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OCBC Results Announcement

03-Aug-2009 12:40:24

Media Release

OCBC Group Reports Second Quarter 2009 Net Profit of S$466 million

Core earnings growth of 22% driven by higher revenues and lower expenses

Singapore, 3 August 2009 - Oversea-Chinese Banking Corporation Limited (“OCBC Bank”) reported a net profit of S$466 million in the second quarter of 2009 (“2Q09”), up 10% from the S$425 million profit a year ago. Excluding the non-core gains and tax refunds of S$44 million in the year ago period, core net profit increased 22%, driven by growth in net interest income, higher insurance income contributions and lower expenses.

Second quarter net interest income increased by 5% and non-interest income grew 37%, while expenses fell 5%. Allowances were S$104 million, higher than the S$55 million a year ago but well below the S$197 million in the first quarter (“1Q09”). The non-performing loans (“NPL”) ratio increased moderately during the quarter from 1.8% to 2.1%.

Compared to 1Q09, net profit was 15% lower, as the previous quarter’s profit of S$545 million included S$175 million of non-recurring gains from Great Eastern Holdings (“GEH”), arising mainly from the implementation of the new Risk Based Capital framework in Malaysia.

For the first half of 2009 (“1H09”), the Group achieved core net profit of S$1,011 million, 20% higher than last year’s first half results of S$841 million. Net interest income grew 10% while non-interest income increased by 50%, boosted by the non-recurring gains from GEH in 1Q09. Operating expenses fell by 4% due mainly to lower staff costs. These strong operating results were partially offset by the higher allowances of S$301 million as compared to S$48 million in 1H08. Return on equity, based on core earnings, was 13.4% in 1H09, while annualised core earnings per share rose 17% to 62.8 cents.

Shareholders will receive an interim one-tier tax-exempt dividend of 14 cents per share, unchanged from 1H08. The interim dividend payout will amount to S$445 million, representing a payout of 44% of the Group’s core net profit for 1H09. The Scrip Dividend Scheme will be applicable to the interim dividend. The issue price for the new shares, to be allotted to shareholders who opt for the scrip dividend, will be at a 10% discount to the average closing share price during the price determination period (from the ex-dividend date to the books closure date, both dates inclusive).

..... Read more at

http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_6B77B6D49ACCC181482576070017EF76/$file/2Q09_Financial_Results.pdf?openelement

SECOND QUARTER 2009 RESULTS PRESENTATION

http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_058DAA4F54330DD74825760700190079/$file/2Q09_Results_Presentation.pdf?openelement

May 6, 2009

Things will still get worse

By Michelle Tay

THINGS will still get worse before they get better, but the upside is that the stock markets appear to be bottoming, said the chief executive of Oversea-Chinese Banking Corp (OCBC), Mr David Conner.

Mr Conner gave this assessment at a media briefing on the group's first quarter results on Wednesday, shortly after a Bloomberg report said that most Asian stocks rose on the better-than-expected earnings of United Overseas Bank (UOB) and OCBC, offsetting concerns that US banks will need more capital.

OCBC said its first-quarter profit fell 12 per cent due to writedowns on bad debts. Singapore's third largest lender earned a net profit of $545 million in the three months to Mar 31, down from $622 million in the same period a year ago.

Bad debts totalled $197 million, compared to a net allowance writeback of $8 million a year ago. The allowances include $94 million for the bank's corporate CDO (collateralised debt obligations) portfolio, as the bank's total CDO exposure of $305 million has been fully written down through the first quarter income statement.

Said Mr Conner: 'It's quite a surprise that portfolio declined as rapidly as it did given the fact that 18 months ago it was a single A-rated portfolio. But it was continuing to decline so we said enough is enough and let?s put it behind us once and for all.'

OCBC's revenue for the quarter grew 16 per cent year on year to $740 million, driven by loans growth and improved interest margins. Gross loans grew 7 per cent to $80.4 billion, which the bank attributed mainly to business loans in Singapore and overseas markets.

'If you add it all up it's quite a good quarter,' said Mr Conner, adding that the group has 'done well' despite the challenging operating environment.

But he cautioned: 'We don't see good times returning very quickly. Consumers have to rebuild their own balance sheet, and even if they wanted to be profligate with their spending, they can't get credit. So I think it's going to be a fairly long and slow climb out of this situation.'

Compared to the fourth quarter of 2008, however, the group's profit rose by 118 per cent from $250 million, due to a doubling in insurance income from subsidiary Great Eastern Holdings, a recovery in foreign exchange, securities and derivatives dealing income from losses in the previous quarter, and a reduction in expenses, said the group.

Revenue saw a quarter-on-quarter increase of 134 per cent, also due to the higher insurance income. Net gains from foreign exchange, securities and derivatives dealing totalled $112 million, up from net losses of $64 million for these trading activities in the previous quarter.

Read the full report in Thursday's edition of The Straits Times.

Business Times - 06 May 2009

UOB, OCBC surprise with smaller Q1 profit drops

* UOB's Q1 net profit down 23%, OCBC's net falls 12%
* Both banks say outlook tough
* Analysts say asset quality not very bad, interest income up
* UOB shrs erase losses, up 0.2% after results, OCBC flat

SINGAPORE - UOB and OCBC, Singapore's second and third-biggest banks, posted smaller-than-expected falls in net profits on Wednesday as they made more loans at higher rates which partially offset jumps in bad-debt charges.

