Oversea-Chinese Banking Corporation

We announced our results this morning and we are pleased to report the robust performance for the quarter, which contributed to record net profit for the 9 months of 2023. Moving on to our financial highlights in slide 4. For the third quarter of 2023, or how we use 3Q23 in short, Group net profit rose 21% from a year ago and 6% from the previous quarter to S$1.81 billion. The group's annualized return on equity for 3Q23 improved 2.1 percentage points year-on-year to 14%. Total income rose 13% from a year ago to S$3.43 billion. underpinned by record net interest income and growth in non-interest income. Net interest income was $2.46 billion, up 17% from the previous year, supported by asset growth and a 21 basis point expansion in net interest margin to 2.27%. Non-interest income of $973 billion was 4% above with fee income rising to the highest level in the past four quarters. We continue to invest in our franchise to support business expansion while keeping costs well controlled. With income growth up facing 5% year-on-year increase in expenses, cost-to-income ratio improved to 39.1%. Credit costs for the quarter increased were at annualised 17 basis points, and our loan portfolio remained sound, with MPR ratio further improving to 1.0%. Loans grew 1% on a constant currency basis to $298 billion, while deposits were 1% lower from the previous quarter as we proactively managed our balance sheet by reducing higher-cost deposits. Our capital position remained strong with core equity tier 1 ratio at 14.8%. Moving on to slide 5, our three key business pillars of banking, wealth management and insurance continued to deliver resilient performance. Banking operations net profit for 3Q23 was $1.66 billion, 31% higher than the previous year and 7% above the prior quarter, on the back of record net interest income and fee growth. Wealth management income was also higher year-on-year and comprised one-third of the group's total income, and sex under management worth $217 billion as of 30 September 2003, up 8% from the previous year from net real money. insurance business registered higher single premium sales in Singapore during the quarter. The total rated new sales for new business and rated value up quarter on quarter. Moving on to slide six. We maintain our strong balance sheet position, placing us on a good footing to support growth opportunities and to buffer for uncertainties. Regulatory ratios were all well above Group Net Profit of RM5.4 billion for 9 months grew 32% year-on-year. on the back of record income, which exceeded $10 million. Income growth was largely driven by a 35% rise in net interest income. We achieved positive operating jaws, which drove a 7.1 percentage point improvement to cost-income ratio to 38.2%. Allowances rose year on year, specific allowances were prudently set aside. Turning to the next page, for the third quarter, net profit increased 21% year-on-year to $1.81 billion, largely attributable to a record quarterly net interest income and higher non-interest income. Compared to the prior quarter, net profit rose by 6%, mainly from a rise in net interest income and lower balances. Moving on to slide 12, where I will go through the group's performance trends. Net interest income for 9 months of 2023 rose 35%, exceed S$7 billion mark for the first time, to reach S$7.18 billion. This was driven by a 6% growth in average assets and a 50 basis point uplift in NIM to 2.28%. For Q23, net interest income was a record 2.46 billion, up 17% year-on-year and 3% from the previous quarter. We continue to actively manage our balance sheet. quarterly NIM was 2.27%, a 21 basis point expansion from a year ago, on the back of higher margins across our key markets. Compared to 2Q23, NIM was up one basis point as higher asset yields outpaced the rise in funding costs, moving to slap 30. Non-interest income for nine months 2023 was 3.04%, The increase was mainly driven by higher trading income, net gains from sale of investment securities and insurance profits. This is more than compensated for lower fee income, which was largely due to softer wealth management fees in the first half of this year. For 3Q23, non-interest income rose 4% year-on-year to $973 million, supported by in free income and investment performance. Insurance income was lower year-on-year, largely due to an increase in medical claims, which was partly compensated by improved investment performance. Moving on to slide 14, where I will cover free income in more detail. If you put free income of $461 million was the highest in the last four quarters, 2% above a year ago and 7% higher since 1923. The quarter-on-quarter