Established in 1912, OCBC is the second largest financial services group in Southeast Asia, classified by assets. OCBC Bank is among the world's highest rated banks, with a long term credit rating of Aa1 from Moody's. They offer a broad array of specialist financial services, ranging from consumer, corporate, investment, private and transaction banking to treasury, insurance, asset management and stock broking services.
The key markets are Singapore, Malaysia, Indonesia and Greater China. The bank has a network of more than 500 branches and representative offices in 15 countries and territories, including 400 branches and offices in Indonesia operated by our subsidiary, Bank OCBC NISP. OCBC Bank is Singapore's longest established local bank with a heritage that can be traced as far back as 1912, which eventually culminated in the merger of three banks - Chinese Commercial Bank Limited (1912), Ho Hong Bank Limited (1917) and Oversea-Chinese Bank Limited (1919). During this challenging period of economic crisis, many people had difficulties coping with everyday work life. The founders understood the problems that people faced, and took the initiative to provide customers with financial solutions for their personal and business needs, and also to support the community. This indirectly helped to gradually rebuild Singapore's war-torn economy after 1945.
Bank OCBC NISP, previously Bank NISP, was established in 1941 in Bandung. Currently it has more than 380 offices and over 550 ATMs, which are part of a shared network of more than 26,200 ATMs (including ATM Bersama, BCA, OCBC Bank and BankCard) that accept Bank OCBC NISP ATM cards. The Bank has more than 5,000 employees. In its business which focuses mainly on the SME and consumer sectors, Bank OCBC NISP has received wide-ranging support from OCBC Bank, its controlling shareholder (74.7%). Another shareholder that also actively supports its business since 1999 is the IFC-World Bank Group, which helps in the areas of capital, long term loans and technical assistance among others.
Bank OCBC NISP has been awarded Best FX Prime Booking Services 2008 and Best Single-Bank Electronic Trading Platform 2008 from Asiamoney and from InfoBank, the Golden Trophy Award 2008 for Excellence Performance for the fifth consecutive year as well as Banking Service Excellence Award 2008. In the year before, it received the "Trusted Company" (Perusahaan Terpercaya) Award at the Corporate Governance Perception Index (CGPI) Awards 2007, Annual Report Award 2007 (2nd place) for private listed financial institutions from InfoBank and was also named Retail Bank of the Year, Indonesia in the Asian Banking & Finance Retail Banking Awards 2007 by Asian Banking & Finance.
Bank of Singapore, formerly known as ING Asia Private Bank, is a wholly owned subsidiary of OCBC Bank, one of Asia's leading financial services groups and the second largest in Southeast Asia, classified by assets.
Building on ING Asia Private Bank's success and its consistent ranking amongst the top 5 global private banks in Asia by Asiamoney, Bank of Singapore is the only dedicated private bank headquartered in Singapore. It adopts a global private banking approach, combined with a fully open architecture product platform and proprietary research for truly independent advice.
Bank of Singapore offers its clients the best of both worlds - combining global know how with a distinct level of service that is among the best in the industry. Backed by OCBC Bank's extensive branch network and expertise in retail, mortgage and SME banking as well as stockbroking, insurance and investment management, Bank of Singapore offers the best of breed products and a wide range of capabilities expected from an international private bank.
With a branch in Hong Kong and offices in Manila and Dubai, Bank of Singapore serves high net worth individuals and wealthy families of global Non-Resident Indians, China, Taiwan, Hong Kong, Indonesia, Malaysia, Thailand, Singapore, the Philippines, Japan, Korea, the Middle East and Europe
Under the leadership of Dato Lee Kong Chian (1938-1964), Tan Sri Tan Chin Tuan (1966-1983) and Mr Lee Choon Seng (acting Chairman during the Occupation), the bank flourished to become one of the largest banks in Singapore and Malaysia. OCBC Bank was also the only foreign bank to have branches in China in the 1950s - the long history in China dates back to 1925 when OCBC opened the first branch in Xiamen, the first Singapore bank to do so. They have an excellent history of innovation, which is constantly enriched by the introduction of "firsts" into the market. Even as far back as 1948, OCBC Bank changed the face of banking by introducing the night safe system which allowed customers to deposit cash and valuables after dark. In 1958, the mobile bank was created, targeting customers living in suburban areas. The bank was also one of the pioneers in the Asian dollar market in the 1960s.
By 1970, the total resources exceeded S$1 billion, making, then, the largest banking organisation with the biggest deposit base in Singapore. Today, OCBC Bank has total assets of over S$214 billion and operations in 15 countries and territories. The spirit on innovation is also kept alive by a strong focus on introducing new products and services that meet the customers' changing needs, and is apparent from the awards that have been conferred on. The insurance subsidiary, Great Eastern Holdings, is the largest insurance group in Singapore and Malaysia by assets, and our asset management subsidiary, Lion Global Investors, is one of the largest private sector asset management companies in Southeast Asia.
