Oversea-Chinese Banking Corporation

Good morning, everyone. We have some of our media friends with us and also some who have logged in online. We can't see you. I know you can't see us either. But please do, you know, later on during the Q&A, do raise your hand and let us know when you want to ask a question. So before we begin, I'm going to pass the time to Helen first.

Thanks, Chin Chin. Good morning and welcome to our third quarter results announcement and the briefing. would like to first introduce Jingyi. For those who are in the room, I think you have introduced yourselves to each other already. Jingyi is our own homegrown talent. That's how I always describe her. She joined the group as a management trainee. So like me, I also joined the group as a management trainee, but Jingyi has stayed with us and she has risen through the ranks and I've done, I think I'll never remember everything, corporate finance, global treasury, investment research, asset management, and in the finance team and in risk management as well. So it's pretty all-rounded. And she was our head of group audit, internal audit, before she took up the CFM role just this week. just this week. So I'm sure we will benefit from her experience and her understanding of the institution. And over time, I'm sure she will be getting to know all of you better as well. So I will now pass to Chin Ye to walk us through the financial performance.

Thank you, Helen, for the introduction. Good morning to everyone. And thank you for coming to our third CUBE results presentation. And for everyone online, For the third quarter of 2022, we reported a record net profit of S$1.6 billion, a 31% increase from the previous year and 8% above last quarter. The group's annualized return on equity improved to 12.4%. Total income rose 23% year-on-year. A strong 44% rise in net interest income from higher interest rates and sustained asset growth more than offset a 4% decline in our non-interest income. NIMH expanded by 54 basis points year-on-year to 2.06%. both customer loans and deposits grew by 6% from last year. As income growth outpaced debt of expenses, the cost-to-income ratio improved to 40.3%. Allowances set aside were comparatively lower against last year, and credit costs for loans were 14 basis points. The NPR ratio decreased to 1.2% and non-performing assets coverage ratio rose to 108%. OCBC's capital remains strong at 14.4% CET1 ratio. I will now move on to some key financial highlights in slide five. On banking operations, net profit rose 31% from a year ago and 10% quarter on quarter to a new high of $1.37 billion. Wealth management income was also higher for the quarter and comprised 35% of our total income. During the quarter, the group's wealth management business saw positive inflows of net new money, which offset decline in market valuations. As a result, Our wealth management AUM was stable quarter-on-quarter. Our insurance business registered lower sales in Singapore, which offset an increase in sales in Malaysia, while NBEV margins were higher for more favourable product mix. Net profit contribution for the group for the quarter was S$233 million, 32% above last year. Moving on to slide 6, our earning space continued to be well diversified across businesses and geographies. Moving on to the next page on balance sheet, we are well positioned with healthy levels of capital, liquidity and funding. This puts us in a very good state to support our customers and capture new opportunities as they arise. I'll keep slide 8 going to slide 9. Moving on to the details of our group performance. For the third quarter, net profit rose 31% from the previous year to S$1.6 billion, mainly from higher net interest income. Compared to the last quarter, net profit rose by 8% as an increase in net interest income offset lower trading and insurance income. Turning to next page. Our group's net profit for the first nine months was $4.44 billion, 14% higher year on year. Underpinned by growth in net interest income and lower allowances, this offset a decline in non-interest income and higher operating expenses. Turning to slide 12. is reaching a new high for the first nine months. Similarly, our banking operations net profit also reached a record high for both nine months as well as third quarter. To slide 14 now. Net interest income for the third quarter exceeded $2 billion mark for the first time to reach $2.1 billion, 44% higher year-on-year and up 23% Q1Q. This was driven by margin uplift and asset growth. Net interest margin for the third quarter was 2.06%, rising 54 basis points from last year and 35 basis points from the previous quarter. Margins for