Oversea-Chinese Banking Corporation

Thank you very much for joining us this morning. We've started our media briefing for our third quarter results and I will pass the time to Chini.

Good morning to all. Thank you for joining us at OCBC's third quarter 2024 results briefing. We reported a strong set of results for the quarter and I will now share the highlights. For the third quarter of 2024, we recorded net profit of S$1.97 billion, up 9% year-on-year and up 2% quarter-on-quarter. Total income for the quarter climbed to a record S$3.8 billion. Net interest income was generally flat at S$2.43 billion. Non-interest income surged 41% from the previous year to $1.37 billion. Buoyant wealth management activities boosted fee and trading income. Insurance income was also up. The cost-to-income ratio improved year-on-year to 38.5% on positive operating jaws. Loan growth momentum was sustained. our loan portfolio expanded 4% year-on-year on constant currency basis. The deposits were broadly stable. Portfolio quality remained benign, with NPR ratio at 0.9%. We continued to set aside allowances, mainly for non-impact assets. Non-performing assets coverage ratio increased to 164%. MES's final Basel III reforms came into effect on 1 July 2024. On a transitional basis, common equity Tier 1 ratio was 17.2% as at the end of September 2024. On a fully phased-in basis, CE Tier 1 ratio would be 15.6%. Our strong Q34 performance contributed to a record nine-month group net profit of $5.9 billion, up 9% year-on-year. I will elaborate more on the performance of our key businesses in the following slides. The three main engines of our diversified franchise continue to deliver resilient performance. banking operations net profit for 3Q24 was $1.72 billion, up 3% year-on-year. Our wealth management business performed well, reflecting our continued efforts in growing the franchise. Group wealth management income grew 15% year-on-year to $1.29 billion, accounting for about one-third of group total income. Assets under management grew to a record $284 billion from net new money inflows and improved market valuations. Profit contribution from Great Eastern rose 72% year-on-year to $254 million, driven by better underlying insurance performance and stronger investment results from its shareholders' fund. Our operating profit is well diversified across businesses and geographies, providing long-term earnings stability. Our capital, funding, and liquidity positions remain robust. Our financial strength places us in a good position to pursue growth opportunities, navigate uncertainties, and increase shareholders' returns. Moving on to details of our food performance trend from slide 19. Net interest income was largely stable throughout all three quarters of 2024. For the nine-month period, NII increased 2% to $7.3 billion. This was underpinned by a 4% rise in average assets from customer loan growth and a 10% increase in other high-quality assets. As part of our ongoing balance sheet positioning to manage NII amid declining interest rates, liquidity was deployed to high-quality bank placements and debt securities. These assets were income lucrative but lower-yielding and customer loans. Overall, ninth month, 2024, NIMH narrowed to 2.22% as the increase in funding costs outpaced the rise in asset yields. For the quarter, NIMH was 2.18% and exit NIMH for September was 2.16%. Taking into consideration the recent Fed rate cuts, as well as our House view on rates for the remainder of 2024, we expect full-year NIM to be around 2.2%. This is in line with our previous guidance of coming in at the lower end of our NIM range. Non-interest income for 9 months of 2024 moved 23% to a new high of $3.76 billion. driven by higher fee, trading, and insurance income. For the quarter, non-interest income was up 41% year-on-year from broad-based growth. I will go into more details of our fees and trading income in the next two slides. 3Q24 fee income rose 10% year-on-year to $508 million. the highest level over the last three years. The improvement was largely driven by a 25% increase in wealth management fees. We saw robust customer activities during third quarter, driven by higher demand across wealth products, including bank assurance, unit trust, structured deposits, and private banking. Investment banking and loan-related fees were also higher. We recorded strong trading income growth for the quarter and nine months from record customer flow and higher non-customer flow income. 