growth was led by an increase in wealth management, credit card and trade-related fees. The improvement in wealth fees underscores the strength of a wealth management franchise. Customer activities and we also saw higher demand for wealth management products, including bank assurance, bonds and structured products. Turning to slide 15. Trading income, which mainly comprised customer flow income, was $783 million for nine months of 2023, up 5% compared to the previous year. For the quarter, customer flow income continued to trend higher. Non-customer flow income was lower as compared to the prior quarter, mainly attributable to a drop in mark-to-market valuations of fair value through P&L securities and derivatives. Moving on to slide 16 on corporate expenses. In line with our corporate strategy, we continued while still maintaining costs disagreeing. Operating expenses for the nine months and quarter were well managed, up 5% year-on-year for both periods and 1% higher quarter-and-quarter for 3Q23. The possibly operating jaws at year-on-year income growth outpaced the increased expenses. Cost-to-income ratio for the last three quarters were below 40%. Moving on to allowances on slide 17. For the nine months of 2023, credit costs were 20 basis points on an annualized basis in line with our full year 2023 guidance. For the third quarter, total allowances were $144 million, 27% lower than the prior quarter. We need you to write back the general allowances of the mistakes as compared to a $200 million charge in 2Q23. The group had prudently set aside general allowances in previous quarters, and the right-back 3Q23 included migration of general to specific allowances. Specific allowances for the quarter were mainly attributable to corporate accounts in our working markets, across a range of sectors. We also saw reversals. For example, in 2021, we made allowances for a project in Greater China from delays due to supply chain disruptions brought upon by COVID-19. The project was progressing well and has since been completed and is generating revenue. Turning next to slide 18, The group's non-performing assets coverage ratio continues to rise higher to 139% as of 30 September 2023, driven by a decline in non-performing assets. Turning to the next page on asset quality. Our asset quality stayed resilient with the non-performing loan ratio further improving to 1.0%. Total MPAs as at 30 September 2023 were lower year-on-year and quarter-on-quarter at $3.1 billion. The drop in non-performing assets were across our key markets of Singapore, Malaysia, Indonesia and Greater China, mainly due to higher recovery and updates. Previously in Q3 of 2022, we shared that China portfolio, which was highly secure with its property. To provide an update, this account seems to be fully repaid during this quarter. Moving next to slide 21. Our loan portfolio continued to be well diversified across geographies and industries. Group loans grew 1% in constant currency terms from a year ago and from the prior quarter to S$298 billion. Non-trade corporate loans and housing loans were up quarter on quarter, while trade loans declined. We remain focused on supporting the increasing customer needs for sustainable financing solutions. Our sustainable financing loans rose 28% year on year, and comprised 12% of food loans as at 30th September this year. Moving on to slide 22. Our commercial real estate, or CRE for short, office sector loan portfolio comprised 13% of food loans. The portfolio remained resilient and largely secured the comfortable LTV of between 50 to 60%. Two-thirds of our CRE office portfolio are in our four key markets of Singapore, Malaysia, Indonesia, and greater China. The remaining are primarily to developed markets including Australia, the United Kingdom, and United States, which accounts for 4% of total group loans. There are largely lending to our network names with strong sponsors. Moving on to deposits on slide 23. Customer deposits were $369 billion as of 30th September, 1% lower than the previous quarter as we continue to proactively optimise our balance sheet. CASA balances rose 1% quarter on quarter and CASA ratios increased to 46.3%. The Group Release assessed Moving on to my final slide. Our capital position remains strong. The core equity Tier 1 ratio at 14.8% except for September, keeping us in good position for strong growth and to buffer for uncertainties. CET1 ratio reduced by 0.6%. This was mainly due to third-quarter profit accretion offset by the payment of our E3 2023 dividend in August and increase in credit-based rental assets. With this, I end my presentation and will now pass the floor over to Helen.

