New Horizons II Report Card 21 February 2008 1 Agenda Recap - - PowerPoint PPT Presentation

Presentation to Media and Analysts New Horizons II Report Card 21 February 2008 1

Agenda • Recap - New Horizons II • Highlights of Our Achievements in 2007 � Customers � Products � Risk Management � Productivity � People � Shareholder Value � Overseas Expansion • Appendix: Detailed Report Card 2

New Horizons II: Recap 1. Focused Overseas Expansion � Shift emphasis from adding more country flags to deepening market penetration in Malaysia, Indonesia, China � Selectively explore opportunities to establish strategic partnerships in Indochina � Grow market share in the consumer and SME segments in Indonesia and China by transferring successful business models and product solutions to existing branches and alliances in the two countries 3

New Horizons II: Recap 2. Improving our performance through a Balanced Business Scorecard � Customers � Products � Risk Management � Productivity � People � Shareholder Value 4

Agenda • Recap - New Horizons II • Highlights of Our Achievements in 2007 � Customers � Products � Risk Management � Productivity � People � Shareholder Value � Overseas Expansion • Appendix: Detailed Report Card 5

Customers – Consumers +10% • Healthy growth in number of consumer customers and 20% increase in revenues +7% +2% +9% • Deployed customer insights to successfully strengthen differentiation and service innovation via “Service & 2007 2004 2005 2006 Convenience” # of Consumer Customers (Group) � Enhanced service training � Radical branch transformation � Sunday Banking -4%* +5% � “ATM Plus” Kiosk Banking and a wider +4% ATM network +5% � FairPrice Plus Supermarket Banking • Raised the profile of OCBC’s offerings with the “Stay Curious” marketing 2007 2005 2006 2004 campaign in 4Q07 Assets per Mass Customer, Singapore * Excluding new customers acquired in 2007, assets per Mass Customer grew 7% 6

Customers – Businesses • Healthy growth in number of SME +15% customers and 16% increase in +6% +3% revenues +2% • Maintained robust cross-sell ratio • Focused on building differentiation around convenience and service 2007 2004 2005 2006 # of SME Customers � Simplified account opening process and provided instant cheque book issuance +1% for SMEs – ‘Entrepreneur Account’ and ‘Business Smart’ Account +25% � ‘Easi-BizCard’ & ‘Easi-Alerts’ in Malaysia +11% � Added ‘Quick Cheque Deposit’ boxes at petrol stations and industrial buildings; 2004 2005 2006 2007 five locations at Petronas stations in Cross Sell Ratio* (Spore & M’sia) Malaysia *Defined as % of non asset revenues to asset revenues 7

Product Innovation • Innovation index lower at 11%, but absolute revenues from new products are up 20% 84 83 • Increased recognition for our product 78 61 58 capabilities • Best Cash Management Bank in Singapore (Finance Asia and Asiamoney Customer Poll) 2003 2004 2005 2006 2007 # of New Products • Best Trade Finance Bank in Singapore (Alpha South East Asia) and Malaysia (The Asset) • Singapore Loan House of the Year (IFR Asia) • Best Domestic Provider of Forex Services, Best for Innovative Forex Products and Structured Ideas and Best Forex Prime Broking Services 16% 14% (Asiamoney Polls) 11% 11% • Best Fund Group over 3 years (Mixed Asset 6% Group) (Edge-Lipper) 2007 2003 2004 2005 2006 Innovation Index Defined as % of revenues from new products 8

Risk Management • Adoption of Basel II from 1 January S&P Moody’s Fitch 2008 2007 A+ Aa1 AA- � Advanced IRB Approach for major 2006 A+ Aa3 AA- retail portfolios 2005 A+ Aa3 AA- � Foundation IRB Approach for major corporate portfolios 2004 A+ Aa3 A+ � Standardized Approach for operational 2003 A Aa3 A+ risk Credit Ratings • Enhanced market and credit risk 6.9% capabilities in support of expanded NPL ratio 5.0% trading activities and new market 4.1% 3.0% entry 3,834 1.7% 2,866 2,392 1,829 • Improved credit ratings with Moody’s 1,354 upgrading us to Aa1 in May 2007 2003 2004 2005 2006 2007 NPLs (S$m) 9