SERVICES OF THE BANK
OCBC Bank offers a comprehensive range of innovative banking services and financial solutions in consumer banking, business banking, investment banking, global treasury, and investment management, among others. In addition, the OCBC Group has diverse subsidiaries that are involved in insurance, financial futures; regional stock broking; trustee, nominee and custodian services; property development and hotel management.
CONSUMER BANKING
The Global Consumer Financial Services Division offers an array of consumer products and services to more than one million OCBC customers with diverse needs in Singapore and Malaysia. The philosophy is to deliver such services at affordable cost to our customers. These range from providing convenience in financial transactions and deposits, home and car loans, credit cards, personal revolving credit and commercial property loans to investment opportunities and insurance. They also have a leading presence in several segments, including wealth management and home loans.
BUSINESS BANKING
The Global Corporate Bank, the corporate banking division of OCBC Bank, services small and medium-sized enterprises (SMEs), large corporates, real estate companies, government and institutional customers from key markets including Singapore and Malaysia. The service philosophy is to provide our clients with high-quality customer service, a one-stop banking centre with professional expertise and quick turnaround time. The bank offers the clients a whole range of products and services from traditional credit facilities and cash management services to more sophisticated capital raising arrangement in the public debt market.
INVESTMENT BANKING
The Group Investment Banking Division, which comprises Capital Markets, Corporate Finance and Mezzanine Capital, works closely with the Group Business Banking Division to develop and customise products and services to meet customers' requirements.
TRANSACTION BANKING
The Group Transaction Banking Division offers transaction-related services such as cash management, trade finance, trustee and custody/nominee services, to SMEs, large corporations, financial institutions and government entities in Singapore and Malaysia. They have a dedicated team of specialists bringing total trade and cash management solutions to business banking clients to help streamline their operations and optimise their cash flows. Together with a state-of-the-art electronic delivery system, the clients can make payments and prepare trade documents with ease, speed and accuracy
GLOBAL TREASURY
The Group Treasury Division works in partnership with Global Corporate Bank and Global Consumer Financial Services to structure products and financial solutions for customers who need to invest the funds or hedge their exposures. It also engages in proprietary trading in the money, foreign exchange, fixed income securities and equity derivatives markets. The focus is to assist our clients to effectively manage their market risks in foreign exchange and interest rates. The team is focused on understanding the clients' business needs and offering competitive rates and efficient execution services, using state-of-the-art tools and technology
INTERNATIONAL BANKING
Outside of Singapore and Malaysia, OCBC Bank has an international network of more than 24 overseas branches and representative offices in 13 countries. This extensive network serves mainly international corporate and institutional banking customers as well as our clients expanding or investing overseas from our core markets in Singapore and Malaysia. Similarly, our overseas branch network also assists and provides banking services to foreign companies doing business in Singapore and Malaysia.
OCBC STRATEGIC PLANNING
S.N.
YEAR
PLANS
1.
2004
MAR: Proposed of 22.5% stake in PT Bank NISP, Indonesia
APR: Announced intention to make S$2.8 billion offer for Great Eastern Holdings
JUN: Achieved 81.1% shareholding in Great Eastern Holdings (GEH)
DEC: Announced intention to increase shareholding in PT Bank NISP to 51%
2.
2005
MAR: Official opening of e2 Power's Cyberjaya Office
APR: Bank NISP becomes a subsidiary of OCBC Bank
JUN: Official opening of OCBC Bank's new corporate HQ in Kuala Lumpur
Raised stake in Bank NISP to 70.62%
Announced merger of asset management operations of OAM with Straits Lion
Asset Management
JUL: Opened off-shore branch in Brunei
3.
2006
JAN: Announced intention to take a 12.2% stake in China's Ningbo Commercial Bank
MAR: Announced New Horizons II Strategy to embed OCBC in the region
JUN: Completed acquisition of a 12.2% stake in China's Ningbo Commercial Bank
AUG: Achieved 87.1% shareholding in GEH following voluntary cash offer
Completed acquisition of a 10% stake in Vietnam's VP Bank
4.
2007
AUG: Commencement of business of OCBC China
NOV: Received Bank Negara Malaysia's approval to set up Islamic banking subsidiary
5.
2008
JAN: Announced conditional takeover offer of PacificMas Berhad
APR: Achieved 67% shareholding in PacificMas Berhad
DEC: Commencement of business of Islamic banking subsidiary, OCBC Al-Amin
Indonesian subsidiary, Bank NISP, is renamed Bank OCBC NISP
EQUITY PROGRESSIONS OF LAST FIVE YEARS
(OCBC Group 2010 Newsletter)
ACQUISITIONS
SINGAPORE ISLAND BANK
The Singapore Island Bank was established in 1954 as Bank of Singapore. It was acquired in 2000 as a wholly owned subsidiary of Oversea-Chinese Banking Corporation Limited (OCBC Bank). It is the least successful member of the group. During the dot-com era in 2000 the Singapore Island Bank reinvented itself as Singapore's first pure Internet bank, trading under the name finatiQ.com.
