Oversea-Chinese Banking Corporation Limited (O39) Earnings Call Transcript & Summary

Good morning, everyone. Okay. I'll run through our results very quickly. There's a bit of echo because of this cubicle we're in. I'm not sure whether you can hear us reasonably okay. Yes, because I hear myself quite well. Okay, anyway, I'll refer you to Slide 3. So despite the pandemic, we ended the year reasonably well. Fourth quarter, we delivered a net profit of SGD 1.13 billion, and that's an increase of 10% on a quarter-on-quarter basis. Full year, we reported a net profit of SGD 3.59 billion, 26% lower than SGD 4.87 billion in the previous year. You can see that the performance is once again demonstrated the strength of us having a diversified portfolio of businesses. And specifically, if you look at the net interest income, it rose 1% from the previous quarter to $1.44 billion, underpinned by a 2 basis point improvement in terms of net interest margin as we work very, very hard to manage the cost of our funding. Fee income and trading income were up 3% to 4% on the back of improved market sentiment and economic activities. And in particular, if you look at the Bank of Singapore, the AUM rose to a new level of USD 121 billion supported by both inflow of net new money as well as positive market sentiment. We select the valuation of the assets under management. [indiscernible] totaled with the new sales and new business embedded value rose strongly as well, 22%, 72%, respectively, quarter-on-quarter. We continue to remain vigilant in terms of expenses. Operating expenses, although an increase of 2% on a quarter-on-quarter basis was 4% lower for the full year. NPL was relatively unchanged at 1.5%. However, the true impact of the crisis would become more apparent. Subsequent to the roll-off of the various support measures. So we have continued to preemptively set sight some additional allowances to question potential credit deterioration. Consequently, if you look at our allowance coverage of NPA increased to 115%. Our capital ratio was higher at 15.2%. The successful transition of OCBC Wing Hang to IRB approach for resetting its assets. And also accumulation of earnings accounted for the 0.8% increase in terms of CET1 for the quarter. The Board has proposed a final dividend of SGD 0.159 bring full dividend for the year to SGD 0.318. Payout ratio will be 39%. No discount to the script will be applied. I'll now highlight some of the key financials, starting from Slide 7. Net profit for the fourth quarter was SGD 1.13 billion, 10% higher than the previous quarter. Against the previous year, net profit was 9% lower. Now moving on to slide 9. For the full year, the group net profit was 26% lower at SGD 3.59 billion. The unprecedented economy impact brought about by the COVID-19 pandemic has affected us -- had affected us in follow ways. Starting from slide 12. You'll notice that net interest income declined 6% to SGD 5.97 billion from SGD 6.33 billion a year ago. This was mainly due to the 16 basis point decline in net interest margin as a result of lower interest rate from the aggressive rate cuts by central banks globally. In terms of noninterest income, slide 13. Noninterest income for the full year was SGD 4.17 billion, 8% lower as compared to SGD 4.54 billion in the previous year, largely from low fee, trading and insurance income. Our wealth management business did reasonably well despite the pandemic. Total wealth management income for the full year was SGD 3.37 billion, slightly below 2019's and constituted 1/3 of the group's income. Private Banking AUM, as I mentioned earlier, rose 3% year-on-year and 4% quarter-on-quarter to USD 121 billion, supported by net new money inflow as well as higher market valuation. For the full year, our net fee income fell 6% year-on-year to SGD 2 billion, mainly from lower loan-related and credit card fees. Customers' activities fell during the first half of the year when movements were restricted. We did observe some pickup in activities in the second half of the year after the reopening in some countries, but these activities were still below 2019. On the other hand, wealth management fee increased 5% year-on-year to SGD 998 million. A low interest rate environment coupled with positive sentiment have resulted in an increase in investment activities amongst our customers. Consequently, customer flow trading income increased 12% to a new high of 668 million for 2020. On the cost front, on Slide 17, full year operating expenses decreased 4% to SGD 4.44 billion from a combination of lower staff costs as well as discretionary expenses. We continue to exercise strong cost discipline in line with income expectations. Moving on to slide 18. Total allowance of SGD 2.04 billion for 2020 increased significantly from SGD 746 million a year ago. Given the downturn the, we took prudent steps to set aside higher allowances for impaired assets as well as additional allowances for non impaired assets. As a result, allowance for impaired assets increased to SGD 1.18 billion. This included the allowances set aside for loans to Singapore, is Singapore oil trader. Additional allowances were also made for NPLs of the remaining oil and gas offshore support vessels. In addition, SGD 864 million in allowances for non-impaired assets, which largely comprised SGD 244 million in terms of macroeconomic variable adjustments and SGD 405 million in management overlay were also provided. As a result of the increased allowances, total NPA coverage increased to 115% from 86% a year ago. Now on slide 20, you'll notice that the overall credit quality of our loan portfolio remained reasonably sound with NPL ratio at 1.5%. As at year-end, nonperforming assets were SGD 4 billion, 3% higher than SGD 3.88 billion a year ago. One thing that's interesting is that net NPA formation was actually lower by SGD 325 million despite the pandemic. However, with the roll-off of the relief measures, we will be watchful of our exposures under moratorium. Moving on to slide 22. Loan growth continues to be muted, ending the year relatively unchanged at SGD 267 billion. Our loan portfolio remains well diversified by industry, building and construction still represented the largest segment at 27% of total loan. Oil and gas constitutes of 4%, including 2% in the OSV sector. Specifically, our OSVs exposure net of specific provision in CASA, ECL 3 were now about 0.2%. Our exposure to commodity sector was about 5%. Transportation sector loan to shipping, excluding OSV was 2%, of which aviation sector remained at less than 1%. As part of our ESG agenda, the group continues to expand its green and sustainable finance portfolio as we transition to a low-carbon economy. Moving on to our customer deposits. As at year-end, customer deposits were SGD 315 billion, up 4% for the year and 2% for the quarter, coupled with a muted loan growth, our LDR, loan-to-deposit ratio was low at 83.7%. As we shifted our funding from fixed deposit to CASA deposit, you will notice that the CASA ratio has increased from 48% to 60%. On slide 25, the final slide, the board proposed a final dividend of SGD 0.159 per share. The scrip dividend scheme will be applicable to the final dividend. Shareholders can elect to receive all or part of the dividend in scrip. However, there will not be any discount to the issued price of the new shares. To conclude, OCBC capital liquidity and funding position remains strong. This would enable us to support our stakeholders and to capture market opportunities. So with this, I'll pass the floor to Sam. Thank you.

