8/3/2019 2Q10 Financial Results (Website) http://slidepdf.com/reader/full/2q10-financial-results-website 1/41 Media Release OCBC Group Reports Second Quarter 2 Net Profit of S$503 million Record First Half 2010 Core Net Profit of S$1,179 m Singapore, 2 August 2010 - Oversea-Chinese Banking Corporation Limited “Group”) today reported a net profit attributable to shareholders (“net profit”) o second quarter ended 30 June 2010 (“2Q10”), an increase of 8% from S$466 m Group’s second quarter result included three months’ consolidation of the r Bank of Singapore (formerly ING Asia Private Bank), which was acquired in J net profit growth was driven by increased fees and commissions, higher realise securities and lower allowances. Second quarter net interest income grew by 1% over the previous year to S$ 18% increase in average interest earning assets which more than offset the margin. Loan growth was broad-based in the consumer, corporate and SME and overseas. Non-interest income increased 5% to S$516 million, led by a commission income, and higher realised gains from the sale of investment secu markets resulted in a 35% decline in net trading income. Despite a 26% fall i from insurance subsidiary Great Eastern Holdings (“GEH”), the underlying bus substantially, recording 30% year-on-year growth in new business sales an business embedded value. Operating expenses increased by 24% to S$559 million, as a result of investments in regional expansion and higher business volumes. Eff management kept net allowances for the second quarter low at S$18 million, do a year ago and from S$25 million in 1Q10. The non-performing loans (“NPL” the quarter to 1 3% from 1 5%
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Non-interest income in the second quarter grew by 5% year-on-year to S$516 m
fee and commission income and higher realised gains on the sale of investme
partially offset by lower dealing income and profit from life assurance. Fees
30% over the previous year to S$252 million, led by growth in wealth mana
including contributions from Bank of Singapore, more than doubled to S$4
banking, fund management, and trade-related activities also contributed to the
fee and commission income. The sale of investment securities contributed neas compared with net gains of S$21 million in 2Q09. Net trading income declin
S$39 million, with lower foreign exchange income more than offsetting an imp
and derivatives trading results. Profit from life assurance fell 45% to S
investment performance, although partly offset by improved profits from unde
operating expenses and improved claims experience.
Compared with 1Q10, non-interest income fell 24% as a result of a lower profassurance and a decline in net trading income, as volatile financial market
second quarter led to a decline in foreign exchange as well as securities a
income.
Operating Expenses
Operating expenses in 2Q10 increased by 24% year-on-year over a low base
Group resumed investments to expand its businesses in key markets. Staff co
million, mainly as a result of increased headcount and higher base salaries, w
Bank of Singapore being the largest contributor. Group headcount rose 9%
personnel increase coming from the Group’s expansion in overseas markets
including Malaysia, Indonesia, China and Bank of Singapore. Over the last twe
Amin opened two additional branches in Malaysia, PT Bank OCBC NISPbranches/sub-branches and offices in Indonesia, and OCBC Bank (China) op
and one sub-branch. Other operating expenses rose 7% to S$232 million,
depreciation, rental and business promotion expenses.
Allowances for loans and other assets were S$18 million for the quarter, dow
year ago and S$25 million in 1Q10. Specific allowances for loans, net of reco
were S$11 million, as compared with S$5 million in 1Q10 and S$44 million
allowances of S$5 million were flat versus the year ago period.
The Group’s asset quality and coverage ratios remained strong. Absolute NPL
the previous quarter to S$1,260 million, and the NPL ratio improved to 1.3% frthe decrease in NPLs during the quarter was mainly from the manufacturing, g
professionals and individuals sectors. Total cumulative allowances represen
performing assets (“NPAs”) and 288% of unsecured NPAs, up from 107% an
1Q10.
Capital Ratios
OCBC Group continues to be strongly capitalised, with its Tier 1 ratio as at 30 J
15.3%, up from 14.4% at the end of the previous quarter, and total c
strengthening to 16.3%, from 15.2%, over the same period. These are we
minimums of 6% and 10% respectively. The Core Tier 1 ratio, excluding pe
preference shares, was 11.6%, up from 10.8% at the end of 1Q10.
