Oversea-Chinese Banking Corporation

Welcome to our first quarter results briefing. So I guess we go straight into it since we're all familiar faces. Let Chini start.

Good morning, everyone. Thank you for taking time to join us today. For the first quarter of 2025, group net profit was S$1.88 billion, up 12% quarter-on-quarter, but down 5% compared to the record quarter a year ago. ROE was 13%, on an annualized basis. Total income grew 7% quarter-on-quarter and 1% year-on-year to $3.66 billion. Net interest income was 4% lower at $2.35 billion against a backdrop of declining interest rates. I will cover more on NII in my later slides. Non-interest income increased 36% QRQ and 10% year-on-year to $1.31 billion, driven mainly by stronger wealth-related fees, trading and insurance. Cost-to-income ratio improved to 38.7%. Against last year, loans and deposits grew by high single digits. Asset quality remained healthy with NPR ratio at 0.9%. Total credit costs were higher at 24 basis points on an annualized basis. We adopted a prudent approach to set aside additional preemptive allowances in view of the current macroeconomic uncertainties and heightened geopolitical tensions. Our capital position remained robust. Transitional common equity tier 1 ratio was 17.6%. Fully face-in CET1 ratio was 15.5%. Moving on to slide 5 for performance highlights of our three key business pillars. The strength of our diversified franchise is reflected in the performance across our banking, wealth management and insurance pillars. Banking operations profit was unchanged queue on queue. Our 15% increase in non-interest income compensated for the lower net interest account. Wealth management income and assets under management were at record highs. Wealth management income was 29% above the last quarter at $1.37 billion. It now contributes more than a third or 38% of our group's total income. AUM rose 2% from last quarter to $306 billion from continued net new money For insurance, its profit contribution from GEH increased significantly to $322 million. This was driven by stronger investment performance as well as underlying insurance business. If you recall, in Q4 of 2024, we recognised a one-off negative impact from the changes in the medical insurance business in GE's key markets, Singapore and Malaysia. Turning our attention to net interest income on slide nine. Net interest income for first Q of 25 was 2.35 billion, 4% lower compared to a quarter ago. While average assets grew by 3%, this was more than offset by a narrower NIM and the effect of a shorter quarter. NIM compressed 11 basis points quarter-on-quarter to 2.04%. This was partly due to the declining loan yields in the first quarter of 2025 after taking in the full impact of the Fed rate cuts in late 2024. Almost three-quarters of our loan books are denominated in Sing Dollar, US Dollar and Hong Kong Dollar. And these are predominantly on floating rates. Notably, the pass-through effect was more pronounced for Seng Dollar and Hong Kong Dollar rates, which experienced much sharper decline compared to the Fed rate cuts. Consequently, the decline in our loan yields outpaced the reduction in deposit costs, which typically reprised much slower than loans. In addition, NIM was NIM also declined as part of our planned effort to defend that interest income as we intentionally deployed deposits to grow our liquid assets. This was part of our active balance sheet management strategy to defend our income over the long run, especially as we expect further Fed recuts in the second half of this year. Our exit NIM for March was 2.03%. As at the end of March 2025, NIMS sensitivity based on one basis point drop in rates across our four major currencies of SingDollar, Malaysian Ringgit, Hong Kong Dollars and US Dollars was around 5 million on an annualized basis. Non-interest income grew to reach $1.31 billion. The growth was underpinned by higher wealth-related fees, trading and insurance income. I will elaborate more on our fees and trading income in the next few slides. Fee income for first Q of 25 was up 6% Q on Q and 14% year-on-year, led by higher wealth-related loan-related and investment banking fees. Total fees also reached the highest level since the start of 2024. We continue to see good momentum in wealth management. Both wealth management fees and assets under management delivered double-digit growth year on year. Our AUM rose 12% to $306 billion. led by continued net new money inflows. In first Q of 25, we saw net new money inflow of 5 billion Singapore dollars. About 60% of our AUM are placed into investments across all our world wealth segments. For the first quarter, trading income moved 31% quarter-on-quarter to $396 million. This was underpinned by stronger customer flow and non-customer flow trading income. The rise in our customer flow trading income was contributed by both wealth and corporate segments. Turning on to operating expenses. Operating expenses for the quarter declined 9% from . The reduction is largely attributed to the higher costs incurred in the fourth quarter of last year to fund our strategic initiatives and to pursue loan business growth. Cost-to-income ratio for Q1 of 2005 was below 40%, I mentioned 38.7%. Turning on to portfolio