3Q24 trading income more than doubled year-on-year to $508 million. while nine months trading income surpassed the $1 billion mark for the first time. The rise in customer flow trading income was underpinned by both corporate and wealth segments. The increase in non-customer flow treasury income was led by higher mark-to-market valuations and gains in our global markets portfolio and great business shareholders funds. we continued to put in targeted investment to support the goal of our businesses. Operating expenses for the quarter were up 9% year on year. This was mainly driven by higher costs associated with increased business volumes, as well as technology expenses linked to our ongoing digitalization initiatives. Cost to income ratios to each quarter of this year were below 40%. Nine-month 24 cost-to-income ratio was 37.8%, marginally below the previous year. Our loan portfolio quality remains some, with NPR ratio improving from a year ago to 0.9%. Total NPAs dropped 10% year-on-year to S$2.8 billion. Compared to a quarter ago, MPAs were 4% lower as higher recoveries, upgrades and write-offs more than compensated for new corporate MPAs. New corporate MPA formation in third quarter was mainly attributable to the downgrade of one corporate name in Hong Kong, which relates to real estate and is largely secure. For the nine months, Total credit cost was 17 basis points on an annualized basis, lower than 20 basis points a year ago. Total allowances for the third quarter were $169 million. These were mainly $132 million in general allowances taken, largely for credit portfolio changes. For example, in Hong Kong, we have taken prompt action to watch list accounts when necessary, given the headwinds and weak real estate market sentiments. This is in line with our prudent and forward-looking risk management approach. The group's NPA coverage ratio continued to trend higher to 164%, as at 30th September, 2024. Our low portfolio, continued to be well diversified across geographies and industries. Group loans expanded 4% year-on-year to $305 billion. By geography, this was driven by Singapore, Malaysia, the United Kingdom and Australia. By industry, the growth was largely from mortgages and non-trade corporate loans. We supported customers in the student accommodation and built-to-rent asset space. We also supported new economy industries including technology, digital infrastructure like data centres and the new energy sector. One of our fastest growing segments is our sustainable financing loans portfolio. which expanded 31% from a year ago to $47 billion. This portfolio now made up 15% of our group loans. Loans to the commercial rare assets office sector comprise 11% of total group loans. These are largely secured with an average LTV of 50% to 60%. About two-thirds of these loans are in our key markets. of Singapore, Malaysia, Indonesia, and Greater China. Consumer deposits were $369 billion at the end of September, steady from a year ago, and $1 billion below previous quarter. Group loans to deposits ratio increased to 81.6% on the back of loan growth. Importantly, the change in deposit mix reflected our proactive balance sheet management. Compared to the previous year, higher-cost fixed deposits were reduced by a billion. On the other hand, we grew lower-cost CASA balances by 8 billion year-on-year, and CASA ratio increased to 48.4%. Closing off on my final slide, we maintain our strong capital position. CET1 ratio increased quarter-on-quarter to 17.2%, mainly driven by a significant drop in risk-weighted assets after the adoption of final Basel III reforms. The Basel III reforms are being progressively phased in until 1 January 2029, and the transitional decrease in risk-weighted assets will reduce over time. Assuming our portfolio as of September 2024 was subject to the full application of the final three reforms, which will take effect on 1st January of 2029, CET1 ratio will be 15.6% on a fully phased-in basis. With this, I end my presentation and will now pass the floor over to Helen. Thank you. Helen, please.