Asia's economic slump is gradually showing up in soured loans and lower investment gains for banks, but analysts said the outlook would improve after the city-state suffered from its worst ever GDP contraction in the first quarter.

'The economy was very weak in the first quarter and the results were fairly resilient. If this is as bad as it gets, going forward results should be better,' said David Lum, a banking analyst at Daiwa Institute of Research.

'The asset quality is not as alarming and the year-on-year loans and margins have improved.' Both United Overseas Bank (UOB) and Oversea-Chinese Banking Corp (OCBC) sounded cautiously optimistic.

'The journey ahead remains tough, but we are confident that we will come out of the crisis stronger,' UOB CEO Wee Ee Cheong said in a statement.

OCBC's chief executive David Conner said the economic outlook remains difficult and uncertain.

UOB's Jan-March net profit fell to S$409 million (US$278 million) from S$529 million a year ago, against an average forecast of S$387 million by four analysts.

Bad-debt charges rose more than four-fold to S$378 million for the quarter from S$89 million in the year-ago quarter, largely due to losses on loans and investments due to the global economic downturn, the bank said.

OCBC's first-quarter net profit fell to S$545 million from S$622 million a year ago. Analysts had predicted a net profit of S$293 million, according to the average of five forecasts compiled by Reuters against a comparable figure of S$460 million a year ago that excluded exceptional items.

The bank benefited from higher insurance income from its subsidiary Great Eastern .

However, bad-debt charges rose to S$197 million compared with a writeback of S$8 million a year ago.

DBS Group, Southeast Asia's biggest bank, will report earnings on Friday.

Despite the optimism in the market that has boosted Singapore's financial index by half since March 10, not everyone is bullish on banks.

'We expect asset quality to show real deterioration in second half of 2009 as the NPL cycle lags,' Morgan Stanley's Matthew Wilson wrote in a note about non-performing loans.

UOB chairman Wee Cho Yaw, whose family controls the lender, said earlier this month the financial crisis may last another 1-2 years and he is pessimistic about the outlook.

UOB said net lending grew 5.6 per cent from a year earlier, against a 7.7 per cent growth in the fourth quarter, while OCBC saw a loan growth of 7 per cent in the first quarter.

The one consolation for both banks was a rise in net interest margin, as Singapore banks were able to charge higher prices on loans as foreign players scaled back from Asian markets.

Net interest margin for UOB rose to 2.41 per cent from 2.20 per cent a year ago and OCBC's net interest margin moved up to 2.42 per cent from 2.17 per cent a year ago.

Till Wednesday's midday break, shares of UOB were up 0.9 per cent from the start of the year, underperforming DBS, whose shares were up by around 28 per cent and OCBC which had gained 26 percent. The benchmark Straits Times Index is up 18 per cent in 2009. -- REUTERS

OCBC's financial statements

http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_40ACE60AF711BB3F482575AE0015E18C/$file/1Q09FinancialResultsFinal.pdf?openelement

Presentation slides

http://info.sgx.com/webcoranncatth.nsf/VwAttachments/Att_BBEB7279513CAE9A482575AE001600FB/$file/1Q09ResultsPresentationFinal.pdf?openelement

Business Times - 18 Feb 2009

Singapore

February 18, 2009, 12.50 pm (Singapore time)

OCBC Q4 profit down 30% as bad debt spikes

* Q4 net $301 mln vs expectations of $381 mln
* Bad debt charges rise to $243 mln vs $13 mln yr ago
* says to tightly manage expenses, recession to last all year

The smallest of Singapore's three banks said on Wednesday net profit for October-December fell to $301 million from $428 million a year ago

The smallest of three Singapore banks warned on Wednesday that 2009 will be challenging as a recession is expected to last throughout the year.

OCBC, like its Asian peers, largely escaped the credit storm that badly damaged Western banks, but is now threatened by rising bad loans due to an economic downturn in Asia and lower fees from crippled capital markets.

'Clearly asset quality is deteriorating and we saw that in the big jump in provisions,' said David Lum, a banking analyst at Daiwa Institute of Research in Singapore. 'That is something, like all other banks, they will have to tackle.'

OCBC CEO David Conner said in a statement that the bank plans to manage its expenses more tightly and its risk management will be on high alert given the uncertain outlook.

Net profit for October-December fell to $301 million from $428 million a year ago. Analysts had, on average, forecast a net profit of $381 million, according to five forecasts compiled by Reuters.

Related link:
	Click here for OCBC's media release and financial statement

Bad debt
Bad debt charges surged to $243 million in the fourth-quarter from $13 million a year earlier, led by bad loans.

DBS Group, Singapore's biggest bank, reported last week a bigger-than-expected 40 per cent drop in October-December profit, its worst results in three years, also hurt by an increase in bad debt provisions.

OCBC's net interest income rose 28 per cent from a year ago to $783 million in the quarter, helped by 12 per cent growth in loans and higher interest rate margins.

But non-interest income, which includes commissions and fees on investment products such as mutual funds, dropped 44 per cent to $259 million, the bank said.

OCBC also saw a drop in contributions from its insurance arm Great Eastern, which reported a 47 per cent drop in net profit in the fourth quarter. OCBC owns 87 per cent of Great Eastern.

OCBC shares were down 0.4 per cent at $4.88 by midsession.

The shares are down around 2 per cent this year after dropping 40 per cent in 2008.

United Overseas Bank has fallen about 16 per cent this year and DBS is down 4.5 per cent. The benchmark Straits Times Index has fallen 7 per cent so far this year. -- REUTERS

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OCBC Results Announcement