Productivity • Productivity gains of 26% and unit cost reductions of 15% across 7 operations factories 41.4% 41.1% 40.1% 39.6% 39.6% • Two additional work streams commenced hubbing into Malaysia; 2003 2004 2005 2006 2007 cumulative hubbing of 6 streams to- date with up to 70% of Singapore Cost to Income Ratio transactions now being processed in Malaysia. 10-year savings estimated at more than S$100 million 2003 2004 2005 2006 2007 -5% -9% • Executed another 10 cross-functional -11% -13% -15% process improvement projects with S$11.4 margin improvement; cumulative margin improvements of S$124 million to-date Unit Processing Costs Reduction 10

People • Employee engagement score up by another 6% • Employee shareholding remains +8% above 30% +6% +5% +5% +4% • Average training days per staff maintained at a high level (increased 2003 2004 2005 2006 2007 by >50% since 2002) Employee Engagement Score Improvement � Launched leadership training programme for senior executives 39% � Opened new and expanded 31% training facilities, ‘Learning 29% Space @ OCBC’ • 12% Opened Little Skool-House (a child 10% care center) and new Recreation Club for staff 2003 2004 2005 2006 2007 Employee Shareholding 11

Shareholder Value 13.4% 11.8% • Core ROE improved from 11.8% to 11.4% 10.3% 13.4% (13.8% if Bank of Ningbo impact is excluded) • Core EPS growth of 32% vs 10% target • Dividend per share increased by 22%, 2004 2005 2006 2007 dividend payout at 46% of core ROE excl divestment gains earnings 49% 46% 44% • S$90m divestment gains 38% • Invested S$88m in Bank NISP’s rights issue 2004 2005 2006 2007 Dividend Pay-out Ratio 12

Overseas Expansion Malaysia • Obtained approval from Bank Negara to establish Islamic subsidiary • Opened another new branch in Damansara Indonesia • Continued network expansion at Bank NISP (added 93 branches and 148 ATMs) • Launched wealth management platform • Established exclusive partnership with Great Eastern Indonesia 2,447 China • Launched locally incorporated 1,878 27% 1,706 subsidiary in Aug 2007; opened 2 Singapore 1,359 27% new sub-branches in Shanghai & Malaysia 30% 1,094 Chengdu 24% Other 65% 14% Locations 66% 64% Vietnam 69% 78% • Seeking regulatory approval to increase our stake in VP Bank from 2003 2004 2005 2006 2007 10% to 15% Pretax Profit excl divestment gains (S$m) 13

In a Nutshell • Good progress on our scorecard objectives � Continued to build differentiation in home markets � Penetration of overseas markets picking up • New Horizons ll plan on target to achieve 2010 goals 14

Agenda • Recap - New Horizons II • Highlights of Our Achievements in 2007 � Customers � Products � Risk Management � Productivity � People � Shareholder Value � Overseas Expansion • Appendix: Detailed Report Card 15

Our Achievements – Consumers (continued) OUR ACTION PLANS OUR ACTION PLANS PROGRESS PROGRESS • 10% overall growth in Consumer customers 1. Focus on acquiring and doing more with Customers • 18% growth in Premier Banking customers • 4% drop in assets per mass customer in Singapore* • 7% growth in assets per mass customer in Malaysia 2. Deepen and deploy customer • Established Regional Analytics Competency Centre in insights into new and enhanced Chengdu; rolling out customer analytics regional platform to Malaysia Value Propositions • Pioneered supermarket banking with FairPrice Plus around value proposition of “Simplicity and Good Value Financial Products” • Implemented new Premier Banking branch designs along with new service standards • Engaged SMU & NTU students to co-develop and manage OCBC’s value proposition as their de facto bank (over 50% penetration) * Excluding new customers acquired in 2007, assets per Mass Customer grew 7% 16

Our Achievements – Consumers (continued) OUR ACTION PLANS OUR ACTION PLANS PROGRESS PROGRESS • Re-modeled 6 branches in Singapore and Malaysia with 3. Refresh OCBC’s Branding through new format, including enhanced service excellence Service Excellence and Convenience training, integrated merchandizing designs, digital marketing stations and new uniforms • Extended Sunday Banking to 10 branches with unique family-based themes and events • Launched the “Stay Curious” television commercials • Expanded ATM network (2 nd largest in Singapore) and introduced New “ATM Plus” Kiosk Banking with new Cash-In & Out functionalities • Value of transactions conducted via the mobile and internet channels increased by over 500% and 70% respectively 17