OCBC Group First Half 2024 Net Profit Up 9% to a Record S$3.93 billion

Interim dividend raised 10% to 44 cents, from 40 cents a year ago

Singapore, 2 August 2024 - Oversea-Chinese Banking Corporation Limited ("OCBC") reported net profit of S$3.93 billion for the first half of 2024 ("1H24"), 9% higher as compared to S$3.59 billion from the previous year ("1H23").

The Group's strong first half performance was underpinned by broad-based income growth which surpassed S$7 billion for the first time, lifted by higher net interest income and non-interest income. Operating expenses were well controlled, with cost-to-income ratio ("CIR") improving to 37.5%. Allowances were 14% lower at S$313 million. Customer loans grew 3% in constant currency terms, while asset quality remained sound with non-performing loan ("NPL") ratio trending lower to 0.9%. The Group maintained its healthy capital, funding and liquidity positions. On an annualised basis, return on equity improved to 14.5% and earnings per share was higher at S$1.74.

The Board has declared an interim dividend of 44 cents, up 10% or 4 cents from a year ago. This represents a payout ratio of 50% of the Group's 1H24 net profit.

1H24 Year-on-Year Performance
Group net profit climbed 9% to S$3.93 billion, lifted by record total income and lower allowances.

• Net interest income rose 3% to a new high of S$4.87 billion. Average assets grew 5%, largely driven by an increase in high quality assets which were income-accretive, but lower yielding as compared to customer loans. This largely contributed to the moderation in net interest margin ("NIM") by 5 basis points to 2.23%.
• Non-interest income rose 15% to S$2.39 billion, from broad-based growth across various businesses.
  • Net fee income was 7% higher at S$945 million, primarily driven by a 19% increase in wealth management fees from strong momentum across all wealth channels from an increase in customer activity.
  • Net trading income was up 28% to S$726 million, lifted by customer flow treasury income which reached a new high.
  • Insurance income of S$583 million was 17% above the previous year, largely attributed to stronger performance from the underlying insurance business. Total weighted new sales grew 34% to S$973 million, underpinned by sustained sales momentum mainly from the Singapore and Malaysia markets. New business embedded value ("NBEV") grew 16% to S$339 million.
• The Group's wealth management income, comprising income from insurance, private banking, premier private client, premier banking, asset management and stockbroking, rose 14% to a record S$2.54 billion. Group wealth management income accounted for 35% of the Group's 1H24 total income, up from 33% a year ago. The Group's wealth management AUM reached a new high of S$279 billion, up from S$274 billion in the previous year.
• Operating expenses increased 6% to S$2.72 billion, mainly from higher staff costs, IT-related expenses as well as other operational expenses. The rise in staff costs largely reflected annual salary increments as well as continued investments to support the growth in the Group's franchise. CIR improved to 37.5% from 37.8% a year ago, as income growth outpaced the increase in operating expenses.
• Total allowances declined 14% from a year ago to S$313 million.
• Share of results of associates was S$498 million, down 2% from S$510 million in 1H23.

2Q24 Year-on-Year Performance
Group net profit of S$1.94 billion was up 14% as compared to 2Q23, driven by income growth and a decline in allowances.

• Net interest income grew 2% to S$2.43 billion from a year ago. This was led by a 5% increase in average assets, and partially offset by a 6 basis-point drop in NIM to 2.20%.
• Non-interest income rose 13% to S$1.20 billion from robust fee, trading and insurance income growth.
• Operating expenses were S$1.37 billion, up 3% from 2Q23, driven mainly by higher staff and IT-related costs. CIR improved to 37.8%, from 38.5% a year ago.
• Total allowances were S$144 million, down 43% year-on-year, largely from a decline in allowances for non-impaired assets.
• Share of results of associates was 3% lower at S$243 million.

2Q24 Quarter-on-Quarter Performance
Group net profit was 2% lower from 1Q24 at S$1.94 billion.

