FY 2024 Full-Year Financial Results Briefing

Full year, 2024, Group Net profit was 7.59 billion Singapore dollars up 8%. This was driven by robust income growth across our three key pillars of banking, wealth management and insurance. Total income search above Singapore dollars, 14 billion for the first time to a new high from broad-based income growth. Net interest income rose to a record of 9.76 billion, supported by 5% asset growth. Non-interest income grew 22% to 4.72 billion. Wealth-related fees and insurance income delivered strong growth, while our trading income rose to a record high. Cost to income ratio was below 40% at 39.7%. We achieved high single digit

loan growth and deposit growth this year. Loan growth of 8% was above our guidance level. quality remain healthy with our NPL ratio lower at 0.9% year-on-year. Total credit costs were also lower at 19 basis points. Our capital position remains strong. Transitional CET1 ratio was 17.1% and fully phased in CET1 ratio at 15.3%. With our resilient results and strong capital position, we are pleased to announce a new two-year capital return plan to enhance shareholders' return. $2.5 billion capital distribution over two years through special dividends and share buybacks.

We will initiate our capital return to start early, with a special dividend for FY24 and another one for FY25 set at 10% of our group net profit. The balance of around $1 billion will be via share buybacks over two years at management discretion and barring any unforeseen circumstances. shares will be acquired from open market and will be cancelled. This means that total dividend payout of 60% annually for FY24 and FY25, i.e. 50% target payout ratio for ordinary dividend and an additional 10% in special dividend. For FY24, we propose final ordinary dividend of 41 cents per share,

bringing our total ordinary dividends to 85 cents or 50% of our group profit. We further propose a special dividend at 16 cents per share or 10% of our group profit. That comes to a total of 101 cents per share, 23% higher than 82 cents that we paid in FY23. We will repeat the 60% dividend payout for FY25. Now our capital return plan is set after a comprehensive review of our capital position. Taking into consideration the capital required to support our business growth, investment options available to us, and based on our target 14% fully face-in CET1 ratio. Now let's move back to our financial results

On slide 5, for full year of 24, we reported record profits for both grouped and banking operations for the third consecutive year. For the fourth quarter, group net profit was 4% higher year on year. Quarter on quarter, group net profit declined 15%. This was partly due to the decline in insurance income from Great Eastern arising from changes in medical insurance business in its core markets of both Singapore and Malaysia. These changes were explained in Great Eastern results which was released yesterday. At banking operations level, net profit declined by a smaller degree of 9%, due primarily to seasonal slowdown in trading

and investment activities. Earlier on, I mentioned that our record profit was driven by strong contribution and performance across three key business pillars of banking, wealth management and insurance. This reflected the power of our diversified franchise and collective strength as one OCBC group to deliver continuous sustainable growth and improve shareholders' returns. Banking operations reported a third year of record profit, driven by strong income growth. Wealth management businesses continue to grow from strength to strength. Both wealth management, income and assets under management deliver double-digit growth to new record levels.

Our wealth management income rose 13% to 4.89 billion. under management grows 14% to $299 billion, led by continuous net new money inflows. For insurance, profit contribution from Great Eastern grows 39% year-on-year to $882 million, driven by strong underlying insurance business as well as improved investment performance in its shareholders' funds. Moving on to net interest income in slide 11. Our full year net interest income of 9.76 billion was a new high, supported by 5% average asset growth from both customer loans and lower yielding high quality assets such as government securities

and interbank lending. In 2024, we deployed assessed liquidity into these high-quality assets as part of our ongoing balance sheet management to sustain net interest income in a declining interest rate environment. Net interest margin was down 8 basis points to 2.20%. funding costs rose faster than asset yields over the year on average for FY24 compared to FY23. NIM was also partly impacted by the increase in high-quality assets which are income-accretive, but lower yielding compared to our customer loans. Starting in 2025, we expect full year NIM to trend lower to around 2.0%.

This takes into consideration the legged effect from fat rate cuts of a total of 50 basis points in late November as well as in December of last year, and our house view of 3 rate cuts of up to 75 basis points in 2025. As of end December 2024, NIMS sensitivity based on one basis point dropped in rates across our four major currencies of Singapore dollars, US dollars, Hong Kong dollars and Malaysian ringgit was about 4 to 5 million for one basis point of drop. Now, this is lower than the 7 million a year ago as we continuously took steps to reduce NIMS sensitivity, including growing fixed-rate loans and putting on more cash flow hedges.

We are touching on non-interest income now. Non-interest income rose 22% to 4.72 billion, driven by broad-based growth. related and insurance income rose higher. Trading income rose to a record high. For the fourth quarter, non-interest income was up 18% year on year but down 30% Q on Q. As I've highlighted earlier, this was partly impacted by lower insurance income from Great Eastern in the fourth quarter. The wealth and trading income were also seasonally lower in the fourth quarter. However, we see strong momentum coming back in January.

Full-year fee income rose 9% year-on-year, led by higher wealth-related investment banking and loan-related fees. Wealth management fees rose 22%. We saw higher fees across all our wealth channels. This was driven by a rise in customer activities from improved investment sentiment. Our higher AUM, based of $299 billion, also contributed to fee income growth as this higher percentage of AUM was placed in investment products compared to a year ago, contributing to our fee income growth. Now on average we have around 60% of our AUM invested in investment products across all our wealth segments.

In the fourth quarter, it's notable that fee income was actually slightly higher despite a seasonally quieter quarter in Fortview. Trading Income Our trading income for the full year was at a new high of 1.54 billion Singapore dollars. The 53% increase from a year ago was driven by record customer flow treasury income. We also saw strong growth in non-customer flow trading income, coming from improved investment performance from both our global markets as well as Great Eastern. The robust growth in customer flow treasury income was contributed by both our consumer and corporate segments. For the fourth quarter, trading income declined from the high base that we achieved in the

third quarter, and in part also due to the seasonality that I mentioned earlier. Full year operating expenses were up 9% as we continued to invest in strategic initiatives and pursue business growth. The increase was led by staff calls, mainly from a combination of higher variable compensation in line with our income growth and business activities growth. We also saw headcount increase and annual salary increments. The consolidation of PT Bank Commonwealth from May 20-24 onwards also added to expense growth This year, cost to income ratio for FY24 was still maintained at below 40%.

Our local folio remains healthy and we are currently not seeing any systemic stress in any particular sectors. NPL ratio was 0.9% lower than a year ago. Total NPA's as at end December were lower year on year at 2.87 billion. In the fourth quarter, our new corporate NPA formation was mainly from a downgrade of one Hong Kong CRE account. We did not observe any significant stress in the Hong Kong CRE sector and we remained watchful and are closely monitoring the portfolio for any signs of early indicators of weakness, if any. Our full year, 24 total allowances were 690 million, down 6% year on year.