quality, our overall loan portfolio quality remained resilient. NPL ratio was 0.9% lower than a year ago. We have reviewed our portfolio and assessed that trade tariffs have first-order impact on 3% of our loan book. We further stress tested our portfolio for potential vulnerability and assess that our portfolio remains resilient. First Q25, total allowances were $212 million, up from the prior quarter and a year ago. This was mainly driven by allowances for non-impaired assets. Allowances set aside for non-impaired assets was $118 million, comprises mainly the pre-emptive allowances that I mentioned earlier. Total credit costs for the quarter were an annualized 24 basis points within our credit cost guidance of 20 to 25 basis points. Cumulative allowances rose for the first quarter as we continue to prudently set aside allowances. Our group's NPA coverage ratio continued to trend higher to 162% as of March 2025. Allowances for non-impact loans were at 0.9% of total performing loans. Loan portfolio continued to be well diversified across geographies and industries. Our group loans grew 7% year-on-year to $322 billion. We saw increases in residential mortgages and corporate loans led by the transport, storage and communications sector, which is in line with our group's strategic focus to capture opportunities in the new economy sectors and high-growth industries. By geography, the year-on-year increase in loans was led by growth in Singapore as well as in our overseas markets such as the UK and the US. Our group's strong and stable funding position was supported by customer deposits which represented about 80% of our funding base. customer deposits was 9% higher year-on-year at $403 billion from both CASA as well as fixed deposits growth. Over the same period, lower-cost CASA balances grew by 12% while CASA ratio improved to 48.9%. On capital, our group's capital position remains sound with transitionary CET1 ratio at 17.6% up from 17.1% in the prior quarter. The increase was mainly from profit completion. CET1 ratio would be 15.5% on a fully phase-in basis. Proforma CET1 ratio will be at 14.5% after the payment of our final and special dividend for FY24, which will be paid today. That will bring us closer to our target of 14% CET1 ratio. With this, I end my presentation and pass the floor over to Helen.

Good morning everyone again. I think Chien Yeh has delivered quite a lot of information. I just want to maybe add a few points. I think overall, our first quarter results does reflect the strength of our diversified business franchise, which enables us to deliver a very resilient set of results. Total income grew quarter-on-quarter, supported by broad-based non-II, across fees, insurance, trading, etc. This more than offset the lower NII. Wealth management, income and AUM are doing fine, they are record highs. and actually talked about $306 billion and rose $7 billion and actually $5 billion is from net new money inflows both in Bank of Singapore and also our CFS business on Premier, Premier and Premier Private. So cost and income ratio came back down below 40%. but it is important, 40% important that we continue to exercise a very tight cost discipline in view of the uncertainty in the market. Sometimes people always ask me about investment, are you stop investing and all that. I think we have to look at it in two ways. A lot of investments is just is building also for the future. Some are invested to continue to make your BAU or your business as usual better. But there are costs that are variables that we can have more discipline on. It is those costs that we can... I mean, in a worse market, for example, maybe you travel a bit less. Maybe you do less marketing costs, right? You hold a few fewer events, but it doesn't mean that you are not doing things because your clients are expecting you also paying more time, more focus on helping them as well. So we will continue to execute a very tight cost discipline. And with this say, we continue to see deposit and loan inflows as well. Asset quality, we want to highlight NPR ratio at 9%. We always took a prudent approach to look at whether we are comfortable with our allowances. And given the uncertainties in the operating environment, we did say that we put aside more ECR 1 and 2. And we continue to be very vigilant on how we underwrite transactions, how do we monitor our portfolio, doing the right stress test, looking at how we do it and indeed a tariff situation. We're quite prepared for it and indeed has already think about how our portfolio is like. I think Julie talked about first order of impact. Of course, you define, you look at the industry your customers are in and talk about what are the second order. And ultimately, those customers, that is what we call a safer portfolio, which is a predominantly more domestic portfolio. domestic driven. I mean, the demand and the business is more domestic. And this includes utilities, local real estate, digital centers. You talk about financial intermediaries, etc. This would be the sectors with a strong domestic focus that would be much, much less impacted by terror. So we are very prepared and we analyze and do stress tests like this. We also focus on achieving our strategic goals despite uncertainties. So