• Net interest income was relatively unchanged from the previous quarter at S$2.43 billion, underpinned by a 3% rise in average assets and offset by a decline in NIM. NIM was lower by 7 basis points, largely due to an increase in lower-yielding high quality assets and the tightening of loan yields alongside market rate movements.
• Non-interest income of S$1.20 billion was 1% above 1Q24.
• Operating expenses rose 2% to S$1.37 billion mainly from IT-related and other operational expenses. Integration costs relating to the acquisition of PT Bank Commonwealth in Indonesia of S$12 million were also recognised in 2Q24.
• Total allowances were lower at S$144 million, down 14% from S$169 million in 1Q24.
• Share of results of associates was 5% lower as compared to a quarter ago.

• Total NPAs were S$2.90 billion as at 30 June 2024, 5% below the previous quarter and down 11% from a year ago. The quarter-on-quarter decline in NPAs was attributable to higher net recoveries, upgrades and write-offs. This more than offset new corporate NPA formation which was less than half of that of the previous quarter.
• NPL ratio of 0.9% was below the 1.0% in the previous quarter and 1.1% in the prior year. Allowance coverage for total NPAs increased to 155%.
• Total allowances were S$313 million in 1H24, lower as compared to S$362 million a year ago. Allowances in 1H24 comprised allowances for impaired assets of S$334 million and write-back in allowances for non-impaired assets of S$21 million.
• 2Q24 total allowances were S$144 million, a decline of 14% from 1Q24. This was mainly due to lower allowances for impaired assets.
• Total credit costs for 1H24 were an annualised 15 basis points.

• As at 30 June 2024, customer loans were S$304 billion, up 3% from the previous year in constant currency terms.
  • Year-on-year, the S$7 billion loan growth was driven by both non-trade corporate and housing loans. The expansion in loans was contributed by growth in Singapore, Malaysia, the United Kingdom and Australia.
  • Sustainable financing loans grew 33% from a year ago to S$44.6 billion, against a total loan commitment of S$63.3 billion.
• Customer deposits were 1% lower year-on-year at S$370 billion, largely driven by a 5% decline in higher-cost fixed deposits. CASA deposits increased 5% or S$8 billion from a year ago, and the CASA ratio rose to 47.9% from 45.3%.
• Loans-to-deposits ratio was 81.1%, higher than 78.8% a year ago.
• Group CET1 CAR was 15.5%, and the leverage ratio was 7.2%.

• An interim dividend of 44 cents per share has been declared, up 10% or 4 cents from a year ago.
• The interim dividend payout will amount to S$1.98 billion, representing a payout ratio of 50%.
• The Scrip Dividend Scheme will not be applicable to the interim dividend.

Message from Group CEO, Helen Wong

"We achieved a record set of earnings for the first half of 2024, with total income and net profit at new highs. This was driven by resilient performance across our key businesses in banking, wealth management and insurance. Our robust capital position has enabled us the flexibility to pursue growth opportunities, manage uncertainties, and increase shareholder returns. In line with our dividend policy, our interim dividend was raised by 10% to 44 cents per share, which represents a payout ratio of 50%.

Our performance underscores the progress we have made in executing our corporate strategy. We have strengthened our franchise, broadened our customer base and invested in our talent pool. We continued to capture trade, investment and wealth flows across ASEAN and Greater China, while supporting our customers to venture globally.

In May this year, we made a voluntary unconditional general offer for Great Eastern Holdings. At the close of the offer on 12 July 2024, we increased our stake by 4.88% to 93.32%. In addition, we have completed the acquisition of PT Bank Commonwealth Indonesia in May 2024.

As we look ahead, we are alert to the heightened level of geopolitical uncertainties. With our strong capital position, diversified earnings base and prudent approach towards risk management, we are well positioned to navigate the challenging macroeconomic landscape. We remain confident in the continued strength of our franchise to deliver enduring value to our stakeholders."

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