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.