Annual Report 2022
Our Sustainable Future. Our Enduring Legacy.
Excel for
Sustainable
Growth.
Contents
1 Key Highlights
2 Message from Chairman and CEO
6 Excel for Sustainable Growth
8 Financial Highlights
9 Creating Investor Value
10 A Leading Sustainable Bank in the Region
14 Creating Positive Impact for Society
16 Connecting with the Community through Sports
18 Fighting Climate Change in the Community
20 Board of Directors
22 Management Committee
24 Upfront with Helen – Group Chief Executive Officer
28 Upfront with Chin Yee – Group Chief Financial Officer
30 Upfront with Khiang Tong – Group Chief Operating Officer
32 Upfront with Noel – Group Chief Risk Officer
34 Upfront with Sunny – Global Consumer Financial Services
36 Upfront with Teck Long – Global Wholesale Banking
38 Upfront with Kenneth – Global Treasury
40 Upfront with Hwee Boon – Group Human Resources
42 Bank of Singapore Highlights
44 Corporate Governance
63 Additional Information on Directors Seeking Re-election
67 Additional Information required under SGX-ST Listing Manual
68 Capital Management
70 Risk Management
84 Pillar 3 Disclosures
88 Financial Report
Management Discussion and Analysis
Financial Statements
253 Shareholding Statistics
255 Five-Year Ordinary Share Capital History
256 Further Information on Board of Directors
259 Further Information on Management Committee
264 International Network
266 Financial Calendar
IBC Corporate Profile and Corporate Information
Featured on our cover this year is the mangrove tree, which absorbs CO2 at
a prodigious rate. Four times as much carbon can be trapped and stored in
mangrove forests and their surrounding mudflats and soil than in comparable
tropical forests. For OCBC’s 90th anniversary in 2022, we gifted two mangrove
projects to the community – 9,000 trees at the OCBC Mangrove Park in Singapore
and another 9,000 at the Tebuk Mendeleng mangrove project in Malaysia. These
trees will absorb more than 30 million kg of CO2 in their lifetimes. Mangroves
also provide natural infrastructure for greater biodiversity as well as protection
against erosion and storm surges. OCBC has been expanding nature-based
carbon storage solutions to help fight climate change.
All figures in this Annual Report are in Singapore dollars unless otherwise specified.
Key Highlights
Over $10 billion in new
sustainable finance commitments
to bring total commitments to
$44 billion, on track to achieve
$50 billion by 2025
Achieved carbon neutrality
for emissions from banking
operations
Over 500,000 man-hours
in productivity improvement
Unveiled OCBC Mangrove
Park, Singapore, part of a
18,000-mangrove tree contribution
to fighting climate change
Invested over $250 million
in Phase One (2019 – 2022) of
seven-year Digital Core Roadmap
to accelerate digital transformation
Over 65,000 staff
volunteer hours logged in
helping the disadvantaged
in our communities
Record net profit of
$5.75 billion $25 billion net new money
inflows across Bank of Singapore
and OCBC wealth management
franchise
Uplifted Hong Kong hub
capability to support ASEANGreater China trade and
investment flows
OCBC Annual Report 2022
Key Highlights 1
“It was a year of strong
performance for OCBC.
Despite economic
challenges, we achieved
our best-ever net profit.
We executed our
transformational
strategic priorities to
drive growth and doubled
down on our sustainability
efforts. We supported
and made a difference
to our stakeholders –
customers, employees,
communities and
shareholders. We are
confident that OCBC
will grow from strength
to strength for many
years to come.”
Dear Shareholders
2022 was the year OCBC celebrated its
90th anniversary. We delivered our bestever net profit despite considerable
global headwinds. We continued to
achieve good progress in executing on
our strategy, and made significant
advancements in our commitment to
our sustainability agenda. Our
organisational capabilities were further
enhanced. We stepped up investments in
technology and our people which yielded
positive outcomes, while wholeheartedly
supporting the communities we serve.
OCBC remains fully committed to deliver
excellence and sustainable value for all
our stakeholders.
With much of the world adapting to
Covid, 2022 had initially started on a
positive footing. Developed countries
were gradually reopening, providing
momentum for a global economic recovery.
However, the start of the Russia-Ukraine
crisis in February 2022 precipitated a
spike in commodity and energy prices,
disrupted supply chains and heightened
volatilities in financial markets. Inflation
turned out to be higher and more persistent
than the initial expectations of many
central banks. Monetary policies were
tightened through a series of rapid
interest rates hikes. In Greater China,
ongoing pandemic-related restrictions
during the year contributed to
a slowdown in economic activities.
The combination of these conditions
curtailed global growth in 2022.
Despite these headwinds, OCBC delivered
a record operating performance in 2022.
Accordingly, we are pleased to raise our
2022 dividend to 68 cents, up 28% from
the previous year.
Record Financial Performance
We achieved record high Group net profit,
improved return on equity, better efficiency
ratios and increased shareholder returns,
whilst we maintained our strong capital
position. Our diversified income streams
across business lines and geographies
enabled us to deliver well-balanced
growth. Our results reflect the foundations
we have laid in the previous years to
grow our franchise, optimise our balance
sheet and prudently manage our portfolio.
OCBC Group net profit rose 18% to
$5.75 billion. Return on equity of 11.1%
was 1.5 percentage points above 2021,
while earnings per share rose 20 cents
to $1.27. Total income increased 10% to
$11.7 billion, largely driven by higher
net interest income, which surpassed
$7 billion for the first time, on the back
of asset growth and net interest margin
improvement. Our well-positioned
balance sheet allowed us to benefit from
a rising interest rate environment and
net interest margin expanded 37-basis
points to 1.91%, the highest level in over
10 years. Operating expenses rose less
than income growth, as we maintained
cost discipline and paced our ongoing
investments to drive franchise growth,
raise productivity and deliver operational
2
Message from
Chairman & CEO
Strong Financial
Performance
$11.7b
Record Total Income
10%
$5.75b
Record Net Profit
18%
$295b
Customer Loans
2%
4.5%
(in constant
currency terms)
$350b
Customer Deposits
2%
Progressing on
Sustainability Agenda
$44b
Sustainable Financing
Commitments
30%
Net-Zero by 2050
1 of only 4 ASEAN Banks to
Pledge Commitment
Carbon Neutrality
Achieved for Banking
Operational Emissions
>$3b
SME Sustainable
Financing Commitments
>50%
Creating Value for
Shareholders
$1.27
Earnings Per Share
18%
11.1%
Return on Equity
1.5
percentage points
1.25%
Return on Assets
0.12
percentage points
68 cents
Higher Dividend Per Share
28%
Making Great Leaps Forward
in Our Sustainability Journey
The firm commitment of the Board and
Management to effective stewardship
and corporate governance is the bedrock
of our stakeholders’ trust in us, and we
continue to be recognised for our high
standards of governance and responsible
business practices. We adopt a robust
and holistic approach to positive
environmental, social and governance
(ESG) factors. This is integrated across
how we operate our business and manage
our risks. Our ongoing efforts relating to
sustainability have led us to earn an
inaugural inclusion on the Steward
Leadership 25 list, awarded by the
Stewardship Asia Centre, as well as on
the FTSE4Good Index. Further details are
shared in our Sustainability Report which
is separately published on our website.
Driving Transition to Low-Carbon
Economy
We established a Board Sustainability
Committee to give greater focus on our
sustainability agenda, a key strategic
pillar. In 2022, we achieved carbon
neutrality for our banking operational
emissions. We are one of only four banks
in ASEAN to pledge our commitment
towards achieving net-zero in our
lending and investments businesses
by 2050 as a signatory to the United
Nations-convened, industry-led Net-Zero
Banking Alliance. We have begun
developing a systematic plan to achieve
this goal and aim to unveil our sectoral
financed emission targets by the
first half of 2023. As part of our
decarbonisation efforts, more than
$25 million will be deployed in energyefficient technology across the Group in
Singapore, Malaysia and Greater China.
We sponsored two large-scale mangrove
restoration projects in Singapore and
Malaysia in commemoration of our
90th anniversary. In Singapore, $3 million
will be contributed to the OCBC Mangrove
Park to help grow 9,000 mangrove trees.
Across neighbouring Malaysia, another
9,000 trees will also be grown at the
Tebuk Mendeleng mangrove project in
the state of Selangor.
efficiencies. With a comparatively better
credit environment in 2022, total
allowances of $584 million were 33% lower.
Loans grew 4.5% on a constant currency
basis to $295 billion while deposits were
up 2% to $350 billion. With proactive
monitoring and stress testing of our
loan book, our portfolio quality remained
resilient with the non-performing loan ratio
declining to 1.2%. Our non-performing
assets coverage ratio stood at 114%.
Our strong funding, liquidity and capital
positions were maintained, with CET1
ratio at 15.2%. This provides us with
continued flexibility to pursue growth
opportunities and buffer for uncertainties.
We are one of the world’s most highlyrated banks with Aa1 credit rating from
Moody’s and AA- from both Fitch and S&P.
Dividends
The Board has recommended a final
dividend of 40 cents per share, which
brings the full year 2022 dividend to
68 cents, a 28% increase from the
previous year’s 53 cents. Barring
unforeseen circumstances, we aim to
deliver a dividend payout ratio of 50%.
Full year 2022 payout ratio is at 53%
against net profit, which exceeds 49%
a year ago. The dividend increase
demonstrates our strong capital position
and confidence in OCBC’s ability to
generate earnings growth over the
long-term.
Achievements
One of the World’s Best Banks
(Singapore)
Awarded by Forbes
One of the Strongest Banks in
Asia Pacific
Awarded by The Asian Banker
Best Managed Board above $1b in
market cap (Bronze)
Awarded by Singapore Corporate Awards
Most Transparent Company Award,
Runner Up
Awarded by the Securities Investors
Association (Singapore)
Included on the FTSE4Good Index
OCBC Annual Report 2022
Message from Chairman & CEO 3
Helping Our Customers to Decarbonise
Our total sustainable financing
commitments grew to $44 billion in
2022, which is well on-track towards
our stated target of $50 billion by 2025.
We funded green buildings and projects
that generate clean energy such as
wind and solar farms. This included
nearly 70 labelled large sustainable
financing transactions, which saw OCBC
advising and participating in the first
healthcare social bond and corporate
green retail notes issued in Singapore.
Our SME sustainable financing
commitments grew more than 50% to
over $3 billion. Our SME Sustainable
Finance Framework, first launched in
Singapore in 2020, was expanded to
Malaysia, Indonesia and Hong Kong.
OCBC’s ‘Eco-Care’ car, home, renovation
and solar panel loans encourage retail
customers to go green through incentives
like promotional interest rates. We listed
Lion-OCBC Securities Singapore Low
Carbon ETF, Singapore’s first ETF that
focuses on the top 50 Singapore companies
with a lower carbon footprint.
Executing Well on Our
Strategic Priorities
Our optimism for OCBC’s future is driven
by the many strengths we possess, which
stem from our diversified regional
franchise, solid financial position and
committed employees. Our unique and
highly-interconnected franchise is
generating good business momentum.
We have a robust balance sheet, strong
capital base and high levels of liquidity,
supported by a comprehensive risk
management framework. Through the
use of cutting-edge technology, our
innovative digital solutions have
sharpened our competitive position,
driven meaningful insights and brought
convenience for our customers.
Supporting Regional Business Activities
One of our key strategic priorities is to
support growing ASEAN-Greater China
trade and investment flows along the
regional corridor. We are focused on
enhancing our wholesale banking
capabilities to better serve corporates
and government-related entities, some
of which are set out in the section above
on sustainability. We are boosting the
onshore-offshore connectivity between
our Singapore-ASEAN-Greater China
network – to be the bank of choice for
both China and Hong Kong SAR corporates
venturing into ASEAN, and for our network
customers expanding into Greater China.
We have expanded our Greater China
Business Office coverage beyond
Singapore, Malaysia and Thailand, to
include Indonesia. We strengthened
our product and transaction banking
capabilities in Hong Kong to deepen
our position as a regional hub. We are
the first bank in Singapore to leverage
highly-secured digital passport
authentication for foreign business
owners of Singapore-incorporated SMEs
seeking to open their first business
banking account. We are ranked the top
two and top three for loan syndication
in Singapore and Malaysia respectively
and maintained our top three ranking
for Singapore dollar bonds origination.
Expanding into New Economy &
High-Growth Industries
We are building new partnerships
and integrating ecosystems beyond
conventional banking channels, playing
a broader and more entrenched role
across value chains. We formed new
partnerships in areas such as digital
trade finance, mobility, environment, and
food and agriculture, and these set the
foundations for us to unlock long-term
value from these emerging sectors.
Capturing Asian Wealth Flows
We have built a deeper and broader
value equation for our customers across
our wealth management business. We
raised our private banking presence in
the region to serve ultra-high and high
net worth customers, such as setting up
BOS Wealth Management Malaysia, and
offering onshore private banking services
in China through OCBC Wing Hang. Our
private banking net new money fresh
funds in 2022 reached the highest in
five years. To serve OCBC’s Premier
Private Client (PPC) and Premier Banking
customers, we strengthened our regional
proposition in our key markets through
capitalising on our strong network. We
expanded the suite of products and
services on our core Group Wealth
Platform (GWP). First launched for Bank
of Singapore, GWP was rolled out to
OCBC’s PPC and Premier Banking
customers in Singapore and Malaysia
in 2022, allowing us to deliver superior
offerings and advisory services with
unified investment views on one platform.
Customers can also now open premier
banking accounts in Singapore and Hong
Kong together in a single application,
providing a seamless regional onboarding
experience. In addition, OCBC Wing
Hang launched the Northbound Wealth
Management Connect Service to provide
new investment channels and broad
asset allocation options for customers.
Our highly successful collaboration with
our insurance subsidiary, Great Eastern
Holdings, has enabled us to consistently
be amongst the top two in bancassurance
sales in Singapore over the years, with
this strong partnership also extended in
Malaysia and Indonesia.
Driving Group-Wide Collaboration
Central to all of these is aligning ourselves
internally to serve our customers as a
single relationship across markets as
Head of Global Consumer Financial Services Sunny Quek, Group Chief Executive Officer Helen Wong and Head of Personal and
Premier Banking Singapore Bob Ng at the official opening of the Wisma Atria branch on 25 November 2022, OCBC Bank’s largest
integrated lifestyle and banking branch in Singapore.
4
they expand globally. We forged a
“One Group” integrated approach to
work seamlessly and propel group-wide
collaboration across our highlyinterconnected business franchise. We
augmented our organisational structure in
2022 by strengthening and expanding the
scope of our Group Customer Experience
Office and establishing the Global
Wholesale Bank Sustainability Office.
These complement some of the changes
we made in the previous year when we
implemented a tighter group-wide matrix
reporting structure, appointed a Group
Chief Operating Officer and established
a Group Data Office.
Fostering a High
Performance Workforce
Our commitment to attracting, developing
and retaining talent is key to achieving
our long-term goals. We are intensifying
our efforts in talent growth and development,
upskilling our workforce and enhancing
the overall employee experience. We
made significant investments in helping
our employees develop to their greatest
potential and be future-ready. In 2022,
we made a number of key management
appointments as part of our succession
planning and ongoing commitment to
groom the next generation of leaders
for OCBC. They include the Group
Chief Financial Officer, Group Chief
Risk Officer, Head of Global Wholesale
Banking, Head of Global Consumer
Financial Services, Head of Group
Human Resources and CEO of OCBC
Bank Malaysia.
New Chairman of the Board
Mr Ooi Sang Kuang retired as Chairman
and Director of the Board on 31 January
2023 and was succeeded by Mr Andrew
Lee on 1 February 2023. Mr Lee was first
appointed to the Board on 18 February
2022. He has more than 30 years of
consumer banking and insurance
experience in Singapore and elsewhere in
South-East Asia. He joined the Group in
1999 and during his 18-year tenure up to
2017, held key executive and leadership
appointments at OCBC Bank and Great
Eastern. Prior to his distinguished career
at the Group, Mr Lee held senior executive
positions at Standard Chartered Bank.
During Mr Ooi’s nine-year tenure as
Chairman, he led the Board in crafting
the Group’s strategic vision of creating
a strong Greater China platform, and
sharpening the corporate structure and
operating model to support the growth
of our core markets. He ushered in a
refreshed set of corporate values in 2019
and also steered OCBC during the Covid
crisis to emerge stronger. On behalf of
the Board, we would like to convey our
deep appreciation to Mr Ooi for his
invaluable leadership and wise counsel.
We would also like to take this opportunity
to wish him all the best ahead.
Outlook
The global economy is expected to face
continued challenges in the year ahead
as the near-term outlook remains
uncertain. There is rising recession
worries in major economies, which are
expected to see slower growth from
elevated inflation, rising interest rates,
lower consumer spending and reduced
industrial production. As central banks
in advanced economies prolong their
contractionary monetary policies to
bring inflation under control, this raises
fears of a potential situation where
growth and inflation outcomes diverge.
The further escalation of geopolitical
tensions could further destabilise world
markets and complicate the business
landscape. We may also need to navigate
through ambiguity as more supply chain
shocks, whether due to geopolitical or
climate complications, cannot be ruled
out. However, these could also spur
supply chain diversification and wealth
flows, as well as, drive sustainability
efforts that would present opportunities
for ASEAN economies.
It is encouraging to note that despite
these challenges, there is cautious
optimism on the resiliency of our key
markets in Asia, which are mostly
expected to outpace the global average
GDP growth in 2023. Singapore’s labour
situation remains firm and the return
of travellers continues to benefit the
aviation, tourism-related and hospitality
sectors. Malaysia and Indonesia’s path
of steady recovery is also expected to
extend through this year on the back of
domestic and tourism demand. In China
and Hong Kong SAR, the normalisation
of Covid restrictions and supportive
government measures could provide a
conducive environment for growth to
pick up from a low base, and help spur
regional activities.
OCBC has a highly-trusted brand, strong
business franchises, and an established
regional network. Our robust balance
sheet, prudent risk management and
talented workforce allow us to be
well-poised to support our customers
and pursue growth opportunities. We
enter the new year with confidence as
we excel for sustainable growth and
deliver enduring value to our stakeholders.
Acknowledgements
We would like to express our deep
appreciation to our fellow Board members
for their invaluable insights, vision and
excellent counsel. We welcome Ms Helen
Wong, Group CEO, to the Board and bid
farewell to three Directors. They are
Mr Tan Ngiap Joo and Mr Wee Joo Yeow
who have each served nine years on the
Board, and Mr Koh Beng Seng who served
more than three years. We thank them
for their highly valuable contributions
to the Group and wish them well.
To the management team and all our
employees, we are grateful for your
dedication, hard work and teamwork in
making 2022 an outstanding year.
Finally, our heartfelt thanks goes to
all our customers, shareholders and
the communities we serve in for your
continuing support to OCBC.
Mr Andrew Lee
Chairman
Ms Helen Wong
Group Chief Executive Officer
February 2023
OCBC Annual Report 2022
Message from Chairman & CEO 5
Excel For Sustainable Growth
With a broad geographical footprint in North and Southeast Asia and a diversified business,
OCBC is well-positioned as a leading financial services partner for a sustainable Asia.
With our refreshed three-year strategy, we aim to excel for sustainable growth so as
to continue creating long-term value for our stakeholders.
We help individuals and businesses
across communities achieve their
aspirations by providing innovative
financial services that meet
their needs.
Our Purpose
Our Values
Who We Create
Value For
Customers
Employees
Community
Shareholders
Environment
How We Create Sustainable Value
Reinforce
Strengths
Forge a “One Group” integrated
customer experience approach
• Increased collaboration across the Group,
with 29% rise in cross-border income
• Established Global Wholesale Banking
Sustainability Office to accelerate Group-wide
decarbonisation efforts for businesses
Invest in accelerating Transformation
and Digitalisation
• Achieved over 500,000 hours of
productivity improvement through the
streamlining of close to 150 processes
across the Group
• Completed Phase One of a seven-year digital core
roadmap supported by a $250 million investment
to accelerate digital transformation
Strengthen our people assets
and culture
• Partnered eight reputable Institutes of
Higher Learning to roll out 14 new
sustainability certification programmes
• Continued to support the reskilling and
transformation needs of our people via
OCBC Future Smart Programme. A total of 221
programmes were conducted in 2022, of which
66 were newly curated
Build on our capital and risk
management strengths
• Achieved strong investment-grade credit
ratings of Aa1 by Moody’s and AA- by both
Fitch and S&P
• Augmented the bank’s climate scenario analysis
methodology to better understand the risks and
opportunities associated with climate change
Accelerating investments in transformation, digitalisation and people assets 2022 Key Achievements
Drive
Growth
Capture rising Asian wealth with
our Singapore – Hong Kong hubs
and digital propositions
• $25 billion net new money inflows across
Bank of Singapore and OCBC wealth
management franchise
• More than 60% increase in the number of client
advisors to serve offshore clients with investable
assets of at least $1 million
Support increasing ASEAN-Greater
China trade and investment flows
• Expanded Greater China Business Office
coverage beyond Singapore, Malaysia, and
Thailand to include Indonesia to better
support Greater China corporates
investing in ASEAN
• Uplifted Hong Kong hub capability to support
ASEAN-Greater China trade and investment flows
Unlock value from New Economy
and high-growth industries
• Launched embedded finance proposition
through six ecosystem partnerships,
enabling SMEs in Singapore, Malaysia and
Indonesia to access their financing needs
more efficiently
• Launched the global OCBC Sustainability
Innovation Challenge with Asia’s leading provider
of food solutions and gateway services, SATS, to
pilot waste management and reduction solutions
Drive transition to a sustainable
low-carbon world
• Joined the Net-Zero Banking Alliance and
achieved carbon neutrality for OCBC’s
banking operational emissions
• $44 billion in sustainable financing committed
by December 2022, on track to achieve target of
$50 billion by 2025
Banking on four growth priorities to capture regional trade, investment and wealth flows 2022 Key Achievements
3-year strategy refresh to drive growth and reinforce core strengths
F orward-looking
Respect
Responsibility
ntegrity I
L asting Value
6
OCBC Annual Report 2022
Excel For Sustainable Growth 7
Financial Highlights
Group Five-Year Summary
2022 2021 2020 2019 2018
Selected Income Statement Items ($ million)
Total income 11,675 10,596 10,139 10,871 9,701
Operating expenses 5,026 4,764 4,439 4,644 4,214
Operating profit before allowances and amortisation 6,649 5,832 5,700 6,227 5,487
Amortisation of intangible assets 104 103 104 103 102
Allowances for loans and other assets 584 873 2,043 890 288
Profit before income tax 6,939 5,680 4,165 5,800 5,552
Net profit attributable to equity holders of the Bank 5,748 4,858 3,586 4,869 4,492
Cash basis net profit attributable to equity holders of the Bank (1) 5,852 4,961 3,690 4,972 4,594
Selected Balance Sheet Items ($ million)
Net loans to customers 291,467 286,281 263,538 262,348 255,502
Deposits of non-bank customers 350,081 342,395 314,907 302,851 295,412
Total assets 559,956 542,187 521,395 491,691 467,543
Assets excluding life insurance fund investment securities
and other assets 461,961 442,091 424,327 404,353 390,676
Total liabilities 505,288 487,849 470,219 443,088 424,151
Ordinary equity 51,387 51,463 48,422 45,662 40,637
Equity attributable to equity holders of the Bank 53,087 52,663 49,622 47,162 42,137
Per Ordinary Share ($)
Basic earnings 1.27 1.07 0.80 1.12 1.06
Dividend (cents) 68.0 53.0 31.8 53.0 43.0
Net asset value 11.43 11.46 10.82 10.38 9.56
Ratios (%)
Return on equity 11.1 9.6 7.6 11.2 11.5
Return on assets (2) 1.25 1.13 0.85 1.23 1.17
Dividend cover (times) 1.86 2.02 2.50 2.08 2.46
Cost-to-income 43.0 45.0 43.8 42.7 43.4
Capital adequacy ratios (3)
Common Equity Tier 1 15.2 15.5 15.2 14.9 14.0
Tier 1 15.9 16.0 15.8 15.6 14.8
Total 17.7 17.6 17.9 16.8 16.4
(1) Excludes amortisation of intangible assets.