Well, once again, good morning to all of you, and welcome to our briefing session. First of all, we are still in the first 15 days of the Chinese New Year, happy Chinese New Year to you, [Foreign Language] and hope you have a happy, healthy and a very successful year of the Ox going forward. I also hope that you like our refreshed and renovated meeting space over here, which are now able to cater more people with proper social distancing. I would like to welcome Helen to join this session. Helen actually has been on our briefing sessions in the past few quarters. But because we have no meeting, so you were not able to see her. Unfortunately, because of a recent travel, she is not able to join us physically, but she's on the screen there and Helen is attending the session in the new capacity as my successor come April 15. So in that sense, this will be the last quarterly results briefing session with all of you. Before we go to Q&A, maybe I'll just talk about some overview about the 2020 results. And I will not be focusing on the quarter, but I'll be talking about the trend, the underlying fundamentals and what is happening as drivers for our economy. First of all, I think our financial year 2020 demonstrated the value and the power of our diversification. And when we talk about diversification, we're not only talking about geographical diversification, but also the segmental diversification. You have previously heard me say that our corporate strategy has got 2 -- 3 business pillars we got banking, we've got insurance and then we've got wealth management. This time, it really showed the power of our diversification. Our wealth management fee income paid for the whole year, last year it was close to SGD 1 billion, SGD 998 million. This is up 5%. Our AUM under the Private Banking unit hit a new record high of USD 102 billion. Our insurance business, which is the third pillar that we have, our embedded value of the insurance business is up 12% to SGD 17.4 billion. As you know, insurance business is not only measured on its profit, but also measured on its embedded value because the insurance business is a long-term business. So you really have to look at the long-term value of this business, and we use something called embedded value across the insurance industry to measure it. Great Eastern's embedded value for 2020 was up 12% to SGD 17.4 billion vis-à-vis that of last year. This is business pillar diversification. Geographical diversification. Our expansion into Greater China about 8 years ago has really reaped very good results. As a matter of fact, Greater China contributed 31% of our profit-before-tax for the group, primarily because the provisions that we needed to take in some other countries are because of COVID, and the possible pressure on our portfolio is not strong in the Greater China region at all. So as a result of that, our profit after allowances contribution for Greater China is now up from last year's 20% to this year's 31%, again, an evidence of the importance and the value of diversification. I will talk about the performance trend. Fourth quarter is the third consecutive quarter of our net profit increases. And this is not only from the banking side, it's also from the insurance side. Our fourth quarter insurance total weighted new sales and new business embedded value created, these are, again, the 2 good measurements for our insurance business, hit a record high in the fourth quarter. It's a quarterly high throughout the past many years for an insurance business. So from a trend perspective, it is very positive. Our NIM on a year-on-year basis was down by 16 basis points but if you analyze our NIM on a quarterly basis, it has stabilized in the second half of last year. As a matter of fact, our fourth quarter NIM was up by 2 basis points, primarily through the management of our funding costs and our funding profile. We also made record wealth fees and fee income from the wealth -- from the customer treasury flows. Expense management continued to be good. On a year-on-year basis, our expenses were down by 4%. On the 4Q versus last year's 4Q basis, our expenses were down by 11%. So from a trend analysis perspective, it is also very positive. From a risk management perspective, the concern that we had at the beginning of this crisis was the impact on the portfolio. And whereas we are extending relief program to our customers, whether they'll be able to exit from the relief program in a smooth and orderly manner. I have enclosed in my enclosure in the CEO update that our exit from the relief program actually has been orderly, very well managed, and it is better than what we had originally expected. Just to give you some numbers. At the end of September, which is, at that time, none of the countries have exited from the relief program yet. Countries like Hong Kong, Indonesia, Malaysia, Singapore, all have government orchestrated relief programs, less so in