Thank you, Chini, and welcome to our office again. and she has given quite a detailed presentation on the third quarter's results and the nine-month numbers. So I'm not going to repeat most of what she said. I have prepared only two very simple slides, but perhaps we'll give a bit more of you about how I think the business is progressing and also some of the new things that we are doing. So first thing, happy to say that, of course, this is a another record result for the group and this is nine months and again powered by our three franchises banking insurance and wealth management also our total income across 11 billion I think dollars for the first time happy about that as well and supported by higher NII and record non-II as well. So of course, our income ratio improved and we're operating, we have a positive operating jaws for nine months. So I think a lot of what we do this year in preparation for interest rate peaking and coming down is to how we look at our net interest margin and also our net interest income. So we embarked to defend NII and there are a few things that we have done, right? The first thing is indeed to drive volume growth. You need bigger volumes to counter for the drop in NIM and so that we continue to bring more NII in. And we also put our liquidity to work to invest in high-quality assets. So that may have some impact on NIM, but we protect our NII. which is protecting the income. The second thing is we grow our fixed rate mortgages and particularly quite successfully in Singapore. And then we put in some cash flow hedges and that was when interest, catching interest rate at the higher point. And lastly, manage our funding base. I think in the past I talked quite a lot about how we grow digitally in SME account opening, in the consumer account opening, and indeed I think we have seen some fruit and with more of these accounts open and we're able to actually build our CASA and then face off some of the higher cost fixed deposits and if you look at how our CASA work has been trending up it's now close to 49% of the total deposits and we hope we'll be able to do it in that same momentum going into next year So our non-II also have a rather broad-based growth, which adds on to show that how our franchise have worked. Ching-Yin mentioned about AUM, and you know we reported AUM, which is a record high of $284 billion. This is contributed by Bank of Singapore, contributed by our premier private client segment, and also our premier banking segment. and just also want to mention one more number that for nine months, these segments together, we wanted about 12 billion net new money for inflow. For third quarter, it is close to 5 billion. So we do see a bit of an increase. over along this year. So seeing some of the results that we have invested in people, invested in products, and also invested in the capabilities to serve our customers using our capabilities. So some of the trading income that we've seen also reaching quite a good record. It's really about serving our customers. So Dushy in particular, I feel the growth is very much customer-driven, which is good. Because this will be a longer-term growth for the group in particular. And thus reflect, when we announced we have growth plans and various initiatives to bring the one group together to serve our customers in more drop-off This is seeing some results. And that is why, if you reflect on what we announced last year, we said we want to, based on all these initiatives, we want to have incremental income of $3 billion in three years. So last year we reported $500 million, which we made, and this year our target is $1 billion. I'm quite pleased to say that by the end of nine months, we are close to $1 billion. So probably this year we'll overachieve. But it's good to overachieve this year because next year the market will be perhaps a bit more uncertain as to how loans will grow but the interest rate will still stay higher for longer. So these are things that we will actively manage. I just mentioned trading income is robust, crossing one billion. I want to say that our sales and trading work hand-in-hand together and working with our corporate side and also with our retail side to bring a lot of customer-driven income for this good trading number. Loans expanded $9 billion from the end of last year. I think this is on track for us to achieve our full-year loan growth guidance. And we have successful capture flow. I think Chin Yeh talked about what area we're focusing on and indeed she also talks about we continue to help our clients to transition into net zero and indeed as a single loan financing outstanding is 47 billion as Chin Yeh mentioned and our commitment including I mean those that is not drawn yet is about 63 sorry it's about 65 billion as at the end of September. So asset quality is at an NPR ratio of 9%, but we remain prudent. Prudent meaning that we know the market is uncertain and we are closely monitoring because geopolitical tension will remain. with especially with after the US election results has come out and of course there's ongoing wars and conflicts in various parts of the world. So we will continue to actively do stress testing and manage our portfolio. So that would get us to in a way we will refine our full year credit cost guidance to range of 20 basis points. We did say last quarter that we expect to be low end of 20 to 