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.