we're saying that performance for the first quarter was resilient, but indeed focus is on the future. On the future is I think you all know we talk about announcing 2023, a three-year plan of bringing incremental revenue, right? So as two years has passed, we say that we overshoot our target a bit. by the end of last year, by achieving close to $2 billion out of the three, was supposed to reach $1.5 billion last year. This year, with what we have done well, exceeding our target last year, I think we are quite comfortable still to deliver the $3 billion this year. But we don't stop there, right? So actually well in advance in last year, we look at what is it? Is our strategy still valid? What else are we doing in order to continue to be able to grow our bank and grow the group and also have our customers going into the future? And you recall last year, we set up a strategy and transformation division as early as in April last year. and we know, I mean, as we look at the world, right, and we're quite well prepared for the type of situation. I talk a lot about being vigilant on your portfolio, but also how do we react and how do we plan, right? And in our strategy, we have a special focus on handling a situation like what we see today, right? Of course, nobody exactly know what Liberation Day means and how much is a tariff that was sort of talked about, right? But what we're seeing is we have been having a strong focus on how we deal with situation like this, So we have a focused team working on situations. So stress testing is one thing, but thinking about how that impacts our customers, how does that impact our own revenues, where we have to tighten and where we have to actually expand to capture more revenues, these are all in the planning. and with a very focus, a special focus on what if the world become like this or what if the world become not like this. So I want to emphasize that. And of course, IMF in reaction to the term situation have also forecast global growth downward, right? And escalating trade tensions as well. So it is indeed a very unpredictable environment, but the whole point is about being nimble to recognize the potential impacts, but also limbo to identify the opportunities that arise and then invest in, plan to invest in the right manner so that we will be able to continue to deliver resilient results. Also actively engaging our customer and preparing them. So just to want to say the first quarter, we did say wealth management fees are fine and stock market was doing not badly, right? and indeed want to just give you a data point. And that particular week of very high volatility, we actually have very low amount of margin calls, meaning we talk to our customers well in advance to prepare for uncertainty. If you're not prepared, maybe there's a lot of customers that suffer, right? So I think we support all of this with a very strong balance sheet, as Chin-Yi presented. our capital position and indeed our well-diversified business franchise has helped us to deliver this balanced earnings throughout the cycles. So flipping the slide, in view of the uncertain macroeconomic backdrop, we're still keeping maintaining our financial targets for the reason that, as we said, we have plans to hopefully to achieve these targets. Doesn't mean that this is set in stone, right? The market is still uncertain, but at this point, we do want to maintain the financial targets. The exit limit in March is 2.03%. We still plan for three rate cuts the rest of the year, but we don't know yet whether that would suddenly come. It looks like that potentially not in the second quarter, but maybe at the end of the second quarter, right? So we have actually attracted more divorces and then invested in liquid assets, as Jeannie has said. The target growth in liquid assets for the first quarter has been achieved. We will moderate the growth of liquid assets in the coming quarters. We have also announced the lowering of some of our deposit pricing. So this will be able to help us to proactively manage our funding costs. So we'll see. We'll continue to be vigilant and look at the situation. Loan growth, we maintain at mid-single digits. Though if you look at these five points, I would think which ones probably see more happens is probably really low growth, especially if the market continues to be very uncertain. Doesn't mean that we don't engage customer and customer don't need money. Refinancing is always there. And we do think that there will be some flag to quality, meaning we probably will be able to continue to keep customer relationships well. and continue to take in more deposits and with customers talking to us about their investment needs. But if the economic situation is going down, meaning economic growth is slower, of course, loan growth will be lower as well. So cost-to-income ratio, we maintain low 40s. and credit costs to remain between 20 to 25 basis points. And I really want to say that we remain committed to deliver the 60% dividend payout ratio, which we have announced, and coupled with our share buybacks over a two-year period, which we have started. So, of course, bearing unforeseen circumstances, right? But it is what we are working towards. So with that, I pass it to Jingjing. Thank you.