25. So now I want to say this year's So on page two of my slide, we said we firmly plan to deliver this 2024 target, which includes the NIM around 2.2, and then single-digit loan growth, no single-digit loan growth, a full-year credit cost in the range of 20, and then the ROE about 14%. So I just want to touch on I talk about the initiatives allowing us to build faster growth and improve income, right? I also want to say some of the things that we have invested over the last two, three years as how we're seeing bearing fruit. And we continue want to do more of the first-to-market initiatives. For example, I think some of you do see and cover that in October, we launched our OCBC My Account. for teenagers, young teenagers and older children between the age of 7 to 15. We see very good interest from the parents. This is more about financial literacy, teaching young people how the money is coming in and going out. But giving parents the controls over the money a ceiling of each payment, for example, and teaching and working with the young children to manage the money. We got some interested. Since we launched in October, I think we're only about two weeks into it. We have opened quite a few thousand accounts already for children and teenagers. And I think this goes hand in hand with some of our ESG initiatives as well that we really want to the community to be a lot more financially literate and also this would be able to help children or young people to understand some of the anti-scams efforts that the industry is putting in. We have also set up the first comprehensive financial and personal wellness program for property agents. So property agents, we are working, want to treat them, give them more, in a way, give them more attention so that they would work with us also closer. So we have a program that we launch for property agents. And also we have just this week announced, we are working with a real estate, a government-owned property agent company, a government body to pilot a blockchain-based conditional payments for construction projects. And you know, payments for construction projects is a very tedious process. Tracking construction process, getting certificate, launching a lot of, getting a lot of documents in place, and then drawing down the loans and making payments, etc. So if we use blockchain, that means everything will be tracked in a very safe environment and everything can be tracked along the blockchain, which makes things a lot more transparent and easier for those who are involved. And also in October, the first bank with enabling intraday institutional lending capability, this is to use a platform to lend cash intraday to an external counterparty and by accepting tokenized assets. And again, using blockchain technology and all that. So we're quite excited. We are doing a lot of these. Some certainly have to make sure that we onboard more clients. Some make sure that we protect the process as we do a client. Some are more effective to generate more funding channels, for example. So all this is based on a very active period of digitalization investments, and we will continue to do that. So we also want to report some of the corporate development this year. So we completed the merger of PT Bank Commonwealth into OCBC Indonesia on 1st of September. And our state in Great Eastern, so after the VGO that ends in July, that was 93.32%. But you remember we report that is Section 2153, 2153 of the Companies Act that allow our shareholders to continue to sell shares to us based on the same price. And as at the end of this three months, which is 25th of October, our stake in Great Eastern is now 93.72%. So we gathered another 0.4% of the shares. So looking ahead, I would have to say that we're still confident about the asset market to remain resilient. And we are also thinking there are other growth opportunities as well. So outside of Singapore, countries like Malaysia and Indonesia should continue to benefit from the global repositioning of supply chain. And one of the things that we do, again, as we say, we want to onboard more clients, is we are also beginning more active to cover some of the bigger MNCs as they continue to use ASEAN more for the supply chain and we could be taking more risk on the MNC as we finance the receivables of the supply chain companies. So this goes also hand in hand with our increase of supporting in particular Chinese companies coming to this part of the world or even Korean companies, Taiwanese companies coming to this part of the world where we can help them and also provide them the receivable financing as well. as part of it, but also gaining the capital account with us, meaning the working capital account, which is a part of the growth of our plaza. So I think if economic activities and settlements for China improve with the implemented stimulus measure, then this could also provide more wind in the south. So to wrap up, I think we are on a firm footing to deliver on 2024 targets. and our well-diversified franchise again shows that it works. We look at our insurance income and our wealth income as NII become quite flat in terms of growth the last quarter. And I think our strong financial position also will allow us to continue to capture growth and give us confidence in generating shareholder returns as well. So I think we'll I'll stop here and pass it on to Q&A and Ching-Ching.

