Oversea-Chinese Banking Corporation

Okay, good morning.

Welcome to OCBC's 3rd Quarter Results Briefing. We have today with us Mr. Sembuchen, our CEO, and Darren Tan, our CFO. I'm going to let Darren take us through the slides, and then after that we will take questions. Please press hash 1, star 1, sorry, if you want to ask questions, and we will call your name, and then you can ask your questions. Okay, Darren, please.

Okay, thank you, Ching-Ching. Good morning and thank you for joining us. We are pleased to report the net profit of S$1.028 billion for the third quarter. While net interest income continued to decline on the back of a lower interest rate globally, our non-interest income franchise in wealth management and insurance was able to generate a relatively robust performance. This demonstrated yet again the benefit of having a diversified portfolio of businesses and hence multiple sources of revenue. With the phase opening of the various markets, we had also been able to engage our customers and grow our wealth management and insurance franchise further. Consequently, total wealth management income rose 4% from the previous quarter. Bank of Singapore asset under management also expanded 3% to $116 billion, supported by continued growth of net new money and positive market valuations. Great Eastern's total weighted new sales increased 51%, while new business embedded value was 47% higher. We continue to monitor and tighten our expenses. We also remain vigilant to the resurgence of COVID-19 infections and the risk of renewed disruption to the various economies. Further, we want to brace ourselves for any delayed impact arising from the pandemic when the various support measures were gradually withdrawn. Consequently, we set aside total allowances of $350 million for the third quarter 2020 including an additional management overlay of $150 million. This in turn raised our MPA coverage to 109%. We further fortified our balance sheet with a 75% participation rate in our script for the interim dividend and together with the profit retained for the quarter 2020, our common equity tier one had increased to 14.4%. Our liquidity and funding remains strong with all currency liquidity coverage ratio and net stable funding ratio higher at 128% and 122% respectively. I will now highlight some of the key financials before handing the floor over to Sam. Turning to page 7, net profit for the third quarter was 41% higher quarter-on-quarter at $1.028 billion. Operating profit before allowances was $1.59 billion as compared to $1.68 billion in the previous quarter. Higher fee income and customer flow treasury income were more than offset by the decline in net interest income. On slide 9, you can see that for the nine months of 2020, the group's net profit was 32% lower at $2.46 billion as compared to $3.63 billion a year ago. The low profit was mainly due to the significant amount of allowances that we set aside, particularly in the first half of this year, to buffer against any pickup in credit losses. Moving on to slide 12. Net interest income for the third quarter declined 4% to $1.42 billion from $1.48 billion in the second quarter, mainly from a six basis point contraction in our net interest margin to 1.54%. We continue to strive in this case to optimize our balance sheet by lengthening the duration of our loan portfolio and also increasing the proportion of our less expensive deposits. Now in terms of non-interest income on slide 13, non-interest income for the third quarter was $1.12 billion, 6% higher year-on-year, but 2% lower than the previous quarter. Going to slide 14, our wealth management franchise remains strong. Total wealth management income for the third quarter rose 4% to $938 million and now constitutes one-third of the group's income. For the third quarter, net fee and commission rose 14% quarter-on-quarter to $501 million. in particular, wealth management and brokerage fees were higher and had recovered to pre-COVID-19 level. I'll move on to our allowances on slide 18. For the quarter, total allowances were lower at $350 million as compared to $750 million in the previous quarter. We have set aside lower allowances of $148 million for impaired assets and a prudent amount of $202 million of allowances for non-impaired assets in the quarter, specifically allowances for impaired loans in the third quarter were not concentrated in any particular geography or sector as compared to the additional allowances that we made for the offshore support vessels MPL in the second quarter. Now on slide 19, you can see that as a result of the additional allowances, total MPA coverage was further strengthened to 109%. Now in terms of asset quality on slide 20, The credit quality of our loan portfolio remained healthy, with NPR ratio unchanged at 1.6%. On slide 21, you will notice that total non-performing assets was $4.25 billion, 2% lower than the $4.35 billion a quarter ago. The decline was mainly attributed to recoveries and upgrades of $200 million and write-offs of $91 million respectively. This more than offset the new MPA formation of $270 million in 2021. the quarter. In comparison, new MPA formation was $496 million in the previous quarter. Moving on to slide 22, customer loans grew 2% year-on-year and 1% from the previous quarter to $269 billion. The growth came mostly from Singapore, Australia and the UK. On slide 23, you will notice that our loan portfolio remained well diversified. Oil and gas sector constituted 5% of our loan book including 2% in the OSB sector. Specifically, our OSB exposures net of specific provisions were now only about 0.2% of our total loan portfolio. Our exposure to the commodity sector was about 5% of total loan, and in the transportation sector, loans to the shipping sector, excluding OSB, was 2% of total loan, of which the aviation sector remained at less than 1%. Now, in terms of deposits on slide 24, customer deposits were $307 billion, up 3% year-on-year and then changed from the quarter before. Current account and savings account deposit rose to a new high of $182 million, with CASA ratio now at 59.2%. We also allow the higher cost fixed deposit to gradually run off. Now, with this, I'll end my presentation and pass the floor to Sam. Thank you. Good morning, everyone. Welcome to this session.