Indonesia, but there is also some directions from the regulators. At the end of September, that was the time that the relief program is already in place, but the relief program has not started to exit yet. Malaysia was the first country to exit on the relief program. At that time, September 30th, our total loans under the relief programs were 9%. By the end of last year, which, at that point in time, Hong Kong and Malaysia has exited from the relief program, it is down to 4%. At the end of January, we just passed the financial year that we are now discussing, it was actually down to 2%. So particularly for Malaysia, because it was on an opt out basis, the participation in the relief program, when the relief program was enforced was 53% and by the end of last year, it was down to 7%. And by the end of last month, it was down to 6%. And the majority of these exposures are secured, and a majority of those exposures, even for those who are under the second relief program, the performance ratio is over 90%, meaning that they are able to meet the requirements of repayment under the second relief program or an extension of the relief program, over 90% of them paid according to the original schedule. So on the risk management side, the exit from the relief program has been very good. And I will attribute it to the coordination that is done around our different countries, particularly in Singapore, which is handled very well between the banks as well as the regulators. It was also due to OCBC's client selection and customer engagement. We do make sure that we engage the customers early on so that we can advise them that you need to preserve the cash flow for your future requirements. As Darren has said, our new NPL formation continues to be very stable, NPL ratio at 1.5%. Our NPL coverage ratio has been increased to 115%. And so this is a very high coverage ratio. And our total credit cost for last year was 67 basis points, 67 basis point is well within our original expectation of 100 to 130 basis points for 2 years, 2020 and 2021. We expect that this crisis is going to impact our portfolio in terms of credit quality for 2 years. So first year was last year, 2020, 67 basis points. We expect that for the 2-year period, we will end up with a credit cost, which is low -- at the lower end of our forecast range of 100 to 130 basis points. Then we talk about the fundamentals of our banking business. We have a very strong balance sheet now. If you look at the way that we have provided for the NPLs, 115% coverage with a very strong capital, as Darren mentioned, at 15.2%. Our technology investments that we have made over the past many years have been able to prove of their value, of their use, and the customers are utilizing it. When the customers utilize the technology investments that we have made, for example, in digital, it means a lot to us. It means that we don't have to put up as much human resources to support the customers because they were able to do the transaction digitally, it also means that we can be able to apply street-tool processing then if it's a paper-based or a counter based transaction. so that's very important for us. And we are starting to see the results and reaping the benefits of those investments. We continue to pay dividend as guided by the MAS on the maximum percentage that we can pay, but we have decided, whereas we are putting in the scrip dividend, there will be no discount offered this time. And we have no M&A plans under review at this current time. To conclude, I think 2020 is a test and testament to our strong crisis management through this crisis. All the fundamentals are even stronger than before the crisis. Our capabilities build up in risk management, in customer engagement in portfolio protection in liquidity and funding continues to be strong and will serve us well going forward. Looking forward, we believe that most of the countries are exiting from the trough of this crisis, although the recovery continues to be sectorial. We will continue to be cautious. We believe that a strong recovery will probably not be seen until towards the end of this year and stronger into next year. We are aware there continue to be sociopolitical event that's happening around the world and we hope that those will die down. If this were to die down, I think the recovery will even be stronger. It is very important for the U.S. market also to pick up not only from a China-U.S. trade perspective, but U.S. is a very strong consumer market. And if that market can recover as is now expected with the proper policies put in place, we have high hopes that the recovery will be stronger than what we even expect right now. But at the present time, we believe that the recovery indicators will probably be stronger only in the second half of this year and even stronger by next year. So with that, I will conclude my overall remarks, and we'll take any questions that you may have. Yes, carry on.