BANK NISP
As of 2005, OCBC Bank's subsidiary OCBC Overseas Investments owned 72.29% of the shares in Indonesia's Bank NISP. NISP shareholders approved the sale of a 28.5% stake to OCBC, making the Singapore-based bank the majority shareholder. OCBC Bank initially owned 22.5% of Bank NISP which was valued at $73.1 million. After the buy out, they controlled 51% OCBC Bank, through OCBC Overseas Investment. The subsidiary spent about Rp 992.62 billion (US$107.89 million) for the acquisition of over 1.1 trillion shares at about Rp 842.5 each. It plans to buy another 44% of the Indonesian bank, leaving 5% for the Surjaudaja family. Founded in 1941 in Bandung, West Java, Bank NISP today is the fourth oldest bank in Indonesia. Its total assets stood at Rp 19.6 trillion (SGD 3.3 billion) as of September 2005. By assets, Bank NISP is the 12th largest bank in Indonesia. The bank has a network of more than 185 branches and offices and more than 15,000 shared ATMs nationwide. Bank NISP is focused on serving small and medium enterprises as well as the consumer market in Indonesia.
KEPPEL TAT LEE BANK
In June 2001, OCBC merged with Keppel Tat Lee Bank. This was in line with the Singapore government's desire to consolidate the local banking sector. As a result of the merger, HSBC bought out Keppel Insurance for SGD 154 million and the takeover was completed in the first quarter of 2003. The insurance arm was renamed HSBC Insurance (Singapore) Pte Limited. With the merger of OCBC Bank and Keppel TatLee Bank, keppelbank.com.sg and keppelcard.com were integrated with ocbc.com.
CHINA'S NINGBO COMMERCIAL BANK
In 2006 the bank acquired a 12.2% stake in China's Ningbo Commercial Bank.
PERFORMANCE TO HOLDERS
Customers
We aim to sustain our top 3 consumer banking position and become one of the top 3 corporate banks in the combined Singapore-Malaysia market.
Risk Management
We will expand our balance sheet proactively to deliver enhanced risk-return, and execute our Basel II implementation plan in line with regulatory guidelines.
We aim to maintain our position as one of the highest rated banks in Asia-Pacific.
Products
We will build more best-in-class products and strive to become known for product innovation by sustaining 15% revenue contribution from new products annually.
We aim to be one of the top 3 banks for wealth management, credit cards and unsecured lending in the combined Singapore-Malaysia market.
Shareholder Value
We aim to deliver 10% earnings per share growth annually, as well as achieve and sustain ROE of above 12%.
We will periodically review our target minimum dividend payout of 45% of core earnings for possible increase.
We will continue to divest non-core assets at the right time and invest the gains in core financial services growth opportunities, and return excess capital to shareholders via share buyback programmes.
People
We will build people resources with a focus on diversity, cross-border management skill sets and competences to support our overseas expansion efforts.
We will maintain our share ownership schemes so that all our employees can easily own OCBC shares.
We aim to continually improve employee satisfaction so that we are increasingly recognised as a regional employer of choice.
Productivity
We will leverage our cross-border processing hubs in Singapore and Malaysia to deliver further efficiency gains.
We strive to be an efficient, low cost service provider.
(http://www.ocbc.com/global/aboutOCBC/Gco_Abt_Strategy.shtm)
OCBC'S CHANGING PORFOLIO
Singapore, 11 March 2010 - Oversea-Chinese Banking Corporation Limited ("OCBC Bank") today announced that it has received the Businesses for Families Mark from the Ministry Of Community Development, Youth and Sports (MCYS), making it the first bank to receive the accreditation. The mark is awarded to businesses that meet specific pro-family standards related to their strategy, service quality, infrastructure & results. Mr Nicholas Tan, Head of Global Wealth Management, OCBC Bank, said, "It is an honour to be conferred the Businesses for Families Mark. This recognition by MCYS encourages us to continue to invest in product innovation and service improvements to differentiate OCBC Bank from our competitors in the family customer segment.''
"From customer insights gained through extensive research on the needs of this segment, we created a unique family-oriented banking environment and rolled out several innovative products and services to support family banking. These efforts have not gone unnoticed by our customers.'' The demand for full-service Sunday Banking has increased since the bank introduced the service in 2006. As a result, the number of Sunday Banking branches was increased from 5 to 18 within 3 years. Another example is the success of OCBC Mighty Saversâ„¢ Programme. OCBC Bank has seen more than 30% growth for its children-related accounts over the past one year. OCBC Bank has developed a suite of financial products and services to meet the needs of families as a segment, as they progress through different life stages:
SUNDAY BANKING
A pivotal point for OCBC Bank was the introduction of full service banking on Sundays to offer customers a viable alternative from taking time off their work or busy schedules to transact. OCBC Bank is the first bank in Singapore to launch full-service Sunday Banking in November 2006. Sunday Banking was introduced because OCBC Bank acted on the insights learned from research and understanding of customers' lifestyle and banking needs. Customers gave feedback that weekends were more conducive times to review financial needs and plans for the family as there was less of a rush compared to weekdays. Today, there are a total of 18 Sunday Banking branches that are conveniently located within shopping malls and next to MRT stations across Singapore. On Sundays, these bank branches are transformed to provide a relaxing and fun environment for parents and children. Children's activity corners are created so that parents can be assured that their children are entertained and well-looked after while they perform their banking transactions.