Interim Dividend
An interim one-tier tax-exempt dividend of 15 cents per share has been declare
of 2010, a 7% per share increase from the 1H09 interim dividend of 14 cents
dividend payout will amount to S$493 million, representing a payout of 42% o
profit for 1H10. As per the last three dividend payments, the Scrip Dividend Scto the interim dividend. The issue price for the new shares, to be allotted to sh
the scrip dividend, will be at a 10% discount to the average of the volume wei
the shares during the price determination period (being the period commencing
the shares are first traded on an ex-basis and ending on the books clos
entitlements to the interim dividend) Further details will be announced at a late
OCBC Group prepares its financial statements in accordance with the Singapore Fina
required by the Singapore Companies Act, including the modification to FRS 39 Finan
and Measurement requirement on loan loss provisioning under Notice to Banks No. 6
Provisioning” issued by the Monetary Authority of Singapore.
The following new/revised financial reporting standards and interpretations were m
January 2010:
FRS 27 (Revised): Consolidated and Separate Financial Statements
FRS 103 (Revised): Business Combinations
FRS 39 (Amendments): Financial Instruments: Recognition and Measurement
FRS 102 (Amendments): Share-Based Payment – Group Cash-settled Share-ba
INT FRS 117: Distributions of Non-cash Assets to Owners
Improvements to FRSs 2008
Improvements to FRSs 2009
The revised FRS 27 requires that changes in a parent’s ownership interests in a subsid
loss of control be accounted for as equity transactions, with resulting gains and losses t
income statement. The standard also requires the effects of all transactions with n
recorded in equity if there is no change in control.
Under the revised FRS 103, the Group has to expense costs incurred in the acquisition
which it was incurred or when the service was rendered. Where an acquirer obtains
step acquisition, any previously held equity interests shall be measured at fair valueattained, with resulting gains and losses taken to the income statement.
The initial application of the above standards and interpretations is not expected to hav
Group’s financial statements.
Financial Results
Group net profit attributable to shareholders for the second quarter ended 30 June 2010an increase of 8% year-on-year, driven by increased fees and commissions, higher
securities and lower allowances. The 2Q10 result included three months’ consolidation
Bank of Singapore (formerly ING Asia Private Bank), which was acquired in January this
Net interest income grew by 1%, as asset growth more than offset a decline in net
Non-performing loans (“NPLs”) declined 4% from the previous quarter to S$1,260 milindustry, the decrease in NPLs during the quarter was mainly from the manufactu
professionals and individuals sectors. By geography, the decrease was mainly from S
The Group’s NPL ratio continued to improve to 1.3%, from 1.5% in the previous quarte
The Singapore and Malaysia NPL ratios fell marginally versus the previous quarter to 0
from 3.5% respectively.
Including classified debt securities, contingent liabilities and CDOs, the Group’s total no
were S$1,316 million, 26% lower than a year ago and 6% lower as compared with the NPAs, 49% (Mar 10: 47%; Dec 09: 52%) were in the substandard category and 61%
were secured by collateral.
30 Jun 2010 31 Mar 2010 31 Dec 20 % of % of
S$ million loans S$ million loans S$ million
NPLs by Industry
Loans and advancesAgriculture, mining
and quarrying 9 0.4 10 0.6 14
Manufacturing 396 6.1 414 6.7 402
Building and
Construction 156 1.0 149 1.0 203
Housing loans 215 0.9 227 1.0 224
General commerce 153 1.5 170 1.8 218
Transport, storage
and communication 108 1.8 106 1.8 109 Financial institutions,
Investment and
holding companies 23 0.2 28 0.3 37
Professionals
and individuals 162 1.3 177 1.4 140
Others 38 0.6 38 0.6 37
Total NPLs 1,260 1.3 1,319 1.5 1,384
Classified debt securities 14 29 31
Classified contingentliabilities 42 54 33
Total NPAs 1,316 1,402 1,448
30 Jun 2010 31 Mar 2010 31 Dec 20 S$ million % S$ million % S$ million
Compared with the year ago period, Global Corporate Banking’s operatin
increased by 44% to S$577 million in 1H10, driven by growth in net inte
commission income as well as lower net allowances. Net interest income inc
volumes and wider loan spreads.
As compared with 2Q09, operating profit increased by 24%, attributable to high
increased trade-related fee and commission income.