(2) Computation of return on assets excludes life insurance fund investment securities and other assets.
(3) The Group’s capital adequacy ratios were computed based on MAS’ fully phased-in Basel III rules.
8
Creating Investor Value
OCBC Share Price ($)
2018 2019 2020 2021 2022
Source: Bloomberg
14
12
10
8
0
Close to 600 engagements
with investors, analysts and
rating agencies
Coverage by over 20
research analysts
Conducted quarterly results
briefings for the media and
the investment community
Annual General Meeting
held in April 2022 with
all resolutions passed
Strong investment-grade
credit ratings
S&P Moody's
AA- Aa1 AAFitch
Five-Year Share Performance
2018 2019 2020 2021 2022
Share Price ($) (1)
Highest 13.96 12.14 11.20 12.57 13.41
Lowest 10.40 10.51 7.81 10.06 11.22
Average 12.05 11.16 9.38 11.62 12.04
Last Done 11.26 10.98 10.06 11.40 12.18
Market Capitalisation ($ billion)
(based on last done price) (1) 47.9 48.3 45.0 51.2 54.7
Ratios (2)
Price-to-earnings ratio 11.37 9.96 11.72 10.86 9.48
Price-to-earnings ratio
(based on core earnings) 11.37 9.79 11.72 10.86 9.48
Price-to-NAV (number of times) 1.26 1.08 0.87 1.01 1.05
Dividend yield (%) 3.57 4.75 3.39 4.56 5.65
(1) Share prices and market capitalisation information are from Bloomberg.
(2) Price ratios and dividend yield are based on average share prices.
2022 Investor Relations Calendar
The following were key events to engage the investment community in 2022. These were complemented by group and one-on-one
meetings throughout the year.
First Quarter Second Quarter Third Quarter Fourth Quarter
4Q and FY21 Results Briefing
and Live Webcast
Credit Suisse Asian
Investment Conference
SGX-Goldman Sachs Virtual
Singapore Corporate Day
2022 Annual General Meeting
1Q22 Results Briefing
Post Results Meeting
with Investors
Non-Deal Fixed Income
Roadshow in Australia
ANZ Debt Conference
BofA APAC Financial, Real Estate
Equity and Credit Conference
Citi Annual Pan-Asia Regional
Investor Conference
Morgan Stanley Virtual
ASEAN Conference
UBS OneASEAN Conference
2Q and 1H22 Results Briefing
and Live Webcast
Post Results Meeting
with Investors
Non-Deal Equity Roadshow in
United Kingdom
Jefferies Asia Forum
Macquarie ASEAN Conference
3Q and 9M22 Results Briefing
Post Results Meeting
with Investors
BofA Asian Credit Conference
Morgan Stanley Annual
Asia Pacific Summit
Proactive Engagement with
Our Investment Community
OCBC Annual Report 2022
Creating Investor Value 9
A Leading Sustainable Bank in the Region
We are committed to creating sustainable and long-lasting value for our stakeholders by
embedding responsible and sustainable business practices in everything we do.
The Board provides oversight for the overall sustainability agenda and strategy at OCBC and is supported by the Board
Sustainability Committee. The Board determines the material Environmental, Social and Governance (ESG) factors and considers
sustainability issues as part of the Bank’s business and strategy. This includes providing oversight of the effective management
and monitoring of our material ESG factors, as well as opportunities and risks associated with
sustainability issues such as climate and environmental matters.
Chaired by the Group Chief Executive Officer, the Sustainability Council oversees and approves our
Sustainability Strategy as well as key strategic initiatives relating to sustainability. The Council also
monitors and manages our material ESG factors, as well as approves the Bank’s Sustainability Report.
Our Sustainability Strategy contributes to the global sustainable development agenda through the
eight selected United Nations Sustainable Development Goals (UN SDGs) where we can make the
greatest positive impact in our core markets and create long-term value for our stakeholders.
Please refer to our Sustainability
Report for more information by
scanning the QR code.
• Climate Action
• Responsible Financing
• Sustainable Financing and
Investing
• Financial Inclusion
• Employee Health, Safety and
Wellbeing
• Diversity, Equity and Inclusion
• Talent Management
• Community Development
• Economic Contributions
• Strong Governance
• Fair Dealing
• Financial Crimes Prevention
• Cyber Security
Build a Low-Carbon Future
Taking climate action by managing
climate change risks and seizing
opportunities, as well as reducing
our own environmental footprint.
Create Positive Impact for Society
Driving socio-economic initiatives to
promote diversity, equity, inclusion
and wellbeing of our customers,
employees, communities and
wider society.
Act with Integrity
Embedding responsible business
practices to safeguard trust and
protect the value for our
stakeholders.
Purpose and Values
Sustainability Governance
Three Sustainability Pillars
Support the Global Sustainable Development Agenda
13 material ESG Factors
Our Sustainability Strategy
Our refreshed Sustainability Strategy reinforces our aspiration to create a positive social, environmental, and economic impact for
all stakeholders through the three sustainability pillars:
10
Taking climate action by managing
climate change risks and seizing
opportunities, as well as reducing
our own environmental footprint.
Hong Kong’s First Sustainability-Linked Loan in the Logistics
Industry with Kerry Logistics
OCBC Hong Kong successfully issued the city’s first sustainability-linked
financing in the logistics industry, reinforcing the Bank’s strategy of
innovating and supporting diversified industries on their ESG journeys.
The Bank acted as the sole lender and sustainability advisor to Kerry
Logistics Network (KLN), the largest international logistics company listed
on the Hong Kong Stock Exchange (HKEX). By achieving predetermined
ESG targets, including reduction in energy consumption intensity and
water consumption intensity, KLN will be incentivised with interest
savings for their HK$980 million loan (equivalent to $165 million).
Singapore’s First Corporate Green Retail Notes with Frasers
Property Limited
Sustainability is a key priority for Frasers Property Limited, who has
committed to achieving net-zero carbon by 2050. To support its
commitment, Frasers Property launched Singapore’s first corporate green
retail notes in September 2022. The proceeds from the retail notes will
go towards financing or refinancing new and existing green projects in
accordance with the issuer’s Green Finance Framework. OCBC acted as
the Sole Green Finance Advisor and a Joint Lead Manager and Bookrunner
of the offer.
Pillar 1:
Build a
Low-Carbon
Future
Net-Zero Banking Alliance Signatory
reinforcing our commitment towards achieving
a net-zero economy
Carbon Neutrality
achieved for our banking operational emissions
Achieved $44 billion
in sustainable finance commitments, on track
to achieving our $50 billion by 2025 target
$3 million contribution to OCBC
Mangrove Park to expand carbon
sequestration capacity
through partnership with NParks in Singapore’s
first large-scale ecological mangrove
conservation project
OCBC Annual Report 2022
A Leading Sustainable Bank in the Region 11
Pillar 2:
Create Positive
Impact for
Society
Driving socio-economic initiatives
to promote diversity, equity,
inclusion and wellbeing for
our customers, employees,
communities and wider society.
Skills-based Volunteering for Lasting Impact
Skills-based volunteering leverages our employees’ unique skills to serve
the community. Though it requires more planning and development work
than one-off projects, skills-based volunteering generates greater and
longer-lasting impact. Imparting skills like digital literacy, entrepreneurship
and personal management will go a long way in helping individuals and
families to succeed.
Our completed projects include teaching seniors to draft wills and lasting
power of attorney documents, organising activities to teach special needs
youths financial literacy, and helping a food charity utilise data to track
demand and stock sufficient supplies for low-income families while
minimising waste.
Supporting the Needs of Society with Innovative and Accessible
Financial Solutions
With an increasing focus on personal health and wellbeing, Kydra, a
local activewear brand, thrived, with a turnover in the millions. However,
the need for financing increased in order to keep up with the growing
customer demands amid the lengthy production lead time.
To meet Kydra’s growing financing needs, OCBC provided invoice
financing at a competitive rate. This allows Kydra to unlock valuable
capital tied up in unpaid invoices and improve its business cash flow.
First community urban farm in central
business district
that is expected to produce 140 kg of vegetables
annually to support Singapore’s “30 by 30” goal
Launched the Eco-versity certificate
programme
in partnership with reputable Institutes of
Higher Learning that lead in sustainability
thought leadership to upskill employees on
sustainability topics
Upskilling of 400 elderly customers
within a year
at heartland branches to educate them on
digital banking and scam awareness
Donated $2.39 million and contributed
over 65,000 volunteering hours
to address gaps in society
12
OCBC Cyber Smart Programme: Uplifting Employees’
Cyber Vigilance and Competencies
The OCBC Cyber Smart Programme is a strategic initiative to hone
employees’ knowledge, skills and demonstrated behaviour in managing
risks associated with social engineering, data loss and cyber security.
As part of the Cyber Smart Programme, OCBC held a Cyber Resilience
Webinar that drew over 500 participants. The aim of the webinar was
to educate employees on how to become more cyber resilient and to
mitigate the risks of falling prey to cyber-attacks. External speakers were
invited to share their insights on cyber threats targeting individuals and
how criminals take advantage of victims’ emotions and mindsets. The
webinar also included a panel session for the panellists to share their
knowledge and experience in cyber resilience.
We also held our first Cyber Escape Room Online Competition to
enhance employees’ cyber competencies. Over 150 participants from
various entities and locations across the Group were divided into 38
teams. The participants were given one hour to crack a series of puzzles,
failing which ‘sensitive information’ would be released resulting in
damage to a fictional company. The intent was to enhance employees’
cyber competencies.
Pillar 3:
Act with
Integrity
Embedding responsible business
practices to safeguard and protect
the value for our stakeholders.
Formed an Anti-Scam unit
in collaboration with more than 80 institutions
to co-locate their staff within the Singapore
Police Force’s new Anti-Scam Command Office
which operates 24/7 to enable a timely response
in the case of a scam incident
An emergency kill switch
for financial scams
was introduced to enable customers to swiftly
suspend their accounts via ATMs, the OCBC
helpline or the OCBC Digital app
Launched our Best Execution Policy
to ensure legal compliance and fair dealing
when employees execute orders for specific
financial instruments
Strengthening Anti-Fraud Detection and Prevention Measures
Given the increasing importance to safeguard against frauds and scams,
OCBC works together with key stakeholders to bolster the security of
digital banking. For instance, together with ABS and MAS, we continuously
collaborate with the industry to review and strengthen our fraud
detection and prevention measures. We have also worked alongside
the Singapore Police Force (SPF) to reinforce our anti-scam measures,
and have formed an Anti-Scam unit within the SPF’s new Anti-Scam
Command Office which operates 24/7 to enable a timely response in
the case of a scam incident.
Additionally, we have enhanced our Fraud Management System to better
manage incidents in real time, including the ability to reject transactions
and suspend suspect accounts, sending automated email and SMS
notifications to warn customers of potential frauds, and refining the
Bank’s flexibility in creating and amending fraud rules to better protect
our customers against financial crimes.
OCBC Annual Report 2022
A Leading Sustainable Bank in the Region 13
Creating Positive
Impact for Society
Impacted 238,974 individuals
13,068 volunteers
65,155 hours contributed
53%
Community
(supporting vulnerable seniors,
low income families, children and
youths, people with special needs)
$2.39
million
Awards
Singapore
Champion of Good Award 2022, National Volunteering and
Philanthropy Centre, for exemplary action in doing good, and being
a multiplier in engaging partners and stakeholders to do good
Outstanding Corporate Award, Thye Hua Kwan Moral Charities,
for volunteer contributions during the Covid pandemic
Malaysia
Excellence in CSR Strategy (Silver),
Human Resources Online HR Excellence Awards 2022
Hong Kong
Named Caring Company for 20th consecutive year,
Hong Kong Council of Social Service, for good corporate citizenship
and contribution towards creating an inclusive society
Contributed 2,654 hours of skills-based volunteering,
a 47% increase over target of 1,800 hours
Helped 1,096,266 vulnerable individuals as
at end 2022 – ahead of target of 1 million by 2023,
counting from 2017
10% increase in volunteer hours despite limited
face-to-face volunteering opportunities in some markets
2-fold increase in community projects involving
staff volunteers’ contribution of skills and expertise,
for greater and long-lasting impact
OCBC Staff Volunteers
Through our #OCBCCares Programme, we provide targeted financial and volunteer
support to help underserved communities across our core markets.
47%
Environment
Donation breakdown by category:
14
Allaying anxiety and depression
among vulnerable seniors
Organised face-to-face activities for more
than 3,300 seniors across Singapore, Malaysia,
Hong Kong and China who faced loneliness
during the pandemic due to isolation and
disruption in daily routines
Skills-based volunteering for lasting impact
• Created a supermarket simulation programme to teach students
with special needs money management skills
• Taught seniors to draft wills and lasting power of attorney documents
• Helped a food charity partner tap on data to track demand for food
items and stock sufficient supplies
Supporting inclusiveness for those with
special needs
• Empowered physically-challenged beneficiaries in
Macau in giving back as they flexed motor skills to
make towel flowers and bears for seniors at a Home
• Organised a private movie viewing session in Singapore for
adults with special needs, allowing them to move about
freely during the show without affecting other viewers
Building resilience to withstand
unexpected life events
• Conducted financial literacy workshops for more than
2,800 individuals in Singapore, Malaysia and Indonesia
to help alleviate financial stress and anxiety
• 67 volunteers in China raised funds to help highperforming high school students who were unable to
complete their studies because of family circumstances
OCBC Annual Report 2022
Creating Positive Impact for Society 15
Total number of cyclists
6123
Youngest participant
2 years old
Total distance cycled
328,000km
Oldest participant
82 years old
OCBC Cycle
Singapore
OCBC Cycle has become Singapore’s marquee cycling event since
we started the programme in 2009. Synonymous with family
and friendship bonding, the event also conveys the message of
sustainability, to encourage the community to commute by
cycling as contribution towards a low carbon world.
After a two-year hiatus due to the pandemic, OCBC Cycle
Singapore 2022 brought back an in-person component by
gathering 2,000 cyclists for its City Ride. There was also a virtual
leg where 6,100 cyclists participated in five categories ranging
in distance from 5 to 200 km, an almost 30% increase in
participants from 2020.
OCBC-KL Car-Free Morning
We returned as title sponsor of this popular activity following its
hiatus since 2020 due to the pandemic. For two hours every
Sunday, a 7-kilometre stretch of road will be closed for anyone
to walk, run, skate or cycle.
Connecting with the
Community Through
Sports
Supporting key sporting activities like cycling and swimming is one way to connect with
the community. Besides breaking down social and cultural barriers and providing
opportunities to learn life skills, such activities can enhance mental wellbeing.
OCBC Cycle Singapore 2022
16
Macau
In Macau, we held our second Charity Virtual
Cycle event from November to December 2022
to encourage the community to reduce their
carbon footprint by cycling more. 178
individuals participated in the 100km and
50km challenges while 36 children participated
in the 2-5km Youth Group category. In total,
the participants clocked 16,432 km. The
registration fees amounting to $6,500 were
donated to Caritas Macau, a social welfare
services provider.
Total number of cyclists
214
Youngest participant
5 years old
Total distance cycled
16,432km
Oldest participant
74 years old
OCBC Aquatics
We collaborated with the Singapore Swimming Association to pilot the inaugural OCBC Aquatics event, enabling
participants to try out aquatic sports like aquatic dancing, flippa ball and diving. Close to 120 employees, family members,
staff volunteers and beneficiaries from the Movement for the Intellectually Disabled of Singapore (MINDS) and the
Singapore Children’s Society attended the event. Besides building water confidence, this helps to impart a life skill to the
disadvantaged segments of our community who may otherwise not have the chance to learn because of their
family circumstances.
Following the positive response from participants, we plan to expand the event to involve more segments of the community
in the following year.
The OCBC Aquatics event was held at the OCBC Aquatics Centre, Singapore Sports Hub.
The virtual cycling event in Macau helped promote awareness to reduce carbon footprint.
With encouragement from OCBC staff volunteers, our beneficiaries were prepared to try
different aquatic activities.
OCBC Annual Report 2022
Connecting with the Community Through Sports 17
Reducing carbon emissions continues to underpin our climate change efforts. We partner
various stakeholders, including government bodies, advocates and the community to
achieve sustainable outcomes.
Fighting Climate
Change in
the Community
Expanding Capacity for Carbon Storage
We initiated two new carbon storage projects which involve
the planting of 9,000 mangrove trees at the OCBC Mangrove
Park, located at Pulau Ubin, Singapore, and another 9,000
mangrove trees at Tebuk Mendeleng, Malaysia. Mangrove
ecosystems can store up to four times more carbon than
terrestrial ecosystems. These 18,000 trees can absorb more
than 30 million kg of CO2 in their lifetimes.
Our carbon sequestration capacity, after including these two
new projects, has been expanded to more than 111 million kg
of CO2 absorbed through forestation efforts across all markets.
Expanded carbon sequestration capacity to absorb
more than 111 million kg of CO2
• OCBC Habitat Enhancement Programme,
Coney Island, 2017 – 2021
• OCBC Arboretum, since 2019
• OCBC Mangrove Park, since 2022
• Tebuk Mendeleng project, since 2022
Ms Helen Wong, Group CEO of OCBC Bank, and from (left) Professor Leo Tan,
Chairman of Garden City Fund, Mr Kenneth Er, CEO of NParks and Mr Desmond Lee,
Minister for National Development planted mangrove trees to mark the start of
the OCBC Mangrove Park project.
Restoration work at the OCBC Mangrove Park will be completed by 2026.
18
Conserving Ecosystems
We partnered Hong Kong’s Ocean Park Conservation
Foundation, Hong Kong to reverse the decline of juvenile
horseshoe crabs, valued for their medical contributions to
biomedical research and applications. Over a 90-day period,
our staff volunteers learnt to care for this endangered
species before releasing them into the wild.
Promoting Awareness and Green Practices through the OCBC Climate Index
Partnering Eco-Business, we conducted the second edition of the OCBC Climate Index, which measures the levels of environmental
sustainability awareness and action among Singaporeans. This is based on a survey that covered three pillars – Awareness,
Adoption and Advocacy – across four themes: Transport, Food, Home and Goods.
Cost Time
consuming
Incovenience/
hassle to
do so
I find it hard
to maintain
sustainable
habit
Lack of
incentives
44%
36%
32% 32% 31%
For better
health
To save
money
For a cleaner
and
greener
environment
For
future
gererations
For selfsufficiency
47% 47%
43%
39%
30%
Raising awareness of the practical benefits
of going green can encourage people to
adapt a more sustainable lifestyle
Motivation for wanting to live a sustainable life Reason for not adopting climate action
“I eat less red
meat for health
reason.”
“I can save money and do
better for the environment,
a win-win situation.”
Singaporeans Who Adopt Sustainable Habits Are Primarily Motivated by Personal Practical Benefits and Not Concern
for the Environment.
#OCBCCares Environment Fund Supports Ground-up Projects
The #OCBCCares Environment Fund supported the implementation of four new ground-up projects ranging from reducing
plastic bottle use at vending machines to rallying communities to adopt environmentally-responsible practices. Costing over
$62,000 in total, these projects were chosen from entries submitted under the Sustainability Exchange programme. This is a
youth-professional mentorship initiative to motivate youths to develop solutions for real-world issues, organised by EB Impact –
the non-profit sister arm of Eco-Business. To date, the #OCBCCares Environment Fund, which was introduced in 2017, has funded
18 projects totaling $323,150.
The endangered horseshoe crab is valued for its contribution to science and research.
OCBC Annual Report 2022
Fighting Climate Change in the Community 19
Board of Directors
Ms Christina Ong
Non-Executive and Independent Director
Mr Andrew Lee
Chairman,
Non-Executive and Independent Director
Ms Chong Chuan Neo
Non-Executive and Independent Director
Ms Helen Wong
Group Chief Executive Officer,
Executive and Non-Independent Director
Dr Andrew Khoo
Non-Executive and Independent Director
Ms Tan Yen Yen
Non-Executive and Independent Director
Mr Pramukti Surjaudaja
Non-Executive and Non-Independent Director
Mr Chua Kim Chiu
Non-Executive and Independent Director
Dr Lee Tih Shih
Non-Executive and Non-Independent Director
20
Board Committees
Executive Committee
Dr Lee Tih Shih, Chairman
Mr Andrew Lee
Dr Andrew Khoo
Nominating Committee
Dr Andrew Khoo, Chairman
Mr Andrew Lee
Ms Christina Ong
Mr Pramukti Surjaudaja
Ms Tan Yen Yen
Remuneration Committee
Ms Christina Ong, Chairman
Mr Andrew Lee
Dr Andrew Khoo
Mr Pramukti Surjaudaja
Audit Committee
Mr Chua Kim Chiu, Chairman
Ms Chong Chuan Neo
Ms Tan Yen Yen
Observer: Mr Andrew Lee
Risk Management Committee
Mr Andrew Lee, Chairman
Mr Chua Kim Chiu
Ms Tan Yen Yen
Ms Helen Wong
Ethics and Conduct Committee
Ms Christina Ong, Chairman
Mr Andrew Lee
Ms Chong Chuan Neo
Board Sustainability Committee
Ms Chong Chuan Neo, Chairman
Mr Andrew Lee
Ms Helen Wong
The OCBC Board is fully
committed to upholding the
highest standards of corporate
governance. It ensures that
OCBC is managed in the best
interests of the Bank as a whole
while taking into account the
interests of shareholders,
customers and other stakeholders.
Various Board Committees have
been established to assist the
Board in discharging its duties
more effectively with clearly
defined terms of reference.
OCBC Annual Report 2022
Board of Directors 21
Management Committee
Ms Parwati Surjaudaja
President Director and CEO,
Bank OCBC NISP
Mr Tan Chor Sen
CEO, OCBC Bank Malaysia
Ms Ivy Au-Yeung
CEO, OCBC Wing Hang Bank
Mr Wang Ke
CEO, OCBC Wing Hang Bank (China)
Mr Sunny Quek
Global Consumer Financial Services
Mr Tan Wing Ming
Greater China
Mr Kenneth Lai
Global Treasury
Mr Tan Teck Long
Global Wholesale Banking
Mr Noel Gerald DCruz
Group Chief Risk Officer
Ms Goh Chin Yee
Group Chief Financial Officer
Ms Helen Wong
Group Chief Executive Officer
Mr Lim Khiang Tong
Group Chief Operating Officer
22
Ms Sylvia Ng
Strategic Planning Office
Mr Praveen Raina
Group Operations and Technology
Ms Koh Ching Ching
Group Brand and Communications
Ms Lee Hwee Boon
Group Human Resources
Mr Melvyn Low
Global Transaction Banking
Ms Loretta Yuen
Group Legal and Compliance
Mr Harry Lim
Group Audit
Mr Linus Goh
Global Commercial Banking
Ms Elaine Lam
Global Corporate Banking
Mr Jason Moo
CEO, Bank of Singapore
Mr Gan Kok Kim
Global Investment Banking
OCBC Annual Report 2022
Management Committee 23
Upfront with
Helen
Group Chief Executive Officer
You unveiled the Corporate Strategy
to Excel for Sustainable Growth in
2022. In which areas of the strategy
have you seen the most progress?