the quarter improved across all our key markets, including Singapore, Malaysia, Indonesia, China, and Hong Kong, as a rise in assets yield outpaced our funding costs. Turning to next page on non-interest income. Non-interest income for the third quarter was $1.05 billion, down 4% from last year and 11% from last quarter. The year-on-year decrease in non-interest income for the quarter was driven by lower fee income and sale of investment securities, which was partly offset by higher trading and insurance income. Against the previous quarter, the decline in non-interest income was mainly from lower trading and insurance income. to the next page. Going into more details from the previous slide, fee income for the third quarter was softer at $453 million. Compared to the previous year, the drop in fee income for the quarter was mainly due to lower wealth management fees as we continue to see a risk of global investment climate which dampened customer activities. A year-on-year rise credit card as well as loan and trade related fees helped to partly mitigate the decline in wealth management fees. Moving to the next page on trading income. Trading income, which mainly comprised customer flow treasury income, was $194 million for the quarter, above $83 million a year ago. Compared to the previous quarter, a rise was more than offset by lower non-customer flow income in part due to weaker investment performance. Turning to slide 15, operating expenses for the third quarter was well managed and rose by 7% from last year and a modest 1% quarter on quarter. The year-on-year increase for the quarter attributed to rise in staff costs, from headcount growth to expand our talent pool and annual salary increments. With positive operating jaws from strong income growth, our cost-to-income ratio improved to 40.3% for the quarter. Next on allowances. For the nine months, credit costs amounted to nine basis points. for the third quarter, total allowances were $154 million. About half of these were for impaired assets, which comprised a $47 million charge for the group's overseas properties. Third quarter, expected credit loss, or ECL, one and two allowances were $76 million, reflecting updates of macroeconomic Turning to next page on total cumulative allowances. Our cumulative allowances increased from the previous quarter to $4 billion. Coupled with the decline in non-performing assets, our MPA coverage ratio increased to 108% this quarter. Next page on asset quality. Our loan book remained resilient and the NPR ratio trended lower to 1.2%. Non-performing assets at $3.69 billion, lower by 7% quarter on quarter, as higher recoveries and upgrades more than offset our new MPA formation. Touching on Greater China, Greater China NPR ratio was 1%. The increase in Greater China MPLs for the quarter was largely attributable to a single network customer name that is highly secure against property and there is no structural stress observed for the group's Greater China exposure. In the next page, recoveries and upgrades for the quarter were higher at $669 million across both the corporate Next page on customer loans. Our loans grew 6% to $303 billion from $285 billion a year ago as we supported our customers across our whole markets of Singapore, Indonesia and Greater China, as well as our international network in US, Australia and UK. By industry, the year-on-year increase was mostly driven by loans to the building and construction sector, FIs, investment and holding companies, and the consumer segment. Again, the last quarter, loans were up 2%. Our loans continue to be well diversified across geography as well as industry. The building and construction sector and housing loans remained the largest segment at 30% and 20% of total loans respectively. Turning to next on the customer deposits. Customer deposits grew 6% from a year ago to $353 billion and were 1% higher compared to the previous quarter. As interest rates rose, in line with market conditions, there was increased customer demand for higher-yielding deposits. As such, we saw both continued shift of CASA balances to fixed deposits and new fresh funds placed with us. Consequently, our CASA ratio for the third quarter was lower at 56.1%. The group's liquidity remained ample a loan-deposit ratio of 85%. Next on capital, our capital remains strong with CET1 ratio at 14.4%. The quarter-on-quarter decrease in CET1 ratio was mainly due to third-quarter profit contribution being offset by payment of our interim 2022 dividend as well as higher credit risk-weighted assets associated with our asset growth. Okay, with this, I end my presentation and I will now pass that to Helen.

