My first Publication ocbc_ar17_fullreport_english | Page 138

MANAGEMENT DISCUSSION AND ANALYSIS
(OCBC Group – As at 31 December 2017)
OVERVIEW (continued)
Funding, Liquidity and Capital Position
The Group’s funding, liquidity and capital position continued to be resilient. Customer loans of S$237 billion were up 8% from
S$220 billion the previous year, driven by growth across the corporate and consumer segments. Customer deposits rose 8% to
S$284 billion, underpinned by 4% growth in current account and savings account (CASA) deposits, which made up 49.2% of
total deposits. As at 31 December 2017, the loans-to-deposits ratio was 82.5%, relatively unchanged from 82.9% a year ago.
The Group’s average Singapore dollar and all-currency liquidity coverage ratios (excluding OCBC Wing Hang Hong Kong,
OCBC Wing Hang Macao and OCBC Yangon which will be included in due course) were 262% and 148% respectively for 2017,
well above the respective regulatory ratios of 100% and 80%.
The Group’s Common Equity Tier 1 (CET1) capital adequacy ratio (CAR), Tier 1 CAR and Total CAR as at 31 December 2017 were 13.9%,
14.9% and 17.2% respectively. Based on Basel III transitional arrangements, these ratios remained well above the respective regulatory
minima of 6.5%, 8% and 10%. The Group’s CET1 CAR, based on Basel III rules which will be effective from 1 January 2018, improved to
13.1% from 12.4% in the previous year. In addition to these minimum capital requirements, a Capital Conservation Buffer (CCB) of 2.5%
and Countercyclical Buffer of up to 2.5% are being phased in from 2016 to 2019. The CCB was 1.25% as at 1 January 2017, and would
be increased by 0.625% each year to reach 2.5% on 1 January 2019. The Group’s leverage ratio of 7.3% was above the 3% minimum
regulatory requirement.
Subsidiaries’ Full Year Results
Great Eastern Holdings achieved a net profit after tax of S$1.16 billion for the year, significantly above S$589 million in 2016. Its robust
year-on-year performance was driven by higher operating profit from its insurance business and strong performance in its investment
portfolio as a result of favourable market conditions. Total weighted new sales and new business embedded value grew 23% and 17%
respectively from a year ago. Great Eastern Holdings’ contribution to the Group’s net profit, after deducting amortisation of intangible
assets and non-controlling interests, rose from S$470 million to S$968 million, contributing 23% of the Group’s earnings.
OCBC Bank Malaysia reported a 17% rise in 2017 net profit after tax of RM949 million (S$305 million), underpinned by a rise in net
interest income and non-interest income, and from a decline in allowances. As at 31 December 2017, customer loans were RM68 billion
(S$22 billion) while customer deposits were RM74 billion (S$24 billion). Asset quality remained healthy, with the NPL ratio down at
2.1% from 2.2% a year ago.
Bank OCBC NISP’s net profit after tax rose 22% to IDR2,176 billion (S$224 million), driven by broad-based income growth which more
than offset a rise in operating expenses. Customer loans were up 14% over the previous year at IDR106 trillion (S$10 billion), while the
NPL ratio was lower at 1.8%. As at 31 December 2017, customer deposits of IDR113 trillion (S$11 billion) were 10% higher than a year ago.
OCBC Wing Hang’s full year net profit after tax was 18% higher at HK$2.41 billion (S$425 million), driven by increases in both net
interest and non-interest income. Customer loans rose 11% to HK$180 billion (S$31 billion) and the NPL ratio improved to 0.5%
from 0.9% a year ago, while deposits increased 15% to HK$222 billion (S$38 billion).
Bank of Singapore’s assets under management as at 31 December 2017 increased 25% to US$99 billion (S$132 billion) from
US$79 billion (S$115 billion) a year ago, driven by sustained net new money inflows and improved market valuations. Its earnings
asset base, which included secured loans, likewise rose 25% to US$121 billion (S$161 billion) from US$97 billion (S$140 billion)
the previous year.
The Group’s 2017 wealth management income, comprising income from insurance, private banking, asset management, stockbroking
and other wealth management products, rose 43% to a new high of S$3.25 billion. As a proportion of the Group’s total income,
wealth management income contributed 34%, as compared to 27% in 2016.
Final Dividend
The Board has proposed a final tax-exempt dividend of 19 cents per share, an increase from 18 cents per share the previous year,
bringing the 2017 total dividend to 37 cents per share, up from 36 cents in 2016. The Scrip Dividend Scheme will not be applicable to
the final dividend. The estimated total dividend payout will amount to S$1.55 billion, an increase of 2.86% over the prior year
and representing 37% of the Group’s net profit in 2017.
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OCBC ANNUAL REPORT 2017