As the name of the strategy suggests,
it is about growing OCBC sustainably
and achieving excellence in the way
we operate and run the business. The
emphasis here is on ‘long-term’. OCBC
has navigated various crises and
challenging times. We have always
emerged stronger.
Tapping on our collective strength as
OCBC Group is important. By building
on our comprehensive regional
franchise under “One Group”, we
expect collaboration across various
products and business groups to play
a bigger role in driving income.
We have made some structural changes
to our franchise in Hong Kong. Since
OCBC Bank acquired Wing Hang Bank
in 2014, Hong Kong branch and the
renamed OCBC Wing Hang remained
separate entities. In December 2021,
we reached a significant milestone with
the integrated platform of Hong Kong
branch and OCBC Wing Hang. Doing so
enabled us to use our talent, capital,
liquidity and other resources more
efficiently and effectively. We can also
scope business opportunities better and
support a full spectrum of customers
with the strength of one consolidated
Hong Kong team.
“We celebrated our 90th
anniversary in 2022 –
a milestone for OCBC.
I am confident that,
guided by our values
and strong management,
we will thrive for another
90 years and beyond.”
24
Our investments in digitalisation have
shown good results too. In Singapore,
98% of SME accounts and practically all
of our consumer accounts are opened
digitally. 96% of consumer financial
transactions are done online and 90%
of business financial transactions are
conducted digitally. We made progress
in the new economy and high-growth
industries spaces too. For instance, we
launched embedded finance propositions
on five platforms in Singapore, Malaysia
and Indonesia, thereby enabling small
and medium-sized enterprises to access
financing more efficiently.
2022 was a significant year for OCBC in
the area of sustainability. I will talk more
about it later in this section.
What are you most optimistic
about for 2023, and what are some
of your concerns?
2023 will hopefully be the year where we
can put Covid firmly in our rear-view
mirror. China’s faster-than-expected
reopening and policy stimulus has made
this more of a possibility, barring any
setbacks. Trade and investment flows
between Greater China and ASEAN will
pick up as a result and we expect wealth
flows to increase as well.
The groundwork that we have
conscientiously and consistently been
working on has put us in a good position
to seize these opportunities. We are
already seeing the fruits of our labour.
In the area of Wealth Management,
we will continue strengthening our hub
capabilities across Singapore, Hong
Kong, Dubai and London and enlarge
Bank of Singapore’s dedicated Family
Office Advisory Unit. We will also expand
our offshore OCBC Premier Private Client
and OCBC Premier Banking propositions
in key Asian markets.
Achievements
Group net profit rose 18%
to a record high of $5.75 billion
$25 billion net new
money inflows across Bank of
Singapore and OCBC wealth
management franchise
Became a signatory to the
Net-Zero Banking Alliance
Achieved carbon neutrality
for banking operational
emissions in 2022
Top 10 Strongest Banks
in Asia Pacific
Awarded by The Asian Banker
This change was foundational for us
given the importance of Hong Kong.
Together with Singapore as the nexus
of ASEAN, and Hong Kong as the
gateway to Greater China, we have
successfully captured the increasing
ASEAN-Greater China trade and
investment flows.
Such flows often result from the China
Plus One strategy adopted by corporates
including China State-Owned
Enterprises (SOEs) and companies. They
want to establish an additional
manufacturing base in ASEAN to
complement their China operations and
build resilience, especially in the wake
of global supply chain disruptions. By
tapping on different business units’
expertise and our presence in different
markets, we can offer them the breadth
of products and services that they need,
from lending to treasury, foreign
exchange, and cash management. To
further facilitate the capture of these
flows, we have expanded our Greater
China Business Office network last year,
adding Indonesia to our existing offices
in Thailand, Malaysia and Singapore.
We have also fared well in leveraging
our twin wealth hubs and digital
propositions to capture rising Asia
wealth flows. Even though 2022 was
challenging for wealth management
in general, we attracted net new
money inflows.
We continued to improve on our Group
Wealth Platform – a collaboration
between OCBC Bank and Bank of
Singapore – for our high net worth
and ultra-high net worth customers to
provide superior advisory and unified
investment views on one platform. In
February 2022, OCBC Wing Hang China
and OCBC Wing Hang Macau jointly
launched the Northbound Wealth
Management Connect Service to
provide more diversified investment
opportunities and richer asset
allocation options.
OCBC Annual Report 2022
Upfront with Helen 25
Partnerships can assist in developing a better understanding of sustainability. Together with the National University of Singapore, we embarked on a study on how to best nudge Singaporeans
towards the adoption of electric vehicles. (L-R) Ms Helen Wong, Ms Grace Fu, Minister for Sustainability and the Environment and Associate Professor Alberto Salvo from the Department of
Economics at the NUS Faculty of Arts and Social Sciences launched this partnership at OCBC Centre in August 2022.
Of course, 2023 will have its challenges.
The volatility that we saw in 2022 has
carried into 2023. This could be the
story for the entire first half of the year,
although we do believe that it will ease
in the second half. The volatility
may create headwinds for Wealth
Management but our diversified
business, with the three pillars of
Banking, Wealth Management and
Insurance, provides stability, whatever
the season.
Our reshaped balance sheet allowed us
to capture the benefits from the series
of rate hikes by the Fed in 2022 as seen
in increases in net interest income and
net interest margins. In 2023, we must
once again be well-prepared – but this
time, with an eye on interest rates
coming down.
The bank has made big strides in its
environmental sustainability efforts.
What is next?
2022 was significant for us. We achieved
carbon neutrality for our operational
emissions through key carbon reduction
measures such as space optimisation
and adopting innovative cooling
technologies, while supporting carbon
offset projects in the region. We also
expanded our carbon sequestration
efforts through two mangrove restoration
projects in 2022 – the OCBC Mangrove
Park in Singapore and another project in
Tebuk Mendeleng, Malaysia.
In addition, we became the second
Singapore bank to join the United
Nations-convened, industry-led Net-Zero
Banking Alliance. This reflects our
commitment to achieving net-zero not
just in our operations but also in our
lending and investments businesses.
The next step to this would be to unveil
our sectoral financed emission targets,
which we will do by the first half of 2023.
While we are working on formalising
these targets, we are already supporting
our customers in their transitions to
net-zero with utmost urgency. This is
reflected in the continued expansion
of our sustainable finance commitments
which currently stands at $44 billion.
At this rate, we are likely to reach our
$50 billion target ahead of our
2025 schedule.
Given the urgency of the climate
agenda, we are constantly looking for
new ways to support the movement.
Last year, we launched the OCBC
Sustainability Innovation Challenge.
Our inaugural partner on this challenge
was our corporate customer SATS,
and working together, we were able
to conduct a worldwide search for
solutions to waste management and
reduction challenges. We will continue
this challenge with other likeminded
customers from key industries and
also find other partnership
opportunities.
26
Volunteers from OCBC Malaysia planting a mangrove tree at Tebuk Mendeleng, Malaysia.
90 Years and Beyond
We commemorated our 90th anniversary by launching two mangrove restoration
projects in 2022: OCBC Mangrove Park at Pulau Ubin in Singapore and Tebuk
Mendeleng in Malaysia. 18,000 mangrove trees are expected to take root by 2026.
These trees can absorb more than 30 million kg of CO2 in their lifetimes and protect
shorelines against erosion and storm surges. These gifts to the community are in
line with the theme “90 years of giving” and show how our LIFRR values are
translated into action.
I have summarised steward leadership
for sustainability in 4Cs:
• Commit: We will commit to making
policy and process changes and invest
in people development.
• Collaborate: Collaboration must
flourish in our interactions with other
organisations and the community.
• Catalyse: We must play a catalytic
role by enabling and encouraging the
transition towards decarbonisation.
• Courage: Oftentimes, someone just
needs to tip the first domino and set
things in motion. We have done that
in the past. We were the first bank
in Southeast Asia to say we would
stop funding new coal-fired power
plants and to announce a target for
sustainable finance. Bank of Singapore
was the first in Asia to incorporate
ESG factors in assessing investment
funding. We will continue to play this
leadership role.
What is your management
philosophy and vision for your
leadership team?
To me, it is very important to lead –
and live – by the OCBC corporate values:
Lasting Value, Integrity, Forward-looking,
Respect and Responsibility. LIFRR, as we
call it, is an important part of our culture.
It is the foundation for everything we do.
That is true not just for the leadership
team, but also everyone in the Group.
Being future-oriented is especially
important and this has been the impetus
for a lot of what I have done since
becoming CEO two years ago. In an
increasingly competitive landscape,
there is an urgency to collaborate even
better as One Group.
We institutionalised this regionally with
an enhanced reporting structure at the
end of 2021 and continued to build on it
in 2022. New teams like our Group Data
Office and the Global Wholesale Banking
Sustainability Office were also formed
as part of an organisation refresh.
With the retirement of some of our
senior leaders, there have been new
members joining our senior leadership
team. These additions came from both
our internal talent base as well as
external hires. Together, we have the
right mix of experience and perspectives
in the senior leadership team to be able
to deliver on our Corporate Strategy and
drive sustainable growth.
We celebrated our 90th anniversary
last year – a milestone for OCBC. I am
confident that, guided by our values and
strong management, we will thrive for
another 90 years and beyond.
OCBC Annual Report 2022
Upfront with Helen 27
“I will strengthen our
capital management
and optimise the utilisation
of capital resources. This
will allow us to deliver
long-term shareholder
value, while leaving us
with sufficient room to
drive franchise growth and
to explore opportunities
for inorganic growth as
they arise.”
Having assumed the role of Group
CFO in November 2022, what is your
vision for Group Finance?
My immediate focus is to take stock of
Group Finance as a whole and work out
how we can play an effective strategic
role in our refreshed Corporate Strategy
to Excel for Sustainable Growth. There
are three focal areas of priority.
Firstly, I would like to look at how
Group Finance can reinforce our
strengths, especially in our business
analytics capabilities to better provide
business insights and advisory to our
colleagues across the bank. This is an
important enabler to drive more efficient
resource allocations (including people,
technology and capital), and support all
eight pillars of our Corporate Strategy
to drive growth.
Secondly, I will strengthen our capital
management and optimise the
utilisation of capital resources. This
will allow us to deliver long-term
shareholder value, while leaving us
with sufficient room to drive franchise
growth and to explore opportunities
for inorganic growth as they arise.
Upfront with
Chin Yee
Group Chief Financial Officer
28
Achievements
Record net profit of
$5.75 billion
Return on equity improved to
11.1% from 9.6% in 2021
Earnings per share at
$1.27, up 18% from 2021
Total dividend raised to
68 cents, at 53% dividend
payout ratio
Strong capital position with
Common Equity Tier 1 Capital
Adequacy Ratio of 15.2%
Last but not least, building up our
people assets is important. That, of
course, includes developing individual
talents. But to really support our
Corporate Strategy’s “One Group”
approach, we need to first reinforce
collaboration within our Division by
finding ways to optimise our collective
talents as “One Group Finance”. By
doing so, we can better scale our
expertise and foster innovation to be
an enabler for the Group in achieving
our Corporate Strategy.
OCBC reported record profits in
2022. How can this momentum
be sustained?
We were able to manage the challenges
of 2022 well in part because we have a
diversified business comprising banking,
wealth management and insurance. In
particular, our well-positioned balance
sheet has enabled us to benefit from the
rapid rise in interest rates. Our results
have been propelled by strong growth
in net interest income, underpinned by
asset growth and net interest margin
expansion. Lower allowances from
improving credit conditions and sound
portfolio quality also lifted our earnings.
These more than compensated for
slower investment-related fee income
amidst volatile and uncertain market
conditions. Overall, while customer
investment activity was more subdued,
we were still able to attract and grow
net new money inflows into our wealth
management franchise. That is a very
positive sign.
Our geographical diversification continued
to be a plus for us as well. It is one of the
key enablers for us to pursue growth in
challenging and uncertain climates.
Though we are headquartered in
Singapore, a substantial proportion of
our income comes from our key overseas
markets like Greater China, Malaysia
and Indonesia.
In the immediate future, as we continue
to reshape our balance sheet, we are
thinking about how we can consistently
perform well even when interest rates
are dropping. Ensuring the resilience of
our portfolio quality so that we do not
end up with high impairment charges
is also foremost in our minds. This is
especially so given the inflationary
pressures and possibility of recessions
in certain markets.
However, we are not just thinking about
our next immediate steps, but planning
for the medium to long-term too. While
doing so, it is important to exercise
efficient resource allocations and be able
to reap benefits from our investments,
and Group Finance plays a vital role in
providing insights and advisory.
What impact will our net-zero
commitment have on our business?
Sustainability is often seen as a balancing
act and indeed, sometimes doing the
right thing might come at the expense
of short-term profits. But ultimately, we
believe that organisations should choose
to do good, and that we can still achieve
consistently good returns by doing so.
Investors are now seeing sustainability
as a must-have, not just good to have,
and are focusing more on companies
with responsible business practices.
Apart from investors, rating agencies
are also paying close attention. They
are increasing their due diligence on
our sustainability practices as part of
their rating assessments for banks. We
maintain regular communication with
the rating agencies as well as with our
investment community, to provide
updates on our efforts and progress.
As a result, we were included on the
inaugural Steward Leadership 25 list
and the FTSE4Good Index. Our net-zero
commitment, and other efforts in the
realm of sustainability, are vital
to position us well for the future.
Upfront with Chin Yee
OCBC Annual Report 2022
29
“The exchange of insights
and information between
businesses and academia
has long been valued
by us and we want to
embark on more of such
collaborations to pioneer
new innovations that will
benefit our customers
and the community.”
What did the Bank achieve on the
digitalisation and transformation front?
We continue to double down on our
digitalisation and transformation efforts
to drive operational and business
excellence.
2022 marked the completion of Phase 1 of
our seven-year digital core roadmap which
commenced in 2019. Over $250 million
was invested in the period (2019 – 2022)
to refresh our key channel systems across
our markets to enable quicker roll-out of
digital features and sharpening of our
personalisation capabilities with artificial
intelligence and machine learning.
Time-to-market for new digital features
has been cut dramatically, allowing new
releases to be introduced twice as quickly.
An example was the use of digital passport
authentication for foreign SME owners to
open accounts with us, eliminating the
need for cumbersome paper documents.
There has also been a significant uptake
in sales through the deployment of
personalisation capabilities.
We continue to explore opportunities
in the digital asset space to benefit our
customers, employees and the broader
community. In conjunction with the
Bank’s 90th anniversary celebrations
and to raise awareness of such assets
among our staff, we minted our first
Non-Fungible Token (NFT) which was
Upfront with
Khiang Tong
Group Chief Operating Officer
30
given to staff to commemorate the
special occasion. The NFT was minted
on our in-house blockchain platform.
On the operational excellence front,
we have streamlined close to 150
processes in the second half of 2022.
Such improvements not only speed up
our response to our customers’ needs
but also optimise the internal workflows
and drive better working experience for
our colleagues.
Building our data and analytics capabilities
remains a key focus as well. More than
7,000 staff completed the ‘Lead with
Data’ training programme in 2022 and
we will further tap on data to make
decisions and unlock insights.
What is the progress on the
operational decarbonisation front?
I am glad that we achieved carbon
neutrality in our operational emissions
in 2022. In pursuing this target annually,
not just in 2022, we are guided by the
principle of reducing our global carbon
footprint as much as possible before
offsetting the residual and unavoidable
emissions through the purchase of
carbon credits.
We announced in May last year that
more than $25 million will be invested
in decarbonisation efforts in Singapore,
Malaysia and Greater China. The
investments will be used to deploy
energy-efficient technology to reduce
our carbon emissions, and solar energy
systems that will increase renewables in
our energy mix for powering operations.
These investments will yield
approximately a reduction of 10,000
tonnes of carbon emissions by 2025.
This is equivalent to removing close to
10,000 cars from the road.
Other initiatives in our decarbonisation
roadmap include converting our fleet
of corporate cars to electric vehicles
and deploying electric vehicle charging
facilities at major commercial buildings
we manage. In March 2022, 10 charging
points were installed at OCBC Centre
– making it the largest electric vehicle
charging hub in the central business
district in Singapore.
Singapore’s Deputy Prime Minister, Coordinating Minister for Economic Policies, and Chairman of the National
Research Foundation, Mr Heng Swee Keat (standing, middle), witnessed the signing of the research collaboration
agreement between NTU Singapore and the Bank.
Achievements
SG Mark Gold
Awarded by Design Business
Chamber Singapore
Singapore Employee
Experience of the Year
– Banking
Awarded by Asian Business
Review for our HR-in-yourPocket app
Best Digital Robo-Advisory
Service
Awarded by The Asian Banker
Best Mobile Banking
Initiative
Awarded by The Digital Banker
We will not stay still in our efforts and
will continue to explore new ways to
reduce our global carbon footprint as
it is the right thing to do for ourselves
and the communities we are in.
Going into 2023, what are your
priorities and goals?
We have commenced Phase 2 of our digital
core roadmap which will see another
investment of $300 million over the
period of 2023 to 2025. The investments
will go into improving areas such as the
facilitation of payments and loans that
will improve turnaround time.
To intensify our transformation, we
have been and will continue to build
our workforce capabilities. Our tech
workforce doubled from 2018 to 2023
and there are plans to hire another
1,500 tech talents by 2025.
Strategic partnerships is another area
that we will continue to harness to
deliver greater value for our customers
and employees. Last year, we signed
a five-year partnership with NTU
Singapore to develop innovative
technological solutions in areas such
as data privacy and cyber security.
The exchange of insights and information
between businesses and academia has
long been valued by us and we want to
embark on more of such collaborations
to pioneer new innovations that will
benefit our customers and the community.
OCBC Annual Report 2022
Upfront with Khiang Tong 31
“We are resilient and
well-positioned to
navigate the challenging
risk landscape and capture
new opportunities to excel
for sustainable growth.”
Upfront with
Noel
Group Chief Risk Officer
How did the Bank navigate
through the risk and credit portfolio
challenges of 2022? How is 2023
going to look like?
2022 had its own share of challenges,
with the withdrawal of Covid restrictions
in many economies offset by multiple
headwinds and event risks. Pent-up
demand as economic activities returned,
supply bottlenecks caused by RussianUkraine war and labour shortages, for
instance, led to sharp spikes in inflation.
Central banks responded with several
rounds of interest rate increases, sharply
raising borrowing costs. Other challenges
included China’s rolling Covid lockdown
and property malaise, as well as
escalating geopolitical and economic
tensions with the US.
In the face of this, we managed our
risks well and our portfolio quality has
remained resilient. We proactively
assessed the vulnerability of our credit
portfolio from emerging headwinds and
event risks via thematic and portfolio
reviews and stress tests. Appropriate
and timely actions were then taken
to manage potentially vulnerable
borrowers and portfolios identified. We
grew our portfolio cautiously through
careful client selection and tightening of
underwriting criteria for sectors-at-risk.
We also increased hedges in our bond
portfolios to manage the sharp
corrections in major financial markets.
In 2023, headwinds from the polycrisis
are expected to continue. The
macroeconomic environment remains
uncertain and financial markets volatile.
32
How has the Bank responded to
the growing calls to reinforce the
financial system’s resilience to
climate risks?
Our approach to this challenge is
two-pronged.
First, fulfilling our responsible and
sustainable financing commitments to
minimise our contribution to climate
risks. In 2022, we expanded our
prohibitions on coal power generation
and thermal coal mining by not
financing corporates that derived more
than 50% of their revenues or production
capacity from these activities.
We joined the Net-Zero Banking Alliance
in October 2022 to reinforce OCBC’s
commitment towards a net-zero economy.
We also leveraged our strengths in
sustainable finance to support our
clients’ net-zero transition efforts.
Second, adequately addressing the
potential impacts of climate change on
business and operational resilience.
Climate risk is transverse and can
amplify credit, market, liquidity,
operational and reputational risks. To
bolster our resilience, we embedded
climate risk management in relevant
governance structures across the Bank.
We enhanced climate scenario analysis
capabilities to better understand the
implications of climate change on
portfolio resilience. We also actively
participated in industry capacity building
initiatives, including a pilot study on
applying the Task Force on Nature-related
Financial Disclosures’ framework for
addressing nature and biodiversity loss.
What non-financial risks are high
on the Bank’s radar?
We embarked on a strategy to bolster
operational resilience by uplifting
day-to-day risk management practices,
particularly for hotspots that warrant
That said, there are growth opportunities
via foreign direct investments in
ASEAN and Greater China as global
businesses attempt to diversify their
supply chains. China has removed its
zero Covid policy and is rebooting its
economy. Inflation appears to have
peaked, though expected to remain
elevated compared to the pre-Covid
period. We will continue to closely
monitor our portfolio and the evolving
operating environment and cautiously
capture growth opportunities by
leveraging on our regional footprint
and the strength of our core client
relationships. With our strong capital,
funding and liquidity position, backed
by our strong corporate culture, we are
well-positioned for sustainable growth.
How did the Bank protect its
investments and that of the
customers in light of uncertain
and volatile markets?
To protect the value of our investment
portfolio, we shortened the interest
rate duration and increased interest
rate hedge positions. We prioritised
investments into sectors that were
resilient against recession risk and
remained selective over names in the
late cycle economic phase. We also
implemented controls to limit the
downside capital impact and entered
into macro hedges to protect against
tail risks of our portfolios.
For our customers, we have been
advocating defensive positioning and
portfolio diversification to include
investments that exhibited lower volatility
and stable earnings. We also tracked the
price changes and adverse news on our
customers’ investments to provide
relevant and timely communications
for them to make better-informed
investment decisions.
We will continue to stay nimble and
advocate caution for the various
investment portfolios in the coming year.
heightened attention due to the
challenging macroeconomic conditions,
unrelenting pace of digital transformation,
and increasing regulatory requirements.
We also continued to strengthen our
engagement with our people especially
with the Great Resignation impact seen
across the industry since 2021.
Fraud prevention and detection is
also high on our agenda. We have
integrated and centralised our fraud
risk management capabilities into
Group Financial Crime Compliance to
unlock synergies and step up vigilance
in combatting scams, frauds, and
financial crime. We strengthened our
risk mitigation and controls across
the Group, particularly in the areas
of detection, prevention and
transaction surveillance.
To emphasise its importance, we have
elevated Information Security and
Digital Risk as a principal risk type,
managed by a dedicated risk
management function and oversight by
a newly formed group risk committee.
Other enhancements made include the
strengthening of cybersecurity controls
and the roll-out of a Cyber Smart
Programme to raise employee cyber
vigilance and competency.