OCBC MIGHTY SAVERS
To encourage saving from a young age, an interactive savings programme, called The Mighty Saversâ„¢ Programme, was introduced in February 2007 to help parents educate their children on saving and the value of money. The key components of the programme are its mascots, Simon and Sally, and the introduction of Mighty Saversâ„¢ stickers and cards. Through the concept of placing a sticker onto the card for every dollar saved, and receiving rewards for saving more, the children are encouraged to save from young.
As more children visit OCBC Bank with their parents on Sundays to deposit their savings, efforts were made to ensure that the environment is child-friendly. One of the most popular features is the special steps placed at the dedicated teller counter for opening children's savings accounts, to enable the children to engage with our bank tellers face-to-face.
Following the success of the OCBC Mighty Savers Programme, OCBC Bank was appointed by MCYS as one of the two banks selected to manage the Children Development Accounts (CDAs) that parents are required to open in order to receive cash benefits under the MCYS Baby Bonus Scheme. Parents who choose to open these accounts with OCBC Bank to manage their CDAs enjoy better-than-market interest rates, a comprehensive suite of product offerings and the convenience that only a Singapore bank could offer.
OCBC SMART PARENT
To help today's busy parents manage the financial and lifestyle needs of the family, OCBC Bank introduced OCBC SmartParent. SmartParent is a transactional family statement savings account which is bundled with an OCBC Platinum Master Card. Parents also receive regular help on understanding the challenges of raising children through the OCBC SmartParenting Series. This comprises a series of educational seminars where parents learn from the experts about key child development areas such as academic learning, creativity, health, character and life skills.
OCBC SMART SENIOR
OCBC SmartSenior is a comprehensive programme that offers banking solutions and privileges to meet the individual's financial, self-enrichment and other lifestyle needs in the retirement phase of life. Cognizant of the Asian value of filial piety, a key component of the programme is the SmartSenior Account, which serves as a convenient means for working children to channel a regular flow of funds to their parents. In addition, the account comes with an eAlerts feature that sends SMS notifications when banking transactions are carried out from the account.
SUNDAY BANKING
Sunday Banking provides a relaxing and fun environment for parents and children, with children's activity corner where parents can be assured that their children are entertained and well-looked after while they perform their banking transactions. On Sundays, OCBC Bank staff put on aprons to create a relaxed family-friendly environment that is service oriented. It results in a much more casual atmosphere that helped families feel relaxed when they transacted on Sundays. Sunday Banking branches also serve complimentary coffee and cookies; offer reading materials like newspapers and various magazines for customers to peruse while they wait to be served. There is also calming music and aromatherapy type scents to enhance the Sunday Banking experience. It is the bank for the WHOLE FAMILY.
INFRASTRUCTURE
As customers step into the branches, they enter a Welcome Area where they are greeted warmly by OCBC Bank's Service Ambassadors. Service Ambassadors are trained to be knowledgeable of OCBC Bank's products and services and their primary purpose is to ensure that customers who come into our retail banking spaces have a hospitable experience and that their service needs are met promptly and efficiently. This saves time for busy parents who have children with them, or elderly who need someone to guide them. With the family in mind, rest bars area also installed in our service areas for customers' comfort as they line up. Elderly and pregnant ladies will find it more comfortable while they queue up.
FASTLANES
The self serve area, called the Fastlane, is located close to the entrance such that it is the first area a customer notices. In this space are the ATMs, passbook update machines, cash deposit automated tellers and cheque deposit boxes. Fastlane serves to provide customers a hassle free and quick option to transact. Fastlanes are especially useful and convenient for parents with children, who prefer not to have to queue in branches for transactions. At a dedicated counter for children to transact with the bank, special steps were installed at these counters so that kids could be eye to eye with the teller and could watch their money being counted. This often thrills the children and they feel motivated to re-visit the bank to bank in their money.
LEDGES
Ledges are installed at our customer service counters for customers to place their belongings (like big baby bags for mothers, or shopping bags for the elderly) when they transact with our tellers at our Counter Services Area.
OCBC'S CONTRIBUTION
As Banker to the community, the Purpose is to help individuals and businesses across communities achieve their aspirations by providing them with innovative financial solutions. In the same helping spirit, OCBC Bank, as one of the key corporate members of the United Nations Global Compact and its affiliate in Singapore, the Singapore Compact for Corporate Social Responsibility, has a Corporate Social Responsibility (CSR) programme designed to support the community. Our CSR programme which is centred on helping children and youths realise their full potential and promoting education, continues from the legacy of our founder, Lee Kong Chian, who in the 1950s actively made contributions to schools and libraries and helped many children and youths fulfil their aspirations through education. OCBC Bank continues to encourage and support academic excellence by awarding book prizes and scholarships to outstanding youths from Singapore, Malaysia, Indonesia and China, to pursue higher education in Singapore, without any conditions attached.
