Presentation to Media and Analysts 2003 Final Results 11 February 2004
Agenda Results at a Glance Income Statement Trends Loans and Deposits Asset Quality and Provisions Conclusion 2
Results at a Glance : Full Year FY2003 FY2002 YoY S$m S$m +/(-)% Net Interest Income 1,435 1,509 (5) Non-interest income 758 712 6 - Fee Income 373 374 (0) Total Income 2,193 2,222 (1) Operating Expenses 855 849 1 Operating Profit 1,338 1,372 (2) Goodwill 127 127 (0) Provisions 225 501 (55) Associates 235 161 46 Net Profit 954 667 43 3
Results at a Glance - Quarterly 4Q03 4Q02 YoY 3Q03 QoQ S$m S$m +/(-)% S$m +/(-)% Net Interest Income 369 376 (2) 359 3 Non-interest income 206 192 7 230 (11) - Fee Income 103 91 13 100 4 Total Income 575 569 1 589 (3) Operating Expenses 216 217 (0) 214 1 Operating Profit 358 352 2 375 (4) Goodwill 32 32 (0) 32 (0) Provisions 54 130 (58) 37 45 Associates 94 47 100 52 80 Net Profit 279 169 65 292 (5) 4
Results Adjusted for Non-Core Asset Divestment Quarterly 4Q03 4Q02 YoY 3Q03 QoQ S$m S$m +/(-)% S$m +/(-)% Adjusted Operating Profit 308 352 (12) 297 4 Adjusted Net Profit 224 169 33 220 2 2003 / Full Year 2003 2002 2002 S$m S$m +/(-)% Adjusted Operating Profit 1,211 1,372 (12) Adjusted Net Profit 828 667 24 Note: Adjusted to exclude the following net gains from divestment of non-core assets: 3Q03 - F&N (S$72m) 4Q03 - Mount Emily property (S$36m), WBL Corp (S$4m), Raffles Hotel (S$14m under associates) 5
Dividend Payout 2003 2002 Gross Dividend per Share (cents) 23* 20 Net Dividends (S$m) 231 201 Net Profit (S$m) 954 667 Less: Gain on non-core assets 126 0 Adjusted Net Profit (S$m) 828 667 Payout based on Adjusted Net Profit 28% 30% * Excluding Special Dividend of 63.78 cents (49.75 cents net of tax) paid in July 2003 6
Agenda Results at a Glance Income Statement Trends Loans and Deposits Asset Quality and Provisions Conclusion 7
Positive Quarterly Trends in Net Interest Income & Margins Net interest margin 2.17% 2.02% 1.90% 1.99% 1.90% 1.89% 1.88% 1.94% 1,392 1,509 1,435 Net interest income (S$m) 376 352 356 359 369 2001 2002 2003 4Q02 1Q03 2Q03 3Q03 4Q03 8
Non-Interest Income Buoyed by Non-Core Asset Divestment Non-interest income/ Total income 37.1% 32.1% 34.6% 33.8% 29.6% 32.9% 39.1% 35.8% 822 712 30.5% 758 29.8% 29.7% Non-interest income (S$m) 260 562 128 630 192 148 174 230 78 206 50 153 156 2001* 2002 2003 4Q02 1Q03 2Q03 3Q03 4Q03 Gains from divestment of non-core assets * 2001 income was boosted by S$260m gain from disposal of OUB shares Excluding divestment gains 9
Steady Rise in Fee Income Contribution 19.5% 19.7% Fee income/ Total income 13.2% 16.8% 18.1% 17.0% 16.1% 16.5% 16.5% 16.9% 18.0% 374 373 Fee income (S$m) 292 91 82 88 100 103 2001 2002 2003 4Q02 1Q03 2Q03 3Q03 4Q03 Excluding gains from divestment of non-core assets 10
Wealth Management Sales by Product (S$m) 5,210 3,856 3,006 2,478 612 826 1,040 1,162 1,473 1,221 1,212 992 2001* 2002 2003 Bancassurance Unit Trusts Treasury & structured products Total * 2001 figure for treasury & structured products is estimated 11
Operating Expenses Stable Cost-to-Income Ratio 39.1% 38.2% 41.4% 39.0% 38.1% 40.3% 42.1% 41.9% 36.4% 41.2% 37.6% 867 849 855 164 178 157 Operating expenses (S$m) 194 192 225 476 465 478 217 201 52 36 51 51 223 33 72 214 216 41 47 52 50 113 119 119 121 119 2001 2002 2003 0 4Q02 1Q03 2Q03 3Q03 4Q03 Staff Cost Premises & Equipment Others Restructuring Expenses Excluding gains from divestment of non-core assets 12
Operating Profit before Provisions and Goodwill (S$m) 1,347 1,372 260 1,338 128 352 298 307 375 78 358 50 1,087 1,211 297 308 2001* 2002 2003 4Q02 1Q03 2Q03 3Q03 4Q03 Gains from divestment of non-core assets * 2001 operating profit includes S$260m gain from disposal of OUB shares 13
Substantial Reduction in Provisions (S$m) Specific Provisions for Loans 518 501 Provisions for Diminution in Investments and Other Assets General Provisions 68 163 130 448 365 225 57 194 0 74 55 64 24 70 70 22 47 37 30 54 47 (27) (26) (31) 2001 2002 2003 4Q02 1Q03 2Q03 3Q03 4Q03 14