Thank you. I just want to add some remarks. I have two very simple pages of information. So, while I think we all talk about the uncertain market and just use a a pretty volatile year, but still pleased to have reported solid performance, which underscores our strong business fundamentals. I think Jimmy went through all the information, just single out that we're happy to see a banking net profit and also group net profit is also a record high. So this is very pleasant for the first quarter and also for the first nine months of the year. I think a lot of attention obviously focuses on the net interest income and our LIM and indeed the key driver of the performance is indeed the NII growth and I think I attribute that to a well-positioned balance sheet. We've been reshaping our balance sheet for the past two, three years and this allows us to capture the benefit from the series of rate hikes. This is, we're talking about year-on-year uplift of more than 50 basis points for the third quarter leap. On loans and deposits, loans is 5% up year-to-date. and this is within our guidance. I'm expecting the full year to stay in the meetings level. This is indeed a lot is on supporting our customers working capital and investment needs across our network. I think we have a page that shows, to me show a page of where we grow our loan books. So very much in Singapore and in the international branches. That was shown earlier on. On the deposit side, our franchise continues to grow. I think a lot of investment in digitalization for the previous years. We have mentioned the deposits from SMEs actually grow very nicely because we say that it is very effective in opening an account with the SME. I think 98% of SME accounts were opened online without having the customer to bring documents or whatever into the bank. on the consumer front. It's very effective. I believe we have the lowest number of clicks to open an account. And once you click everything with your information, the account number comes to you in seconds. So I think that is a result of really investment in digitalization. So that helps us to have more accounts and indeed resulting in also a higher CASA percentage. CASA at 56%, this is comfortably above pre-2020 levels, and we expect it will stay, although of course, with continued interest rate rising, there's still opportunity, but we will start to pass on of course, to passing on to the depositors as well. So you know that CASA has dropped also because some of the funds are switched to fixed deposit, which is a natural phenomenon in a high-interest fair value. Wealth management, on wealth management fees, indeed depend on investment sentiments. The good thing is we have net new money coming in across our private bank, across our premier private and also premier accounts. and I think the also investment in the WEAL platform that is now uniform for both our POS and OCBC Bank also allow customers to do their own investment much more effectively but also without the need to necessarily talk to an LLM. So I think that helps to sustain our marketing too and our dealings with our customers. And on asset quality and credit costs, portfolio quality is resilient. NPL ratio declined to 1.2%, but our coverage is still, NPA coverage ratio is above 100%. We have been proactively managing our book and indeed doing stress testing. I think one thing that helps to reduce the NPL, of course, is relief loans, which was relatively high last year. or in the beginning of COVID is now has been exiting in an ordinary manner. I think the book is now about 0.2% of our total notebook. I think it was as high as a high single digit at one point of time. So we continue to see ordinary exit customers are starting their repayment, and that's why there's also some write-back on ECL as well. Of course, we said that there is no systemic stress, but I won't be surprised. I think the world now always gives a surprise, so any idiosyncratic occurrence, I won't be surprised, but depending on what it is, if something does happen. But generally comfortable with the quality of our book and on expenses, we continue to have investments to drive our franchise growth, raise productivity and deliver operational efficiencies. And this would, we have continued to see yield results I just mentioned about deposits. And indeed, this is through investments over the years. and will continue to target a positive operating draw. Turning to a page, the next one, I did mention that I am comfortable and quite confident, and so we will continue to build on the momentum. So we are hoping to continue to reach targets towards the end of the year. Long growth, mid-digit, single-digit, the fourth quarter NIM with an exit NIM in the third quarter of 2.15 and the average NIM of 2.06 for the third quarter. We are expecting fourth quarter NIM to be about 2.1. For the full year, expect NIM to be between 1.8 to 1.9% for the full year, likely to be in the higher range of that, in the higher part of the range. We expect 22 credit costs to be low to meet in terms of basis points. Performance, I would say, should provide good base for us as we move into next year. About the market, everyone talks about the uncertainties, inflation, and slower growth, but I'm still more optimistic on the resilience of our key markets, in particular ASEAN. So if you look at Singapore, we know that employment situation remains very firm, traveled and consumer-facing sector benefited from the reopening. I was at the SFF this week and wow, I'm so happy to see the flow of people and it's really very normal. I arrived in 2020 I remember going down 2020 we were we were really saying that you should sit at this table and five people and you cannot cross to the other table and the tables are like three meters apart I remember and there was very very few people going there last year we see more activities already but I think this