SINGAPORE
In Singapore, the Singapore Children's Society ("SCS") has been the adopted charity since 2004. Established in 1952, SCS champions and promotes the welfare of children and youth of all races and religion. In 2004, they committed to donate $2.5 million over a period of five years to SCS. The bank extended the support with an additional donation of S$2.5 million for the period from 2009 to 2013, bringing our total donation to SCS to S$5 million over 10 years. With the funding, SCS reaches out to about 66,000 children, youth and families in need. Beyond cash contributions, our employees also offer their time and skills to enrich the lives of the children and youths in the key countries that OCBC Bank operates in. Launched on 23 December 2004 to initially support the Singapore Children's Society, the OCBC Staff Volunteer Programme has grown to a pool of more than 1,000 staff volunteers from Singapore, Malaysia, China and Indonesia (including Bank OCBC NISP) who help less fortunate children and youths in the region realise their full potential through various activities and programmes. In Singapore, staff volunteers have enriched the lives of the children at SCS through various initiatives. These include conducting computer workshops, reading programmes to arranging outings to various places of interest.
Other charitable organizations that the bank works with in Singapore include the NTUC Childcare Bright Horizons Trust Fund, the Straits Times (ST) Pocket Money Fund and the Business Times Budding Artists Fund. The ST Pocket Money Fund aims to provide needy children with pocket money for school while the Business Times Budding Artists Fund was initiated to level the playing field, because no child with strong interest and artistic potential should be deprived of the opportunity to develop his or her talents because of his or her family's financial background.
CHINA
The philanthropic heritage of supporting children and education extends to China where the bank had committed to donate RMB 1.5 million (S$300,000) over six years to the Soong Ching Ling Foundation since 2007, the year OCBC Bank was incorporated in China. The funds, disbursed through the Soong Ching Ling Scholarship ("SCLS") under the SCLS-OCBC Fund, help about 800 outstanding children across China who need financial assistance. Under the staff volunteer programme, the employees from OCBC China work closely with SCLS on a volunteer programme that brings volunteer teachers to rural schools in Shanghai to help children of migrant workers.
INDONESIA
In Indonesia, the bank works with the subsidiary, Bank OCBC NISP to support a joint community development initiative in Bandung, in collaboration with Habitat for Humanity. The three year initiative, which began in 2009, is committed to build 20 houses and renovation of a school in the village of Banjaran, Bandung. 2010 marks the second year of the programme. In July 2010, more than 50 volunteers from OCBC Bank and Bank OCBC NISP returned to Bandung to continue the building project at the school. Other than donating items such as backpacks, water bottles, towels and caps to the students, they presented the school with 19 computers and fixed the internet connection for the computer lab we helped set up in 2009.
OCBC CYCLE SINGAPORE
In November 2008, the community engagement efforts took on a higher profile as we announced our support as the title sponsor of Singapore's first mass participation cycling event on public roads. OCBC Cycle Singapore was designed to promote an active lifestyle among people of all ages and fitness levels. Sponsoring the event is in line with our ongoing commitment to engage with the community. The inclusive nature of the activity event and its ability to bring people closer together, are consistent with our value of Teamwork as well as our business propositions aimed at families.
Through this event, they have seen a growing number of cyclists in Singapore take part in the event as the cycling course allows. The bank believes that the enthusiasm for, and participation in the event will only grow in the coming years. In line with this sponsorship, OCBC Bank, the Singapore Sports Council (SSC) and the Singapore Amateur Cycling Association (SACA) also entered into a partnership agreement since 2008 to train and develop a pool of talented cyclists who will represent Singapore at major Games. This significant partnership is the first structured talent identification and development programme involving a corporate organisation, the SSC, and the national sports association for cycling (SACA) in Singapore. The programme helps cycling enthusiasts fulfil their dreams and have a taste of competing among elite cyclists in regional competitions. It also ensures that there is a steady pool of talented cyclists that SACA can work with and nurture for future events.
The bank is sponsoring this event for the long run. Following the success of OCBC Cycle Singapore 2009 and 2010, we have confirmed our participation as title sponsor in 2011 and 2012.
Helping in Times of Natural Calamities
The bank does their part to support the communities that operate in when unfortunate natural disasters strike, such as earthquakes and floods. In response to the calamity brought about by Cyclone Nargis in Myanmar on 2 May 2008 and the earthquake in Sichuan on 12 May 2008, we extended our helping hand in three areas: corporate donations, staff donations and/or opening up banking channels to facilitate public donations. We also donated RMB 1 million (S$200,000) to support rebuilding efforts in and contributed S$40,000 to the Singapore Red Cross Society to support the relief efforts in Myanmar. In August 2010, the bank facilitated the collection of public donations by opening up our banking channels, to support relief and recovery efforts for the Pakistan Floods. Customers were able to make donations via our ATMs, mobile banking, internet banking and phone banking.