Given the increased regulatory
expectations and scrutiny over the
management of third-party service
providers amidst high profile data loss
incidents, we have rolled out initiatives
such as the expansion of the third-party
risk management programme to include
ecosystem partners, and extended our
education and awareness efforts on key
topics such as data loss prevention to
service providers.
For more information on how the Bank is managing
the Climate, Fraud, Information Security and Digital
and Third-Party Risks, as well as Talent Management,
please refer to the Risk Management Chapter on
page 70 and/or our Sustainability Report 2022.
OCBC Annual Report 2022
Upfront with Noel 33
Upfront with
Sunny
Global Consumer Financial Services
With Singapore and the region
in “recovery” from the Covid
pandemic, what drove the consumer
banking business in 2022?
2022’s volatile market conditions
negatively affected equities and fixed
income markets. Yet, we were able to
seize opportunities thanks to our
well-positioned business and strong
foundations.
We beefed up staff strength, growing
client advisors and relationship
managers 10% since 2019.
Improvements to our Group Wealth
Platform for affluent customers in
Singapore and Malaysia have also
contributed to our overall performance.
Customers can monitor investments via
a single wealth account and access a
wide range of best-in-class investment
products and solutions, backed by
reliable and consistent advice from
investment specialists across the Group.
Our AUM growth has averaged above
10% annually for the past five years.
Digitalisation has been another key to our
success. We have always led the industry
in market-moving digital innovations.
We offer one of the most comprehensive
digital wealth offerings of any bank on
our OCBC Digital app, including access to
equities trading, robo-investments, 24/7
FX and precious metals.
Our customers can make Central
Provident Fund (CPF) contributions
directly from digital banking channels
“We will accelerate
acquisition, deepen
engagement with
customers, and grow
our Premier Banking
business.”
34
‘Spend’ bonus interest category on our
flagship OCBC 360 account, while
revising interest rates to remain
competitive. We relaunched our OCBC
Cashflo credit card as ‘NXT’ to capture
younger customers. Since then, monthly
OCBC 360 account openings have more
than doubled, and monthly OCBC 365
credit card acquisitions have increased
more than 80% on average. In 2023, we
expect demand to remain healthy.
What opportunities do you see in
sustainable finance and investments
and how do you plan to seize them?
Our sustainable financing sales have
grown fourfold from 2021, and more
than 80% of our recommended funds
have a minimum ‘BB’ MSCI ESG Rating
in 2022.
Increasing transparency is important
so customers have information to
make sustainable choices. We launched
ESG ratings for our OCBC RoboInvest
portfolios and two ESG-integrated funds
in 2022, with more on the way.
We must tap on innovation and
organisational partnerships to drive
sustainability. We began a research
initiative with the National University of
Singapore to understand what messages
would encourage Singaporeans to adopt
electric vehicles. These insights will
enable us to develop relevant products
and services for customers.
Achievements
More than 10%
average yearly growth
in AUM since 2017
64% of customers are
active digital users, up from
58% in 2021
96% of financial transactions
now performed digitally
Best Digital
Robo-Advisory Service
Awarded by The Asian Banker
for OCBC RoboInvest
Best Customer Experience
via Mobile and Internet
Banking
Awarded by The Digital
Banker for OCBC Financial
OneView
The 20,000 sqft branch at Wisma Atria is OCBC Bank’s largest integrated lifestyle and banking branch in Singapore.
It was officially opened in November 2022. Branches are important to facilitate face-to-face conversations for
wealth management and other complex transactions.
– a first in Singapore – and we enabled
eligible Singaporeans to collect
government pay outs at ATMs using
facial biometrics. We leveraged the
Singapore Financial Data Exchange
(SGFinDex) and integrated data from
seven insurers to provide holistic
financial planning to customers.
Digital wealth sales have grown more
than four times in two years. We even
grew our base of active digital customers
to 64% from 58% in 2021.
I am happy with the agility we showed
in a fast-rising interest rate environment
which enabled us to remain competitive
in both the loans and deposits
businesses despite the challenging
operating environment.
What are your key areas of focus
for 2023?
We will accelerate acquisition, deepen
engagement with customers, and grow
our Premier Banking business.
While we seek to replicate our Singapore
success in Malaysia, Indonesia and Hong
Kong, we expect competition from new
digital bank entrants and incumbents
alike. I believe customer-centric digital
offerings, complemented by the human
touch, is key in setting us apart and
helping to move customers towards
primary banking relationships with us.
Hence, even as we double down on digital
banking capabilities, we will continue to
improve the branch experience.
We must move towards a single offering
where the differentiation between
‘physical’ and ‘digital’ is removed.
Customers should always feel they can
engage with just one channel – the bank.
We will leverage data and design to
create seamless and hyper-personalised
experiences for customers to achieve this.
As global travel picks up, we are
optimistic about consumers’ return to
discretionary spending. In Singapore,
travel accounted for one third of the
overall growth in card spend in 2022.
We improved the proposition of our
OCBC 365 credit card and reinstated the
OCBC Annual Report 2022
Upfront with Sunny 35
What were some of the highlights
in 2022?
The Wholesale Banking Division was
able to navigate the volatile economic
landscape successfully, achieving a
record operating profit in 2022, close
to 50% higher than a year ago. This was
supported by broad-based loan growth,
higher treasury income and interest
rate hikes.
We have achieved good outcomes in
tapping flows between Greater China
and ASEAN, focusing on sustainability
and effective data analytics to target
customer segments for business
generation and risk management.
To better support increasing ASEANGreater China trade and investment
flows, we expanded our Greater China
Business Office coverage beyond
Singapore, Malaysia and Thailand,
to include Indonesia. With the expanded
network, we were able to better support
Greater China corporates investing
in ASEAN.
In Singapore, we deepened our
partnership with the public sector to
broaden the suite of digital solutions
to better serve the community.
Collaborating with GovTech, the
government technology agency that
drives digital transformation in the
“With a strong foundation
in place, coupled with
our robust international
franchise, deep sectoral
expertise and strong
digital capabilities, we
are well placed to seize
opportunities and support
our customers in the
coming years ahead.”
Upfront with
Teck Long
Global Wholesale Banking
36
see sustainability as a business risk
consideration, where it is a key driver of
business viability and long-term survival,
as opposed to a good-to-have.
This shift contributed to over 600
SMEs and mid-cap corporates across
Singapore, Malaysia and Hong Kong,
taking up sustainable financing in 2022
– close to three times higher than a
year ago.
We signed up to the United Nationsconvened, industry-led Net-Zero Banking
Alliance and are on track to unveil our
sectoral financed emission targets in
2023. To achieve net zero by 2050, we
have begun developing a systematic plan.
To drive the transition, we will heighten
client engagement, develop new financing
solutions and collaborate with partners
to build ecosystems and encourage
innovations in climate solutions.
What is your outlook for 2023?
The economic outlook for 2023 is
expected to remain uncertain, with
headwinds such as interest rate hikes
and a slowdown in global demand.
We will continue to remain nimble and
stay focused on executing our ASEANGreater China strategy. ASEAN continues
to register strong economic growth due
to its young demographics, macro trends
of investing in ASEAN to improve global
supply chain resilience and continued
ASEAN-Greater China trade and
investment flows. With Mainland China
re-opening borders, this is expected to
provide a boost for the region.
Sustainability will continue to be a
multi-year trend and opportunity for
us. We are committed to working
with industry peers, customers and
policymakers to transition into a
low-carbon world.
With a strong foundation in place,
coupled with our robust international
franchise, deep sectoral expertise and
strong digital capabilities, we are well
placed to seize opportunities and
support our customers in the coming
years ahead.
Achievements
Record operating profit,
close to 50% higher than
a year ago
Uplifted Hong Kong hub
capability to support
ASEAN-Greater China trade
and investment flows
Tripled the proceeds raised
from sustainable and green
bond deals in 2021
Best SME Bank in
Asia Pacific
Awarded by Global Finance
Best Cash Management
Bank (Singapore, Malaysia
& Indonesia)
Awarded by Asian Banking &
Finance
public service, we rolled out a national
digital payment service through GovWallet
on the LifeSG mobile application for
Singaporeans and Permanent Residents
to receive government payments,
instead of cheques and paper vouchers.
They can either transfer the payments to
PayNow NRIC-linked bank accounts, or
spend them at merchants that accept
payment via PayNow UEN or NETS QR.
Our records show that close to 3 million
transactions, totalling over $100 million,
were made through this service in 2022.
We continued our digitalisation efforts
to acquire and deepen our relationships
with SME customers as well as improve
customer experience. To help our SME
customers better understand their
businesses, we launched Business
Trends on our Business Mobile Banking
app, providing personalised data-driven
insights on sales, expenses and cashflow.
Leveraging data analytics, we were able
to better identify loan opportunities
from our SME customer base. We were
also the first bank in Singapore to enable
digital passport authentication for
foreign business owners.
As Malaysia and Indonesia wound down
their moratorium schemes, we have
proactively engaged and supported our
SME customers in these markets to
assist them with a smooth transition.
We will continue to support SMEs as
they recover and grow.
What progress has been made on
the sustainable financing front?
Good progress was made in growing
our sustainable finance commitments
during the year. We achieved over
$10 billion in new sustainable finance
commitments, bringing our total
commitments to $44 billion – on track
to achieve our target of $50 billion by
2025. In addition, we completed almost
three times as many sustainable and
green bond deals, tripling the proceeds
raised in 2021.
What was particularly pleasing to see
was a shift by SMEs – who play a crucial
role in addressing climate change – in
how sustainability is viewed. They now
OCBC Annual Report 2022
Upfront with Teck Long 37
Upfront with
Kenneth
Global Treasury
How did Global Treasury fare
in 2022?
It was a tough year for financial markets.
The sudden reversal of central banks’
stances on post-pandemic inflation took
global markets by surprise. Increased
funding rates resulted in fewer gapping
opportunities and sharp repricing of risk
assets. As a result, our market-facing
income was lower year-on-year.
Despite the challenges of 2022, Global
Treasury’s revenues were well supported
by our diversified customer franchise.
Our overseas treasury centres contributed
to almost half of treasury revenues as
we focused on further developing our
core overseas markets like Greater China
and Indonesia.
How do you foresee economic
growth globally and within ASEAN
in 2023 and how would that impact
your business?
Our baseline scenario is that the major
central banks will pause rate hikes
by mid to late 2023. The year could,
therefore, wind up being a story of two
halves. Equity, rates and credit markets
could remain under pressure in the first
half until there is greater clarity on the
central bank’s resolve and peak interest
rates, while the second half could usher
in a more benign market environment.
As a result, trading and investment
activity might remain choppy for some
time before stabilising in the later half
of the year.
“Despite the challenges
of 2022, Global
Treasury’s revenues
were well supported
by our diversified
customer franchise.”
38
Achievements
House of the year
(Singapore)
Awarded by Asia Risk
FX house of the year
(Singapore & Malaysia)
Awarded by FX Markets Asia
Best FX Bank for Corporates
& FIs (Singapore)
Awarded by Alpha
Southeast Asia
Best FX Bank for
Structured Hedging
Solutions and Proprietary
Trading Ideas (Malaysia)
Awarded by Alpha
Southeast Asia
Best Online FX Platform
in Southeast Asia,
Marquee Award
Awarded by Alpha
Southeast Asia
On the research front, we will continue
to support clients with reports on the
green, social, sustainability and
sustainability-linked credit market.
Accelerating digital transformation is
another priority for us. One of our focus
areas is to build a top-notch digital
platform to offer treasury products. We
have built an ecommerce infrastructure
that helps facilitate treasury product
offerings in e-channels across customer
segments and geographies. Together
with our colleagues from Group
Operations and Technology, we are
working to optimise our risk warehousing
using artificial intelligence.
We believe that these improvements
can help us to capture opportunities in
the short term, as well as set us up for
long-term success.
OCBC Global Treasury Forum
Throughout 2022, we continued to engage our customers via multiple channels
including webinars and podcasts. With the easing of Covid rules in mid-2022,
we held our OCBC Global Treasury Forum on 20 July 2022 with 250 in-person
attendees and 273 virtual attendees from various countries.
Head of Global Treasury Kenneth Lai and Chairman, Middle East Institute, National University of Singapore Bilahari
Kausikan. Mr Kausikan was invited to speak on the topic “Geopolitical Flashpoints”.
China remains a key factor. Its Covid
policy U-turn in early December came
earlier than expected, and barring
any setbacks, this reopening will
be positive for the global economy,
including ASEAN. Thus far, sentiments
are generally up and the easing of
Covid regulations will likely drive the
business and investment pipeline back
into Chinese asset markets. In tandem,
sales and trading activities should also
pick up for us.
For ASEAN, it might be premature
to call the peak of monetary policy
tightening yet if the Fed continues
to nudge its expected terminal rate
higher in the interim due to persistent
inflationary pressures. Notwithstanding
this, the region remains favoured
among investors and portfolio flows
are expected to be healthy. The Asset
and Liability Management (ALM)
business should start to recover from
the second half of 2023 if central
banks succeed in capping inflation.
What are your key priorities
for 2023?
In line with our Corporate Strategy,
sustainability continues to be a
priority for us. Our clients are
increasingly showing interest in
sustainability-related solutions to
meet their own sustainability KPIs,
and we will roll out new green
solutions to meet these needs.
These new solutions will beef up our
current stable, which includes
sustainability-linked interest rate
swaps, cross currency swaps (including
the first sustainability-linked Islamic
cross currency swap), structured
deposit and green bonds. The demand
for these solutions remains healthy,
showing that sustainability-related
products have found a permanent
place in the market.
OCBC Annual Report 2022
Upfront with Kenneth 39
Upfront with
Hwee Boon
Group Human Resources
40
“We hope to make OCBC
a place where the best
want to work at and our
people enjoy coming to
every day.”
Since your appointment as Head of
Group Human Resources in June
2022, what have you set out to do?
I came into this role with a very clear
goal – to reinforce OCBC as an employer
of choice by creating opportunities and
strengthening support for our people to
succeed and thrive.
We have a strong learning culture at
OCBC and are constantly expanding the
breadth of our programmes to reskill
and upskill our people. As technology
and digitalisation continue to reshape
processes and roles, digital skills have
never been more of a priority in the
workplace. To keep our workforce up to
speed, we introduced The Future Smart
‘20-Minute Challenge’ in 2022, a series
of online bite-sized learning modules
covering topics such as data, customer
centricity and new business models.
The response was overwhelming, with
more than 40,000 completions for
these modules and an average user
rating of 4.9 out of 5.
We are glad that our workforce has
benefited from growth opportunities
because of such learning and
development support.
Employee wellness is another area
where we want to double down on
our efforts. Recognising the increasing
pressure on our people from the fast
pace of work, rising cost of living and
other factors, we refreshed our
MyWellness framework in 2022 to
empower our people to invest in their
own health and wellness. The array of
programmes and online resources
supports their journey to better health
A team of over 100 bank volunteers will join forces to shoulder year-round tasks like seeding, germination
and harvesting.
Achievements
SkillsFuture Employer
Award – Gold (Singapore)
Awarded by SkillsFuture
Singapore
2022 LinkedIn Top
Companies (Singapore,
Malaysia & Indonesia)
Awarded by LinkedIn
Best Leadership
Development – Gold
(Singapore)
Awarded by EngageRocket
Outstanding Employer
(Greater China)
Awarded by HRoot
Best Corporate Wellbeing
Programme Grand Award
(Hong Kong)
Awarded by CTgoodjobs
– both mentally and physically – and
financial wellbeing. The expanded
line-up of wellness talks and activities
under the programme’s flagship event,
MyWellness Fiesta, saw an increase in
participation across 19 markets – more
than 2.5 times compared to that in 2021.
In-person employee resource group
sessions have also resumed, providing
groups of employees – such as first-time
parents and parents of teenagers – with
a platform where they can share their
problems, support each other and get
practical tips and resources.
While our progress thus far has been
encouraging, there is still more to be done.
What are the areas that you are
keeping a close watch on?
Our people are empowered to take on
new initiatives, projects or meaningful
causes that resonate with them. One
such initiative that came to fruition is
the urban farm atop OCBC Centre’s
carpark roof. Run by a group of more
than 100 bank volunteers, the farm is
one of many low-carbon projects at OCBC.
We also launched our inaugural OCBC
Sustainability Day in 2022, an event
managed by the Sustainability Interest
Networking Group, a group of employees
united in their shared desire to raise
awareness of the importance of climate
action and inspire behavioural change.
We support and encourage employee
activism as it engages our people and
fosters bonding within the growing
OCBC community.
The use of data to drive decision-making
and employee experience is another area
in which the leadership team and I pay
particular attention. There is vast potential
for us to further leverage data to improve
decision-making in people-related matters,
make HR processes and operations more
efficient and improve our employees’
overall effectiveness in the course of
their work.
What are your priorities for 2023?
Accelerating HR transformation will
be one of the key priorities in 2023 to
achieve both operational excellence and
strategic impact. The aim is to refocus
roles, modernise organisational structure,
uplift capabilities and internalise
mobility to deploy talent with the right
skills to areas of demand at speed.
To future-proof our workforce, we will
continue to focus on talent and leadership
development by expanding our suite of
learning opportunities, leadership
programmes and mentoring framework.
We will also introduce overseas
assignments on a wider scale so that
more colleagues can experience the
OCBC culture across geographies and
in different contexts.
People are our greatest asset. We will
continue to invest significantly in
developing their skills and instilling
a mindset of lifelong learning. Our
learning culture enables us to open up
opportunities and shape diverse paths
for our people’s professional growth. In
so doing, we hope to make OCBC a place
where the best want to work at and our
people enjoy coming to every day.
OCBC Annual Report 2022
Upfront with Hwee Boon 41
Bank of Singapore
Highlights
42
Jason Moo
Appointed CEO, Bank of Singapore
with effect from 6 March 2023
“With market volatility expected to continue way
through 2023, Bank of Singapore will focus on what
it does very well – delivering a hyper-personalised
client experience with strong risk management and
governance. We will continue to tap on the regional
resources and capabilities of the OCBC Group.
The Group’s comprehensive Greater China and
ASEAN network, global wealth platform, and
commercial banking and treasury solutions put
Bank of Singapore in a very sweet spot to capture
the increasing wealth flows in this region.”
Net new money inflows
more than doubled
Strong momentum in
alternative investments
with 15% growth in flows
20% increase in ESG and
sustainability learning hours
First private bank to become
a signatory of the Singapore
Stewardship Principles for
Responsible Investors
Recognised as “World’s
Best for ESG Investing”
by Euromoney
Partnered Community
Foundation of Singapore
to avail philanthropy services
to high-net-worth individuals
Co-chaired The Association of
Banks in Singapore’s taskforce
that launched the Sustainable
Private Banking and Wealth
Management Guidelines
20%asset growth from net
new money flows in the financial
intermediary segment
Named Best Asia-based
private bank active in Middle
East and North Africa by
WealthBriefing
OCBC Annual Report 2022
Bank of Singapore Highlights 43
Corporate Governance
The Bank is fully committed to living its core values and fair dealing in all its activities.
The Bank’s core values are captured as LIFRR which stands for Lasting Values, Integrity,
Forward-looking, Respect and Responsibility. The Bank upholds the highest standards of
corporate governance and complies in all material aspects with corporate governance
regulations, code and guidelines established in Singapore.
Disclosures made pursuant to the Bank’s
corporate governance practices are
summarised on pages 61 and 62 of this
Annual Report.
Board Matters
Principle 1: The Board’s Conduct
of Affairs
The Board is elected by the shareholders
to supervise the management and affairs
of the Bank. The prime stewardship
responsibility of the Board is to ensure
the viability of the Bank and to ensure
that it is managed in the best interests of
the Bank as a whole while taking into
account the need to safeguard the
interests of shareholders, customers and
other stakeholders. The Bank has a board
charter approved by the Board.
Broadly, the responsibilities of the Board
include the following:
• reviewing, approving and overseeing
the implementation of strategic
direction and overall business
objectives as well as organisation
structure, as developed and
recommended by management;
• ensuring that decisions and
investments are consistent with
long-term strategic goals;
• ensuring that the Bank operates in such
a way as to preserve its financial
integrity and in accordance with
policies approved by the Board;
• overseeing, through the Audit
Committee, the quality and integrity of
the accounting and financial reporting
systems, disclosure controls and
procedures and internal controls;
• providing oversight in ensuring that the
Bank’s risk appetite and activities are
consistent with its strategic intent,
operating environment, effective
internal controls, capital sufficiency
and regulatory standards;
• overseeing, through the Risk
Management Committee, the
establishment and operation of
an independent and effective risk
management system, processes
and internal control mechanism for
managing risks on an enterprise-wide
basis, and ensuring that the risk
management function is sufficiently
resourced to manage the various
risks exposed by the Bank and that
it has appropriate independent
reporting lines;
• reviewing any transaction for the
acquisition or disposal of assets that
is material to the Bank;
• ensuring that the necessary resources
are in place for the Bank to meet its
objectives;
• reviewing management performance
and ensuring that management
formulates policies and processes to
promote fair practices and high
standards of business conduct by staff;
• overseeing, through the Ethics and
Conduct Committee, the establishment
and review of the code of conduct and
ethics as well as the culture and
conduct framework emphasising
integrity, honesty and proper conduct
at all times with respect to internal
dealings and external transactions,
including situations where there are
potential conflicts of interest;
• overseeing, through the Nominating
Committee, the appointment or
reappointment, election or re-election,
resignation and retirement of Directors
of the Bank as well as the appointment,
dismissal, resignation and retirement of
senior management, ensuring that
principles of transparency, accountability
and meritocracy are observed;
• overseeing, through the Remuneration
Committee, the design and operation
of an appropriate remuneration
framework, and ensuring that
remuneration practices are aligned to
and in accord with the remuneration
framework;
• providing a balanced and understandable
assessment of the Bank’s performance,
position and prospects, including
interim and other price-sensitive public
reports as well as reports to regulators;
• ensuring that obligations to shareholders,
customers, employees and others are
understood and met;
• maintaining records of all meetings of
the Board and Board Committees,
particularly records of discussion on key
deliberations and decisions taken;
• identifying the key stakeholder groups,
recognising that perceptions affect the
Bank’s reputation; and
• considering, through the Board
Sustainability Committee, sustainability
matters, e.g. environmental, social and
governance (ESG) factors, as part of
strategy formulation.
Directors with conflicts of interests are
required under the Bank’s Constitution to
recuse themselves from meetings and
decisions involving issues of conflicts.
44
Board Approval
The Bank has documented internal
guidelines for matters that require
Board approval. These guidelines are
communicated to management in
writing. Matters which are specifically
reserved for Board approval, amongst
others, are:
• corporate strategy and related
operational plans;
• material acquisition and disposal of
assets;
• corporate or financial restructuring;
and
• share issuance, dividends and other
returns to shareholders.
The Board approves transactions
exceeding certain threshold limits, while
delegating authority for transactions
below those limits to the Board
Committees and management to
optimise operational efficiency.
Board Access to Information
Directors are provided with complete
information related to agenda items in a
timely manner before each meeting to
allow adequate time for review. Directors
are also equipped with electronic tablets
that allow secured access to Board and
Board Committee meeting materials,
including background information on
matters to be addressed by the Board. On
an on-going basis, relevant information is
also provided to Directors to enable them
to make informed decisions when
discharging their duties and responsibilities.