Okay, we also have a few of our media friends online. I'll start with Em here first, with us. Yes, just to continue the theme of these earnings. Since you have very high excess capital,

Could you say on fully fresh in CET1, how much excess capital do you have and what's your plan on capital management? Since your two rivals already mentioned Capital Buy Bank, is it something on the cards at OCBC? Second question, I would like to get your 2025 outlook that includes profit, NII, NIM and wealthy growth.

You want to take the capital? I'll take the capital management question. You mentioned the fully phased-in, capital, common equity, Q1, and I wanted just now, fully phased-in is 2.6%. We don't release, we don't unveil excess capital, but just suffice to say that we have always been saying that over the medium term, we want to have our formal equity tier 1 at about 40%, minimally 40%. And why 14% is really because that was the expectations that our rating agencies has conveyed to us for AA rated banks. We want to definitely maintain our AA rating.

So 40% is minimally what we want to do.

and over the medium term. And talking about capital planning, capital planning to us fundamentally, the most important is to be able to have enough capital to support our franchise growth. As outlined in our corporate strategy, we do have a lot of growth ambitions and a number of exciting plans in the pipeline on how we can use capital. Secondly, Navigating uncertainties, as we can see today, there are really quite a lot of uncertainties in the country. Like what Helen has actually highlighted as well. And finally, providing capacity for us to be able to capitalize on any inorganic opportunity that crop up on and off again, right? and we do have small bits of that in the form of ET Bank Commonwealth which we announced in 2023 and then just completed a merger in September 2020. And then there's also mMapLife that our Great Eastern subsidiary has outlined and of course not forgetting our exercise for so these are areas of usage of capital and we do have quite a fair bit of this because we are really excited about the future and you know providing enough capacity for Helen to go shopping yeah we particularly like portfolios vote on part of acquisition yeah so these are areas that we have share buybacks and cancelling the shares is indeed one of the capital management tools that can be used alongside delivering dividends. Maybe I should rephrase. For us, looking at share buybacks really depends on the situation as well. Currently, we do have share buybacks, but we don't cancel the share. It's to meet our employee share plan. And why do we buy back share to meet our employee share plan? It's because we don't want to issue new shares to fulfill such employee share plan, although we do have to mandate that it's fresh every year at our AGM to do so. Now, why do we not do that? It's because we don't want to dilute our existing capital gains, right? By issuing new shares. Now, on the share buyback to pencil shares, it depends pretty much on the situation. As of now, you know, whenever we have, let's say, share trading or share price above price to book of one, my preference would be not to do share buyback and canceling the share, but to deliver more in terms of dividend. And also, of course, we fundamentally in capital planning, you know, we really take into consideration the usage of capital, the usage of funds. We have already outlined exciting prospects in relation to that. So I'll stop there in terms of share buyback. It's a tool that can be considered, but not at this moment for us.

Just to understand your comment on valuation a bit better, you say share buyback with cancellation depends on situation. Thank you.

You have a second question, which is asking me to tell you a lot of things for the future. We will have better guidance by the time we go into the final results announcement in February. But just have some discussion on what you asked. Of course, we are all projecting interest rates to further come down. And indeed, last night is another cut of 25 basis points. Although the results of the Trump administration may throw different lights on the interest rate environment, but before that, we're still thinking that with interest rate coming down and with the way we grow our business, we do view that the growth of non-II should be in double-digit again next year, which should be able to counter the fall of NII, right? Form of NII also would be mitigated by higher volume as well. So if you ask me, given the original scenario where the market generally talk about a further interest rate cut, we're still thinking that or we expect profits to be quite stable for next year. When I say stable, compared to this year. a lot of the growth initiatives we were talking about, right? But I'll give you better guidance when we come to February. So I just say that that means that our wealthies, we're expecting wealthies to do better. And with the AUM that is increased and with the hiring that Bank of Singapore has been doing, remember Jason mentioned you want to grow to 500 numbers strong in the AUM. This year, he added quite a number of RMs already. So hopefully, we can put, of course, some of the net inflow of funds. And if interest environment is coming down, our customer will be a lot more active. As you can see, actually, the last quarter, wealthiness has been going really well. So that is on the non-II for LIMB. It also depends on whether we can grow loan faster as well. But with interest rate coming down, of course, NIM would always have pressure. Pressure doesn't mean that it is exceptional pressure. It's just that you will indeed see that we will be able to protect NIM to an extent of building more CASA, lower cost CASA. As we said, SME account opening, consumer account opening, and more account open with us, then you would have more CASA coming in. So this is to protect them. But again, volume is still important. So I do see that next year, loan growth have a bigger potential compared to this year. But I will tell you the whole year guidance. in February again. So I think these are the few things I can discuss and disclose. Before you ask, I probably would just want to mention, when Jingyue talks about how we have various plans, right? I do want to mention that there was a question about the center, the property, right? So before you ask, we did talk about exploring and I just want to say we have made certain progress. So certain progress that may need us to have more to say by next year. But I can't disclose any details. But when we say more to say that if we do embark to redevelopment, of course, that need capital as well.

Is this fully, is the plot ratio fully reduced? Or is there, do you have any sense?

This is the details I can't tell you. Oh. Because we are still planning, but I just want to say that we make progress.

It's not the center, right?

You know, when we have center east, center south, that's the whole thing. Okay, I'll come back to you. We do have that number. will give you the details.

And the capital.

But we want to preserve this building. We want to preserve this building.

Okay, but at least today is about results.

So, especially about results, please. Sorry, I jumped to say, but I thought you may ask, and I want to relate that to some of the things that we are doing here.

