL Ratio
%
91.3Loans-to-Deposits Ratio
79.0Cost-to-Income Ratio
4.99Net Interest Margin
1Q08
26
27
In Summary
27
• Resilient earnings despite significantly lower insurance contribution and volatile financial markets
• Core lending, fee-based and treasury businesses remain robust
• Expenses under control
• Realization of growth opportunities in our key markets continues on track in spite of financial market turmoil
• We are on alert given inflationary pressures and potential further deterioration in global economy
28
Appendix: Update on Bank’s CDO Portfolio
(55)(33)(c)344- Corporate CDOs
-(226)(b)250- ABS CDOs
(55)(259) 594Total CDOs
Adj. to Fair Value Reserves to-date(taken to Equity)
Allowances/ MTM Losses to-date(taken to P&L)
Investment Amount as at 31 Mar 08 (a)
(S$m)
(a) Based on 31 March 2008 US$/S$ exchange rate of 1.3809(b) Allowances of S$221m in 3Q07, S$5m in 4Q07, zero in 1Q08(c) MTM loss in the value of credit default swaps related to synthetic corporate CDOs (2007: S$18m; 1Q08: S$16m)
• ABS CDOsContain some exposure to US sub-prime mortgage assetsS$74m have been classified under non-performing assets
• Corporate CDOsBreakdown: US 64%, Europe 28%, Asia/Others 8%. AAA - 28%, AA - 16%, A - 56%.No defaults or downgrades to date. S$97m of CDOs mature in Nov 08, S$55m in Sep 09
28
29
First Quarter 2008 Results
Thank YouThank You
________________________________________________