FINANCIAL ANALYSIS
Oversea-Chinese Banking Corporation Limited ("OCBC Bank") reported a net profit attributable to shareholders of S$676 million for the first quarter of 2010 ("1Q10"), a 24% increase from the S$545 million profit a year ago. Excluding a non-recurring insurance gain of S$175 million1 in 1Q09, earnings growth in 1Q10 would have been 83%. The strong performance was driven by broad-based growth in non-interest income, including healthy insurance revenue from Great Eastern Holdings, and a significant reduction in allowances. The first quarter performance marked a new quarterly record for the Group in terms of core net profit.
The first quarter results included two months consolidated results of the former ING Asia Private Bank, which became a wholly-owned subsidiary on 29 January 2010 and was renamed Bank of Singapore Limited. Bank of Singapore's two months' profit contribution was not material relative to the Group's record earnings for the quarter. Excluding the non-recurring gains in 1Q09, non-interest income in the first quarter surged by 68% to S$681 million, accounting for nearly half of the Group's revenue. All major segments - fees and commissions, insurance, trading and investment income - registered strong growth, benefiting from the economic recovery and more favourable market conditions as compared to a year ago. Net interest income was 5% lower than a year ago at S$704 million, as margins were impacted by reduced gapping income and a sustained low interest rate environment. Operating expenses rose 21%, largely from higher staff costs. Allowances for loans and other assets were S$25 million, well below the S$197 million in 1Q09.
The Group's non-performing loans ("NPL") ratio improved to 1.5%, from 1.8% a year ago and 1.7% at the end of 2009. Compared to the fourth quarter of 2009 ("4Q09"), net profit was 35% higher. Non-interest income grew 37%, while net interest income increased 2%. Operating expenses grew 8%, while allowances were lower than the fourth quarter's S$77 million. Annualised return on equity improved to 15.3% from 14.9% in 1Q09 and 11.6% in 4Q09, while annualised earnings per share rose 20% year-on-year to 82.1 cents. 1 S$201 million before tax and minority interests, classified under life assurance profit (non-interest income). The gains were mainly due to the adoption of the risk based capital framework for insurers in Malaysia.
NET INCOME INTEREST
Net interest income declined 5% year-on-year to S$704 million, as the growth in interest earning assets was more than offset by a lower interest margin. Net interest margin fell from 2.42% to 2.03%, contributed by lower gapping income and decline in average asset yields as interest rates remained low. Loans grew by 12% from a year ago, and 10% from the previous quarter, to S$90.4 billion. Excluding the consolidation effect of Bank of Singapore, loan growth would have been 7% year-on-year and 4% quarter-on-quarter. Growth during the quarter was driven by loans to the general commerce, housing and manufacturing sectors, and to professionals and individuals. Compared with 4Q09, net interest income increased 2%, contributed by assets growth. Net interest margin narrowed 5 basis points from 2.08% in 4Q09 due to the inclusion of Bank of Singapore's loweryielding assets which are largely collateralised by marketable securities. Excluding Bank of Singapore, the Group's net interest margin would have improved one basis point over the previous quarter.
NON INTEREST INCOME
Non-interest income rose 12% year-on-year to S$681 million. Excluding the non-recurring insurance gains of S$201 million in 1Q09, underlying year-on-year growth was 68%. Fee and commission income rose 46% to S$226 million, led by increases in wealth management, loan-related, trade-related and stockbroking income. Life assurance profits surged 127% (excluding the 1Q09 non-recurring gains) to S$146 million, contributed mainly by a strong investment performance in the Non- Participating Fund and a better claim experience. Net trading income rose 40% to S$157 million as the Group achieved strong results in derivatives and securities trading and a stable level of foreign exchange income. The disposal of investment securities resulted in net gains of S$65 million for the
quarter as compared to net losses of S$36 million a year ago. Quarter-on-quarter, non-interest income increased by 37%, with fee income and life assurance profits growing by 18% and 15% respectively, while net trading income and gains from investment securities more than doubled.
OPERATING EXPENSES
Operating expenses increased 21% from a year ago, and 8% from the previous quarter, to S$502 million, partly contributed by the consolidation of Bank of Singapore. Year-on-year, staff costs rose 21% as a result of higher salary and other compensation costs, and increased headcount. Other operating expenses increased 32% mainly because of higher insurance related expenses. The cost-to-income ratio was 36.2% in 1Q10 as compared to 30.7% in 1Q09 and 39.4% in 4Q09.
ALLOWANCES QUALITY
Net allowances for loans and other assets declined significantly to S$25 million from S$197 million in 1Q09 and S$77 million in 4Q09. Specific loans allowances fell to S$5 million, reflecting the improving economic conditions and the Group's strong portfolio quality. Portfolio allowances of S$30 million were set aside in the quarter in line with loan growth. Net allowance writebacks of S$10 million were recorded for CDOs and other assets. The Group's NPL ratio improved further to 1.5%, from 1.7% at the end of 2009 and 1.8% a year ago. Absolute NPLs fell 5% over the previous quarter to S$1,319 million. The allowance coverage ratio remains strong, with cumulative allowances representing 107% of total non-performing assets ("NPAs") and 266% of unsecured NPAs.
