First Quarter 2008 Results - OCBC Bank · 2008 Results Presentation 7 May 2008. 2 Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries y r a m m u S

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




• In Summary


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


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%


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


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




• In Summary


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



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



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

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Documents

First Quarter 2008 Results - OCBC Bank · 2008 Results Presentation 7 May 2008. 2 Agenda • Results Overview • Performance Trends • Results of Key Subsidiaries y r a m m u S