Global Treasury
Global Treasury engages in foreign exchange activities, money market ope
derivatives trading, and also offers structured treasury products and financial so
investment and hedging needs.
Compared with the year ago period, Global Treasury’s operating profit declinedin 1H10, and by 27% to S$101 million in 2Q10 from lower net interest incom
gapping opportunities.
Insurance
The Group’s insurance business, including its fund management activities, is ca
subsidiary GEH, which provides both life and general insurance products tSingapore and Malaysia.
Compared with the year ago period, operating profit from GEH fell 33% from
S$274 million in 1H10, mainly due to the inclusion in 1H09 of S$201 million of
mainly from the adoption of the risk based capital framework in Malaysia. Exc
gains, GEH’s operating profit would have increased by 32%, contributed mai
both life and general insurance. Operating profit fell 40% from S$139 million 2Q10, due to poor investment performance, although partly offset by improve
through lower operating expenses and improved claims experience.
After non-controlling interests and tax, GEH’s contribution to the Group’s core n
30 Jun 2010 31 Mar 2010 31 Dec 20S$ million % S$ million % S$ million
Total assets
Singapore 136,912 64 134,765 65 125,001
Malaysia 45,214 21 45,281 22 43,070
Other ASEAN 7,468 4 6,897 3 6,922
Asia Pacific 20,061 9 17,613 8 15,754
Rest of the World 3,518 2 4,168 2 3,553 213,173 100 208,724 100 194,300
The geographical segment analysis is based on the location where assets or
For 2Q10, Singapore accounted for 62% of total income and 63% of pre-
accounted for 24% of total income and 28% of pre-tax profit.
In 1H10, the pre-tax profit for Singapore rose 28% year-on-year, led by highdealing and investment income and significantly lower allowances for loans and
Malaysia’s pre-tax profit for 1H10 decreased 25% year-on-year to S$381 m
recurring insurance gains recorded in the previous year arising mainly from the
Dividends to non-controlling interests – – – – DSP reserve from dividendsof unvested shares – – – 2 Ordinary and preference dividendspaid in cash – – – (155)Share-based staff costs capitalised – (1) – – Shares issued in lieu of ordinary dividends 325 – – (325)Sh i d t ti di t #
CONSOLIDATED CASH FLOW STATEMENT (UNAUDITED)For the half year ended 30 June 2010
S$ million 1H10 1H0
Cash flows from operating activitiesProfit before income tax 1,493 1,36
Adjustments for non-cash itemsAmortisation of intangible assets 23 2Allowances for loans and impairment of other assets 43 30Change in fair value for hedging transactions and trading securities # (28Depreciation of property, plant and equipmentand investment property 75 6
Net gain on disposal of property, plant and equipmentand investment property (1) (Net (gain)/loss on disposal of government, debt and equity securities (118) 1Net (gain)/loss on disposal of associates and interest insubsidiaries (2)
Share-based staff costs 8
Share of results of associates and joint ventures 1 (Items relating to life assurance fund
Surplus before income tax 268 46Surplus transferred from life assurance fund (215) (39
Operating profit before change in operating assets and liabilities 1,575 1,55
Change in operating assets and liabilitiesDeposits of non-bank customers 5,676 2,53Deposits and balances of banks 2,469 29Derivative payables and other liabilities 1,141 (3,42Trading portfolio liabilities (10) 36Government securities and treasury bills (51) (4,50Trading securities (821) 53Placements with and loans to banks 974 (2,70Loans and bills receivable (8,389) 2,06Derivative receivables and other assets
(593)2,48
Net change in investment assets and liabilities of life assurance fund (46) (24Cash from/(used in) operating activities 1,925 (1,05Income tax paid (216) (20Net cash from/(used in) operating activities 1,709 (1,25
Cash flows from investing activities
Dividends from associates 3
Decrease/(increase) in associates and joint ventures (62) (Net cashflow from acquisition of subsidiaries (2,010) Purchases of debt and equity securities (3,455) (1,02
Purchases of property, plant and equipment and investment property (80) (7Proceeds from disposal of debt and equity securities 2,512 1,91Proceeds from disposal of interest in subsidiaries –
Proceeds from disposal of associates 14 Proceeds from disposal of property, plant and equipmentand investment property 4
Net cash (used in)/from investing activities (3,074) 82