But I just need for capital, right? I just want to bring back to the dividend part, because when we had a chat, you and I, one-to-one, sorry everybody, you said, I mean, I did ask, and you said that you prefer dividends to share buyback at that time.

I have a question regarding the impact of global minimum corporate tax

and sector would be most affected.

This Minimum Global Tax Alliance will take effect on 1st Jan of 2025 and typically for countries which have tax rates below 15%. Because the minimum global tax rate now is 15%. So the three countries that are relevant for OCBC will be Singapore, Macau, as well as UAE, right? UAE.

I think you mentioned that I think also it will be Singapore, Malaysia and Hong Kong. I think she's also talking also within our network, but our key markets would be Singapore, Malaysia and Hong Kong.

There are also some incentives in Singapore, depending on the sort of activities, where we have the financial services sort of incentives.

that our overall growth even for this year, our effective tax rate are already quite close to like 15%, you know, because of the blend of our revenues and countries that we operate in. So when this take effect, the impact will not be overly significant for us.

So what causes the, what causes some tax rates to go up? I mean, what causes some tax rates for some banks to rise? Yeah, because we need to comply with this minimum 15% global tax. When you do trading and all that, is it tax-free?

No, it's not tax-free. But in Singapore, some of these could have the financial services incentive scheme where the tax is actually lower. It can be 5% or 10%. So it also depends on the mix. The effective tax rate overall for OCBC Group is actually close to 14%

I think we have been quite competitive in terms of our mortgages, right? So we have also increased our market share within the mortgage space. So I think right now we are around, I think quite close to 80% already.

So up from last year.

I guess Japan is asking whether we are going to cut mortgage rates.

How are you going to respond to those?

We will always adjust. We will look at the market and we will adjust accordingly. It's not like somebody cut, we will definitely just cut immediately. It depends on how our pipeline is like, depends on how our relationship with the customer is like. And I think the last two years as we improved in the fixed rate mortgages. I mean, you know that the life of a mortgage holder with any bank is quite short. So we actively look at repricing and how we manage the book.

I think what we're saying is that we have grown our mortgage book very well.

Yeah, despite local banks pricing.

Coming back to the NPA that you mentioned, that's a new one from Hong Kong.

This would be quite idiosyncratic. We're not seeing it as like the whole industry or our book. Having big pressure is not like that. And for this particular one account, it is largely secure with LTV around actually with an average LTV below 50%. But, of course, we look very keenly at, in particular, the Hong Kong office sector because residential is a lot more stable. And when we say office sector, we started managing it actually much earlier. and just want to share with you one data point for Hong Kong office sector we have reduced exposure by 50% over one year from last September to this September this is due to our active engaging clients to advise them to deleverage much earlier on and also that's the reason why we actually reduce our outstanding and will continue to help clients to how to reach the market and to leverage earlier and later. So hopefully it will, it's favouralised.

I think Jody has a question too.

Just very basic question. I think back in August, Kenneth said the bank's house view is for two rate cuts by the Fed this year, which has so far materialised, and possibly for the five next year. So does this still hold with Trump presidency in mind? And how much of an update on 2024 forecast was said

and inflation, because we think that Trump will create a lot of inflation. And inflation leads to interest rates staying higher. Thank you. I think our plan has been on two to three human cuts this year, plus five next year. I think that is what the interest rate normally is. would think as well. So if a lot of people are now saying that potentially there's still rate cuts, but maybe stop in March, right? Some people are saying that industry is changing the view. I would not be telling you now what views we adopt. It just happened last night, right, in a way. But indeed, if interest rate is a reduction stop in March, and it does provide potentially higher limit for the rest of the year. But again, ASEAN currency is not directly linked with US dollars. We have to always remember that. Different countries' currency interest rate respond a little bit differently. Of course, in general, interest rate will go down together alongside the US Fed cards. in that sense. So I think we won't be able to say whether we would change the outlook from five cuts next year to three. I think it's too early to say. We don't want to. We haven't even heard from the president hasn't sworn in yet. So to an extent, I think it's a bit early to tell. But I think by early next year, we'll be seeing what our plans are. We'll be able to give some more guidance on NIM for the year, on loan growth for the year, and also for expected wealthiest growth for the year, etc.