CAPITAL POSITION
The Group's capital position remains strong post-consolidation of Bank of Singapore. As at 31 March 2010, Tier 1 capital adequacy ratio ("CAR") was 14.4% and total CAR 15.2%, well above the regulatory minimum of 6% and 10% respectively. Core Tier 1 ratio, which excludes perpetual and innovative preference shares, was 10.8%.
INNOVATIVE BANKING
Oversea-Chinese Banking Corporation Limited ("OCBC Bank") and its subsidiary, OCBC Securities Pte Ltd ("OSPL"), announced that they will be offering banking and
securities trading services on iPad with effect from 23 July 2010. The applications will be made available through the Apple App Store in Singapore. The new service offerings are in line with OCBC Bank's ongoing strategy to proactively leverage on technological innovation to make it easier for our customers and investors to perform retail banking and securities trading transactions, anytime and anywhere. It is also in keeping with OCBC Bank's commitment to offer our customers choice of multiple channels to suit their lifestyles. Since its launch in May 2010, more than three million iPad units have been sold worldwide. Similar to the popularity of the iPhone, OCBC Bank recognises that the iPad can potentially become an important tool of engagement with customers and investors alike.
OCBC MOBILE IPAD
Mr Patrick Chew, OCBC Bank's Head of Delivery, Global Consumer Financial Services said, "The need to evolve our banking channels with devices like the iPad is important as customers' expectations grow in tandem with what technology can offer. Consumers expect convenience and ease when they go about with the basic necessities of life, especially when it comes to services that they use on a regular basis, such as banking."
"Following the increased usage of OCBC Mobile Banking when it was made available on iPhones in 2008, the iPad's responsive high-resolution multi-touch display has allowed us to create a banking application that will enable users to have an even better banking experience." The OCBC iPad banking application will continue to evolve after today's launch, with new banking services added progressively.
OCBC TRADE THROUGH IPAD
Mr Hui Yew Ping, Managing Director of OCBC Securities Pte Ltd shared, "Since the launch of our iOCBC TradeMobile iPhone application in May this year, there has been close to 10,000 downloads. This shows that investors are increasingly tech-savvy and want to leverage on technology to make investing faster and more accessible." He added, "We have customers who are based outside Singapore who are downloading iOCBC TradeMobile. Correspondingly, we see about 35% of the trading transactions through iOCBC TradeMobile carried out outside the Singapore market. This trend is in line with our global trading value proposition where customers can trade in 14 key global markets anywhere with iOCBC. With iPad being both a mobile and powerful platform with highly intuitive user interface, we believe that trading activity will be further integrated into investors' lifestyles. iOCBC TradeMobile not only provides our customers with a new trading channel, it will also help us reach out to a new market segment."
OCBC Securities customers will find the iOCBC TradeMobile iPad application more dynamic and easier to control, with better presentation of on-screen content. The trading features on the iPad were selected based on feedback from our customers as well as our observation of investors' trading habits. With iOCBC TradeMobile iPad application, our customers can:
1) View 20 of their favourite stocks or market indices at a glance
2) Trade into 14 key local and foreign securities exchanges that include Bursa Malaysia, the Hong Kong Stock Exchange ("HKEX"), National Association of Securities Dealers Automated Quotations ("NASDAQ"),
OCBC Bank customers can enjoy better layout and more intuitive use of the services on iPad. Among the suite of banking services that our customers can carry out are:
1) Locating the nearest OCBC branch and ATMs real time
2) Obtaining a graphical view of bank account transactions and balances
3) Comparing savings balances versus outstanding balances of credit facilities in pie chart form
4) Paying bills online and transferring funds to other bank accounts online
5) Tracking credit card transactions
FINANCIAL YEAR 2009 : THE LATEST ANALYSIS
Oversea-Chinese Banking Corporation Limited ("OCBC Bank") achieved a resilient set of results for the financial year ended 31 December 2009, amid challenging operating conditions arising from the global financial crisis. Group net profit grew by 12% to S$1,962 million, while growth in terms of core earnings was significantly higher at 32%, after adjusting for the one-off divestment gains and tax refunds of S$263 million in the 2008 reported earnings. Operating profit before allowances increased 26% to S$3,019 million, underpinned by a recovery in insurance income and strong trading results which lifted non-interest income by 37%, as well as a 3% reduction in operating expenses as a result of disciplined cost management. Prudent risk management and active portfolio reviews helped to contain credit costs at a slightly lower level than 2008.