Helen, please. Thanks, Cherie. Good morning to those who are on the call and for those who are physically here, welcome to the OCBC offices. Chen Ye has done quite a detailed presentation on the third quarter results so I won't repeat it but just want to highlight a few things that I feel are important and which is encouraging to our team and to the bank so first of all I'm very glad that our total income has surpassed the 10 billion mark and also our net profits also surpassed the 5 billion mark and these are record highs. And so we're quite happy, good numbers. Of course, our year has also been trending up. So it's at 14.12%. So we are on target to achieve our full year target of above 14%. I think the performance continued to reflect where we are, what we are in banking, insurance and wealth management. Of course, I think our insurance business have some changes in the way we account for their numbers because of a new accounting standard but which we have been dutifully follow up and I think this will be quite a change although we did actually rebase last year but if you need more information understanding of GE feel free to ask the finance team or of course the GE team directly as well so Net interest income, of course, is high because of how we manage our limp. And of course, we benefited from high interest rate environment enabled by the foundations we laid for the banks the past few years. This is regarding proactively managing our balance sheets. including how we do our loan book and which sector we grow and also how we manage our funding base as well. One important thing over the years is we've been managed to work hard and win some new cash management mandates and grew our corporate banking operating account space. And this is the area where you will be hold on to the cash the money of the clients and if they need to run their business, they need to maintain operating accounts with us. So in that sense, because we have acquired so many more SME clients as well, the SMEs typically place a very little of their funds in fixed deposits because they need to manage their money for their working capital. So we also enhance our digital proposition. So that helps us to acquire customer faster, easier, more effectively, and in a way also allows our customer to continue to use us in doing their business. So this is important, also very important for the retail deposit franchise. I'll talk a little bit about it later. Again, because of all these, we also allow us to build a more resilient deposit base. So as Julia has covered for the first quarter, we do see cost of balance increase and also we are able then to part with some of the higher cost of fixed deposit in managing our funding costs. we have thus revised our full year 2023 target limit to the 2.25% region. Free income also have rebounded in third quarter as Ching-Yi covered earlier. But I wouldn't paint too rosy a picture. We need to see that momentum going. I think investors are still sitting a bit on the fence as regards to whether they would go actively into more wealth management activities. And one more point I want to mention that we continue to invest in people in technology so that we strengthen our businesses. And in a way, we still want to also be diligent in maintaining expenses as well. So we'll be finding our 2023 cost-to-income ratio target to be lowered at around 40%. So I think I don't need to talk too much about how current market conditions are like, right? And before this quarter, we were talking about one war. Now we're talking about a war around the world. Our geopolitical tension continues to remain not very healthy in a way. The tension is quite big. I think it reflects a lot of them on the macroeconomic conditions and also on demand of loans in a way. So we do see loan demand to be quite limited. Trade loans is not doing very well because I think the trade volume around the region also has not rebounded as people have hoped for. So in a way, we still managed to grow our corporate loan portfolio and think for housing loans for this quarter. And delighted to say that one of our big focus is on sustainability financing. Sustainability financing commitment, as Gina earlier talked about, has already surpassed our 50 billion goal by 2025. So we are playing an increasingly important role for our customers in helping them transition to a more low-carbon environment. Non-portfolio is sound. We do not see systemic risk, but need to continue to be prudent as interest rates stay high and also need to be prudent regarding how we look at the portfolio and make appropriate definition of NPL and make appropriate level of provisions as well. So a full year, we are targeting credit costs of around 20 basis points unchanged. So if we flip the page to the second page, I'm just trying to reflect a bit on the three-year plan that I talked about earlier in July. We talked about hopefully with a lot of the initiatives and under the corporate plan, we want to deliver $3 billion more revenue over the period of 2023 to 2025. So just want to report by September, we are quite on track to achieve our 2023 incremental revenue. When I said that, I also have indicated with all the initiatives, the first year you see the smallest amount, right? And then the second year, third year, hopefully you will see more of the amount. But for those that we plan for in 2023, it looks like that we should be able to achieve those by the end of the year. I want to touch base bring in additional revenues according to plan. So going back to our corporate strategy, we talk about growth in three, four areas. The first one is wealth. So what are the key initiatives or the changes we make in order to deliver more to strengthen our wealth management franchise? So one thing that is very important is increase the collaboration, how we drive, in particular for retail, how we drive premier banking and premier private clients so the whole fact about allowing easier account opening I think we did announce that and we're allowing people to do online account opening around the region and we've seen quite a good number like that it's not just any