OCBC - Citi

Net interest income – Credit demand remains firm and broad-based, from both

consumer and business (corporates and SMEs), and across various sectors. Most
loans originated are on floating rates rather than fixed. NIM fell 7bps QoQ in 2Q10
due to various factors: Blending effects from consolidating Bank of Singapore
(BoS)’s loan portfolio (c.1-2bps), lower gapping opportunities, thinner loan spreads,
and generally lower interest rate environment. Mgmt noted some foreign banks
have been more aggressive in the corporate lending space. As such, spreads have
narrowed, but remain above pre-crisis 2007 levels. For the rest of the year, mgmt
expect loans spreads to stay fairly stable.

 Update on regional businesses- Malaysia: Accounted for 26% of OCBC’s 1H10 PBT.
OCBC is the largest foreign bank in Malaysia (by asset) focusing on the SME
segment, though housing loan momentum has also picked up in 1H10. Interest
margins helped by BNM rate hike (2Q10 +19bps QoQ). Recent pick-up in
expenses reflects tighter labor market, plus increased business volumes. Indonesia.
Bank OCBC NISP largely focused on the SME segment, but has been adding
exposure to consumer loans (c.30% of loan book). 2Q10 NIM dipped 21bps QoQ
partly on increased consumer loans (lower margin), and higher deposit costs due to
competition from some foreign banks.

 Bank of Singapore (BoS) - Bank has been active in recruitment, with headcount
rising to 220 (from c.200, including 50 from OCBC Private Bank). Mgmt estimates
incoming RMs will take 6-12 months to re-grow their AUMs. Non-interest income /
interest income split c.80:20, while higher cost-income ratio (relative to group) is
balanced against lower capital consumption. Acquisition has generated numerous
cross-selling opportunities (both-way) between the corporate/SME business and
BoS. Over time, BoS could become net US$ liquidity provider to group even clients’
asset largely denominated in US$.

 Great Eastern (GEH). Underlying business growth has been consistent, both in
Singapore and Malaysia. GEH has also been focusing on higher margins /
embedded value products (eg. investment-linked products). 2Q10 earnings
affected by poorer investment returns due to market volatility related to eurozone
concerns. In Indonesia, GEH’s footprint is still small, but firm has been working to
increase agency workforce. Inorganic growth not ruled out, but only if the
opportunity is right