This includes information such as disclosure
documents, monthly internal financial
statements, risk management reports,
operating plans, forecasts, and reports
of variances from operating plans
and forecasts.
The Board and its Committees have
unfettered access to information which
the Bank is in possession of and to the
Bank’s senior management and Company
Secretary. The Directors, individually or as
a group, can also take independent
professional advice from external advisors
(when necessary) at the Bank’s expense.
The role of the Company Secretary is
defined. The Company Secretary attends
all board meetings and ensures that board
procedures and applicable regulations are
complied with. Under the direction of the
Chairman, the Company Secretary ensures
good information flows within the Board
and its Committees and between senior
management and non-executive Directors,
and facilitates the orientation of new
Directors and professional development
of Directors, as required. The appointment
and removal of the Company Secretary
requires Board approval.
Board Committees
While the Board has ultimate responsibility
for the affairs of the Bank, various Board
Committees have been established to
assist the Board in discharging its duties
more effectively. The Board Committees
have clearly-defined terms of reference
and changes to the terms require Board
approval. The Board and its Committees
maintain records of all meetings setting
out in detail key deliberations and
decisions taken. The minutes of each
Committee meeting are also circulated to
members of the Board who are not
members of that particular Committee.
The composition and summary terms of
reference of each of these Committees
are as follows.
• Executive Committee
The Executive Committee comprises
Dr Lee Tih Shih (Chairman), Mr Andrew
Lee and Dr Andrew Khoo. A majority of
the Committee, i.e. Mr Andrew Lee
and Dr Andrew Khoo, are independent
Directors.
The Committee has written terms of
reference that describe the responsibilities
of its members.
The Executive Committee oversees
– within the parameters delegated by
the Board – the management of the
business and affairs of the Bank and the
Group. It reviews the Bank’s policies,
principles, strategies, values, objectives
and performance targets. These include
investment and divestment policies.
It also endorses such other matters
and initiates such special reviews and
actions as are appropriate for the
prudent management of the Bank.
• Nominating Committee
The Nominating Committee comprises
Dr Andrew Khoo (Chairman), Mr Andrew
Lee, Ms Christina Ong, Mr Pramukti
Surjaudaja and Ms Tan Yen Yen. All
members, other than Mr Pramukti
Surjaudaja, are independent Directors.
The Committee has written terms
of reference that describe the
responsibilities of its members.
The Nominating Committee plays a
vital role in reinforcing the principles
of transparency, accountability and
meritocracy at the Bank. It plans for
board succession and ensures that only
the most competent individuals capable
of contributing to the success of the
organisation are appointed. This
includes reviewing all nominations for
the appointment or reappointment,
election or re-election as well as
resignation or retirement of Directors
and members of the Executive Committee,
Remuneration Committee, Audit
Committee, Risk Management
Committee, Ethics and Conduct
Committee and Board Sustainability
Committee. The Nominating Committee
also has oversight of the appointments
of directors to boards of key subsidiaries
to ensure governance standards are
aligned with the Bank’s. On an annual
basis, the Nominating Committee is
charged with determining whether or
not a Director is independent, capable
of carrying out the relevant duties and
qualified to remain in office. In addition,
it reviews nominations for the appointment
as well as dismissal, resignation or
retirement of senior management,
including the Chief Executive Officer
(CEO), Chief Financial Officer, Chief Risk
Officer and Chief Operating Officer. It
makes recommendations to the Board
on relevant appointments, including
the compensation package for offer of
employment, promotion and cessation
of employment. The Nominating
Committee reviews obligations arising
in the event of the termination of
the contracts of service of executive
Directors and senior management, to
ensure such contracts contain fair and
reasonable termination clauses.
OCBC Annual Report 2022
Corporate Governance 45
• Audit Committee
The Audit Committee comprises
Mr Chua Kim Chiu (Chairman), Ms
Chong Chuan Neo and Ms Tan Yen Yen.
All members, including the Chairman,
are independent Directors and have
recent and relevant accounting or
related financial management expertise
or experience. The Audit Committee
members are not partners of
PricewaterhouseCoopers LLP, the
external auditor of the Bank, and hold
no financial interest in the firm.
The Audit Committee performs the
functions specified in the Companies
Act, the Code of Corporate Governance
2018 (the Code), the Singapore Exchange
Securities Trading Limited (SGX-ST)
Listing Manual, and the corporate
governance regulations and guidelines
issued by the Monetary Authority of
Singapore (MAS).
The Committee has written terms of
reference that describe the responsibilities
of its members. The Board approves the
terms of reference of the Audit Committee.
The Committee may meet any time
and no fewer than four times a year. It
has full access to and co-operation from
management, and has the discretion to
invite any Director and executive officer
to attend its meetings. It has explicit
authority to investigate any matter
within its terms of reference.
Further information on the Audit
Committee is provided under Principle
10 on pages 56 to 58.
• Remuneration Committee
The Remuneration Committee
comprises Ms Christina Ong (Chairman),
Mr Andrew Lee, Dr Andrew Khoo and
Mr Pramukti Surjaudaja. All members
are non-executive Directors and,
other than Mr Pramukti Surjaudaja,
are also independent Directors. All
are knowledgeable in executive
compensation matters, given their
extensive experience in senior corporate
positions and major appointments.
The Committee has written terms
of reference that describe the
responsibilities of its members.
The Remuneration Committee recommends
to the Board a framework for determining
the remuneration of executive officers,
and reviews the remuneration practices
to ensure that they are aligned with the
approved framework. It is empowered to
review the human resource management
policies and the policies governing the
compensation of executive officers of
the Bank and its subsidiaries, as well as the
remuneration of senior executives and
Directors. In addition, the Remuneration
Committee administers employee share
ownership schemes. In its deliberations,
the Remuneration Committee takes
into account remuneration principles,
practices and standards that may be
specified by MAS from time to time.
• Risk Management Committee
The Risk Management Committee,
which supports the Board in performing
its risk oversight responsibilities,
comprises Mr Andrew Lee (Chairman),
Mr Chua Kim Chiu, Ms Tan Yen Yen and
Ms Helen Wong. All members, other
than Ms Helen Wong, are independent
Directors. All members have the relevant
technical financial expertise in risk
disciplines or businesses to discharge
their responsibilities. Mr Chua Kim Chiu
and Ms Tan Yen Yen also serve on the Audit
Committee. The common membership
helps to facilitate communication and
foster the sharing of information and
knowledge between the two Committees.
The Committee has written terms of
reference that describes the
responsibilities of its members.
The Committee reviews the overall risk
management philosophy in line with
the overall corporate strategy as set and
approved by the Board. It oversees the
establishment and operation of an
independent risk management system
for identifying, measuring, monitoring,
controlling and reporting risk on an
enterprise-wide basis. This includes
ensuring the adequacy of risk
management practices for material
risks such as credit, market, liquidity,
operational, information security and
digital, conduct, money laundering and
terrorism financing, legal, regulatory,
reputational, strategic as well as ESG risks.
The Committee reviews the scope,
effectiveness and objectivity of the
Group Risk Management Division. It
ensures that the risk management
function has appropriate independent
reporting lines and is adequately resourced
with experienced and qualified employees
to monitor risk by the various risk categories.
It approves the risk management
frameworks, internal control systems
and major policies, as well as reviews
the risk appetite statement, risk disclosure
policy and risk management principles for
the approval of the Board. It also reviews
the risk profile, risk tolerance level and risk
strategy of the Bank for effective risk
management, as well as the risk reports
to monitor and control risk exposures.
The Chief Risk Officer has direct reporting
lines to the Committee and CEO.
Activities performed by the Risk
Management Committee are also
described under the section on Risk
Management on pages 70 to 83.
• Ethics and Conduct Committee
The Ethics and Conduct Committee
supports the Board in overseeing efforts
to build and maintain a strong and
responsible organisational culture
firmly founded on the Bank’s LIFRR core
values and the spirit of long-term
thinking. The Committee comprises Ms
Christina Ong (Chairman), Mr Andrew
Lee and Ms Chong Chuan Neo. All
members are independent Directors.
The Committee has written terms of
reference that describe the
responsibilities of its members.
The Committee reviews and assesses
the state, adequacy, effectiveness and
relevancy of the Bank’s culture and
conduct programmes and initiatives.
Such review and assessment take into
account regulatory policies, guidelines
and expectations and desired outcomes.
The Committee also reviews communications
to stakeholders on core values, desired
behaviours, ethics, culture and conduct.
46
Directors' Attendance at Board and Board Committee Meetings in 2022
Details of attendance at scheduled Board and Board Committee meetings are described in the tables below. In addition, the Directors also
attended management strategy briefings as well as Board Committee briefings at the invitation of the respective Committee on critical
subjects such as macroeconomic developments, regional business operations, climate and sustainability and new accounting standards.
Board
Executive
Committee (Exco) Audit Committee (AC)
Scheduled Ad Hoc Scheduled Scheduled Ad Hoc
Name of Director Held (1)/Attended Attended Held (1)/Attended Held (1)/Attended Attended
Ooi Sang Kuang (3) 5/5 1 4/4 5/5 1
Chong Chuan Neo (4) 4/4 1 – 3/3 1
Chua Kim Chiu 5/5 1 – 5/5 1
Andrew Khoo (5) 5/5 1 3/3 2/2 1
Koh Beng Seng 5/5 1 4/4 – –
Andrew Lee (6) 4/4 1 3/3 – –
Lee Tih Shih (7) 5/5 1 4/4 – –
Christina Ong 5/5 1 – – –
Pramukti Surjaudaja (8) 5/5 1 – – –
Tan Ngiap Joo (9) 4/4 1 1/1 4/4 1
Tan Yen Yen (10) 5/5 1 – 5/5 1
Wee Joo Yeow (11) 5/5 1 1/1 – –
Nominating Committee (NC)
Remuneration
Committee (RC)
Risk Management
Committee (RMC)
Ethics and
Conduct
Committee (ECC) ID Meeting AGM(2)
Scheduled Ad Hoc Scheduled Scheduled Scheduled
Name of Director Held (1)/Attended Attended Held (1)/Attended Held (1)/Attended Held (1)/Attended
Ooi Sang Kuang (3) 2/2 4 3/3 2/2 2/2 – 1
Chong Chuan Neo (4) – – – – 1/1 1 1
Chua Kim Chiu – – – 6/6 – 1 1
Andrew Khoo (5) 1/1 4 1/1 – 1/1 1 1
Koh Beng Seng – – 3/3 6/6 – 1 1
Andrew Lee (6) 1/1 4 – 5/5 1/1 1 1
Lee Tih Shih (7) – – – – 1/1 – 1
Christina Ong 2/2 4 3/3 – 2/2 1 1
Pramukti Surjaudaja (8) 1/1 – 1/1 – 2/2 – 1
Tan Ngiap Joo (9) 1/1 – 2/2 – – 1 1
Tan Yen Yen (10) 1/1 4 2/2 4/4 – 1 1
Wee Joo Yeow (11) 1/1 – 2/2 6/6 – 1 1
Notes:
(1) Reflects the number of meetings held during the time the Director held office.
(2) Other than Chairman of the Board, Board Committees and Group CEO, all other Board
Members attended the 2022 AGM through webcast (audio-visual) or audio.
(3) Ceased to be RMC member on 23 April 2022.
(4) Appointed as non-executive and independent Director and AC member on 18 February
2022, and as ECC member on 23 April 2022.
(5) Appointed as NC Chairman, Exco and RC member on 23 April 2022, and ceased to be AC
and ECC member on 23 April 2022.
(6) Appointed as non-executive and independent Director and RMC member on 18 February
2022, and as Exco, NC and ECC member on 23 April 2022.
(7) Ceased to be ECC member on 23 April 2022.
(8) Ceased to be NC member and appointed as RC member on 23 April 2022.
(9) Ceased to be RC Chairman, Exco and NC member on 23 April 2022. Stepped down as
Board and AC member on 1 October 2022.
(10) Appointed as NC and RMC member, and ceased to be RC member on 23 April 2022.
(11) Ceased to be NC Chairman, Exco, and RC member on 23 April 2022.
• Board Sustainability Committee
The Board Sustainability Committee was
established on 7 February 2023 to support
the Board in its oversight of the Bank’s
sustainability matters. The Committee
comprises Ms Chong Chuan Neo
(Chairman), Mr Andrew Lee and Ms Helen
Wong. The members, other than Ms
Helen Wong, are independent Directors.
The Committee has written terms
of reference that describe the
responsibilities of its members.
The Committee provides strategic
direction on sustainability issues, with
a focus on climate and environmental
matters. It approves and oversees the
management and monitoring of
ESG factors that are material to the
business and considers the Bank’s
position on relevant emerging
sustainability trends and issues.
It also has oversight of the Bank’s
sustainability reporting including
climate-related disclosures.
OCBC Annual Report 2022
Corporate Governance 47
Directors attend and actively participate
in Board and Board Committee meetings.
Their contributions go beyond attendance
at meetings. They individually or collectively
engage with other Board members and
Management outside formal meetings in
their oversight of the affairs of the Bank.
In 2022, the Board and its Committees
held a total of 33 meetings. The Bank’s
Constitution provides for Directors to
participate in Board and Board Committee
meetings by means of video or audio
conferencing.
Board Orientation and Development
A formal appointment letter and a
director handbook are provided to every
new Director. The handbook sets out,
along with other corporate information,
the time commitment required and the
duties and obligations of Directors, as well
as relevant rules and regulations such as
those relating to the Banking Act and
SGX-ST Listing Manual. The Bank
conducts a focused orientation
programme, presented by the CEO and
senior management, to familiarise
new Directors with its business and
governance practices. The programme
also enables the new Directors to be
acquainted with senior management,
thereby facilitating the latter’s interaction
with and access to the Directors.
Arrangements are made for new Directors
to visit the Bank’s operations and facilities.
On a continuing basis, the Directors
receive appropriate development to
perform their roles on the Board and its
Committees. This includes updates on
global trends and regulatory developments
as well as their impact on business, new
businesses and products, sustainability,
accounting and finance, corporate
governance, risk management and
anti-money laundering issues as well as
fintech, technology and cybersecurity,
which are provided by subject matter
experts from within and outside the Bank.
When deciding on the scope of the
development to be provided, the knowledge
and skills required to enable Directors to
properly discharge their duties as members
of the Board and its Committees are taken
into account.
The Directors participate in external
courses and learning experience as and
when needed. The Bank funds the training
and development programmes that it
arranges for existing and new Directors.
There is a formal record of all attendance
at training sessions.
Training and updates provided to Directors
in 2022 were on subjects that included:
• China’s Dual Circulation Strategy and
its Implications for Industries and
Opportunities for Banks
• Technology Risk Updates
• Environmental, Social and Governance
Essentials
• Climate & Sustainability: Strategic
Implications and Board & Management
Responsibilities
• Briefing on SFRS (I) 17 Insurance Contracts
• Anti Money Laundering / Countering
the Financing of Terrorism
Principle 2: Board Composition
and Guidance
The Bank has majority representation of
independent Directors on its Board.
An independent Director of the Bank is
one who is independent of any management,
substantial shareholder and business
relationship with the Bank, and who has
not served for more than nine years on
the Board. The Board at present comprises
nine Directors of whom six, a majority,
are independent Directors. They are
Mr Andrew Lee, Ms Chong Chuan Neo,
Mr Chua Kim Chiu, Dr Andrew Khoo,
Ms Christina Ong and Ms Tan Yen Yen.
Dr Lee Tih Shih is not independent of a
substantial shareholder. Mr Pramukti
Surjaudaja is not an independent director
as he has served for more than nine years
on the Board and has an immediate family
member, a sister, who is chief executive
of the Bank’s subsidiary, PT Bank OCBC
NISP Tbk. Ms Helen Wong, appointed on
7 February 2023, is deemed not independent
by virtue of her executive role as Group
Chief Executive Officer of the Bank.
Ms Christina Ong is senior partner and
chairman of Allen & Gledhill LLP (A&G),
one of several law firms which provides
legal services to and receives fees from
the Bank. She did not involve herself in
the selection and appointment of legal
counsels for the Group. Her interest in
A&G is less than 5% and the fees paid
by the Group do not form a significant
portion of A&G’s revenue. She is also
an independent director of Singapore
Telecommunications Ltd which provides
telecommunication services to and
receives payments from the Bank, not
unlike many organisations in Singapore.
The Nominating Committee (with Ms
Christina Ong recusing) also notes that
these business relationships have not
affected her conduct at meetings where
her deliberations and constructive views
consistently reflect her independent
business judgement. Ms Christina Ong
is deemed an independent Director.
The Board reviews the size of Board and
Board Committees annually and considers
the current number of Board and Board
Committee members to be appropriate
given the size of the Group and its business
complexity. It also assesses the diversity
of members’ profiles and determines the
collective skills required to discharge its
responsibilities effectively, keeping in
view the Group’s strategic objectives.
A Board Diversity Policy, setting out the
approach to diversify the appointment of
members and composition of the Board
has been established and is published on
the Bank’s website. The policy embraces
the diversity of skills, knowledge, experience
including familiarity in the Bank’s core
markets, age, gender, nationalities and
length of service as well as merit and
independence. Steps are taken to improve
effectiveness where necessary. In assessing
the Board’s mix of skills, knowledge,
experience, competencies and other
aspects of diversity such as gender and
age, the Board agreed to adopt a gender
diversity target that is aligned with the
gender diversity target set by the Council
for Board Diversity (CBD). The CBD advocates
for women board representation of 25%
by 2025 and 30% by 2030. The Bank
currently has four women directors or
more than 25% women representation on
its board of directors. It will maintain at
least 25% women representation on its
board of directors until 2025 and review
the targeted representation subsequently.
48
The Board has also assessed that its
diversity profile in terms of age, nationalities,
length of service and skills and knowledge
are adequate to foster constructive
debate and ensure the effectiveness of
the Board and its Committees in
supporting the Bank’s strategic objectives.
The Board’s current competencies and
skills, aligned to serve the Bank’s
corporate strategy are depicted above.
To strengthen overall board governance,
skills and knowledge on sustainability
matters, the Board established a Board
Sustainability Committee which will be
supported by executives with the relevant
knowledge and experience on sustainability
matters. The Committee will also consider
appointing an external Advisor with the
relevant sustainability experience to
complement the Committee’s existing
skillsets. The Board will also consider
appointing a Director with the relevant
sustainability experience within the
next 3 years. This requirement will be
incorporated into the board succession
plan and search criteria. To enhance
overall Board knowledge, the Board will
continue to advocate regular training for
Directors on sustainability matters. Please
refer to Principle 4: Board Membership
for more details on the board renewal
process. Details of the Directors’
Board Competencies and Skills
Intrinsic Competencies
Strategy formulation &
management experience
Banking & Finance
Insurance
Digital banking & cyber risk
Core market experience in Greater
China, Malaysia and Indonesia
Sustainability/ESG
Foundational Skillsets
Risk management
Regulatory
Accounting
Law
Corporate Strategy
Drive Growth
1. Capture rising Asian wealth with
our Singapore-Hong Kong hubs
and digital propositions
2. Support increasing ASEAN-Greater
China trade and investment flows
3. Unlock value from New Economy
and high-growth industries
4. Drive transition to a sustainable
low-carbon world
Reinforce Strengths
5. Forge a “One Group” integrated
customer experience approach
6. Invest in accelerating
Transformation and Digitalisation
7. Strengthen our people assets
and culture
8. Build on our capital and risk
management strengths
professional qualifications, background and
age can be found on pages 256 to 258.
The non-executive Directors on the Board
constructively challenge and help develop
proposals on strategy, review the
performance of management in meeting
agreed goals and objectives, and monitor
the reporting of performance. They meet
during the year, without the presence of
management, to discuss the effectiveness
of management.
Separate sessions are also arranged for
the independent Directors to meet at least
once a year to ensure effective corporate
governance in managing the affairs of the
Board and the Bank.
The Board and senior executives meet as
frequently as necessary to develop or
refresh strategies for the Group.
Principle 3: Chairman and Chief
Executive Officer
The Chairman and CEO are not related.
The roles of the Chairman and the CEO are
separated, which is consistent with the
principle of instituting an appropriate
balance of power and authority. The
Chairman’s responsibilities, to name a
few, include leading the Board to ensure
its effectiveness in all aspects of its role;
setting its meeting agenda; ensuring that
Directors receive accurate, timely and
clear information; ensuring effective
communication with shareholders;
encouraging constructive relations
between the Board and management;
promoting a culture of openness and
debate at the Board and facilitating the
effective contribution of all Directors;
ensuring constructive relations between
executive and non-executive Directors;
and promoting high standards of
corporate governance.
The Bank does not have a Lead Independent
Director as the Chairman of the Board,
Mr Andrew Lee, is a non-executive and
independent director.
Principle 4: Board Membership
As a principle of good corporate
governance, all Directors are subject to
re-nomination and re-election at regular
intervals and at least every three years.
The Bank’s Constitution provides for the
retirement of Directors by rotation and all
appointments and reappointments of
Directors have to be approved by MAS.
The Board establishes a Nominating
Committee to make recommendations
to the Board on matters relating to board
membership. The Committee reviews the
independence of Directors at least annually
in accordance with internal due diligence
procedures and the Directors’ declarations.
It also reviews the succession plans for
Directors, including the appointment and/
or replacement of the Chairman and
executive Director, and ensures that only
the most competent individuals capable
of contributing to the success of the
organisation are appointed. It reviews all
nominations for the appointment or
reappointment, election or re-election –
as well as resignation or retirement – of
Directors of the Bank and members of
the Executive Committee, Remuneration
Committee, Audit Committee, Risk
Management Committee, Ethics and
Conduct Committee and Board
Sustainability Committee. It is also
charged with determining annually
whether or not a Director is independent,
capable of carrying out relevant duties
and qualified to remain in office.
OCBC Annual Report 2022
Corporate Governance 49
The Nominating Committee assesses
annually the profile of Board members
individually and collectively, having
regard to the skills, talents, experience
and diversity required and their alignment
with the Group’s strategic priorities, and
makes recommendations to the Board on
the appointment of new Directors, when
necessary. When the need for a new
Director is identified, the Nominating
Committee will consider a shortlist of
candidates with the appropriate profile
and qualities for nomination. To improve
gender and other aspects of diversity as
well as skills, talents and experience in
ESG matters, the Nominating Committee
may engage external search consultants
to identify suitable director candidates
from a wider pool. Short listed candidates
are assessed by the Nominating
Committee and recommendations
submitted to the Board for review and
appointment, subject to the approval of
MAS. In accordance with the Bank’s
Constitution, the new Director will hold
office until the next Annual General
Meeting (AGM) and, if eligible, may then
stand for re-election.
As part of the Board renewal process, the
Board has appointed new Directors,
Ms Chong Chuan Neo and Mr Andrew Lee
on 18 February 2022 and Ms Helen Wong
on 7 February 2023. Mr Tan Ngiap Joo
and Mr Wee Joo Yeow retired from the
Board on 1 October 2022 and 1 January
2023 respectively, after having served for
more than nine years on the Board, the
maximum period to be deemed an
independent Director. Mr Ooi Sang Kuang
retired as Chairman and also as a Director
on 31 January 2023. Mr Koh Beng Seng
stepped down as a Director on 3 February
2023 to allow more time to focus on his
other commitments.