particular country but we do see quite a lot of account opening from individuals around in the region and with that with more accounts and also we have invested to our client base. So that includes, for example, ethics. A client overseas with an account with us can just use the digital channel to conduct ethics products and some other products as well. I think the one thing that I also want to mention is we're really regionalizing our brand. So you're very involved when we launch our brand. and I'm glad to say that in July, we have done Singapore, Malaysia and Hong Kong. Recently, we completed Macau. We're also going to look at China and Tunisia, so more news to come. I think being one brand with a new logo and OCBC recognised across the banking world is very important for us so that we increase our business on a regional basis. So on capturing trade and investment flows between ASEAN and Greater China, it's a very important pillar. And again, I did mention before that we have strengthened our China business offices, able to allow customers coming to ASEAN in particular. And of course, we have also improved on how we engage ourselves in the capital markets. We've been a big player in Singapore, but in particular, we have done more syndicated loans for our customers in China. We climb up the syndicated loan table quite well, in particular in Hong Kong. So these are some of the things that we effectively act as a team that we can pull in regional borrowers and help them and serve them. And I want to cite one example as well. In the third quarter, we have brought 10 high-end tech companies from China who want to look at the Indonesian market. So we brought them all and working with our Indonesian team, we introduced them to a lot of the clients that are interested. and of course what result would be they of course they open account with us in Indonesia and eventually hopefully as they embark on doing business they will bank more of us so that this is one of the way how we say we can still grow because you increase the wallet increase a share of wallet of the customer so we don't just bank them in China we bank them in Singapore we're now starting to bank them in Indonesia as well So the first pillar, we talk about unlocking values, new economy. One of these is really getting heavier on onboarding new to bank customer across the region through our digital SME model. So we have by now launched our SME pre-approved loan platform in Malaysia as well. And also applying that to our our element unit, which is the Islamic Sharia financing that we are launching this as well. So with this powerful development, we'll be able to continue to capture more market share by banking more customers. New partnership, there's also new economy as in the way. Just want to say that one example is the year procurement platform of Sesame, which are now same day digital invoice financing approval to Singapore government SME vendors. So it's so much easier now to finance what they sell because the platform announced the recognition of the invoice really quickly so that we do know that by financing them, we'll be repaid by the buyers on due date. On another area, I just also want to mention we have launched a number of us-to-market capabilities enabled by our ongoing technology investment. One of the things I think a lot of customers get quite excited saying that now they can use dual cross-border payments via Alipay Plus. And I actually have a friend who talked to me and said, Helen, I'm not yet an OCBC customer. Of course, I said, how dare you? But in a way, he said that, but I do travel to China a lot. I now need to open an account with you. So we opened... not bad. So I do feel that such capabilities will continue to help us to bring in more customers. And another one thing that we have invested in technology is really to roll out Genitively AI to all our employees globally. So we now have an in-house, in a way, an in-house OCBC chat GPT. but this is very much focused in helping our colleagues to be much more productive. We tested it, there are use case, successful use case and feedback is very good. But of course, meanwhile, we also manage the risk. So this is more a platform that all OCBC data is not released to outside. So we contain our own data while we actually adopt data in the outside world. So these are exciting developments. But again, more importantly, you must have heard me talk about one group for a long time now. And in a way, this quarter, we also make two more appointments to my top team, the CEO of China and Greater China CEO, both are and I'm very excited to work with all of us in order to deliver this solid growth in our business and also good results. So looking ahead, I think to wrap up, I did say earlier on, nobody expect in second world, there's a second world as well. How does the whole world's economic situation come up? Macro, there are a lot of uncertainties. Are we saying that interest rate will certainly come down and the inflationary pressures have already been pained? Would the high interest rate continue to make credit conditions are difficult and indeed would geopolitical tensions continue to escalate. These are all the uncertainties that we're facing. And that's why while we are firmly on track to deliver our 2023 targets with some adjustment as you've seen on the slide, again, we need to continue to be very prudent and make sure that our capital, our liquidity, our funding base are strong as we continue to embark on growth. and indeed continue to improve the ability of how we serve our customers as well. And indeed, broadly, for initial thoughts for 2024, potentially NIM would be staying at current levels for first half. But again, very unforeseen circumstances. You can plan all you do, but things can still don't turn out as you wish, right? So no growth, we don't see sudden jump in demand, but we'll see how we manage to continue to grow, maybe not on the high divots. on a high note. But in a way, we will go into more in details when we report the last quarter results and the full year results by early February. So I think with that, we're opening to questions.