I think we always talk about the uncertainty, which we have seen happening.

long before, I mean, don't talk about Trump 2.0, but even before that, when Trump first, in his first term, right, or whatever, you know, when we refresh our corporate strategy, we are always talking about the flow, intra-Asia, that we're focusing on. I don't think that trend has changed or that trend has deteriorated. because the more conflict, trade conflicts there is, I think Asia do trade more with Asia in that sense. So it actually fits very neatly in our corporate strategy when we refresh it in 2022, right? And the initiatives we talk about in growing wealth are the initiators. We're talking about capturing more corporate clients or SMEs in the supply chain under China Plus One. That is materializing as well, and we continue to see the flow. And nowadays, we talk more about China Plus N rather than China Plus One because Chinese companies are not just going to one country like Vietnam for no-cost manufacturing, right? Chinese companies are doing a lot more in the region don't go to Indonesia, but everybody come to Singapore first to start the company. Before they, they always use Singapore as the center to manage their investments into Indonesia, Malaysia, Vietnam, etc. So that is how we have seen flows coming in and we benefiting under our corporate strategy. So, geopolitical tension will be more fierce, I think. It would be... You cannot draw an equal sign. You just have to look at what's the impact of that and then how we capture opportunity. And I was just saying exactly that would have an impact to cost Asia to trade more of Asia, right? And then with more shift of China manufacturing or investments coming out, then it does benefit a bank like us. And that is why we have been preparing ourselves by adding more China... China officers in that sense sitting in various presence in ASEAN in order to be able to engage and we are seeing the China Plus One not just for Chinese customers. It is for the Koreans, it is for the Chinese, it is also for some of the MNCs that have to actually reshape their supply chain by moving some of the supply chain in ASEAN. So I think that benefits us in that sense.

On the flip side, do you see more need to lyrics in China and Greater Bay Area because you have been quite bullish there?

When we say bullish about China, we were always saying that we are focusing on Au Bang. But today we are focusing on Au Bang, China Au Bang. So if you capture wealth, the risk is not so much about that. And that should say the full stop. Otherwise, on wealth, I mean, we're not talking about the risking. But if you're talking about exposure to Chinese companies lending money to them, We are always saying that we have been serving Chinese companies outside more than within China. Within China, our exposure is more really to the SOEs and to leading companies. But our proposition is always helping them to come to ASEAN. And I think we use that sort of number before every one dollar we lend in China, that will be at least $4 or $5 a land outside of China, which is very clear if you look at page 17. Page 17 of Chin Year's Debt, right? We have a breakdown of the Greater China Loan Boat, and Hong Kong is $32 billion. Offshore is $23 billion. China is only $7 billion. So you can imagine 7 billion versus, and if you consider Hong Kong part of China, but however you consider, meaning 7 versus offshore of 23, that is already 1 versus 3 point something, or 0.24. And of course, part of that is both in Hong Kong as well.

Further on China's question about

to set up shop here. Are they only involved in business around ASEAN, or are you seeing maybe them setting up JVs to enter US, like a bit of Singapore washing?

Interesting question. I don't think you can really do it. You can really do it to say that because companies, you always look at the ultimate beneficiary owner, right? A China-owned company is a China-owned company. Not sure how we watch it in that sense. But when we say, are they only focusing in ASEAN? Probably not. We do see some Chinese companies, especially in new economy, they would take Singapore as the international business headquarters. Some of them do. I have one client that has set up their international quarter in Singapore. but also focusing on the Middle East, not just ASEAN. But a lot of the companies that come now, I mean, the SOEs, they've been in ASEAN long ago, and you do know that because Singapore, we are a very big commodity trade center. So the big POEs do trade using Singapore as a trade center, right? But we're seeing a lot more of the, what we call the new economy company come in. a lot of them's logistic and I mean fintech is already long, long here, right? And then you have other things like research, medtech, architect, some looks at Indonesia on e-commerce because Indonesia is going to be the fast-growing consumer market, right? And some look at linking up with, as I said, with the Middle East as well because we do see Middle East sovereign companies and Saudi, for example. So I think these are all new developments that we think we can capture.

