Oversea-Chinese Banking Corporation

Good morning, everyone. We have our media friends with us here, and we have some of our analysts on virtual. First in the room is somewhere and of course from their various offices. So we are going to go through our results for first quarter this year. And because of the HSBC Indonesia International Wealth and Premier Banking business that we have run is under a non-disclosure agreement. So many of the numbers we will not be able to share and we ask for your understanding on that. So with that, I will now pass the time to Genius and take us through your results.

Good morning, everyone. Thank you for joining OCBC's first quarter 2026 results briefing. OCBC delivered strong performance for first quarter of 2026. Group net profit was S$1.97 billion, up 13% Q-on-Q and 5% year-on-year, on the back of record total income. ROE was 13% on an annualized basis. Net interest income declined amid lower interest rates, partly cushioned by growth in assets. I will cover more in the later slides. The NII decline was more than compensated by record non-interest income, led by strong growth of our wealth management franchise. Non-interest income grew more than 20% Q-on-Q and year-on-year, with broad-based double-digit increase across fee, trading and insurance income. Despite the escalation of conflict in the Middle East during the quarter, wealth management fees recorded robust growth and our customer flow treasury income reached a new high. We continue to be disciplined in expenses with cost-to-income ratio at 39.3%. Loan and deposit growth momentum was sustained up 9% and 10% year-on-year respectively. Our asset quality remained resilient with NPR ratio stable at 0.9%. Factoring in the heightened macro uncertainties, additional management overlays were prudently taken this quarter with total credit costs at 23 basis points on annualized basis. NPA coverage rose to 163%. Our capital position remains strong with fully phased-in CET1 capital adequacy ratio at 15.2%. Moving on to our performance by key business pillars on slide five. We continue to deliver resilient growth across our diversified franchise of banking, wealth management and insurance. banking operations profit was up 9% Q on Q and 6% year on year, driven by strong fee and trading income. Wealth management income rose 14% Q on Q and 11% year on year to 1.48 billion, comprising 39% of the group's total income. This was supported by growth across all segments, from private to premier banking to insurance. Our wealth management franchise continues to attract net new money, with $5 billion of inflows for the quarter. Banking AUM moved 12% year-on-year to $342 billion and was broadly unchanged Q1Q due to a decline in market valuations. For insurance, profit contribution from GEH was $323 million, up 44% Q1Q and generally steady year-on-year. Underlying insurance performance was strong, partly offset by a lower valuation of investments, including those from shareholders' funds. total weighted new sales and new business embedded value grew 60% and 31% year-on-year respectively, led by strong sales from Singapore across both agency and banka channels. NBEV margin improved to 48.6% from 43.1% a year ago. Moving on to more details about good performance trends starting with net interest income on slide 8. NII for Q1 of 26 was S$2.22 billion, 5% down year-on-year and 3% below Q4 of 25. on a day-adjusted basis, NII was slightly lower by 1% Q on Q. To highlight, Sora dropped more than 160 basis points, Hybor more than 120 basis points, and Sofer more than 60 basis points from a year ago. These key benchmark rates were also down Q on Q. The impact of lower interest rates was partly cushioned by average asset growth and assertive management of deposit costs. Average assets grew 4% Q1Q, driven by loan growth and a 7% or $12 billion increase in average balances of high-quality treasury assets. Surplus liquidity from robust deposit growth and a pre-emptive increase in wholesale funding due to macro uncertainties were deployed into NIH-accretive high-quality assets. These treasury assets were dilutive to name but added to asset yield compression First Q26 neem narrowed to 1.76%. Our March exit neem was 1.75%. Income from treasury assets mitigated about 30% intend to continue to build this up, but likely at a slower pace than first quarter. NII's sensitivity based on one basis point of crop in rates across our four major currencies of Sing Dollars, US Dollars, Malaysian Ringgit, as well as Hong Kong Dollars, was about 5 million on an annualized basis, with SingDollar being the key driver of the sensitivity. Moving on to non-interest income. Non-interest income grew by more than 20% to 1.61 billion, which is a quarterly record for us. Fee trading and insurance income all grew by double digits and Q1Q. Non-interest income now comprises 42% of our group total income. Our first quarter 26 fee income rose 12% Q1Q and 24% year-on-year to $675 million, a few million shy fee growth momentum was robust. This is the third quarter in a row that our fee income was above $600 million. In particular, all wealth segments continued to deliver strong performance, reflecting the results of our ongoing efforts in growing our wealth management franchise. Wealth fees rose 34% year-on-year, driven by higher investment activities from customers and our expanded AUM base. Growth was broad-based across all product channels, including private banking, bank assurance, treasury products, unit trusts, brokerage, as well as fund management. Brokerage and fund management fees are now reported within our wealth segments to better reflect the full spectrum of wealth-related products. Moving on to trading income. First Q26 net trading income grew 10% Q1Q and year-on-year. to $434 million underpinned by record customer flow income. Customer flow income was up 35% year-on-year and crossed $400 million for the first time, driven by both wealth-related activities and corporate customers. Increased market volatility and demand for hedging amid economic uncertainty continue to support transactional flows. Moving on to operating expenses. We continue to maintain cost discipline while being targeted on our investments to support our next frontier corporate strategy. 1Q26 operates were up 6% year on year, mainly due to higher costs to support business growth and continued investment in technology. Against 4Q25, expenses were down 4%. Our cost-to-income ratio was 39%. Moving on to loans. During the quarter, we expanded our loan book by $6 billion or 2% to $347 billion. Growth was largely broad-based across industries. Compared to a year ago, loans was up 9% year-on-year on constant currency basis. By geography, this was led by Singapore and Malaysia as well as our international markets like UK and US. The sustained momentum in loan growth reflects the continued traction in our strategic focus areas in wholesale as well as consumer and private banking segments. This includes Singapore residential mortgages, wealth financing, T&T industries including digital infrastructure and sustainable financing. Our sustainable financing loans increased 17% year-on-year to $59.7 billion, now comprising 17% of our total growth rate. Our loan portfolio quality remains sound. NPL ratio was 0.9%, unchanged for eight consecutive quarters. NPAs were $3.12 billion, 4% lower Q1Q as new corporate NPA formation was more than offset by net recount risk and upgrades. 1Q26, new corporate NPAs were an annualized 14 basis points of period start lows. This is lower as compared to 39 basis points for FY25. We are highly watchful of the ongoing Middle East conflict and potential downside risks. We note no significant credit deterioration and continue to refresh our stress test. First order impact is not material at less than 3% of loans or 1% of total assets. This includes petrochemical and refinery sector and other direct Middle East nexus. We continue to actively engage our customers and are closely monitoring for potential second and third order impacts should the situation become protracted. Total allowances for 1Q26 were $216 million, up 8% Q on Q and 2% year on year. allowances were mostly for non-impaired assets. Additional management overlays were set aside in relation to the elevated macro uncertainties, reflecting our prudent and proactive risk management approach. Total credit costs were 23 basis points on an annualized basis. With the increased in cumulative allowances and dropped in our MPAs, MPA coverage ratio was higher at 163%. Our performance loans coverage ratio held steady at 0.9%. Our coverage levels positioned us well to navigate the uncertainties. Moving on to deposits. customer deposits grew 10% year-on-year to $444 billion, driven by 13% growth in CASA deposits from both wholesale and consumer segments. CASA ratio rose 1.3 percentage points year-on-year to 50.2%. For the quarter, deposits were up 4% and grew loan deposit ratio was 77.2%. The growth in our well-diversified deposit base enables us to continue expanding our balance sheet and increase funding resiliency in an uncertain environment. Our funding base remains balanced with close to 80% from customer deposits. All liquidity and funding ratios remain well above regulatory requirements. Wrapping up on captive. Transitional CET1 was 17.0% and fully phased-in CET1 was 15.2%. On a pro forma basis of fully phased-in CET1, The payment of our full year 25 final and special dividend will reduce CET1 by 1 percentage point. The acquisition of HSBC Indonesia's International Wealth and Premier Banking, which we announced earlier this week, will utilise up to 0.2 percentage points of CET1 when completed in the middle of next year. Nick Long will share more of this in his presentation later. Our capital position remains strong, allowing us to support strategic growth opportunities and provides buffer against uncertainties. Our CET1 target of 14% over the medium term remains unchanged. With this, I end my presentation. Thank you very much for your attention. I will now hand the floor over to Teh Long.