use is really normal and we do have in the next two weeks, next two weeks, other types of conferences, etc. And I have never received so many requests for meetings. There's a lot of people coming to Singapore, right? So a lot of people saying, hey, Helen wants to talk to you. So I'm excited about it. Malaysia-Indonesia on path of a steadier recovery, so expected to continue to Nixia. China expect policy measures to support growth. And of course, we hope that the opening up will be sooner than later in Nixia. Hong Kong gradually opening and they just held a conference, which is quite well attended, I was told, and the messages has been very positive. from the Hong Kong government about reopening and the support for the economy to rebound. Of course, we have to be watchful of global macro vulnerabilities. We stay cautious on near-term vulnerabilities from developed markets, which could have a tender impact on overall asset quality, growing divergence in growth indeed, and inflation outcome as is yet to be seen. So there is rising risk of policy miscalibration by central banks to obtain the inflation. So the recession risk remain high, elevated in Europe and the US will remain also watchful in case it spill over to the Asian economies. Geopolitical tension and issues could not be understated. That could also further complicate business matters. I think in a way, our positioning for next year is good. But of course, we remain very watchful for how the market turns and switch in the coming year. On the opportunities, definitely we see opportunities from the strengthening intra-Asian links. and indeed our driving one group approach to capture opportunities from cross-border regional flows from supply chain and wealth migration. We've seen quite obvious examples that we have one mandate for cross-border payment, which can be in between China, Singapore, Indonesia, Malaysia, as an example. And continue to see wealth accumulated and as we said, we are able to bring in net new monies for our wealth business. We also deepen relationship with new economy industries such as digital services, mobility, advanced manufacturing. I met quite a number of fintech companies, CEOs and owners at the SFF. Pretty robust, I think discussion is they are keen continue to invest more into Singapore and from Singapore to rest of the countries. and in a way, these are indeed customers for us and we have opened accounts with many of these new companies coming into town. We continue to focus on strengthening our core. When I say core, this definitely means investment technology. So indeed ensure digital platforms work well and this is to meet evolving needs of our customers and also to enhance the banking experience and to instill trust. Last year, you may remember, I set up the COO function with Kentong heading that out and we built We strengthened the transformation office, we strengthened the data office, and we strengthened the customer experience office all under the COO. So this all is an investment for us to, as I said, ensure that our platforms are sound and that we will be able to meet the needs of our customers. Benefiting from the digital progression, we saw in the first quarter a strong pickup in the number of time deposits placed digitally. So customers don't need to call us up and they find it extremely fast, it's simple and convenient and also do not need to queue up in the branch and can simply open the one on our digital app. We're also first in Singapore to enable CPF account to top up and directly from digital banking platforms as well. and as part of our innovative drive and evolution towards new technologies, we will be minting, we use the word minting, and issuing NFTs, non-fungible tokens, to our employees through our own in-house blockchain platform. This is to commemorate our 90th anniversary. We just passed, we entered into our 91st year, our birthday is on 31st of October. So this week as well. So very happy and we indeed need to deepen our talent pool and investments will be in wholesale banking, in private banking and in technology. Stepping up ESG assets. I think this is a big topic. I always talk about it in all of my announcements. We'll make further strides towards 50 billion of our 2025 target. Mid-year, you will remember, we said that our commitments was at 37 billion and now it's 40 billion by end of September. So this is commitment, but the drawdown has reached 28 billion. out of the 40 billion commitments, and it is about 9% of our loan book. I think it is quite a happy number, and I think it's relatively high in the industry where banks choose to disclose the composition of the green and sustainable finance in the loan book. We announced just last month that we joined the Net Zero Banking Alliance, and we flex our commitment as a group to achieving net zero, not just in operations, but in lending and investment business by 2050. We will announce more details on how we achieved our goal in the coming months. In celebrating our 90th birthday, we wanted to give back to the community and pleased to have launched Singapore Mangrove Park in Palawo Wing. And this is Singapore's first large-scale ecological mangrove restoration project. And we also have started one in Malaysia at the same time. So together, as they have continued to grow the mangrove trees, and mangrove trees in a way store more carbon than common trees, like three to five times, let's say four times. So the two projects together would be able to reduce about 13 million kg of CO2 in the lifetimes. So I think reducing carbon emission is one of the key factor to help fight climate change. So I'm very excited I was in there planting a tree and hopefully go back every year to look at how the mangrove plants have grown and this very interesting ecology. So I think I'll stop here, and thank you very much for coming today. I'll pass the time to QQ for our Q&A.

