1H 2025 Financial Results Briefing

We are a bit early, but I guess we can start. So good morning, ladies and gentlemen. Welcome to OCBC second quarter 2025 results briefing. On our panel this morning, we have our group CEO, Ms. Helen Wong, and our newly minted Deputy CEO, Mr. Tan Tae-Long, our CFO, Ms. Goh-Ching-E, Mr. Kenneth Lai, our head of global markets. And then to Helen's left. Right. We'll have Mr. Sunny Quack, our head of consumer banking as well as our group CEO, Mr. Jason Moon. So I guess today I'm just a bit too excited because we have our CEO and WCO together. All right. So I think Chini will take over to go through our results and thereafter we will take a Q&A. Ching-Yi, please. Okay, our first half, 2025, group net profit was 3.7 billion Singapore dollars, 6% lower

than last year's record high level. Total income was little change at 7.2 billion. The The decline in net interest income was mostly compensated by growth in non-interest income, reflecting the resilience of our diversified franchise. Net interest income was down 5% to $4.63 billion against the backdrop of declining interest rates. I will spend more time to talk about net interest income in a later slide. income rose 8% to 2.57 billion, lifted by broad-based fee income growth and higher trading income. Expenses were well-managed and controlled, even as we increased our strategic spending to invest for growth.

Cost-to-income ratio stayed below 40% at 38.9%. We achieve solid year-on-year growth in loans and deposits, up 7% and 10% respectively. Asset growth remains resilient, with NPL ratio at 0.9%, total credit cost at an annualized of 18 basis points. Capital position remains strong. common equity tier one ratio was 17% and fully face-in ratio was 15.3%. In line with our target ordinary dividend payout ratio of 50%, in-trim ordinary dividend of 41 cents was declared. Moving on to second quarter performance. Group and

banking operations, second-quarter net profits were 7% below last year, mainly due to lower net interest income. Against the previous quarter, banking operations' net profit was up 2%, from higher operating profit and lower allowances. At group level, net profit moderated by 4% as GEH second-quarter performance was impacted by lower insurance income. Our three key business pillars of banking, wealth management and insurance provide diversified earnings base. Banking business continued to see customer-driven growth, reflected by rising loans and deposit its volume. Net interest income came off from prior year's peak level but mostly compensated

by double digit growth in our non-interest income. We are seeing results of our focused investment in wealth management business. Our wealth management income was up 4% to new high of 2.66 billion, contributing 37% to our group total income. Banking AUM rose 11% year on year to record 310 billion, driven by net new money inflows across all our wealth segments as well as positive market valuation. Our first half, 25, net new money inflows were $9 billion, with $4 billion in second quarter alone. For insurance, first-half profit contribution from GEH grew 10% to $553 million.

GEH's higher contribution was driven by improved investment performance from its shareholders' funds and our increased stake in GEH following our voluntary general offer last year. GEH New Business Embedded Value or MBAF was 16% higher and MBAF margin improved to 44.7%. This reflected GEH's strategic shift towards higher margin products. Moving on to net interest income in slide 10. Second Q, net interest income decreased 3% Q on Q to 2.28 billion. Average assets rose 2%. But this was more than offset by 12 basis points decline in NIM.

We have included additional analysis on this slide to provide more colour on NIM. The main factor was the drop in loan use, which impacted group NIM by 17 basis points. This was largely due to the shortfall in Sink dollar and Hong Kong dollar benchmark rates during second quarter. in loan use outpaced the drop in deposit costs which reprise much slower than loans. Close to half of our loan book are denominated in SingDollar and HongKongDollar. About 80% of our SingDollar loans are on floating rates and nearly all our HongKongDollar loans are on floating rates. the second quarter, one month and three month compounded solar dropped more than 50 basis

points. And high ball fall was even sharper. One month and three month high ball rates were down around 300 basis points and 220 basis points respectively. Strategic equity deployment into income accretive high quality assets during our first water also led to a small drag on NIMM, about two basis points. Now our June exit NIMM was 1.88%. We expect upward inflection from the exit NIMM as we see flow through from ongoing deposit rate cuts. As an end zone, meme sensitivity based on 100 basis point drop in rates across our four major currencies of Singapore dollars, Malaysian ring gate, Hong Kong dollar and US dollars

was around 12 basis points on an annualized basis. For the remainder of this year, we maintain our assumption of three fat rate cuts. But with the unexpected sharp drop in solar and high board that I mentioned earlier, we now expect FY25 NIM to be in the range of 1.9 to 1.95%. Moving on to non-interest income. The first half non-interest income grew 8% year-on-year to 2.57 billion, lifted by strong growth in fee income, trading income, as well as higher realized gains from sales of fixed income securities. This more than compensated for a 9% decline in insurance income. The lower insurance income was largely due to two factors.

Mark to market impact of decline in interest rates on valuation of insurance contract liabilities and revaluation of private equity holdings in our insurance funds. More details have already been shared in GEH result announcement earlier this week. I will cover more details on fee and trading income in the next two slides. First half fee income grew 19% to 1.13 billion from work-based growth underpinned by increased customer activities. From the chart, we can see upward trajectory in fee income over the past few quarters, supported by sustained growth momentum in our wealth management fees. self-wealth management fees rose 25% to $548 million, the highest level in the past three

years. Our strong performance was driven by growth in private banking, bank assurance, unique trust as well as structured deposits. Compared to a year ago, customer increased deployment of funds into investments. Now around 60% of our AUM are placed in investments across all our wealth segments. First half 25, trading income was up 6% to 771 million. Customer flow treasury income, which made up almost 80% of our trading income, grew 10% to a record 594 million. The growth was contributed by both wealth and corporate segments. We also saw higher treasury sales across all our key markets.

On cost, we continued to be disciplined in cost management. First half, operating expenses rose by a modest 3%. Our cost to income ratio held below 40%. Q operating expenses was 2% lower Q on Q. Our overall loan portfolio quality remained sound and PL ratio unchanged at 0.9%. We continue to stay highly vigilant, including conducting ongoing reviews of the potential impact of trade tariffs on our loan book. We have assessed that trade tariffs having first order impact on 3% of our loan book and 2 third of our loan book are in sectors with strong domestic focus. We further stress tested our loan portfolio

and assessed that our portfolio remained resilient. First half 25 total allowances were 326 million, up 4% largely due to higher allowances for non-impact assets. This included preemptive allowances set aside for trade tariffs and macro uncertainties as well as adjustments for macroeconomic variables updates attributable to weaker economic outlook. The first half, total credit cost, is an analyze of 18 basis points. Second queue, allowances decline 46% queue on queue from lower allowances for both non-impact assets as well as impact assets.