Net Profit Excluding Non-Core Divestment Gains Remained Healthy (S$m) 954 778 126 252 667 828 224 292 72 279 54 526 169 159 220 224 2001* 2002 2003 4Q02 1Q03 2Q03 3Q03 4Q03 Gains from divestment of non-core assets * 2001 net profit includes S$252m net gain from disposal of OUB shares 15
EPS and ROE ROE 9.3% 7.4% 10.0% 7.3% 6.8% 9.4% 12.2% 11.8% 8.7% 9.1% 9.5% EPS 60 19 52 72 10 52 50 67 90 22 81 16 41 62 68 64 2001 2002 2003 4Q02 1Q03 2Q03 3Q03 4Q03 Gains from divestment of non-core assets Excluding divestment gains Note: Quarterly ROE and EPS are annualised; ROE refers to return on ordinary shareholders funds 16
Agenda Results at a Glance Income Statement Trends Loans and Deposits Asset Quality and Provisions Conclusion 17
Loan Growth Driven by Consumer Loans Loans (S$bn) 49.9 49.7 51.2 51.4 52.6 6.8 6.7 7.0 7.1 6.6 6.3 6.4 7.5 7.8 8.0 36.1 35.8 37.1 37.3 38.2 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Singapore Malaysia International 18
Market Share Gains in Singapore and Malaysia Loan Growth, Dec 03 / Dec 02 Singapore OCBC Industry % % DBU loans* 7.3 3.4 * Domestic Banking Unit loans, with Dec 02 base adjusted for the integration of finance companies during 2003. Malaysia OCBC Industry % % Malaysia Loans 10.7 5.3 Source: OCBC, MAS, Bank Negara Malaysia 19
Strong Expansion in Housing Loans 29.2% Share of Group Loans 24.7% 21.1% 15,382 11,174 12,313 Housing Loans (S$m) Dec-01 Dec-02 Dec-03 20
Share of Consumer Loans has Increased Significantly Loans by Sector Loans by Sector Manufacturing 7% Financial institutions 18% General commerce 7% Consumer Loans 35% Professionals & private individuals 14% Financial institutions 17% Manufacturing 6% General commerce 6% Professionals & private individuals 15% Consumer Loans 45% Building and construction 17% Housing Loans 21% Building and construction 14% Housing loans 29% Transport, storage & comm 5% Others 11% Total Loans: S$52.8bn Transport, storage & comm 3% Others 10% Total Loans: S$52.6bn December 2001 December 2003 21
Deposits and Loans-Deposits Ratio Loans-to-deposits 87.8% 85.3% 89.1% 90.9% 93.8% Deposits (S$bn) 53.9 55.3 54.8 53.9 53.5 10.8 11.1 11.3 11.2 11.1 36.2 36.9 35.9 34.4 34.3 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Fixed Deposits Savings Deposits Current Account Others 22
Agenda Results at a Glance Income Statement Trends Loans and Deposits Asset Quality and Provisions Conclusion 23
Steady Improvement in Asset Quality NPL Ratio 8.1% 8.0% 7.5% 7.1% 6.9% 4,356 4,290 4,115 3,890 3,834 NPLs (S$m) 1,199 1,250 1,219 1,105 1,068 2,646 2,559 2,480 2,388 2,389 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Singapore Malaysia International 24
NPL Ratio Reduced by Half in Three Years 13.3% 14.2% NPL Ratio 11.5% 10.7% 9.7% 9.6% NPLs 4,335 4,550 4,092 3,921 5,183 4,979 8.1% 4,356 7.5% 4,115 6.9% 3,834 (S$m) Dec-99 Jun-00 Dec-00 Jun-01 Dec-01* Jun-02 Dec-02 Jun-03 Dec-03 * Increase in absolute NPLs was due to acquisition of of Keppel Capital Holdings 25
Cumulative Provisions (S$m) 2,717 2,695 2,603 2,574 2,568 1,211 1,183 1,184 1,183 1,183 1,506 1,513 1,419 1,391 1,385 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 General Provisions Specific Provisions 26
Provision Coverage Remains Prudent SPs / Unsecured NPLs 100% 105% 103% 105% 100% (SPs+GPs) / NPLs 62% 63% 63% 66% 67% SPs / NPLs 35% 35% 35% 36% 36% Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 27
Conclusion Strong earnings growth driven by lower provisions, divestment gains and higher associates contribution Net interest income and fee income improved in second half Net interest margin largely stable over last four quarters Gained market share in loans in Singapore and Malaysia Substantial improvement in asset quality and provisions Steady progress in non-core asset divestment and capital restructuring Group is well positioned to capitalise on growth opportunities in 2004 28