Thanks, Alan. Yeah, indeed, so we're headed to OCBC Vancouver Park. Yes, please, let me know how you want to do it, and we'll arrange, because it's not so straightforward.

It's not so straightforward.

It's okay, you can see our sign.

Okay, so we open to questions. Okay, so for next year, what do you expect in terms of loan growth

and the loan growth. And then, of course, the question on credit costs. So have all the relief loans been, are they all, I mean, have they all matured?

You know, you had Malaysia, Indonesia, Singapore long ago, but Malaysia and Indonesia, I think. So is it, you say many bonds, one at a time, you remind me if I forgot. Okay, since we're on relief loans, we talk about that first. You're saying that the total amount is about 1-2% of the loan bulk So it comes down really substantially. And when we say MPL, and then it taps the MPL, right? Because once customers start to be paid, we apply like a six months criteria, meaning customers are continuously paying for six months, then we can deem it not as an MPL. But the total size also shrinks, right? This reset is 0.2%. So meaning that they're still there, right? There's still some there, but in the way they, which they say we exit all today, meaning they start to repay. So they have not all matured because we still have outstanding. So that's relief notes. You talk about into next year, what is the long growth, right? Long growth, I think it's a bit early to tell, but I think it will be, again, we are thinking more, again, single digits. So whether it is mid-single or high-single, I probably have more color by the time we talk about our final results. So by February, I give you a better target. But I think we have momentum and customer demand to bring us that. Of course, it's all subject to a lot of the external environment. We can't be sure, but that is the plan. You asked me then about... Yeah, because when is the Fed going to stop raising? Yeah, well, I think the market did talk about potentially still one more in December and one more in the first quarter, right? And so that means we expect next year for interest rate to remain high. So the high meme environment also potentially can hold next year. But when I say can hold, you will naturally see more like, if it is high interest rate environment all the while, and if market investment sector is also still quite uncertain, then you will continue to see the deposit costs and funding costs will pick up as well. So it's two sides, right? One side is further interest rate rising and it's a full year impact. On the other side is the deposit costs rising or your funding costs rising. So I think hopefully next year we'll hope I also will give you, after the full year results, maybe a better target or estimate of NIM. And so we're saying that the full year is 1.8 to 1.9. So if it will hold, that means I hope that that range will be there. Potentially higher depends on how we look at next year as we finish this year. But hopefully it will hold. So that's on NIM. and then you were asking the credit costs. Credit costs, we are talking about no meetings for the full year. I do not see systemic risk. We have done a lot of stress tests. So again, hopefully that can hold as well. So next year, as again, I give you a clearer target by the time we meet again to talk about the final results. So I think these are the three numbers you asked.

in terms of more qualitative, so that, you know, there's been a lockdown in China, et cetera, et cetera, and then there's been a new seven-man Politburo Standing Committee, et cetera. So how does this change? I mean, has this changed your Greater China strategy in any way? Or how would it change your Greater China strategy, if at all?

Yeah, perhaps, yeah. Yeah, I would. The first thing, we just generally don't comment But when you look at our China, our British China business, the strong story is about how we link up British China with us, which is what we call a one-group approach. I think in the past, we were not doing as much, but over the last few years, as I said earlier, we have been investing a lot on our product capabilities. You can only serve you have them Chinese company coming over to ASEAN and I mentioned fintech companies but also again the China Plus One story continues and we have seen advanced manufacturing in Penang which I mentioned the other day I was talking to a micro manufacturer a chip manufacturer who has a big factory in Penang and he told me that company is local and the company has been there for 60 years. Of course, they are seeing more investments into Vietnam. And I said that, so how is international competitors competing with you? It's that we are all building, right? We're all manufacturing and we are all exporting. And in a way that if there's more investment into the area, it's better because your supply chain will be richer as well. And this is where we are saying that where the opportunities are. where there is investment into manufacturing. The local supply chain also got more business. So this is the opportunity I talk about regarding China Plus One. And to our China story, in a way, you may remember we also talked about our onshore notebook is actually not very big. It's about 2% of our total notebook. The reason is we don't intend to compete head-on with the other big banks domestically. our advantage is to be able to lead the Chinese clients into ASEAN. That is where we are strong. So I cite Malaysia, I cite Indonesia, I cite Singapore, and that is exactly where we are strong. So to an extent, every one dollar we lend in China, we potentially are banking with all these Chinese companies overseas, we potentially lend four dollars. So you see where the opportunity lies, right? So in the way Total Crypto China Book is not small, if you look at our pie chart, right? It's not small because Hong Kong, the big, very substantial big Hong Kong customer also banked with us. But the loan book in Hong Kong definitely much bigger than the China book. And so that's how we look at China opportunities. So in a way, for our strategy to serve Chinese companies and China wealth coming overseas, that does not change. And we see the opportunity will continue. And Singapore is our hub, is our strong hub, working with the Hong Kong hub, and I think this is exactly where we think the opportunity lies. And you also may recall that last year we also integrated our original OCBC Hong Kong branch business with Wing Hung, so it's now one team. And I have a crypto-China team now, so that the Hong Kong team, I work very closely with the China team and we continue to see China companies bringing business to Hong Kong and then overseas. And so I think the strategy is not impacted by the situation in China. But of course, if China economy is not growing as fast, it has also whippling effects on the rest of Asia as well. But I think the comfort is to continue to see that China exports stay strong, right? And potentially also help by the weakening remedy. But in a way, when there is trade, when there is investment flow, that's exactly what we're targeting and the wealth flow as well. We have made whatever permissions we have decided to make, but our real estate exposure for China names are very... If you look at our China book, I think I can disclose that I talk about the China book, it's about 2% of the total book, but only one third of onshore, only one third of that is in real estate. And even having said that, that exposure... more than 90% is networked customers. So that's why we're saying that our exposure to domestic real estate companies is really low. And even if it is domestic, real estate companies is potentially more SOEs.