The Bank does not, as a matter of
practice, appoint alternate directors.
Directors are aware of their duties and
obligations and the expectation to set
aside adequate time for their oversight
of matters relating to the Bank. They
attend and actively participate in Board
and Board Committee meetings. The
number of such meetings and each
director’s attendances at such meetings
are disclosed in the annual report. They
must provide declarations of any changes
in their other appointments and principal
commitments, which are disseminated
to all Board members. The Bank has
guidelines on meeting attendance and
the extent of other appointments that a
Director can assume. The Nominating
Committee, based on the guidelines
established, assesses annually each
Director’s attendance record and degree
of participation at meetings to determine
if a Director is able to and has been
adequately carrying out his or her duties
as a Director of the Bank. In respect of
other appointments, it takes into account
– among various factors – the nature of
an appointment (full-time or otherwise),
number of meetings to attend,
complexity of organisation and degree of
participation in sub-Committees.
Generally, a Director who has full-time
employment in any organisation shall
have appointments in no more than three
other listed companies, while a Director
who has no full-time employment shall
have appointments in no more than six
other listed companies.
Key information on the Directors’
qualifications, working experience,
and other directorships and principal
commitments/appointments are
provided on pages 256 to 258 while
information on their shareholdings in
the Bank and its related corporations are
provided in the Directors’ Statement on
pages 103 to 108.
Principle 5: Board Performance
The Board has an annual performance
evaluation process, carried out by the
Nominating Committee, Nominating
Committee Chairman and Board
Chairman, to assess the effectiveness
of the Board, Board Committees and
each Director’s contribution. The
purpose of the evaluation process is
to increase the overall effectiveness of
the Board.
An external party is engaged after every
three years of internal evaluation to
facilitate the evaluation of the Board as a
whole and provide the Board with an
independent perspective of the Board’s
performance, including benchmarking
against peer boards and industry best
practices. In 2022, the Nominating
Committee engaged Aon Solutions
Singapore Pte. Ltd. (Aon) for the evaluation.
Aon and its consultants are independent
and not related to the Bank or its
subsidiaries or any of their directors.
The Directors participate in the
evaluation. Each Director evaluates the
performance of the Board and Board
Committees as well as the Board
Chairman, whilst the Chairman and
Nominating Committee Chairman
evaluate the performance of each
Director and meet to discuss the matter.
The assessments are made against
pre-established criteria which include
composition, information management,
board processes, representation of
shareholders and ESG matters,
performance management, human
capital management, director
development, internal controls and
risk management and effectiveness of
Board Committees. The results of the
evaluation are used constructively to
discuss improvements to the Board and
ensure that each Director remains
qualified for office. The Chairman and/or
Nominating Committee Chairman acts
on the results of the evaluation, and if
appropriate, proposes new Directors or
seeks the resignation or retirement of
Directors, in consultation with the
Nominating Committee.
Remuneration Matters
Principle 6: Procedures for
Developing Remuneration Policies
The objective of the Bank’s remuneration
policy is to attract, motivate, reward and
retain talented and competent staff
globally. The Board ensures that
remuneration policies are in line with
the strategic objectives as well as code of
conduct and ethics of the Bank, and do
not give rise to conflicts between the
objectives of the Bank and the interests
of employees.
50
The Remuneration Committee is tasked
to review and recommend to the Board
the general remuneration framework as
well as the specific remuneration for
each Director and for each key executive.
The composition and summary terms of
reference of the Remuneration Committee
are provided on page 46. No member of
the Remuneration Committee is involved
in the deliberations regarding any
remuneration, compensation, options or
any form of benefits to be granted to
himself or herself.
In its review of the Bank’s remuneration
practices, the Remuneration Committee
can seek expert advice, if necessary. The
Bank used salary surveys conducted by
external compensation consultants, Aon,
Mercer and Willis Towers Watson for the
purpose of benchmarking employee
salaries in Singapore and overseas. Aon,
Mercer and Willis Towers Watson and
their consultants are independent and are
not related to the Bank or its subsidiaries
or any of their directors. The Bank’s
compensation practices are also reviewed
annually by Aon against local regulations
as well as the Financial Stability Forum’s
principles and implementation standards
for Sound Compensation Practices for
significant financial institutions.
The Bank’s remuneration policy is applied
to all OCBC overseas branches and the
following subsidiaries:
• Bank of Singapore Ltd
• OCBC Management Services Pte Ltd
• OCBC Securities Pte Ltd
• OCBC Investment Research Pte Ltd
• BOS Trustee Ltd
• e2 Power Pte Ltd
• e2 Power Sendirian Berhad
• OCBC Bank (Malaysia) Berhad
• OCBC Al-Amin Bank Berhad
• OCBC Wing Hang Bank Ltd
• OCBC Wing Hang Bank (China) Ltd
The Bank does not provide for any
termination, retirement or postemployment benefits to executive
Directors or the top five key management
personnel.
Principle 7: Level and Mix of
Remuneration
Compensation for Non-Executive
Directors
The Bank’s remuneration for nonexecutive Directors is intended to attract
capable individuals to the Board, as well
as retain and motivate them in their
roles as non-executive Directors. It aligns
their interests with those of shareholders,
and recognises individual contributions.
The remuneration for non-executive
Directors is subject to shareholder
approval at the AGM.
The Remuneration Committee has
considered market practices for nonexecutive Director compensation. On its
recommendation, the Board has decided
to adopt the following fee structure to fix
the fee for each non-executive Director of
the Bank.
The fee structure is as follows:
• Board chairman’s fee $1,400,000
• Retainer fee $55,000
• Committee chairperson’s
fee for the Audit, Risk
Management and
Executive Committees
$95,000
• Committee chairperson’s
fee for the Nominating,
Remuneration, Ethics
and Conduct, and Board
Sustainability Committees
$55,000
• Committee member’s fee
for the Audit, Risk
Management and
Executive Committees
(Committee chairpersons
are not awarded these fees)
$55,000
• Committee member’s fee
for the Nominating,
Remuneration, Ethics
and Conduct, and Board
Sustainability Committees
(Committee chairpersons
are not awarded these fees)
$30,000
• Attendance fee per
meeting
$4,000
The resolution proposing the fee for
non-executive Directors will be presented
to shareholders at the 2023 AGM.
In the previous year, shareholders had
approved the grant of 6,000 remuneration
shares to each non-executive Director.
The remuneration shares align the
interests of non-executive Directors with
the interests of shareholders. At the
recommendation of the Remuneration
Committee, the Board has decided to
continue with the granting of 6,000 new
ordinary shares to each non-executive
Director. Any non-executive Director who
has served on the Board for less than a
full financial year will be awarded shares
on a pro-rated basis, depending on the
length of service. The resolution proposing
these share grants will be presented to
shareholders at the 2023 AGM.
Compensation for Executive Directors
The compensation for an executive
Director is formulated and reviewed
annually by the Remuneration Committee
to ensure that it is market-competitive
and that the rewards are commensurate
with the contributions made. The
compensation package comprises basic
salary, benefits-in-kind, performance
bonus, share awards and compensation
in the event of early termination where
service contracts are applicable.
Performance bonus relate directly to the
financial performance of the Group and
the contributions of the executive Director.
The guidelines on the granting of share
awards to the executive Director are similar
to those for the executives of the Bank.
Employee Remuneration
The total compensation packages for
employees comprise basic salary, variable
performance bonus, allowances and
deferred share awards for eligible executives,
as well as benefits. Compensation is tied
to the achievement of business and
performance objectives based on a balanced
scorecard approach, which includes
leadership competencies and adherence
to core values. Where relevant, financial
measurements – adjusted as appropriate
for the various types of risk (such as market,
credit and operational risks) – include:
• Operating efficiency measures covering
revenue, direct and allocated costs and
operating profits, net profits as well as
efficiency indicators such as unit costs.
OCBC Annual Report 2022
Corporate Governance 51
• Economic efficiency measures such as
cost of capital. Capital is attributed to
each business based on the amount of
risk-weighted assets held and the
return on capital.
• Liquidity is factored into the performance
measurement of each business through
the application of liquidity premiums
charged or credited according to the
behavioural maturity of each type of
asset and liability booked.
There were no significant changes to the
above measures during 2022.
In the Bank’s continuous efforts to create
sustainable value for stakeholders,
relevant performance measures are set
for each business unit. These objectives
which include broad-based growth across
its core markets, delivering sustained
earnings momentum from core businesses,
driving core competencies of disciplined
risk management, diversified funding
base and continued investments in
technology and people, and ensuring
sustainable business practices are also
consistent with the Group’s risk appetite.
In the determination of remuneration of
senior executives, risk and control
indicators as well as audit findings and
compliance issues are taken into account
when assessing business performance.
Executives are remunerated based on the
achievements of their own performance
measures, and the demonstration of core
values and competencies, while taking
into account market compensation data
for their respective job roles.
The performance of risk and compliance
functions is measured independently of
the businesses they oversee. Employees in
these functions are assessed based on
achievement related to their respective
performance measures. Market
compensation data on risk and
compliance functions is also taken into
account for remuneration.
In determining the composition of
compensation packages, the Bank takes
into account the time horizon of risk and
includes, in the total compensation for
executives, a significant portion of
deferred payment in the form of deferred
shares. All awards of deferred shares or
share options (granted in previous years)
are subject to cancellation and clawback if
it is determined, amongst other things,
that they were granted on the basis of
materially inaccurate financial statements
and/or that the employee has engaged in
conduct that results in financial loss,
reputational harm, restatement of
financial results, adverse changes to the
Bank’s risk profile/rating and/or is otherwise
detrimental to the Bank and/or Group
and/or the business conducted by any
member of the Group. To ensure that its
remuneration packages are competitive,
the Bank regularly reviews salary levels
and benefits packages based on market
data provided by recognised consultants
who conduct surveys on comparative groups
in the financial sector. The determination
of the Bank’s variable bonus pool is fully
discretionary and the factors taken into
consideration include financial and
non-financial metrics like the Bank’s
performance, audit ratings, risk indicators
and compliance issues, market conditions
and competitive market practices.
The Bank adopts a performance-driven
approach to compensation. Compensation
packages are linked to personal performance,
the performance of each business unit,
and the overall performance of the Bank.
Compensation is reviewed each year
based on information from market surveys
provided by reputable management
consultants.
As a consequence of the last financial
crisis, the Financial Stability Forum
developed principles and implementation
standards for Sound Compensation
Practices for significant financial
institutions. The Remuneration
Committee made changes to the Bank’s
compensation structure to increase the
proportion of the deferred remuneration
component for senior executives. The
Bank’s compensation practices are
reviewed annually by Aon which has
confirmed for 2022 that the Bank had met
the Financial Stability Forum principles
and implementation standards.
The Bank has identified a group of senior
executives whose authority and actions
are deemed to have a major influence on
the long-term performance of the Bank
and whose actions or decisions can
materially impact the Bank’s risk profile.
This group, identified as “Material Risk
Takers” comprises senior management
(the CEO and her direct reports), employees
of Senior Vice President rank and above, key
personnel at business units, senior control
staff, and employees who had been awarded
significant variable performance bonuses
as well as senior managers identified under
the regulator’s guidelines. For the “Material
Risk Takers” with bonuses exceeding
$100,000, at least 40% of their variable
performance bonuses are deferred in the
form of shares. The Board approves the
compensation of the CEO, Chief Financial
Officer, Chief Risk Officer, Chief Operating
Officer and Head, Global Treasury, and
the Audit Committee approves the
compensation of Head of Group Audit.
The Remuneration Committee approves
the compensation of all other senior
executives of Senior Vice President rank and
above, as well as the top five employees
who had been awarded significant
variable performance bonuses who are
below the rank of Senior Vice President.
The performance evaluation for senior
executives in 2022 has been conducted
in accordance with the above objectives
and considerations.
The remuneration practices for staff in
bargainable positions are established
through negotiation with the Bank’s unions.
Share Schemes
• OCBC Share Option Scheme 2001
The Bank has ceased granting share options
under the OCBC Share Option Scheme
2001 (the Scheme) effective from financial
year 2018 remuneration. The Scheme
which was extended from 2011 had
ceased operation on 2 August 2021. Share
options granted in prior years continue
to be outstanding until the options
lapse or are exercised by the recipients.
The validity period of the options granted
is subject to legislation applicable on the
date of grant. Options granted to Group
executives are exercisable for up to 10
years, while options granted to nonexecutive Directors are exercisable
for up to five years.
52
The options granted will lapse
immediately upon termination of
employment or appointment, except
in the event of retirement, redundancy
or death, or where approved by the
Remuneration Committee, in which
case the Committee may allow the
options to be retained and exercisable
within the relevant option periods or
such option periods as may be
determined by the Remuneration
Committee. Shares granted upon the
exercising of options are allocated from
treasury shares or from new ordinary
shares issued by the Bank.
All grants are subject to cancellation
and clawback if it is determined,
amongst other things, that they were
made on the basis of materially
inaccurate financial statements and/or
that the employee has engaged in conduct
that results in financial loss, reputational
harm, restatement of financial results,
adverse changes to the Bank’s risk
profile/rating and/or is otherwise
detrimental to the Bank and/or the
Group and/or the business conducted
by any member of the Group.
• OCBC Deferred Share Plan
The OCBC Deferred Share Plan (the
Plan) aims to increase the performanceorientation and retention factor in
compensation packages of executives,
and foster an ownership culture within
the organisation. It also aligns the
interests of executives with the sustained
business performance of the Bank.
Group executives holding the rank or
equivalent rank of Assistant Manager
and above, and any Group Executive
Director selected by the Remuneration
Committee, are eligible to participate in
the Plan.
In 2021, the Bank adopted a new OCBC
Deferred Share Plan 2021 (DSP 2021).
The new OCBC DSP 2021 permits new
ordinary shares to be issued to satisfy
the Bank’s delivery obligations under
the Plan. It replaces the previous OCBC
Deferred Share Plan, under which no
new ordinary shares may be issued.
The participants are executives of the
Bank, selected overseas locations and
subsidiaries.
Under the DSP 2021, share awards are
granted annually to eligible executives
who are paid variable performance
bonuses exceeding $100,000. The share
awards form 20% to 40% of their total
variable performance bonus for the
year. Half (50%) of the share awards
will vest after two years with the
remaining 50% vesting at the end of
three years in accordance with the
guidelines established under the Plan.
The grants are part of the performance
bonuses for the prior year where the
delivery of key performance indicator
targets have been completed. There are
no further performance conditions
imposed prior to the vesting of the
share awards, other than those
described on pages 52 and 53 of the
2022 Annual Report related to the
conditions for cancellation and clawback
of these share awards. Prior to the
vesting date, the executives will not be
accorded voting rights for the shares.
By implementing the DSP 2021, which
permits new ordinary shares to be issued,
the Bank has greater flexibility in its
methods for delivery of ordinary shares to
fulfil share grants, as this can be effected
through an issue of new ordinary shares,
in addition to the transfer of existing
ordinary shares (including treasury
shares). The unvested deferred share
grants will be adjusted to take into
account dividends declared by the Bank.
The additional shares granted in respect
of this adjustment may be acquired
from the market in accordance with
guidelines established under the Plan.
The awards will lapse immediately upon
termination of employment or
appointment, except in the event of
retirement, redundancy or death, or
where approved by the Remuneration
Committee, in which case the Committee
may allow the awards to be retained and
vested within the relevant vesting periods
or such periods as may be determined
by the Remuneration Committee.
All awards are subject to cancellation and
clawback if it is determined, amongst
other things, that they were granted on
the basis of materially inaccurate financial
statements and/or that the employee has
engaged in conduct that results in financial
loss, reputational harm, restatement of
financial results, adverse changes to
the Bank’s risk profile/rating and/or is
otherwise detrimental to the Bank
and/or the Group and/or the business
conducted by any member of the Group.
• OCBC Employee Share Purchase Plan
The OCBC Employee Share Purchase
Plan (ESPP) was implemented for all
employees of the participating companies
in the Group, including executive
Directors, to inculcate in all participants
a stronger and more lasting sense of
identification with the Group.
The ESPP is a saving-based share
ownership plan to help employees own
ordinary shares in the Bank through their
monthly contributions via deductions
from payroll and/or CPF funds. The
employees have the option to convert the
contributions to ordinary shares after one
year or to withdraw the contributions
at any time. As a further incentive to
employees to enrol in the ESPP, the
Bank pays interest on the amounts
saved at a preferential interest rate.
The duration of the offering period is 24
months and the share acquisition price
is fixed before the offering period based
on the average of the last traded prices
over the five consecutive trading days
immediately preceding the price fixing
date. Shares granted upon conversions
in accordance with the rules of the ESPP
are allocated from treasury shares or from
new ordinary shares issued by the Bank.
The aggregate number of new ordinary
shares issued by the Bank pursuant to the
ESPP, together with the aggregate number
of any new ordinary shares issued pursuant
to the OCBC Share Option Scheme 2001
and the aggregate number of new ordinary
shares issued to awards granted under the
DSP 2021, cannot exceed 10% of the Bank’s
total number of issued ordinary shares
(excluding treasury shares and subsidiary
holdings (as defined in the SGX-ST Listing
Manual)). Notwithstanding the limits
allowed under the relevant rules, the
Bank has been applying a lower
aggregate limit of 5% instead of 10%
as a matter of conservative practice.
OCBC Annual Report 2022
Corporate Governance 53
Principle 8: Disclosure on Remuneration
The following disclosures should be read in conjunction with the remuneration policies, practices and share plans as described under
Principles 6 and 7.
Directors’ and Group CEO’s Remuneration in 2022
Bank
Director Fees Shares (a) Other Benefits (b) Total
$ $ $ $
Ooi Sang Kuang 1,656,877 75,000 47,649 1,779,526
Chong Chuan Neo 160,329 65,125 786 226,240
Chua Kim Chiu 281,000 75,000 4,237 360,237
Andrew Khoo 258,123 75,000 1,139 334,262
Koh Beng Seng 373,493 75,000 – 448,493
Andrew Lee 255,247 65,125 – 320,372
Lee Tih Shih 171,205 75,000 4,237 250,442
Christina Ong 259,328 75,000 4,237 338,565
Pramukti Surjaudaja 155,000 75,000 – 230,000
Tan Ngiap Joo 185,233 56,088 4,237 245,558
Tan Yen Yen 274,123 75,000 4,237 353,360
Wee Joo Yeow 220,959 75,000 4,237 300,196
4,250,917 861,338 74,996 5,187,251
Group CEO Salary Bonus Deferred Shares Other Benefits (b) Total
$ $ $ $ $
Helen Wong 1,442,400 5,385,000 3,590,000 782,244 (c) 11,199,644
Remuneration of Top Five Key
Management Personnel in 2022
The Code recommends the disclosure of
the individual remuneration of the Bank’s
top five key management personnel as
well as their aggregate remuneration.
The Board considered this matter carefully
and has decided against such a disclosure
for the time being as it is not standard
business practice to do so, having taken
into account the highly competitive
conditions for talent in the industry.
Remuneration of Directors’ and CEO’s
Immediate Family
Mr Pramukti Surjaudaja, a Director of the
Bank, has a sister, Ms Parwati Surjaudaja,
who is chief executive of the Bank’s
subsidiary, PT Bank OCBC NISP Tbk.
Her personal remuneration in 2022
exceeds $100,000 but for reasons
stated above, her individual remuneration
is not disclosed. In 2022, apart from
Ms Parwati Surjaudaja, none of the
Group’s employees was an immediate
family member of a Director or the CEO.
Notes:
(a) Value of remuneration shares was estimated based on closing price of ordinary shares on 3 March 2023, i.e. $12.50 per share.
(b) Non-cash component such as club and car benefits for Mr Ooi Sang Kuang and Ms Helen Wong, and carparks for Directors.
(c) Includes the value of shares and cash awarded for loss of compensation from previous employment.
(d) Fees from OCBC Wing Hang Bank.
(e) Fees from Great Eastern Digital for services as nominee director on board of Boost Holdings (an associated company of Great
Eastern Holdings) and Lion Global Investors Ltd.
(f) Fees from OCBC Wing Hang Bank.
(g) Fees from Great Eastern Holdings and its subsidiaries.
(h) Fees from OCBC Al-Amin Bank.
(i) Fees from PT Bank OCBC NISP for being Board President Commissioner, a capacity in Indonesia with critical supervisory
responsibilities over the organisation.
(j) Fees from OCBC Bank (Malaysia) and OCBC Al-Amin Bank.
(k) Fees from Great Eastern Holdings.
Subsidiaries
Director Total
$
Ooi Sang Kuang 91,296 (d)
Chong Chuan Neo 77,010 (e)
Andrew Khoo 170,534 (f)
Koh Beng Seng 558,000 (g)
Andrew Lee 58,166 (h)
Pramukti Surjaudaja 795,760 (i)
Tan Ngiap Joo 165,386 (j)
Wee Joo Yeow 150,000 (k)
54
Remuneration of Substantial Shareholder’s Immediate Family
A disclosure on remuneration to employees who are immediate family members of substantial shareholders is not applicable as none
of the Bank’s substantial shareholders are individuals.
Remuneration Disclosure for Senior Management and Material Risk Takers
Remuneration Awarded during the Financial Year
Senior
Management
Other Material
Risk-Takers
Fixed remuneration Number of employees 17 389
Total fixed remuneration 29% 56%
Of which: cash-based 29% 56%
Of which: deferred 0% 0%
Of which: shares and other share-linked instruments 0% 0%
Of which: deferred 0% 0%
Of which: other forms 0% 0%
Of which: deferred 0% 0%
Variable remuneration Number of employees 17 379
Total variable remuneration 71% 44%
Of which: cash-based 43% 27%
Of which: deferred 0% 0%
Of which: shares and other share-linked instruments 28% 17%
Of which: deferred 28% 17%
Of which: other forms 0% 0%
Of which: deferred 0% 0%
Total remuneration 100% 100%
Special Payments
Guaranteed Bonuses Sign-on Awards Severance Payments
Number of
Employees
Total Amount
($)
Number of
Employees
Total Amount
($)
Number of
Employees
Total Amount
($)
Senior Management 2 Not disclosed* 0 0 0 0
Other Material Risk-Takers 3 910,476 3 547,866 0 0
* Due to confidentiality reason
Deferred Remuneration
Deferred and Retained Remuneration
Total outstanding
deferred
remuneration
Of which: Total
outstanding deferred
and retained
remuneration
exposed to ex post
explicit and/or
implicit adjustments
Total amendment
during the year due
to ex post explicit
adjustments (1)
Total amendment
during the year due
to ex post implicit
adjustments (2)
Total deferred
remuneration paid
out in the financial
year
Senior management 100% 100% 0% 0% 41%
Cash 0% 0% 0% 0% 0%
Shares 100% 100% 0% 0% 41%
Share-linked instruments 0% 0% 0% 0% 0%
Other 0% 0% 0% 0% 0%
Other material risk-takers 100% 100% 0% 0% 41%
Cash 1% 1% 0% 0% 0%
Shares 99% 99% 0% 0% 41%
Share-linked instruments 0% 0% 0% 0% 0%
Other 0% 0% 0% 0% 0%
Notes:
(1) Examples of ex post explicit adjustments include malus, clawbacks or similar reversal or downward revaluations of awards.