Do you have some questions here first before I move to Amber from Bloomberg?

She has three questions. Thank you for your presentation. Give some guidance on the ROE for next year. I know you didn't have a specific, but what is the outlook of the ROE for next year? And are you able to continue this momentum of breaking the total income for next year? And on the second question, I would like to ask, what is OCBC's exposure in the recent money laundering case before? What is the specific allowance allocated to this and do you see the allowance to increase? On the third question, with regards to the recent destructions in the agitation, have you identified the main issues and will you all be making more investment in terms of technology or manpower to manage this kind of issue?

I will look for Aoi. As I said, I cannot give you a time. It depends, of course, on your level of equity and your return. So income, we are committed to continue to do what we can to identify new customer, new area under the one group strategy. So we do hope to be able to bring in what we call above FBAU business. But you're also aware that net interest income is quite subject to the interest rate environment, whether interest rate will come down. To a certain extent, you have to plan that there potentially will be interest rate coming down potentially second half of the year. But of course, that will may change. It depends on how things unfold. So in that sense, whether we'll be able to keep the same return, we hope to, because this is what we try to do, right? Always growing. But again, where will we? At this point, we're certainly working on that. So no target given yet. but hopefully the momentum will build especially on the new initiatives that we can keep that. And I think having the growth group to work together has been powerful as we have seen.

I guess something on what Helen said, I mean, because we may not be able to be at this stage, I'll give you the RE target for next year, but we did set out in July, you know, we outlined our strategy that over a million term, we're looking at RE of about 14%.

So the second thing is about exposure and allowance to the recent AML case. We have insignificant exposure, I have to say. So we will make allowance as appropriate, but because it's insignificant, there's nothing much to talk about in the world. So disruption, we have seen the recent disruption, we have seen technical issue that impact on the performance of a certain software and in a way that results in slowness in the system. So we have detected it, so the way we have been fixing it, so it's now all okay. and I think we will be able to manage a similar risk in the future. But as to your question, are we investing? We're certainly investing. We continue to add more headcount, add more people, specialists in technology. We continue to improve our technology infrastructure. and we continue to invest in new system and upgrade. So it is whenever we say technology investment, it is very much investing in current system upgrading and also investing in the technology that allow us to have a high capabilities and new products as well. The third part of this is advancing in technology to make ourselves more effective in innovation. So when I cite generative AI, it is about to help our colleagues to work more effectively and to be more productive.

The issue that happened that day, affecting the software component that was intermittent, so it was not across the board. So there were transactions coming through. Quite a high percentage of transactions coming through. So that has already been fixed. So on that day, it was fixed. Next question.

What's your view on China? Can you see the environment there?

Can you take the last one? So we raised our primary revenue from what I mentioned as 2.20%, right? During the second quarter of 2020. Now, the return of 0.5%, right? Look at our nine-month mean, which is 2.3%. We are sort of, you know, our outlook for fourth quarter, taking some form of imprudent as well as we expect some competition funds, year-end, which we drive up in cost, right? So as a result, we are still in the position of for the deterioration in the macro environment of the war that Helen mentioned. That's also quite a bit of a concern. Yeah. Yeah. Okay. Second question of China, right? Yeah.

I think for the GDP growth, it surprised a few people that it's growing better. In a way, we do see China trying to have a lot of measures to encourage economic growth. I think they start to see some momentum there, but whether next year I can predict, I think it's up to everybody's guess. Hopefully, the measures continue to yield results. But also, I think the good thing is we also see manufacturing numbers going up and trade slightly pick up as well. So hopefully all this momentum can vary through into next year. Of course, we watch very carefully about any sort of headwinds. I think geopolitical tension, as we mentioned, and also whether they are rebounding at the speed that everybody hoped for. So I think to that extent, I think we still think China is a very important market that nobody can ignore. And in a way, but our strategy for China is also very clear. We are helping Chinese customers and individuals as the venture overseas. I think that's where we can play the most effective assistance to these customers. And on that, I still see a very positive momentum on that.

Maybe I just go to...

I think Bloomberg, Amber again, if you are not satisfied, but because your money laundering question has already been answered, so I will not ask that. Talk about your capital position remains strong, so is there any MAA considerations in China? That's the first question. Second question, are you still benefiting from the credit series collapse in wealth management? Your fees are up quite a bit. So two questions. The money laundering, we have already answered.

M&A for China? Very specific question. So I must say we hold on to what I have always been talking about. We look at opportunities, especially in the markets that would supplement to our core business. So in a way, if you apply that across but I have nothing on the horizon that I'm going to be able to talk about at all. So I hope that answers your question. For the funds flow, actually we do see net funds flow early in the year in the private bank, but also see that also equally flowing in for the retail side, mainly on the premier and premier private as well. So I wouldn't say comment as a continuous flow. I think trying to grow... It's not about credit suites. Yeah, it's not about credit suites. So trying to continue to grow customer and grow AUM is something that is in our DNA. We continue to do that. So I think in the early part of the year, the market did see some funds grow. And I think we talked about it in the first quarter already.