The first question is Chanyaporn Chanjaroen from Bloomberg.

Sam. I would like to ask a few questions. The first one is that the 11% expense cuts, what are the main areas that were cut in the past in the fourth quarter? And what does that mean to pays and bonus to U.S. staff? And is there -- did that include any headcount cut? Will such a tight grip on expenses continue into 2021? That's my first question. And for Helen. Happy New Year to you. I would like to ask you about Hong Kong. I mean, the turbulence that we have seen in Hong Kong in the past 3 years. Do you -- How do you see that playing out into 2021? What will be the key areas for you to grow there in Hong Kong and in Greater China? And how? For Wing Hang, for Bank of Singapore, congrats on the AUM at record high. And I noted that you mentioned new inflows, net new money, where did that come from? How did you manage that despite no travel?

Thank you, Chanya. It's usually the chair of the meeting to direct the questions to the right people, but you have directed to the right people. For the first question, regarding our expense. On the fourth quarter to fourth quarter basis, it was down by 11%. On a year-on-year basis, it was down by 4%. The fourth quarter of last year was still pre-COVID and particularly on business promotion, customer activities were stronger in the fourth quarter. Last year -- this -- last year's fourth quarter, 2020's fourth quarter, we don't have that. So on the quarter versus quarter year-on-year basis, 4Q versus 4Q basis, the expense reduction were primarily in the discretionary category that was spent pre-COVID in the previous year's fourth quarter and was not spent in this year's fourth quarter. So I think it will be better to look at our expense management at the 4% level, which was something that we were able to do it on a full year basis. Again, those are more on the discretionary spending. Business promotion spending and some of the sales incentive spending because the transaction volume for the sales that are subject to commission payments have reduced, particularly in the second quarter and slowly in the third quarter of this year, our commission related payment has also reduced. So this is the basis of that. We do not cut any staff. As a matter of fact, we have made the commitment to our staff that in the midst of this crisis. And this crisis has not yet fully ended, there will be no staff retrenchment exercises. We want to give the comfort to the staff that the job is secure, and we want you to be with the bank in order to serve our customers and to serve the community. And this has go down well with our staff force, which is evidenced in our results as well. On the contrary, we have actually offered -- continue to offer new employment opportunities for people recruited from the outside across the bank, at the bank and our insurance companies at the SGUnited Traineeships Programme. So altogether, in terms of those recruitments, not net increase, those recruitments, we have recruited about 3,000 people for last year versus the year before. They are housed under our insurance company, many of the agents that we offer, they are not in our headcount per se, but those are real jobs that are created for them under SGUnited Traineeships. So that's your question on the expense side and on the staff.

[indiscernible].

Yes, the -- we will look at the results, and we will look at the results, not only from a financial perspective, but on the success of the bank to retain its franchise to continue to be able to deliver the results we're able to deliver. So the total compensation, which includes the variable bonus, will continue to be an element that we will dish out this year to our staff.

[indiscernible].

There will be variable compensation made available to our staff for this year as well. So over to Helen for your Hong Kong question. And following that, Wei Hong, for the Bank of Singapore question.

Thank you, Sam. I think people can hear me all right. Yes. So on the question on Hong Kong, I think at the moment, situation in Hong Kong is bad like many other economies, Hong Kong is combatting with the pandemic. And hopefully, after it will be able to control the situation, then the economic -- the economy will bounce back. When we look at Hong Kong as 1 of our core markets, we actually look at it together with Mainland China. So as Sam has earlier mentioned, contribution by Greater China improved and has been coming up with a good performance in 2020. So going forward, your question is on 2021, what we're going to do in Greater China, is obviously continue to focus on the investment, trade and wealth flows, especially that arising from asset. And indeed, we are looking to strengthen the connectivity between what we call the Greater china and the Asian business corridor, banking on the supply chain transformation, capturing the green and renewable financing, that is in real demand from Greater China. Hong Kong will continue to be the financial center for China. And we believe we are in the Asian hub in Singapore and also in the financial hub in Hong Kong, where we'll be able to work together closely to handle all these investment, wealth and trade flow.

Wei Hong?