The Group's non-performing loans ("NPL") ratio peaked in the second quarter, and improved to 1.7% by year-end. For the fourth quarter of 2009 ("4Q09"), net profit rose 67% year-on-year to S$502 million. Excluding the S$51 million tax refunds in 4Q08, core net profit grew 101%, contributed by significantly stronger non-interest income and reduced allowances. Compared to 3Q09, net profit was 12% higher, as the previous quarter included the effect of a S$213 million loss (S$154 million after tax and minority interests) from the redemption offer of GreatLink Choice ("GLC") policies by subsidiary Great Eastern Holdings ("GEH"). The non-recurrence of this item was partly offset by lower underlying insurance income following an exceptionally strong performance in the third quarter. Return on equity, based on core earnings, improved to 12.2% in 2009, from 9.9% in 2008. Core earnings per share for the year rose 29% to 59.4 cents.
A final tax-exempt dividend of 14 cents per share has been proposed, bringing the full year 2009 dividend to 28 cents per share, unchanged from 2008. The dividend payout of 46% of core earnings is in line with the Group's target minimum of 45%. Similar to the previous two dividend payments, shareholders will be given an option to receive the final dividend in the form of shares, the issue price of which will be set at a 10% discount to the average closing share price during the price determination period (ex-dividend date to books closure date, both dates inclusive).
ACCOMPLISHMENTS BY THE BANK GROUP:
• Best Local Bank in Singapore: Alpha Southeast Asia '10
• Best Trade Finance Bank in Singapore: FinanceAsia Country Awards for Achievement '10
• Project Finance Deal of the Year for Senoko Power Project Refinancing: ALB SE Asia Law Awards '10
• Asset & Corporate Finance Deal of the Year for South Beach Consortium Term Loan Facility: ALB SE Asia Law Awards '10
• Best Domestic Bank in Singapore: Asiamoney Best Banks Awards '10
• Best Domestic Provider for Local Currency Products in Singapore: Asiamoney's Structured Products Poll '10
• One of the Top 10 companies in Singapore for Best Corporate Governance, Best Investor Relations and Most Committed to a Strong Dividend Policy: FinanceAsia's 10th Annual Poll of Asia's Top Companies
• One of the Top 10 Best Managed Companies in Singapore: FinanceAsia's 10th Annual Poll of Asia's Top Companies
• Achievement Award for Cash Management in Singapore: The Asian Banker Transaction Banking Awards '10
• Best SME Bank in Singapore: The Asset Triple A Asset Asian Awards '10
• Best Trade Finance Bank in Malaysia (Foreign Bank Category): The Asset Triple A Asset Asian Awards '10
• Structured Finance Deal of the Year in Asia: The Banker '10
• Best Retail Bank in Singapore & Excellence in Customer Relationship Management: The Asian Banker Excellence in Retail Financial Services Awards '10
• Financial Insights Innovation Award: IDC Financial Insights '10
• Best Mobile Payments & Authorisation Solution of the Year in Southeast Asia: Alpha Southeast Asia '09
• Strongest Bank in Singapore: The Asian Banker Leadership Achievement Awards '09
• Asia Pacific Power Deal of the Year: Project Finance Magazine '09
• Best Activation/Acquisition Program Award for OCBC Titanium F1 Rocks: MasterCard Hall of Fame Awards '09
• Best Vanilla/Structured Loan Deal of the Year Award in Southeast Asia: Alpha Southeast Asia Annual Deal/Solution Awards in Southeast Asia '09
• Best Securitisation Deal of the Year in Southeast Asia: Alpha Southeast Asia Annual Deal/Solution Awards in Southeast Asia '09
• Best Structured Wealth Management Product Award: Money Week Annual Poll for Best Wealth Management Products '09
• Best Domestic M&A Deal Award: FinanceAsia End-of-Year Achievement Awards '09
• Best Domestic Bank in Singapore Award: The Asset Annual Triple A Country Awards '09
• The Cable TV Campaign of the Year Award for "It's Our Pleasure" Campaign: Institute Advertising of Singapore Hall of Fame Awards '09
• SPRING Service Excellence Award: SPRING Singapore '09
• Best Foreign Bank: Chengdu Shangbao Financial Awards '09
• Best Wealth Management Brand: Chengdu Shangbao Financial Awards '09
• Best Co-Brand Product for OCBC Robinsons Platinum Card: Lafferty SE Asia Payment Cards Awards '09
• Most Transparent Company Award - Finance Category (Runner-up): SIAS 10th Investors' Choice Awards '09
• Among Singapore's Top 10 most admired companies and No 1 in financial reputation: The Wall Street Journal Asia 200 Survey '09
• Best Contact Centre of the Year (Gold Award): Contact Centre Association of Singapore '09
• Best Technology Solution Contact Centre of the Year (Gold Award): Contact Centre Association of Singapore '09
• Best Contact Centre of the Year for Customer Relationship Program (Gold Award): Contact Centre Association of Singapore '09
• Best Contact Centre of the Year for Employee Retention Program (Bronze Award): Contact Centre Association of Singapore '09
• Among the World's 50 Safest Banks: Global Finance '09
• Singapore Innovation Class (I-Class) Certification: SPRING Singapore '09
• Best Corporate/Institutional Internet Bank in Malaysia: Global Finance '09
• Best Bond House in Singapore: Alpha Southeast Asia's Annual Best Financial Institution Awards in Southeast Asia