Yes. You asked all the best questions. Just before going there,

Can I just answer? I know that you just talked about greater China exposure, but that seems to be the greater China exposure at 25% of total loans need to be monitored. And that's a report that mentioned that that's a default of one customer in the third quarter. Could you talk about it a little bit?

It is a network name which invested in China and the loan is fully secure. So that's why we have to look at it as an NPL because because we are looking at the security to repay the loan, and so it's in process. It's a network name? It's a network name. It's a customer from Singapore invested in China.

Oh, I see, but the loan is fully secured.

But it's fully secured.

With Chinese assets, is it?

With Chinese assets, yeah.

Yes, I see, I see. Yes, and sorry, I have two other questions. and Greater China in general. For the mainland, do you see lockdown to be prolonged? How many quarters? And you say that you don't see any systemic breaks, but you also flag a lot of uncertainties. I mean, in your view, what are you preparing for the unknown?

China first. I think my read is everybody is scared and potentially you guys get more. more than I do from China. So I think there is an intention to look at how to open up in a good manner. I do not have any particular insight. I just hope that it will be earlier than later. Earlier meaning hopefully it will be end of first quarter, early second quarter. But I think China always do it in an ordinary manner, right? So... I think taking perhaps Hong Kong and Singapore as examples, how do you manage that? And whether there is differentiation between cities, I would not know. But again, I think China has listened to a lot of views. So I think they're working on it. But when would it open up? I do not know.

To add a question, sorry. may be significant contributors to those inflows. Do you see AUM growing significantly next year? You also mentioned in your outlook about deepening the talent pool. Could you share a little bit, we have seen lots of management changes, which units or which operations that you will continue to strengthen?

Well, first, right, the first question is, well, I think we've seen quite a balanced growth of net new money. Yes, that is good to China clients, but also we have, Bank of Singapore has presence in the Middle East, we're in Dubai, we are in Europe, London. But I think, and even, I mean, locally, Singapore, Malaysia, Indonesia, We do all cover. And so in a way, it's quite even, perhaps less so from Europe. Europe has their own situation to manage. But in a way, we do see quite even, you know, increase in wealth customers. So, of course, the Singapore book is always big. If you look up, if you talk about growth in natural monies in primary, that is for the well-being. Then you asked about talent and management change. Yes, indeed. I think we were happy to have Thich Nhat Janh joining earlier in the year, in March. And he is also a contour to invest in people. I mentioned earlier on, next year when he's also looking at having more people for the wholesale. wholesale business. Wholesale business is customer coverage. And indeed, he's building this link, right? Because a lot of what we talk about, the investment flow and the products capabilities is very much wholesale and in grocery as well. So we're also investing into technology, continue investing in technology. We need to build our core. We need to continue to make sure digital capability continues to serve our customer well. We need to invest, everybody is, in defending from cyber. I think that's defending from fraud. That's everybody, every bank is doing. So we'll continue to invest as well. And I think the other opportunity as well So it is not restricted to Bank of Singapore, but it would be in CFS in frontline RM who can be serving customer in the wealth inflow as well. So in general, more RMs.

Oh, any colors? I think you have about 400 RMs.

You're talking about Bank of Singapore? Bank of Singapore.