(2) Examples of ex post implicit adjustments include fluctuation in the value of shares performance or performance units.
OCBC Annual Report 2022
Corporate Governance 55
Accountability and Audit
Principle 9: Risk Management and
Internal Controls
The Board is responsible for the governance
of risk and sets the tone from the top to
cultivate a strong risk culture. It approves
the Bank’s risk appetite and oversees
risk activities to ensure that these are
consistent with the Bank’s strategic
intent and operating environment, as
well as capital sufficiency and regulatory
standards. It oversees, through the
Risk Management Committee, the
establishment and operation of an
independent risk management system
for managing risks on an enterprise-wide
basis. It also oversees the adequacy and
effectiveness of the internal controls and
risk management processes and systems.
It ensures that the risk management
function has appropriate independent
reporting lines and is sufficiently
resourced to monitor risk by the various
risk categories.
Further details on risk management are
described under the section on Risk
Management Committee on page 46.
The Board is also responsible for ensuring
that the Bank’s internal controls
adequately safeguard shareholders’
interests and the Bank’s assets. Selfassessment processes are in place for all
business units to assess the adequacy
and effectiveness of their internal
controls, and level of compliance with
applicable rules and regulations. The
results of the evaluations are reviewed
by senior management. The Board has
received assurance from the CEO and
key management personnel who are
responsible regarding the adequacy
and effectiveness of the Bank’s risk
management and internal control
systems. The Board has also received
assurances from the CEO and Chief
Financial Officer that the financial
records have been properly maintained
and the financial statements give a true
and fair view of the Bank’s operations
and finances.
Based on the established internal control,
work performed by the internal and
external auditors, and reviews performed
by the management and various Board
Committees, the Board – with the
concurrence of the Audit and Risk
Management Committees – is of the
view that the system of internal controls,
including financial, operational, compliance
and information technology controls,
and risk management policies and
systems, were adequate and effective as
at 31 December 2022, to address the
risks which the Bank considers relevant
and material to its operations.
The system of internal controls provides
reasonable but not absolute assurance
that the Bank will not be adversely
affected by any event that could be
reasonably foreseen as it strives to
achieve its business objectives. However,
the Board also notes that no system of
internal controls can provide absolute
assurance in this regard, or absolute
assurance against the occurrence of
material errors, poor judgement in
decision-making, human error, losses,
fraud or other irregularities.
Principle 10: Audit Committee
The composition and summary terms
of reference of the Audit Committee
are provided under the section on
Audit Committee on page 46 and the
Committee’s summary activities are also
provided in the Directors’ Statement on
page 108. The Audit Committee adopts,
where appropriate, relevant best practices
set out in the Guidebook for Audit
Committees in Singapore.
In addition to the review of the Group
Financial Statements, which includes
reviewing the assurances provided by
the CEO and Chief Financial Officer on
the financial records and statements, the
Audit Committee reviews and evaluates,
with the external and internal auditors,
the adequacy and effectiveness of the
system of internal controls including
financial, operational, compliance and
information technology controls, and risk
management policies and systems. It
reviews the scope and results of the
audits, the cost-effectiveness of the
audits and the independence and
objectivity of the external and internal
auditors. When the external auditor
provides non-audit services to the Bank,
the Committee keeps the nature, extent
and costs of such services under review.
This is to balance the objectivity of the
external auditor against its ability to
provide value-for-money services. The
Audit Committee members keep abreast
of changes to accounting standards and
development of related significant
accounting policies which have a direct
impact on financial statements and Group
accounting policies through briefings
provided by internal or external subject
matter experts. The Audit Committee
also reviews significant financial reporting
issues and judgements to ensure the
integrity of the financial statements.
The Committee reviews announcements
relating to financial performance.
The Audit Committee is also responsible
for the review of the Bank’s whistleblowing
policy as well as any concerns, including
anonymous complaints, which staff
may in confidence raise about possible
improprieties in matters of financial
reporting or other matters. The
whistleblowing policy and procedures
for raising such concerns are disclosed
and clearly communicated to employees.
The Committee will ensure such concerns
are independently investigated and
followed up on. If the case escalated is
found to be substantiated, appropriate
action will be taken and the Audit
Committee updated regularly on its
status. The whistleblower’s identity is
kept confidential and his/her interests
will be safeguarded at all times, including
a right to appeal to the Audit Committee
if reprisals are taken against him/her.
The Audit Committee meets at least once
a year with the external auditor and
internal auditor in separate sessions and
without the presence of management, to
consider any matters which may be
raised privately. In addition, the Chairman
of the Audit Committee meets the Head
of Group Audit on a regular basis to
discuss the work undertaken, key findings
and any other significant matters arising
from the Group’s operations. Formal
reports are sent to the Audit Committee
on a regular basis.
56
External Audit
The Audit Committee has received
the requisite disclosures from the
current external auditor evidencing its
independence. It is satisfied that the
financial, professional and business
relationships between the Group and the
external auditor will not prejudice the
independence and objectivity of the
external auditor. The aggregate amount
of fees paid to the external auditor for
financial year 2022, and the breakdown
of total fees paid for audit and non-audit
services, are shown in the Notes to the
Financial Statements.
The Audit Committee assesses the
quality of OCBC’s external auditor
before its first appointment and at least
annually thereafter. The selection of the
external auditor is made through a tender
process based on an established
framework for the selection/ appointment
of OCBC’s external auditor. This
framework lists the considerations and
criteria for the external auditor and
provides a robust tender process.
Considerations include having global
reach as well as technical and industry
expertise, skills, resources and reputation,
and quality of service delivery.
Exercising oversight over the external
audit function, the Audit Committee is
responsible for making recommendations
to the Board in relation to the appointment,
reappointment and removal of the
external auditor. The Audit Committee
also considers the annual fee proposals
presented by the external auditor and
reviews the scope of the audit plan, the
level of materiality, areas of focus and
significant risks to be addressed.
For reappointment of external auditor,
the Audit Committee considers the
length of the external auditor’s tenure
and the risk this may pose to objectivity
and independence. The Audit Committee
also takes into consideration the external
auditor’s compliance with SGX-ST Listing
Rules which require the lead engagement
partner to be rotated every five years.
The Audit Committee is responsible
for monitoring the performance,
objectivity and independence of the
external auditor. In its evaluation
process, the Audit Committee takes
into consideration the following:
• the experience and expertise of senior
members of the engagement team;
• the audit plan agreed with the external
auditor, the areas of audit focus and
the external auditor’s approach to
materiality;
• the quality of reports and findings
presented by the external auditor;
• the external auditor’s presentation
of its Audit Quality Framework and
its confirmation of independence
pursuant to its policies and processes
for maintaining independence
and objectivity;
• the external auditor’s report to the
Audit Committee on main findings on
audit quality reviews of the Bank’s audit;
• the key highlights or findings on the
external auditor’s quality control
systems by audit oversight bodies and,
where relevant, the appropriate steps
taken by the external auditor; and
• feedback through an annual
evaluation exercise from senior
management across geographical
regions to gather internal perceptions
as to the knowledge, competence,
independence, efficiency and
effectiveness – as well as
communications by and with –
the external auditor.
As part of its assurance process on the
objectivity and independence of the
external auditor, the Audit Committee
has in place a policy that lists the
non-audit services which may not be
provided by the external auditor and
sets out the circumstances in which the
external auditor may be permitted to
undertake non-audit services. Permitted
non-audit services exceeding $250,000
require the approval of the Audit
Committee before the auditor can be
engaged. In addition, the Audit Committee
reviews reports on non-audit services
undertaken by the external auditor to
satisfy itself as to the nature of non-audit
services being provided and the fees
incurred. The nature of the non-audit
services provided during the financial year
ended 31 December 2022 is shown in the
Notes to the Financial Statements.
To reinforce the Audit Committee’s
effectiveness and enhance the quality of
the audit, the Audit Committee meets
regularly with the external auditor. The
external auditor discusses its audit plan
with the Audit Committee and presents
its engagement teams and its audit
fee proposals. It reports to the Audit
Committee on audit focus areas, the
support rendered by management, key
audit findings, quantitative and
qualitative aspects of financial statement
disclosures, any unadjusted audit
differences (or review differences in the
case of a half-yearly or a quarterly review)
and any other matters relevant to its
engagement. Discussions may be held
privately without the presence of
management. The external auditor also
discusses with the Audit Committee key
changes to regulatory requirements and
reporting as well as developments in
accounting standards.
In the review of the 2022 financial
statements, the Audit Committee
discussed with management the
accounting principles applied and
significant judgements affecting the
financial statements. Matters raised by
Group Audit and the external auditor in
respect of governance, risk management,
accounting and internal controls over
financial reporting were also reviewed.
The following key audit matters highlighted
in the Independent Auditor’s Report on
pages 109 to 115 of the Annual Report
were discussed with management and
the external auditor:
OCBC Annual Report 2022
Corporate Governance 57
• Impairment of loans to customers
The Audit Committee reviewed
management’s assessment and
justification of allowances for impaired
loans and non-impaired loans,
including the forward-looking
assumptions and scenarios adopted
as well as the adjustments made to
the model-driven requirements to
reflect current conditions and forecasts
of future economic conditions
(e.g. economic and geopolitical
developments). The adequacy of
allowances for impaired loans set
aside for key loan accounts was also
discussed with the external auditor.
Additionally, the Audit Committee
also considered the input from Group
Audit’s independent assessment of
the Group’s credit portfolio quality
and credit risk management process.
• Valuation of financial instruments
measured at fair value – Levels 2 and 3
The Audit Committee, with the input
of the Risk Management Committee,
reviewed management’s valuation of
financial instruments framework
and their control, monitoring and
issue escalation processes. In addition,
the Committee reviewed both
internal and the external auditors’
assessment of the controls over
valuation which included independent
verification of price and validation of
valuation models.
• Impairment of goodwill
The Audit Committee reviewed
management’s goodwill impairment
testing methodology and results,
including the cash flow projections
and discount rates used. The
Committee also considered the
external auditor’s assessment of the
methodology and testing results.
• Valuation of life insurance contract
liabilities
The Audit Committee reviewed the
approach and methodology applied to
the valuation of life insurance contract
liabilities in the consolidated financial
statements of Great Eastern Holdings
Ltd (Great Eastern) in their review of
Great Eastern’s financial results
together with the Group’s financial
performance. In considering the
valuation of life insurance contract
liabilities, the Committee considered
the external auditor’s assessment of
the valuation methodology and
assumptions adopted by Great Eastern
and its subsidiaries.
The Audit Committee believes that
the financial statements are fairly
presented in conformity with the
relevant Singapore Financial Reporting
Standards (International) in all material
aspects, based on its review and
discussions with management and
the external auditor.
Internal Audit
The Audit Committee approves the
Internal Audit Charter of Group Audit and
reviews the adequacy and effectiveness
of the internal audit function, at least
annually. In line with leading practice,
Group Audit’s mission statement and
charter requires it to provide independent
and reasonable, but not absolute,
assurance that the Group’s governance,
risk management and internal control
processes – as designed and implemented
by senior management – are adequate
and effective. Group Audit reports on the
adequacy and effectiveness of the system
of internal controls to the Audit Committee
and management, but does not form any
part of the system of internal controls.
Group Audit meets or exceeds the
International Standards for the Professional
Practice of Internal Auditing of The
Institute of Internal Auditors.
Group Audit adopts a risk-based approach
where audit work is prioritised and
scoped according to an assessment of
current and emerging risks, including
financial, operational, technology, cyber,
compliance, sustainability and strategic
risks. The work undertaken by Group
Audit involves the assessment of the
adequacy and effectiveness of the
Group’s governance, risk management
and internal control processes in meeting
its strategic objectives and operating
within the risk appetite established. In
addition, Group Audit provides an
independent assessment of the Group’s
credit portfolio quality and credit risk
management process. Without assuming
management responsibility, Group Audit
may provide advisory services to line
management on certain business
initiatives as well as system developments
and enhancements where the objective is
to add value and improve governance, risk
management and controls.
The Audit Committee is responsible
for reviewing the independence,
effectiveness and standing of the
internal audit function and adequacy of
resources needed to achieve the internal
audit objectives. For the year ended
31 December 2022, the Audit Committee
has assessed that the internal audit
function was adequately resourced,
independent, effective and possessed the
right standing within the organisation.
The Committee reviews the processes
that are in place to deal with
recommendations raised in internal audit
reports in a timely manner and to closely
monitor outstanding exceptions or
recommendations. Currently, the number
of internal audit staff in the Group is 320.
The division is organised into departments
that are aligned with the structure of the
Group. The Audit Committee approves
the appointment, resignation, dismissal,
succession and remuneration of the Head
of Group Audit and reviews the reasons
for the resignation or dismissal of Head of
Group Audit.
58
Shareholder Rights
and Engagement
Principle 11: Shareholder Rights
and Conduct of General Meetings
In 2022, pursuant to the Covid-19
(Temporary Measures) (Alternative
Arrangements for Meetings for Companies,
Variable Capital Companies, Business
Trusts, Unit Trusts and Debenture Holders)
Order 2020, the Bank convened and held
its AGM via electronic means on 22 April
2022, as a precautionary measure in view
of prevailing Covid-19 situation.
All Directors attended the virtual 2022
AGM together with the external auditor,
senior management and independent
scrutineers. The Chairman shared his
observations on the operating
environment for 2021 and the overall
macro-economic outlook for 2022. This
was followed by the CEO’s presentation
of the Group’s 2021 financial performance,
2022 outlook and corporate strategy.
Shareholders were given the opportunity
to participate in the 2022 AGM despite
not being able to attend the AGM in
person. Shareholders or appointed
proxies who were authenticated via the
Bank’s verification process, were able
to observe and/or listen to the AGM
proceedings via live audio-visual webcast
or live audio-only stream and cast their
votes electronically during the AGM.
Shareholders or appointed proxies were
also able to submit questions at the 2022
AGM in real time via the virtual AGM
platform, or in advance of the 2022 AGM
via the registration portal, and by post or
email. Responses to all substantial and
relevant questions were provided during
the AGM and published on the SGX
website and the Bank’s website.
The Bank conducts voting by poll for all
resolutions proposed at its general
meetings, for greater transparency in the
voting process. The Bank also provides for
separate resolutions on each substantially
separate issue. It does not “bundle”
resolutions, unless the resolutions are
interdependent and linked so as to form
one significant proposal.
Under the Bank’s Constitution,
shareholders are allowed to vote in
person or appoint up to two proxies
unless the shareholder is a relevant
intermediary (as defined under the
Singapore Companies Act 1967).
A shareholder who is a relevant
intermediary can appoint more than
two proxies to attend, speak and vote
at the general meetings of the Bank.
For 2022 AGM which was convened
via electronic means, all shareholders or
appointed proxies were able to perform
live voting via the virtual platform during
the AGM. Shareholders who were unable
to attend the AGM were also allowed to
appoint the Chairman of the Meeting
as proxy to attend, speak and vote on
their behalf at the 2022 AGM. Proxy
forms submitted by shareholders
were independently verified by the
independent scrutineers. The voting
results of all votes cast for and against
each resolution and the respective
percentages, were announced by the
Chairman at the 2022 AGM. The detailed
voting results were announced on the
SGX website and posted on the Bank’s
website within the same day after the
conclusion of the 2022 AGM.
As is the practice, minutes of the Bank’s
general meetings are made available on
the SGX website and the Bank’s website.
The minutes prepared by the Company
Secretary would reflect the proceedings
including responses from the Board and
management to queries from shareholders.
Principle 12: Engagement with
Shareholders
The Bank has a shareholders
communication policy approved by
the Board. The Bank recognises the
importance of communicating regularly
and effectively with its shareholders so
that they can better understand its
operations, strategies and directions.
One of the key roles of the Group’s
Investor Relations and Group Brand and
Communications units is to keep the
market and investors apprised of the
Group’s major corporate developments
and financial performance through
regular media releases, briefings and
meetings with the investment community
and media. As a result of the evolving
conditions arising from the Covid-19
pandemic, the Bank’s financial results
presentations in 2022 were conducted
both virtually and physically, with audio
recordings of the results briefings
uploaded on the Bank’s website. The
Bank’s dividend policy is also disclosed
in the Capital Management section on
pages 68 and 69 of this Annual Report.
In 2022, the Bank held close to 600
meetings and conference calls with
the investment community including
investors, rating agencies and analysts.
In addition, shareholders and the public
can access the Group’s media releases,
financial results and presentation materials
used at briefings, and other corporate
information via the Bank’s website.
Material information is also announced
through the SGX website.
Investors can submit feedback and
queries to OCBC’s Investor Relations Unit
through the contact details provided on
the Bank’s website
Managing Stakeholders
Relationships
Principle 13: Engagement with
Stakeholders
The Bank recognises the importance
in maintaining positive stakeholder
relationships, and adopts an inclusive
approach in the management and
engagement of its stakeholders – namely
customers, investors, communities,
regulators and employees. The
Sustainability Report sets out the Bank’s
approach to stakeholder engagement
including key areas of focus and how it
responds to stakeholder concerns.
The Bank maintains a corporate website
– OCBC.com – to communicate and
engage with its stakeholders.
OCBC Annual Report 2022
Corporate Governance 59
Related Party Transactions
and Interested Person
Transactions
The Group has established policies and
procedures on transactions involving
related parties and interested persons
in compliance with relevant regulatory
requirements and SGX-ST Listing Rules.
For related party transactions, the
Group is guided by relevant authorities
governing the definitions of relatedness,
limits applied, terms of transactions,
procedures for approving and monitoring
the transactions and where necessary,
the writing off of these transactions.
Related party transactions are monitored
with particular care, and appropriate
steps are taken to control or mitigate
the risks of such transactions. The Board
reviews the Group policy on a regular
basis to ensure it remains relevant and is
kept informed of all material related party
transactions. During the financial year,
there were no material related party
transactions between the Bank and its
related parties under the Group policy.
For interested person transactions, the
Bank’s established policy and procedures
comply with requirements mandated
under Chapter 9 of the SGX-ST Listing
Manual. Details of interested person
transactions carried out during the
financial year under review are set out
in the section under “Additional
Information Required under the SGX-ST
Listing Manual” on page 67.
Ethical Standards
The Bank’s ethical standards are guided
by its commitment to uphold its core
values or “LIFRR”.
The Bank has also adopted the SGX-ST
Listing Manual’s guidelines on dealings in
securities and has a policy against insider
trading. Directors and officers are
prohibited from dealing in the securities
of the Bank and its listed subsidiary, Great
Eastern, during the period commencing
two weeks before the voluntary disclosures
of the Bank’s and Great Eastern’s first and
third quarters’ financial results, and one
month before the announcement of
half-year and full-year financial results
(the blackout period) and any time they
are in possession of unpublished
material price-sensitive information.
The Bank will notify Directors and
employees of the commencement date
for each blackout period. The policy also
states that employees are not to deal
in the Bank’s securities on short-term
considerations. In addition, employees
are instructed to conduct all their
personal securities transactions through
the Group’s stockbroking subsidiary.
The Bank’s insider trading policy also
includes instructions pertaining to
dealings in the listed securities of
customers of the Group. The Bank
reviews its policy on insider trading
at least annually to ensure it remains
relevant and effective.
The Bank has a code of conduct that
applies to all employees and reinforces
the core values expected of employees.
The code covers all aspects of the
business operations of the Bank and
sets out principles to guide employees
in carrying out their duties and
responsibilities while adhering to the
highest standards of personal and
corporate integrity.
Employees are required to observe and
comply with laws and regulations as well
as company policies, along with the ABS
Code of Conduct for Banks and Bank Staff.
The Bank has a suite of policies in place
for proper governance and management
that staff have to comply with. All policies,
including those related to vendor
management and procurement, are
subject to the Bank’s risk management
and internal control systems and
processes, including management
self-assessment and independent audits.
The Bank also has a policy to manage
or eliminate any actual or potential
conflicts of interest which may impact
the impartiality of research analyses
or research reports issued by research
analysts in the Bank or its financial
subsidiaries. These include prohibitions
on business units attempting to influence
research analyses or recommendations
by research analysts, as well as on
securities trading by staff who receive
information on research analyses
or recommendations in unissued
research reports.
60
Provisions of the Code of Corporate Governance 2018
Page reference in OCBC
Annual Report 2022
Provision 1.2
The induction, training and development provided to new and existing directors.
Page 48
Provision 1.3
Matters that require Board approval.
Page 45
Provision 1.4
Names of the Board Committee members, the terms of reference, delegation of the Board’s authority to
make decisions, and a summary of each Board Committee’s activities.
Pages 45 to 47
Provision 1.5
The number of Board and Board Committee meetings and the directors’ attendance at these meetings.
Page 47
Provision 2.4
The board diversity policy and progress made towards implementing the board diversity policy, including
objectives.
Pages 48 and 49
Provision 4.3
Process for the selection, appointment and reappointment of directors to the Board, including the criteria used
to identify and evaluate potential new directors and channels used in searching for appropriate candidates.
Pages 49 and 50
Provision 4.4
If the Board determines that a director is independent notwithstanding the existence of a relationship
with the Company, its related corporations, its substantial shareholders or its officers, which may affect
his/her independence, the relationships and the Board’s reasons for considering him/her as independent.
Page 48
Provision 4.5
The listed company directorships and principal commitments of each director, and where a director holds
significant number of directorships and commitments, the Nominating Committee’s and Board’s reasoned
assessment of the ability of the director to diligently discharge his/her duties.
Pages 256 to 258,
49 and 50
Provision 5.2
How the assessments of the Board, its Board Committees and each director have been conducted, including
the identity of any external facilitator and its connection (if any) with the Company or any of its directors.
Page 50
Provision 6.4
The engagement of any remuneration consultants and their independence.
Page 51
Provision 8.1
The policy and criteria for setting remuneration, as well as names, amounts and breakdown of remuneration of:
(a) Each individual director and the CEO
(b) At least the top five key management personnel (who are not directors or the CEO) in bands no wider
than $250,000 and in aggregate the total remuneration paid to these key management personnel.
For CEO and
Management:
Pages 50 to 55
For the Company's
Directors:
Pages 51, 52, and 54
Provision 8.2
Names and remuneration of employees who are substantial shareholders of the Company, or are immediate
family members of a director, the CEO or a substantial shareholder of the Company, and whose remuneration
exceeds $100,000 during the year, in bands no wider than $100,000. The Company should also state clearly
the employee’s relationship with the relevant director or the CEO or substantial shareholder.
Pages 54 and 55
Provision 8.3
All forms of remuneration and other payments and benefits, paid by the Company and its subsidiaries to
directors and key management personnel of the Company as well as details of employee share schemes.
Pages 52 to 55, and
Pages 104 to 107
Summary of Disclosures
Express disclosure requirements in the Guidelines on Corporate Governance for Designated Financial Holding Companies, Banks,
Direct Insurers, Reinsurers and Captive Insurers which are incorporated in Singapore issued by the Monetary Authority of Singapore
(MAS) on 9 November 2021, which comprises the Code of Corporate Governance 2018 and the additional guidelines added by the MAS.