Yes. Chanya, I think in terms of the wealth management business, I would also like to stress that the 2 big chunks of wealth management business that we have in OCBC Group, bank of Singapore is 1 piece. The consumer bank, the premium banking is also another fast-growing business component. And your question is on how do we grow the AUM for Bank of Singapore grew to SGD 121 billion, and our premium Bank AUMs also grew by 18% last year. The growth came from 3 areas. North Asia, which will be 1 big part of it, of South Asian markets as well as the Middle East markets, and that's covered both Bank of Singapore and premium banking. Onboarding hasn't been too bad of issue because we have a sizable operation in Hong Kong as well as in Singapore. So the onboarding continue in these 2 markets. There were also quite a lot of people that -- offshore customers that travel in into both locations, and we were able to onboard. Right? The key part of it is that our digital digitalization efforts has paid off royally for us in 2020, right, because we were able to also engage our customers through mobile banking and through the internet because with secured communications, secured comes through the Bank of Singapore app as well as the OCBC Premier Banking app, they were able to provide all these confirmations, video chats with our customers on a secured basis, that facilitated a lot of the activity for the wealth management business last year. So you saw the growth, both the consumer Bank wealth management fee income grew by 11%. BOS fee income grew by 9%. Yes.

Goola here from The Edge. I have, I think, 1, 2, 3, I have 4 questions. So the first 1 is on those forbearance, the moratorium loans. I just wondered, in dollar terms, how much is left? And where are they mainly from Singapore, South East Asia and Hong Kong? And what are your expectations of credit costs in dollar terms for this year? And are you likely to, by the end of this year, do any sort of write-backs perhaps from your management overlay or from your GP? And also for -- well, I can't ask -- can I ask Helen a question?

Yes, sure. Absolutely, yes.

Okay. So Helen welcome to OCBC. And you've been inherited...

Yes. she's has been with us for over a year now.

Yes, sorry. Well, you've inherited a bank with a very high CET1 ratio versus our other Singapore banks. So how will you use this capital? And also, has the -- has the sort of uncertainty in Hong Kong affected the Greater Bay Area strategy of the bank and also of the central government in Beijing? And so that's the question.

Goola. I'll take the first 2 questions, and then Helen will take the second -- third and the fourth question. With respect to the moratorium, our total amount at the end of last year, still under moratorium was SGD 11.7 billion, which represents 4% of our total group outstandings. However, by the end of last month, which is the 31st of January, the SGD 11.7 billion is now reduced down to SGD 5.7 billion. And then in terms of percentages, it is now 2%. Out of the SGD 5.7 billion, which is the latest number as of January, Singapore has got SGD 2.7 billion Malaysia has got SGD 1.4 billion. Indonesia has got SGD 1.1 billion, and Hong Kong and Macau has got SGD 0.5 billion. It is actually outlined in the CEO update slide that you can find these numbers. So as I mentioned, the exit from the relief program has been orderly. We are pretty pleased with that. But on the other hand, you also have to remember that these loans who continue to be under the moratorium, probably belong to the weaker category. That's why they need to have an extension or the lead into the second or the third phase of the restructuring of the moratorium. So from an ECL model perspective, we have actually taken the potential weaknesses into account where we come up with the amount of expected loss allowances in that. And you will notice that in addition to the model, we've created SGD 405 million above the model. So the model requires you have this amount. In addition -- and the model has already taken into account the expected weaker credit in the portfolio, which is now subject to the second and the third phase of the moratorium. In addition to that, we have also put in SGD 405 million of additional ECL to anticipate for possible future further weakening of the portfolio. So it is fairly done on a very prudent basis. With respect to your question on how much credit cost would it be for 2021? As I said, we expect that over the 2 years, last year and this year, our total credit cost will be 100 to 130 basis points. We're likely to end up at the lower end of the range of 100 and 130. So if that were being the case, then you use 100 and we took 67 last year, we may have 33 basis points or so. This is just by calculation. Our expectation is on a 2-year basis, we will continue to look at what is required. But from a strictly calculation basis, it will be half of that of what we have taken in in 2020. With respect to -- sorry, Goola you have follow up question?

With respect to [indiscernible].

Yes. We will have to look at the market development to see what we are currently seeing and expecting is likely to materialize as expected. If it is exactly as expected, then it will be the 30-plus basis point additional credit costs that we need to take in 2021. But if the market performs better and if the recovery in the second half of this year is indeed strong, which will trigger a lot of investment-oriented developments. Then I think there is a possibility of that. But at this point in time, we do not want to make that forecast. Okay. With respect to the third and the fourth question, I think with respect to capital usage, it may be premature for Helen, who has just been appointed to be my successor to fully opine on this. But Helen may have some overview, a general view that we share with you. And with respect to our GBA strategy and the developments in Hong Kong, Helen can also comment on that. Over to you, Helen.