But then you need to look at wealth, not just for Bank of Singapore because the retail has a very strong premium private client, which is a light private banking business. In line with what you said before. Thank you.

So that matched the strategy as well. We talked about our four growth areas in a refreshed corporate strategy. The first one is the intra-Asia investment and trade flow. so I talk about that's why we want to strengthen our osang banking unit yeah and then we have we have the the wealth piece so that is the I talk about so much already and the third piece is a new new new economy meaning I talk about all the potential new customers from the fintech sector the yeast commerce sector and we have other are parts of a new company arriving in town. There is more licenses given out by the MAS or some of the fintech companies, which we work as a partner as well. So they open account with us, but we also work as partners with some of them. We are also looking at the fourth one is the sustainable financing and investments, which we said that we continue to grow the book. And that part is indeed growing faster than the book. So next year, when we cross the double-digit, we say that is 9% of our total on book. Will next year be 10%? I'm not sure now, but we do see customer continue demand as we help them to transition.

So there was GP provisions of about 70 plus million this quarter compared with the same quarter last year when there was a write-back. What are the possible areas of stress that you see in the bank's portfolio? My third question is on the NFTs, 19th anniversary that you mentioned. Could we have some colour on that as well? Yeah, what types of NFTs?

That question can be taken by checking. The one we can give you will be offline. Yeah, okay.

I think you earlier asked a similar question, but not exactly the same, which I have not taken an apology. But indeed, I think the main concern is inflation. So how does inflation, the pressure goes, I mean, what's the stress is going to be like? And when you say that, do I see US going into it? A lot depends on whether whether the effect of interest rate rising can curb further inflation. So it's, again, everybody's guess, right? That is, in fact, potentially the biggest uncertainty, is how does inflation eventually... Does it peak? Would it continue to go? And would that become what we call a stagflation environment, right? So if US and Europe both go into a stagflation environment, I don't think Asia can be spare. Spare meaning... meaning we will be impacted. But again, with the continued economic recovery as a lot of the Asian economies step out of COVID, I think compared to 2020, or even to some part of 2021. So next year, I think Asia is still more resilient because there's quite a lot of pent-up demand, right? As you say, traveling has resumed, all the conferences have resumed. You talk about people really need to spend some money after three years are not really doing much, right? And so I think if there is no big systemic risk happening, obviously we're talking about geopolitical tension and how long does the Russia-Ukraine war continue, and how does energy prices react to that continuously? All these are the uncertainties that we're facing. I just hold on to the point that Asia still do relatively better than US and Europe. But of course, if something truly bad happen, then everything will be impacted. We go back to, you think about the over 2020, nobody expect COVID coming and then COVID came. And of course the market reacted to it, right? But with wealth accumulated in Asia for a pretty long time and governments able to help and come up with relief measures and helping, salary, help, and all that. So in a way, the market, a lot of the Asian economies managed to bounce back after COVID. But inflation is a different impact, right? But I think the world has to continue to train. Manufacturing still have to go on. And so hopefully for Asia, then it does react better. But we are in, as I said, always said, we have a three pillar business. We are not just in banking, we're in insurance and in wealth as well. So in days where people feel that they need more protection, insurance come in play. And then wealth, as I said, it's a continue growing even over COVID. We also win more wealth customers as well. And that is why we say that investment in digitalization is so important. and it is because customers do not need to travel to see you. They also do not need to come to your bank to see you. But the branch network is still important because customers still want to sometimes do more in-depth discussion on managing their investment and wealth. And that's where the RM comes into play and helping customers to think an overall picture. of how to manage the wealth. So it's difficult to say. When you say, how do we look at what is the main stress, I would say inflation is the main stress, and then geopolitical tension, the second one.

Thank you. Kelly, yeah.

So just to pull up on these medical questions, is it right It's accurate to say that you don't see the ASEAN region hated for recession. And also, another question on technology investments. So a lot of banks now are also exploring tokenizing assets and offering that to their investors. I wonder if you can explore that at scale. I know there was something you did with the carbon credits. I'm just wondering whether there's something that would be expanded. And also, I think earlier on there was mention of expanding the RM bench. Is there, how much are you looking at growing there?