So nothing more to add on.

By now, we are already in the web box.

It's not attributed to credit sources. Okay. Amber, if that is okay, I will move on to Preska.

Oh, okay. I just wanted to follow up on the funds. Helen, you mentioned previously that you saw $10 billion in the first quarter, $6 billion in the second. Just wondering what was the volume in the third quarter as well? Did the momentum continue? I saw there was a slight Q&Q dip in wealth management as well. Was there an impact on key income there? Also curious about your thoughts on the impact of the money laundering saga on the wealth management industry here. Whether you see a longer-term impact there? I also wanted to follow up on what you said about the generative AI and helping productivity. What specific tasks and functions has it been used for at the bank?

I don't always talk about the fund flow the best. I have him talk about it first.

If you look, as you noted, in terms of the AUM, on a quarter-on-quarter basis, it declined of RM4 billion. Whilst we saw fund flows in some segments of the wealth business, including like Premier Banking, the PTC segment, we also saw from the private bank which is usual for private banking. At the same time, some of the decline in the VDM was also a result of market valuations.

I think that handles the first two questions. You have the third one on impact of the AML case on wealth management business. I think it is a good thing that the industry is dealing with there because it ensure that this center, this important hub of us, is a center that can deal with cases like that. So in a way, protect the reputation of Singapore, I think, in that sense. So if you ask me, is there any clients in Singapore saying that they lose confidence and take the money out. We haven't seen it. We haven't seen it at all. So if you ask me the impact, I would say the impact is minimal or no. But to an extent, personally, I feel it is actually a good thing that we're able to handle it. So the four questions on generative AI, what sort of areas that we use it for. I think one thing is on research. because you can assess information much more effectively. Another area is on coding. That's for our engineers, programmers. And then for our... Actually, even for frontline, if you think about an RM, who always have to track information on their customers in the public market. So this helps them more effectively track orders. And for them, if you are now writing an account plan for the clients, you can access to those information. Because Gentoo AI is creative, more than just giving you the data, right? So I think that helps them as well. So we have actually done quite a lot of testing and what we call successful use case before we decide to launch it to all the colleagues in the bank. We see high interest. So in a way we say that we make it very clear that this is not about you do less with your with your work, it is for you to be able to be more productive. Everybody is still accountable to make sure that as you use it, the information and the work you produce, you have the same level of diligence and also you make sure that whatever you use, it is also correctly and accurately projected in your results.

in 2021, for example, three years ago. The bulk of this was from wealth management. So when can we expect wealth management or private banking to return to form like in 2021? And I think further on this, a follow-up question, I know that there is wealth management income every fourth quarter. So is this seasonal? Like with the market situation, as maybe managers are trying to reposition their portfolios for the year ahead, can we expect this for the fourth quarter of this year as well? I can take it.

I mean, if you look in terms of the work-measured fees, currently the outlook for clients is still risk-off, given the current climate. So, again, the trend is clients are still predominantly holding their assets in cash. So that's one reason. I mean, this quarter, the fees were up Again, through a variety of channels, so like private banking services, the sales of well-measured products, structured deposits, student trusts. So I think we hope that the trend should continue. But again, it's really dependent on the current market environment, given the outlook of inflation, drop of intentions. With your second question, seasonally, not just us, but I guess of course the industry as well, you know, hot water does seem to be a bit more soft compared maybe to the rest of the year. Traditionally again, it's a period where, you know, clients do go on holiday, you know, so I think there may be less trades in that respect. So I think I know that the fee income

within Lifestyle? We are indeed working on Lifestyle, so you'll see it when we announce it. I mean, we also did some positive change.

Yeah.

There are no questions.

Yes, I think on non-formal loans, I note similar patterns from second quarter with Singapore, Malaysia, Indonesia, Greater China and PLs falling quarter on quarter.

in Greece and the rest of the world, actually released one corporate name in ASEAN.

and just on a related note as well, I see loans by geography almost entirely unchanged except for a slight increase in the rest of the world. So this is very small. Where is this increase from?

I think it's just one.

So this is from loans by geography. Loans by geography.

So this is very small, but where is this increase from? If you look at this, we continue supporting our network clients in the rest of the world. So the likes increase is really some of the opportunity that is put in the rest of the world. We still want to grow our loan book, of course. But depending on where the opportunity is and where our customers need us. So if the customers need us in the rest of the world, that means we will increase or the look will be booked there somehow.