Thank you, Sam, and thanks for the question. And indeed, I think it is too early for me to talk about how we're going to utilize a very strong capital but indeed, we -- at the moment, we do not have any M&A plan under review. But I certainly would want to continue to look at the emerging opportunities in this region. In particular, what I have mentioned earlier on. On the question on Hong Kong, I think if you look at Hong Kong, even though it has -- is facing the same pandemic situation at the moment, like many other countries. It continues to be an important international financial centers. The financial sector remains to be healthy, and it will continue to be a very important fund-raising center for Chinese corporates and as they actually embark overseas, the Connect program that is developing between Guangdong and Hong Kong, Macau. We see that as continue to offer high potential and I believe the Chinese government have been talking about this, and there is no change in the strategy. So likewise, we are not going to change our [indiscernible] strategy, but we are looking to put in more resources and also look at higher targets for the businesses.

Chris Wright from Euromoney here. Two questions, if I may. The first is another one on the moratorium issue. You paint a very encouraging picture of what you're seeing. But as you say, logically, the borrowers that have chosen to extend the participation in moratorium are probably where the bad news is. With that in mind, what are the key dates coming up for further roll-off of moratorium? And how long will it be before you have true visibility on just how much damage COVID caused from a borrowing perspective? My second question, and it would be good possibly to get Helen's view on this as well. Sam, you spoke about the sociopolitical tension, I think, was the phrase you used, and a desire that, that come to an end. But I wonder if there's actually something of an opportunity for Singaporean institutions here on the basis that Singapore at a state level gets on much, much better with both China and the United States from those places deal with each other. Singapore's good relationships with China, good relationships with the West. Is there a way that this can be advantageous for Singaporean institutions as they do business, particularly in Greater China?

Thank you very much, Chris, for the question. On the first question, what are the key dates so that we can have a better gauge on the quality portfolio development. As the country's moratorium and relief program goes into further phases beyond the first phase, it becomes less defined in terms of dates because they are more targeted. For Singapore, for example, the relief program will be targeted towards those industries, which are more severely hit, which includes the aerospace, the airline industry and the hospitality industry. And the same is true for all of the overseas markets as well. They become targeted. So it is, therefore, less defined dates going forward. We will need to track it on a quarterly basis to make sure that whereas we support those customers who need the short-term relief, we are not supporting those customers of which their business model is already outdated and can no longer survive on a long-term basis. So that is very important. We no longer have the key dates as we had last year. So September, December will be the key dates. If you say, is there another key date? There is, the other key day is probably first quarter of this year by the 31st March, there will be some programs, which will roll after official relief program. But after that, the dates become less defined. With respect to your comment on socioeconomic situation and the tensions that we are currently seeing around the world between the big economies as well as in some of the developing economies. I think Singapore will strive its very best to play the connecting role between the countries. To play that role, however, is not easy. So we will continue to make the best out of it. From a positive perspective, it is true that Singapore can play that role and Singapore had played that role quite effectively in the past. The issues that we're now currently facing are more complex. I think that Singapore will continue to play that role. And if Singapore successfully play that role, it will be quite beneficial for us because our economy is a hub economy. We provide the services in order to link the economies together, and we provide the requirements in terms of knowledge, in terms of transparency, in terms of legal system, in terms of our documentation capabilities to bring the economies together. So if indeed, we are able to play that role, it will be beneficial particularly for the financial services and industry. So that is wait to be seen. But I'm pretty sure that we are eager to play that role, and we are very qualified to play that role. Whether it will be accepted by the parties or not, is to be decided by those parties. Thank you, Chris. Sorry, yes. Do you understand?

Takashi from Nikkei. I'd like to know more about the Private Banking business. So...

sorry?

Private Banking business. Where is ...

Oh, private banking, yes.

So where Private Banking business is a growing business, also a competitive -- very competitiveness. So how are you trying to strengthen the Private Banking business? And how especially, how are you trying to capture high net worth money from North Asia? And also how are you trying to differentiate from competitors?

Wei Hong, maybe you'll take this question?