Thank you, Chin-Yi. Normally, Chin-Yi's presentation is the main cause, but today we have two main causes because of the HSBC acquisition. First, let me give a very quick reflection of our results. Maybe you can move the slide. For treasury income, we have been focusing on growing the customer flow about the treasury income and it has come in very strongly at a new high as well. Now all this work was achieved in the context of a low interest rate environment. So as a result, our year-on-year growth in terms of profit is 5%. Outlook wise, we remain very concerned about what's happening and therefore the prices. So to be prudent, although we don't see credit quality issue in our portfolio, to be prudent, we have put in some provisions, general provisions for non-impact loans. It's really a third-order effect which we are being prudent about. So that would leave our MPA coverage ratio to 1.6 times, which I believe is the highest in the months of years. So outlook-wise, we are very focused Okay. Shall we go to the HSBC part? I was quite tempted to say let's pause for questions. So earlier this week, we announced our acquisition of HSBC Indonesia Wealth and Premier Banking Portfolio. I shall refer to it as the IWP Portfolio. If you recall, under our Next Frontier Strategy, When I look at the IWP portfolio, I realize this is the perfect fit for our next frontier strategy. we actually may lose value because of single borrower risk limit concentration. So we have to manage that. So for this particular portfolio, it's largely deposits, largely AUM, a small retail loan, largely relating to credit cards. So that's the business we are buying. Now, what I really like when I look at We have sizable CASA. So CASA to the bank, if we put on the CASA, we will actually make money straight away because CASA is a low-cost CASA for us to help to fund our loan business. So as a wealth portfolio, Now, this is a big competitive advantage we have in Indonesia. We are one of the top three privately owned banks in Indonesia. We enjoy big economy of scale. We can vote on this equation and gain cost synergy very quickly. Not many banks can match our economy of scale in Indonesia. We expect the equation to be earnings-equitif Under our whole wealth strategy, products, channels, insights belonging to any of our wealth units of OCBC Group will be tapped to support the whole group. We will leverage Bank of Singapore's products, capabilities and insights to help further uplift our enlarged wealth franchise in Indonesia. The acquisition also comes with a small retail loan book, which I referred to just now, of S$300 million, largely related to the credit card business. It is a nice addition to our credit card business. Our credit card balance will increase by 1.5 times. Indonesia is still a very important market for us. It is a core market. If you really think about it, ASEAN is still a very good place to be in right now given the global environment. And Indonesia remains the largest economy in ASEAN. Even though there are economic headwinds in the short term, we are still committed to investing and growing our franchise in ASEAN in Indonesia as part of our next frontier strategy. We have a strong capital position. More importantly, we have good local insights in this region. to navigate an uncertain environment and take advantage of any opportunity which may arise. As we speak, we are already one of the top three privately owned banks in Indonesia. With this acquisition, we have further expanded our franchise in the largest economy in ASEAN. Thank you.