Can you ask specifically about Johor as well? What are you doing in Johor with the special economic zone? There have been some incentives to set up more branches. Do you plan to do that? are you planning to invest more? Are your customers moving to your board?

I think it is quite an early stage of the initiative. We're excited about it. We're excited because we've been in Malaysia as long as we're in Singapore, in that sense. So we actually do have quite a good presence in Johor already. Doesn't mean that, but that is under Malaysia, right? But we want to capture a lot of the initiatives both governments are looking at, and we will be. We will be. I wouldn't even say tracking it. We will be actively involved in it. Being, as we said, we are a very old bank in Malaysia and also a very old bank here. And we're going to support our customers as they develop their business plan for using the Johor information.

I'm wondering about Johor companies. Do you support Johor companies? And there's also this initiative to set up

will you consider for all options at the moment? But it is, I mean, you need some concrete planning exactly how to execute them. And we are at that stage. But we are big in Malaysia. I mean, we have big supporting Johor companies. I think just in Johor, we have seven branches. If I'm not wrong, but I need to confirm that. That's fine. So my memory is quite good. So the seven branches. So we're already supporting Johor. Actually, Johor is a very affluent area. So we're keen about Johor development.

I mean, these areas that we're looking at, I mean, people looking at sustainable energy, trading, electronics, healthcare, data centres, I think we're also seeing interest from customers as well.

We've seen new accounts come in outside of Singapore

Singapore's SME scene is quite vibrant. As Singapore continues to capture the growth in the region, so the domestic companies are also growing quite well. And we're beginning to see quite a lot of what we call serial entrepreneurs. meaning they continue to bank with us and not just in one particular sector. As they grow faster, they are involved in different parts or they may be in their own industry, they are in the whole chain in the industry. So they will open different accounts with us as well. So we grow quite a lot of accounts with domestic owners. in that sense. But it's important, that is why it is so important we have to be very digitally prepared. Because most of the new SME companies, they're very digital, and they need it. They are smaller companies in a way, and they cannot afford to have they cannot afford to do a lot of their own analytics or I mean they know the market but we have them to shape the business plans and the way we do have a service that actually we send them back how we analyze their dealing with us we tell them your customer for example F&B simple as an F&B shop right if we have a lot of the payments data so if If those clients are using OCBC card in particular, we can share your age group of your clients is actually between this age to that age. So we actually can have data analytics that we can help our customer. and we have used, we have launched two years ago because we have enough data analytics that we know which SME customers are doing better and on a trajectory of growth because we can use the data to analyze and we approve loans for some of these SMEs. So we already offered to them before they asked for it and we have launched that in Malaysia last year. Response has been good. This is important because you speed up the way you serve your SME customers and you have them to grow. So a lot of many other things recently we also launched in particular for women. So for women owner, we have launched something that we actually cultivate. I think we issued press release to talk about some of the characteristics of female entrepreneurs. In general, they are more cautious and we know how to deal with them also better in order to support female entrepreneurs. So there are many ways that we're doing to make sure that our SMEs continue to flare well. It's very important because if you look at our commercial banking, the contribution to deposits is about 20%. And these are mainly working capital accounts. Once they bank with you, they trust you, they don't move the money away. And this is the money that they use day in, day out to do business. The float is always there.

Okay, because of interest of time, if any urgent, it's maybe just one last question.

One last question. Your securities book. I know interest rates, the yields are so high now. Yes. I mean, are you going to re-price them now, or do you want to... Do you have anything to re-price if you re-price them now to firm up your name?

We are talking about our debt scheme. I mean, we have been balancing that over the course of the interest rate cycle. And then, if you... It's like what we call the FEOCI, Fair Value Journey. used to be quite negative and interest rates were declining so quickly, rising so quickly during the low of the 20s. Now the negative has sort of gone off. So the fair value to oppressive income has actually tapered off. And even within there, we have been lengthening over the course of the . All of the banks Actually, the above 150% is actually very high. Now it's actually a much better sort of use of, yeah. In the 140-something percent now, it's actually much more better. It's better. It's more efficient. It's very efficient.

I think we can go on. Before we take it offline. All right. Anyway, thank you. Thank you very much for joining us this morning.