Sure. I think for the Private Banking and the wealth management business, the 2 areas, which we are actually putting a lot of money in investments into, right? Number is actually building of our product platform. And you talk about how do you differentiate ourselves. I think the underlying base for Bank of Singapore, which provides the full wealth management platform across OCBC Group which supports our Premier Banking operations as well. That has been a huge area of investments for us, from systems, infrastructure, technology spend in just this field alone has been more than SGD 150 million and in past 24 months for us to lay the foundation that basically from the RMs position, customer positions, RM's ability to discover pricing, to be able to transact online, real-time and all these things with our customers as well as the digitalization. So I think that's a huge part of the investment for us in the product platform, as well as digital. And the third piece, maybe in a sense, of course, people talent is important, Private Banking and premium wealth management business is still a face-to-face business. The feet on the ground is critical. Building of these teams are critical, and being able to recruit talent is critical. And in that, when we bring people on board, across then is the Bank of Singapore and OCBC methodology of training and upgrading skills of all the people in there. I think for us, it's also very unique for OCBC Group, for the wealth management business. We have very strong routes in Asia and assets on the ground, which means our OCBC branches in China, in Taiwan, in Indonesia, Malaysia and branches even in Bangkok. So with our corporate banking business and also the deep reach into the mid-market corporate sector base, it provides a very strong source of referral and also the sort of collaboration that will allow us to build that base.

Yes. Any further questions from any of the participants here? Yes, maybe at the back, yes.

I'm Vivien. I have 3 questions. The first would be on moratorium again. Could you give a further breakdown these moratorium numbers? I understand that 2% of loans under moratorium and at the end of January, what's the percentage of customers extending these moratoriums and which category is seeing more extensions? Would it be SMEs or mortgages? My second question would be on dividend. So do you expect dividend caps to be lifted? And the third would be on Myanmar. So I would like to find out what's OCBC's exposure to Myanmar and what it's doing about its operations there?

Thank you, Vivian. On the moratorium, the majority of the moratorium still belongs to the SME and the consumer side, less so on the corporate side. For those corporate, those are primarily customers who have borrowed under the bridging term loan program, which -- a temporary bridging loan program. Which is under the government program here in Singapore. Overseas, there are very few corporate customers who apply for the moratorium. So this is true for Indonesia, for Hong Kong, as well as for Malaysia. They require relief in financial covenants rather than payment moratorium more. And we also include those who requested for either covenant relaxation or some of the term modifications into this as well. So primarily, it's still in the consumer and the SME sector. With respect to your question on the dividend, we do not forecast on the dividend side. As you know, this final dividend for 2020 is really governed by guidance from the MAS. We -- at this point in time, Darren, we do not know what's the new guidance from the MAS yet.

Yes. We do not know certainly, we hope that will be lifted, obviously, as a way to recognize and to reward our stakeholders, shareholders, confidence in us. But obviously, we're also monitoring the global jurisdiction in terms of how we are approaching this sort of policy pertaining to dividend. So that recent development has added to our hope in terms of that aspect of it.

And you know the dividend declaration and the capital adequacy also depends on the growth aspect of the bank. In the event that there is a very strong recovery coming, which actually happened immediately after the global financial crisis, of which Asia grew very fast, then we will look at how to deploy the capital in the most efficient manner to allow the continued growth of our operation. With respect to your third question on Myanmar, our exposure to -- in Myanmar is actually very insignificant. As a matter of fact, our total deposits well exceed that of our total loans. We have 45 people there. All of them are safe. Our operation is able to be handled remotely in the event that we cannot access the office. But at the present time, we are able to operate all of the settlements and the transactions with offshore still very smoothly by operating it by the fewer people in the branch has well as by people accessing it remotely in Myanmar. We are observing and following the situation in Myanmar, but our exposure in Myanmar is very, very insignificant. And from a liquidity perspective, we have more deposits in both local currency and foreign currency than our loans.

Just a follow up on Vivien's excellent question on dividend. I mean, are you still in talks with MAS with regards to the outlook of dividend? And when do you expect to know the outcome?

Obviously, we have regular dialogue with the regulator. In terms of their position pertaining to this, it's not something that we have privy to. But in terms of timing, obviously, the revision of that timing pertaining to dividend itself would somewhere be -- because the guidance is in place for a year. So we're looking at maybe the next dividend discussion that we have, then we'll have probably better clarity then.

[indiscernible]

Yes. We have a different sort of home regulator.

Okay. Any other questions? Yes, please.

So my name is Kim Taro from EK. Follow-up question about Myanmar. Can we say that OCBC does not have any loans or deposits linked to people or corporations under U.S. sanction?

Yes, we observe all regulations, and we do not extend loans in the event that it is in validation of any of the regulatory requirements.

Also, could I understand OCBC's longer-term strategy for Myanmar?

Say it again, sorry?

Can we understand OCBC's long-term strategy for Myanmar?

Okay. Myanmar is a country that we assess has got very good long-term potential. It's a very resource rich country. And its people are knowledgeable and quite well educated. Their knowledge of the international market is also gradually improving. So our view is that Myanmar continues to be a country that has got long-term potential for OCBC to be in.

Jamie.

Jamie from Business Times.

Jamie, good to see you again.