Okay, the first one is macro. Would recession in Asia, would it happen, is it? Yes. Or separation, would that happen to Asia? Yeah. I don't have a firm view. That's what we say uncertainty is about, right? I'm just generally saying that Asia is more resilient. So, but it depends on how big the impact of the overall impact of the world is. If the whole world goes to minus or negative economic growth, Asia would not be spared. Would not be spared. Does it go to negative? Or is it pretty no single digit, right? Or it's pretty flat, right? So that would be difficult to say. It's just that it should do better than the rest of the region. That's your first question. The second one about tokenization is something we continue to work on. We actually have a task force working on it. First thing on what is the customer's interest and demand. The second thing is the technology supporting that. As I said, we are already using blockchain technology and we have done tokenization before. So it's to tokenize a bond to break it into smaller parts to sell to customers. So this will continue to go on. When you say large scale, it also depends on customers' demand as well. We're generally not supportive of speculative demand, meaning if they want to buy into something that is really volatile, that is not exactly what we want to do for our customers. But to use the technology to support to create products, that is a good investment for our customers. That we continue to do. So that's your second question. Your third one about...

The third one is actually the same as what Chania was asking, whether the number of RMs will expand to how many. But I don't think we are giving... Yeah, we're not giving... Because, I mean, we are hiring across all the core areas, but I think it's also hard to say by a certain number. I just asked whether online anyone is going to ask questions. It looks like they are happy for you to represent them. So last question.

has a view on whether you want to join DBS and JPMorgan and Partior, or they're also doing that pilot in Project Guardian, which once again, those two banks, but not the other two local banks. So if there's any view on that, and so would you partner any of the other local banks and the second question is on your set one, maybe it's to Chin Yee. Does it include the Great Eastern Capital Car? Does it include the Great Eastern Car in your set one? Because yours is always a lot higher than the others and then you won't pay back some of our, you know, some of the investors in dividends, that sort of thing, yeah. So that's, yeah, so could you repeat those?

Okay, tokenization and efforts and we, We have been working actually to establish ourselves with the ecosystem. How do I say that? We announced a couple months back that we have a work with a company, which is a licensed, MES licensed company, called Metaverse Green Exchange, a company called Metaverse Green Exchange. We are working together to consider tokenization of green assets. This comes into our sustainable play as well, our sustainability play as well. So are we working on certain things? We are. But this is something that we have announced. That's why I want to use this as an example. So eventually, what is that work that's going to be like? Whether it will eventually be a joint venture platform or whether it will be an investment in the platform and whether it is a cooperation, we will have more to... we will have more to tell as we continue to work on that. So that is one example. We have been working on other platforms as well. And so some of the industry initiative on using blockchain to look at trade data. and I think these are all ongoing. And this, we definitely are working with the other banks. So using, we are very keen to use the technology, right? To serve the best. The trade platform we're talking about using blockchain is to ensure that every piece of trade data can be traced, right? So this is to help to prevent any type of fraud in the process of trade documents. So this is, we are as active as any other bank and we are one of the leading banks in that as well. So we have a few of these initiatives. So as things mature further, we definitely would want to share with the media.

But no, because Quartier seems to be doing things, you're not interested in Quartier particularly. In the JP Morgan, DBS, the cross-border, they're using... I don't want to comment on that. Oh, you don't want to comment? Okay, good.

Group CET1 Ratio

In terms of our ratio being higher, we have been optimising RWA over the years and as a result, some of our RWA ratio is kept at a fairly good level and also driving the return on So that sort of adds to the CET1 ratio being at the very healthy level.

And I think that would be last year or the year before because of changing the applying IRB to Wing Hung. That was a jump.

IRB to Wing Hung, right? Changing from standardised to IRB. And at the time, we sort of said that 0.6 percentage points are up with IRB.

0.6% or 0.6 percentage point. Okay, the other thing, of course, was that DPS and Yobi both said that the securities portfolio, there was a hit from the securities portfolio under the OCI, whatever it is. Was there an impact on yours?

Yeah, we also do have, but we look at that to manage and to hedge that. So as we thought about the bonds holding, those bought pre-rate highs would have impact on the fair valuation reserve. So we do look at that closely and managing that by hedging where we can. And we also have been selling off some of those pre-rate highs portfolios. That's why you see some losses in terms of investment gains in our second Q&A. and other non-interest income. That's part and parcel of our reshaping our portfolio and managing of our FEOC.