I just have a question about CASTA. So I think there's a slight 1% rise in CASTA. This didn't retreat very far over the past year. It's been quite stable. figure for CASA? I think you mentioned something earlier about SMEs giving funds at current cost.

Yeah, I do hope that by the fact that we have invested so much in onboarding new customers, so the CASA reflects some of the mandates that we have worn, hopefully, but again, it's a one-quarter change and we do want to see whether it is on the uptrend going forward, right? But in a way, you could also assume that because interest rate will stay higher for quite a while, it's very difficult to say that CASA will just bounce back like before, because it's still good to be able to put deposit. In particular, if you are not investing, you would want to put it in fixed deposits as well. So because we actively manage our funding base, right? So where we have a choice, we can always manage down fixed deposit if we feel that we don't really need that funding. Fixed deposit is quite transparent in a way. You pay for it and the customer will put it with you. So it's really CASA that you really need to hope that you can add more customers You can't really talk about it. We always say that this year in particular, we committed to pay 50% will remain committed. Whether there's any upside, it all depends on how we look at our capital positioning for the next year as well. So it is not because we have high CT1 that we'll definitely pay a special dividend. But we will talk about it as we're ready to announce our dividend for the full year.

Okay, any other questions? Yeah, small.

that's a big question actually as we say we're trying to according to our corporate strategy we have a lot of initiatives focusing and in growing the business so when you grow the business obviously the fee should grow alongside it right meaning you have more customers should have more fees. But fees is quite subject to, as we say, investment sentiment. So it's really related to how the market is going to be like next year as well. Because in particular for mile management fees. other than that is you talk about a lot of pieces on transactions so trade in particular remittances you know money flowing cross-border as well so for our initiative capturing more of the customers wallet across country so will go up. But again, the trade situation in Asia in particular, we still hope that it will grow back. So we see some uptick this quarter. If we see another uptick in the last quarter, I'll be quite happy. Hopefully the momentum will continue. But it's very difficult to project how much higher it will be. or if unfortunately there's some other event and investors going to sit more on the sideline again. So we hope that it doesn't happen.

Is there a particular sector or other business that you're most positive about the next coming year?

What are the more positive sectors? I think I will see segments first. I'm still quite positive about wealth flow. And then of course, we are strengthening our composition. I think I'm still quite positive about the segment, but the performance is, as I said, will be more subject to market conditions. But as to segments, focus on new economy. So in a way, they're playing bigger in the ecosystem, doing more with the new techs. It's not just fintech anymore, you're talking about more new techs which is in medicine, in biology, You are talking about different types of new e-commerce players, etc. So these are the segments that we feel we have more opportunity to win because there's more flows in ASEAN across the country. and I think sustainability is an important part. It's not a particularly sector, but it is a particularly product, right? As we support our clients to go green. So I think that would, we're still very positive about that. It will continue to grow fast.

Okay, maybe go to October. Okay.

We are really not operating in that part of the world.

Julie, I think you're first.

I think the first question is about customer finance, like you mentioned. So I think six months ago when we I think we measure ourselves in... Actually, all the wealth of civil finance is one of the measurements. But because it's very prominent, right? You see that growth in the local. That's why we like it.

We continue to measure the growth. We're still thinking that growing double digits is the right way forward. And another thing is you do know that we announced our decarbonisation plan for our book this year. This is one very big commitment. How to reach net zero by 2050 is a big commitment. So for simple financing, go hand in hand with decarbonising the book. The more you can refinance your current customer, by a Green Deal, it is better, meaning they are transitioning themselves. That's why the demand shift to sustainable financing. So I think that would be a strong measurement going forward. And then, of course, what other policies we adopt, what other disclosure we're able to define and share with our customers, what more we put into social, for example. What do we care for? It all builds into the overall sustainability agenda. So we could continue to measure and report on this.

I think OCBC's allowance coverage rose to 139% from the previous quarter. Is this really higher than your previous year?

I guess if you look at it, it's a function of your allowance coverage over your MPAs. So the numerator in the allowances has remained fairly stable, but it's in fact the denominator that has actually come down, I think for the reasons that the engineer explained during the briefing. So that's why I think the allowance coverage has been going up, due to the decline in MPAs.