I thought I have 3 questions. First is actually a clarification on the oil and gas allowance. I noted there was some money set aside for that. And I just wanted to get an understanding of why that is so wide, that continues to be so? I think there was something on OSV there, if I read it correctly. The second is just on -- you mentioned that there was no M&A review or no plans at this moment. And I just want to get some color on why this is -- Is it there are no deals out in the market yet? Are we taking a more prudent plans? Maybe just a bit of color on that. And of course, since I have the final question, could I get some comments from Sam on, of course, this is your last briefing, and I thought, could you get a sense of what did you set out to do when you arrive at OCBC? What are some of the milestones that you are particularly proud of that you could share with us?

Jamie. Thank you for the questions, especially the last one. On the oil and gas provisions, we continue to assess the provision that may be required for the LNG and OSV side. When we set up a provision, it does not mean that we will ultimately take a loss of that. It's just when we assess the marketability of some of the collaterals, the continued cash flow generation of the vessels under employment. Should there be any changes in the market rates or in the term -- contract terms, then we will do assessment of that. These loans continue to be on our books, and most of these loans are performing according to its original schedule. But because the assessment based on the charter rates, liquidity, marketability of the vessels by looking at the last vessel sold, we make adjustments. So the adjustment that was made in the fourth quarter is very minor. As I mentioned and as Darren mentioned in this slide, our total OSV exposure, excluding the national oil companies and the major Singapore corporations, and the method of the SPs that we've created and the collateral value, it's now only down to 0.2% of our total loan book. So it's a miniscule portfolio for us. With respect to M&A. When we do an M&A transaction, we must have good visibility on the market. How is the market likely to perform from now into the foreseeable future? At the present time, I must say that the visibility of the different markets that we are in is not very strong. And you have to realize that in the merger and acquisition, there will be integration. And if the visibility of the market is not very strong, we have to devote quite a bit of time to manage the existing portfolio. And if we have to work on the integration of another portfolio into the existing portfolio, this will distract the management's attention in the era where the visibility is not very strong. So at this point of time, therefore, we have not -- do not have any M&A plans under review. Having said that, of course, if opportunities do pop-up, we do look at those and to see whether it fits into our framework and our corporate strategy or not. We will not ignore them. But the market visibility and our ability to assess, what is the future strength? And when is it coming is very important for a merger and acquisition? With respect to the third question on what I've set out to do. First of all, it is not 1 person. It is the whole team. I think when I first took on the CEO role, we have defined the corporate strategy with the approval from the Board. And the way that we have structured it is that we will focus on the key regions. And not all of the countries will have the same amount of focus. And then we have clearly defined the 3 business pillars that will drive OCBC going forward, commercial banking, wealth management and insurance. And along the way, you noticed that we have made supplemental acquisitions to supplement that in the insurance side, in the wealth manager side as well as in the banking side. For example, insurance side, we've acquired QBE's General insurance in Indonesia. And here, we've got Barclays and in the banking side, we got National Australia Bank. We also increased our investments into Bank of Ningbo. So I think that created a diversified -- oh, yes, of course, we have the Wing Hang Bank, which is the 1 that happened in 2014. This is the largest transaction that OCBC has entered into in its history. And it's performing well. But you will see that all of these are really complementary acquisitions to our model. And as a result of that, we are able to create a diversification, which previously was not as strong as we had before. So the team, the team has really worked on that. And this created a better foundation and the stronger fundamentals for the bank to continue to invest and grow going forward.

All right. Thank you very much. I believe that is the last question, saving the best for last. Thank you very much for everyone's presence this morning.

Can I just say something?

Sure, Chanya.

Thank you, Sam, for putting up [indiscernible] over the year's. Such a pleasure working with you in OCBC. And looking forward to more to come and wishing you the best for your new post in Hong Kong.

Thank you very much. I will continue to spend time in Singapore. So I will run into -- in other occasions in a different capacity. But I want to take the opportunity to thank you very much for providing the bank and providing me with the positive coverage that you have done for us. Your questions are very insightful, and I learned from the questions that you raised with us as well. And as we look at those questions, we try to understand why you ask those questions, and there must be a reason. And is that an area that we can increase our transparency and disclosure going forward. Or otherwise, is that something that you have learned from our competitors that you asked this question in that context, and that's something that we can also learn from that as well. So thank you very much for the opportunity to interact with you in my capacity as the CEO for the past 9 years. And it has always been a pleasure. With that, I wish you an advanced Chinese Valentine's day 2 days later on Friday. Thank you very much. Good to see you all. Hope to see you again in other occasions. Goodbye.