OCBC Annual Report 2022
Corporate Governance 61
Provisions of the Code of Corporate Governance 2018
Page reference in OCBC
Annual Report 2022
Provision 9.2
The Board has received assurance from:
(a) the CEO and the CFO that the financial records have been properly maintained and the financial
statements give a true and fair view of the Company’s operations and finances; and
(b) the CEO and other key management personnel who are responsible, regarding the adequacy and
effectiveness of the Company’s risk management and internal control systems.
Page 56
Provision 10.1
The Company publicly discloses, and clearly communicates to employees, the existence of a whistleblowing
policy and procedures for raising concerns.
Page 56
Provision 11.3
Directors’ attendance at general meetings of shareholders held during the financial year.
Pages 47 and 59
Provision 12.1
The steps taken to solicit and understand the views of shareholders.
Page 59
Provision 13.2
The strategy and key areas of focus in relation to the management of stakeholder relationships during the
reporting period.
Page 59
Additional Guidelines
Page reference in OCBC
Annual Report 2022
Additional Guideline 1.17
An assessment of how the induction, orientation and training provided to new and existing directors meet
the requirements as set out by the Nominating Committee to equip the Board and the respective Board
Committees with relevant knowledge and skills in order to perform their roles effectively.
Page 48
Additional Guideline 4.7
The names of the directors submitted for appointment or re-appointment are accompanied by details
and information to enable shareholders and the Board to make informed decisions. Such information,
which accompanies the relevant resolution, includes: (a) date of last re-appointment; (b) professional
qualifications; (c) any relationships including immediate family relationships between the candidate and
the Directors, the Company or its substantial shareholders; (d) a separate list of all current directorships in
other listed companies; (e) details of other principal commitments; and (f) any prior experience as a director
of a listed issuer or as a director of a financial institution.
Pages 63 to 66
Additional Guideline 4.11
Resignation or dismissal of key appointment holders.
Page 50
Additional Guideline 4.12
Designations and roles of all directors.
Pages 20 and 21
Additional Guideline 9.9
The appointment and remuneration of the non-director member of the Risk Management Committee.
Not applicable
Additional Guideline 9.11
(a) The Board’s comments on the adequacy and effectiveness of the internal controls (including financial,
operational, compliance and information technology controls, and risk management systems).
(b) A statement on whether the Audit Committee concurs with the Board’s comment. Where material
weaknesses are identified by the Board or Audit Committee, they are disclosed together with the steps
taken to address them.
Page 56
Additional Guideline 10.19
The Audit Committee’s comments on whether the internal audit function is independent, effective and
adequately resourced.
Page 58
Additional Guideline 14.5
Material related party transactions.
Page 60
62
Additional Information on
Directors Seeking Re-Election
Name of Director Chua Kim Chiu Lee Tih Shih Tan Yen Yen Helen Wong
Date of appointment 20 September 2017 4 April 2003 1 January 2020 7 February 2023
Date of last
re-appointment
(if applicable)
29 April 2021 18 May 2020 18 May 2020 Not applicable
Age 68 59 57 61
Country of principal
residence
Singapore Singapore Singapore Singapore
The Board’s comments
on this appointment
(including rationale,
selection criteria, board
diversity considerations,
and the search and
nomination process)
Mr Chua Kim Chiu’s
extensive knowledge
and experience in
financial and
accounting matters will
continue to enhance
the Board’s overall
competencies.
In addition to being the
representative of a
substantial shareholder,
Dr Lee will continue to
be of value to the Board
with his qualifications
and experience.
Ms Tan’s background
and experience in
technology will enhance
Board competencies.
As Chief Executive
Officer of OCBC Bank,
Ms Wong’s continuing
membership of the
Board will facilitate
governance and
decision making.
Whether appointment is
executive, and if so, the
area of responsibility
Non-executive Non-executive Non-executive Executive
Job title (e.g. Lead ID,
AC Chairman,
AC Member etc.)
Chairman, Audit
Committee
Member, Risk
Management Committee
Chairman, Executive
Committee
Member, Audit
Committee
Member, Nominating
Committee
Member, Risk
Management Committee
Member, Risk
Management Committee
Member, Board
Sustainability Committee
Professional
qualifications
Please refer to his
academic and professional
qualifications in the
section under “Further
Information on Board of
Directors” on page 256.
Please refer to his
academic and professional
qualifications in the
section under “Further
Information on Board of
Directors” on page 257.
Please refer to her
academic and professional
qualifications in the
section under “Further
Information on Board of
Directors” on page 258.
Please refer to her
academic and professional
qualifications in the
section under “Further
Information on Board of
Directors” on page 258.
Working experience
and occupation(s) during
the past 10 years
Mr Chua Kim Chiu
served as a partner in
PricewaterhouseCoopers
(PwC) Singapore from
1990, headed the banking
and capital markets group
as well as the China desk,
and was appointed a
member of the firm’s
leadership team in 2005.
He retired in July 2012
but was retained as senior
advisor for PwC Hong
Kong until June 2016.
He is currently a
Professor (Practice) in
Accounting, National
University of Singapore
(NUS) Business School.
Please refer to his present
directorships/principal
commitments in the
section under “Further
Information on Board of
Directors” on page 256
for further information.
Dr Lee Tih Shih is
presently an Associate
Professor at the
Duke-NUS Medical
School.
Please refer to his present
directorships/principal
commitments in the
section under “Further
Information on Board of
Directors” on page 257
for further information.
Ms Tan Yen Yen’s past
experiences included IT
and IT-related positions
in SAS Institute Inc,
Oracle Corporation and
Hewlett-Packard
Singapore, and she has
played an active role in
Singapore’s infocomm
industry. She was the
President (Asia Pacific) of
Vodafone Enterprise
Singapore Pte Ltd until
she left in April 2020.
Please refer to her present
directorships/principal
commitments in the
section under “Further
Information on Board of
Directors” on page 258
for further information.
Ms Helen Wong has
40 years of banking
experience, having
started out as a
Management Trainee in
OCBC Bank and was its
first China Desk Manager.
She has vast experience
in Greater China, covering
a wide range of roles in
capital markets, syndicated
finance and corporate
banking. Before returning
to OCBC Bank, Ms Wong
spent 27 years at HSBC,
where her last role was
its Chief Executive for
Greater China.
Please refer to her present
directorships/principal
commitments in the
section under “Further
Information on Board of
Directors” on page 258
for further information.
OCBC Annual Report 2022
Additional Information on Directors Seeking Re-Election 63
Name of Director Chua Kim Chiu Lee Tih Shih Tan Yen Yen Helen Wong
Shareholding interest in the listed issuer
and its subsidiaries
Yes
26,663 ordinary
shares in OverseaChinese Banking
Corporation
Limited
(Direct interest)
Yes
11,656,000
ordinary shares in
Oversea-Chinese
Banking
Corporation
Limited
(Direct interest)
Yes
12,000 ordinary
shares in OverseaChinese Banking
Corporation
Limited
(Direct interest)
Yes
262,431 ordinary
shares in OverseaChinese Banking
Corporation
Limited (Direct
interest)
434,713 ordinary
shares under
OCBC Deferred
Share Plan and
OCBC Deferred
Share Plan 2021
Any relationship (including immediate
family relationships) with any existing
director, existing executive officer, the
issuer and/or substantial shareholder of
the listed issuer or of any of its principal
subsidiaries
Nil Yes. Director of
Lee Foundation
and Selat (Pte)
Ltd, both
substantial
shareholders of
OCBC.
Nil Nil
Conflict of interests
(including any competing business)
Nil Nil Nil Nil
Undertaking (in the format set out in
Appendix 7.7) under Rule 720(1) has been
submitted to the listed issuer
Yes Yes Yes Yes
Other Principal Commitments*
Including Directorships * “Principal Commitments” has the same meaning as defined in
the Code of Corporate Governance 2018.
Past (for the last 5 years) Please refer to
the section
under “Further
Information on
Board of Directors”
on page 256.
Please refer to
the section
under “Further
Information on
Board of Directors”
on page 257.
Please refer to
the section
under “Further
Information on
Board of Directors”
on page 258.
Please refer to
the section
under “Further
Information on
Board of Directors”
on page 258.
Present Please refer to
the section
under “Further
Information on
Board of Directors”
on page 256.
Please refer to
the section
under “Further
Information on
Board of Directors”
on page 257.
Please refer to
the section
under “Further
Information on
Board of Directors”
on page 258.
Please refer to
the section
under “Further
Information on
Board of Directors”
on page 258.
Information required under items (a) to (k)
of Appendix 7.4.1 of the SGX-ST Listing
Manual
(a) Whether at any time during the last 10
years, an application or a petition under
any bankruptcy law of any jurisdiction
was filed against him/her or against a
partnership of which he/she was a
partner at the time when he/she was a
partner or at any time within 2 years from
the date he/she ceased to be a partner?
No No No No
Name of Director Chua Kim Chiu Lee Tih Shih Tan Yen Yen Helen Wong
(b) Whether at any time during the last 10
years, an application or a petition under
any law of any jurisdiction was filed
against an entity (not being a partnership)
of which he/she was a director or an
equivalent person or a key executive, at
the time when he/she was a director or
an equivalent person or a key executive of
that entity or at any time within 2 years
from the date he/she ceased to be a
director or an equivalent person or a key
executive of that entity, for the winding
up or dissolution of that entity or, where
that entity is the trustee of a business
trust, that business trust, on the ground
of insolvency?
No No No No
(c) Whether there is any unsatisfied
judgment against him/her?
No No No No
(d) Whether he/she has ever been convicted
of any offence, in Singapore or elsewhere,
involving fraud or dishonesty which is
punishable with imprisonment, or has
been the subject of any criminal
proceedings (including any pending
criminal proceedings of which he/she is
aware) for such purpose?
No No No No
(e) Whether he/she has ever been convicted
of any offence, in Singapore or elsewhere,
involving a breach of any law or regulatory
requirement that relates to the securities
or futures industry in Singapore or
elsewhere, or has been the subject of any
criminal proceedings (including any
pending criminal proceedings of which
he/she is aware) for such breach?
No No No No
(f) Whether at any time during the last 10
years, judgment has been entered against
him/her in any civil proceedings in
Singapore or elsewhere involving a breach
of any law or regulatory requirement that
relates to the securities or futures industry
in Singapore or elsewhere, or a finding of
fraud, misrepresentation or dishonesty on
his/her part, or he/she has been the
subject of any civil proceedings (including
any pending civil proceedings of which
he/she is aware) involving an allegation of
fraud, misrepresentation or dishonesty on
his/her part?
No No No No
(g) Whether he/she has ever been
convicted in Singapore or elsewhere
of any offence in connection with the
formation or management of any
entity or business trust?
No No No No
64
OCBC Annual Report 2022
Additional Information on Directors Seeking Re-Election 65
Name of Director Chua Kim Chiu Lee Tih Shih Tan Yen Yen Helen Wong
(h) Whether he/she has ever been disqualified
from acting as a director or an equivalent
person of any entity (including the trustee
of a business trust), or from taking part
directly or indirectly in the management
of any entity or business trust?
No No No No
(i) Whether he/she has ever been the
subject of any order, judgment or ruling
of any court, tribunal or governmental
body, permanently or temporarily
enjoining him/her from engaging in any
type of business practice or activity?
No No No No
(j) Whether he/she has ever, to his/her
knowledge, been concerned with the
management or conduct, in Singapore or
elsewhere, of the affairs of:—
No No No No
(i) any corporation which has been
investigated for a breach of any law or
regulatory requirement governing
corporations in Singapore or
elsewhere; or
No No No No
(ii) any entity (not being a corporation)
which has been investigated for a
breach of any law or regulatory
requirement governing such entities
in Singapore or elsewhere; or
No No No No
(iii) any business trust which has been
investigated for a breach of any law
or regulatory requirement governing
business trusts in Singapore or
elsewhere; or
No No No No
(iv) any entity or business trust which has
been investigated for a breach of any
law or regulatory requirement that
relates to the securities or futures
industry in Singapore or elsewhere, in
connection with any matter occurring
or arising during that period when he/
she was so concerned with the entity
or business trust?
No No No No
(k) Whether he/she has been the subject
of any current or past investigation or
disciplinary proceedings, or has been
reprimanded or issued any warning, by
the Monetary Authority of Singapore or
any other regulatory authority, exchange,
professional body or government agency,
whether in Singapore or elsewhere?
No No No No
66
Additional Information Required under
the SGX-ST Listing Manual
1. Interested Person Transactions
Interested person transactions carried out during the financial year under review:
Aggregate value of all
interested person
transactions during the
financial year under review
(excluding transactions less
than $100,000 and
transactions conducted under
shareholders’ mandate
pursuant to Rule 920)
Aggregate value of all
interested person
transactions conducted under
shareholders’ mandate
pursuant to Rule 920
(excluding transactions less
than $100,000)
Name of interested person Nature of relationship
2022
$’000
2022
$’000
Dasar Sentral (M) Sdn Bhd
– Lease of premises at Wisma
Lee Rubber, Kuala Lumpur to
subsidiaries of OCBC Bank.
An associate of
Dr Lee Tih Shih,
director of OCBC Bank
927 –
2. Material Contracts
Since the end of the previous financial year, no material contract involving the interest of the Chief Executive Officer, any Director
or controlling shareholder of the Bank has been entered into by the Bank or any of its subsidiary companies, and no such contract
subsisted as at 31 December 2022, save as disclosed via SGXNet.
3. Appointment of Auditor
The Group has complied with Rules 712 and 715 of the Listing Manual issued by Singapore Exchange Securities Trading Limited in
relation to its auditor.
OCBC Annual Report 2022
Additional Information Required under the SGX-ST Listing Manual 67
Capital Management
Capital Policy
The key objective of the Group’s capital
management policy is to maintain a
strong capital position to support business
growth and strategic investments, and
to sustain investor, depositor, customer
and market confidence. In line with this,
the Group targets a minimum credit
rating of “A” and ensures that its capital
ratios are comfortably above the regulatory
minima, while balancing shareholders’
desire for sustainable returns and high
standards of prudence. The Group actively
manages its capital composition with an
optimal mix of capital instruments in order
to keep our overall cost of capital low.
Capital Monitoring and Planning
The Group’s capital is closely monitored
and actively managed to ensure that
there is sufficient capital to support
business growth, and to pursue strategic
business and investment opportunities
that will create value for our stakeholders,
while taking into consideration the
Group’s risk appetite. The Group’s
internal capital adequacy assessment
process (ICAAP) involves a comprehensive
assessment of all material risks that the
Group is exposed to and an evaluation of
the adequacy of the Group’s capital in
relation to those risks. This includes an
annual capital planning exercise to forecast
capital demands and assess the Group’s
capital adequacy over a multi-year horizon.
This process takes into consideration the
Group’s business strategy, operating
environment, regulatory changes, target
capital ratios and composition, as well as
expectations of its various stakeholders.
In addition, capital stress tests are
conducted to understand the sensitivity
of the key assumptions in the capital
plan to the effects of plausible stress
scenarios, and to evaluate how the
Group can continue to maintain adequate
capital under such scenarios.
Within the Group, excess capital will
be centralised as far as possible at the
parent (i.e. OCBC Bank) level for efficient
deployment across the Group. Whilst the
transfer of capital resources within the
Group is generally subject to regulations
in local jurisdictions, where applicable,
the Bank has not faced significant
impediments on the flow of capital
within the Group.
Dividend
The Group aims to deliver a dividend
payout ratio of 50% of its core net profit,
barring unforeseen circumstances. The
dividends are payable on a half-yearly
basis. For the financial year ended
31 December 2022, the Board of
Directors has recommended a final
dividend of 40 cents per share. This
brings the full year 2022 dividend to
68 cents per share, or a total dividend
payout of $3.06 billion.
Share Buyback and Treasury Shares
Shares purchased under the share
buyback programme are held as treasury
shares. These are recorded as a deduction
against share capital, and may be
subsequently cancelled, sold or used
to meet delivery obligations under
employee share schemes. During the
financial year ended 31 December 2022,
the Bank purchased 20.9 million ordinary
shares for $250 million as part of its
share buyback programme, while
24.2 million treasury shares were
delivered to meet obligations under its
employee share schemes.
Capital Adequacy Ratios
Since 1 January 2019, the Monetary
Authority of Singapore (MAS) has fully
phased-in the Basel III capital adequacy
ratio requirements under the MAS
Notice 637. Under this framework,
Singapore-incorporated banks are
required to meet minimum Common
Equity Tier 1 (CET1), Tier 1, and total
capital adequacy ratios (CAR) of 6.5%,
8.0%, and 10.0%, respectively.
To ensure that banks build up adequate
capital buffer outside periods of stress,
a Capital Conservation Buffer (CCB) of
2.5 percentage points above the minimum
capital adequacy requirements was
introduced. Including the CCB, Singaporeincorporated banks are required to meet
CET1 CAR, Tier 1 CAR and Total CAR of
9.0%, 10.5% and 12.5%, respectively.
68
In addition, the Group will be subject to a Countercyclical Buffer requirement if this buffer is applied by regulators in countries
which the Group has credit exposures to. Generally in the range of 0% to 2.5% of risk-weighted assets, the Countercyclical Buffer
is not an ongoing requirement but it may be applied by regulators to limit excessive credit growth in their economy.
The table below shows the composition of the Group’s regulatory capital and its capital adequacy ratios as of 31 December 2022.
The capital adequacy ratios were determined in accordance with the requirements of MAS Notice 637, which included the
definitions for CET1, Tier 1 and Tier 2 capital, the required regulatory adjustments against capital (including goodwill, intangible
assets, deferred tax assets and investments in unconsolidated financial institutions in which the Bank holds a major stake), and
the methodologies available for computing risk-weighted assets. As per the requirements of MAS Notice 637, the Bank’s insurance
subsidiaries were not consolidated for the computation of the capital adequacy ratios, i.e. capital investments in these insurance
subsidiaries were deducted from the Group’s capital and their assets were excluded from the computation of the Group’s riskweighted assets.
A description of the key terms and conditions of the regulatory capital instruments can be found in Notes 13, 14 and 21 of the
financial statements, and the approaches adopted by the Group for the computation of risk-weighted assets can be found in the
“Pillar 3 Disclosures” chapter.
$ million 2022 2021
Ordinary shares 18,048 18,040
Disclosed reserves/others 26,254 25,782
Regulatory adjustments (9,123) (8,977)
Common Equity Tier 1 Capital 35,179 34,845
Additional Tier 1 capital 1,730 1,231
Regulatory adjustments – –
Tier 1 Capital 36,909 36,076
Tier 2 capital 4,028 3,497
Regulatory adjustments – –
Total Eligible Capital 40,937 39,573
Credit 202,713 197,164
Market 8,587 11,681
Operational 20,348 16,021
Risk Weighted Assets 231,648 224,866
Capital Adequacy Ratios
Common Equity Tier 1 15.2% 15.5%
Tier 1 15.9% 16.0%
Total 17.7% 17.6%
The Bank’s banking and insurance subsidiaries are subject to capital adequacy requirements of the jurisdiction in which they
operate. As of 31 December 2022, the capital adequacy ratios of these subsidiaries were above their respective local requirements.
Capital Management
OCBC Annual Report 2022
69
Risk Management
Risk is inherent in the business activities
of the Group and managing risks is
central to our sustainability. Our overall
goal is to manage our businesses and
the associated risks in a manner that
delivers sustainable value for our
customers, employees, shareholders
and communities over the long term.
Our risk management framework
comprises strong governance, sound
policies and methodologies, and
professionals, supported by fit-for-purpose
technology, infrastructure and data. It
is underpinned by a strong corporate
culture that emphasises accountability,
ownership, integrity, and high ethical
standards. We engage in businesses that
are consistent with our corporate strategy
and risk appetite, are well understood and
are appropriately priced to provide us with
an adequate return.
While the categorisation of risks can be
complex because of their inter-relationships,
we generally categorise the risks we take
into five principal risk types, described in
the table below.
Each principal risk type is governed by
an appropriate risk framework that is
operationalised through policies and
procedures and supported by robust risk
management processes that are regularly
assessed for their continued effectiveness.
Our policies and procedures comply with
regulatory standards such as MAS Notice
637 on Risk Based Capital Adequacy
Requirements for Banks incorporated
in Singapore (MAS Notice 637) that are
aligned with the Basel Framework
published by the Basel Committee on
Banking Supervision. We continue to
invest in risk infrastructure and digital
Principal Risks Definition
Credit Risk Credit risk is the risk of losing principal and/or income due to the failure of an obligor or counterparty to
meet its financial or contractual obligations or an adverse change in the credit profile of an obligor or
counterparty.
Market Risk Market risk is the risk of losing income and/or market value due to fluctuation in factors such as interest
rates, foreign exchange rates, credit spreads, equity and commodity prices or changes in volatilities, or
correlation of such factors. It also includes interest rate risk in the banking book which is the risk to
income and/or capital arising from exposure to adverse changes in the interest rate environment.
Liquidity Risk Liquidity risk is the risk arising from the inability to meet financial and cash outflow obligations as they
fall due without incurring unacceptable costs or losses through fundraising and asset liquidation.
Information
Security and
Digital Risk
Information security risk is the risk of compromising confidentiality, integrity and/or availability of
information (in physical or digital form).
Digital risk encompasses cyber and technology risks. Cyber risk is the risk arising from malicious acts
perpetrated by threat actors. Technology risk is the risk of disruption, failure or irregularity in essential
financial services arising from the use of information and communication technologies.
Operational Risk Operational risk is the risk of loss resulting from inadequate or failed internal processes and systems,
poor management, human error or external events. This is a broad risk category that encompasses fraud
risk, money laundering, terrorism financing and sanctions risk, third-party risk, physical and people
security risk, conduct risk, business continuity risk, unauthorised trading risk, regulatory risk, legal risk,
fiduciary risk and reputational risk.
Please refer to the respective sections for details of our risk management approach for each of the principal risk types.
technologies to meet regulatory
expectations, improve the governance
and risk management capabilities of the
Group and support our corporate strategy.
We adopt a disciplined risk management
approach to identify, assess, measure,
control, monitor and report our risk
positions at granular and aggregate levels.
We regularly review the relevance of the
risk drivers and their potential impact
on the Group’s business to formulate
appropriate risk mitigation actions where
necessary. Risk drivers can emanate from
developments in the economic, business
and physical environment, geopolitical
shifts, regulatory and social changes,
cyber threats, data loss, fraud and human
error, as well as Environment, Social and
Governance (ESG) issues. These drivers
impinge on one or more of the principal
70
risk types with consequential impact on
earnings and asset quality as well as our
reputation, customer franchise and ability
to do business.
With respect to ESG issues, we take an
integrated and risk-based approach
to address their multi-dimensional
implications. This entails ensuring ESG
risk drivers that impact the Group across
credit, market, liquidity, operational and
reputational risks are adequately addressed.
It also ensures that we deliver on our
sustainability commitments to create a
positive impact for all stakeholders. We
prioritise the management of salient risk
issues, such as ESG-related credit and
reputational risks that arise from our
lending activities within our responsible
financing framework. Given the significant
and wide-ranging implications of climate
risks, we have enhanced our climate risk
management framework. This includes
embedding ESG and climate risk
management within the responsibilities
of the relevant risk committees, deepening
our climate scenario analysis and stress
testing capabilities, and measuring the
financed emissions of carbon-intensive
sectors in our corporate lending portfolio.
We have also established a dedicated
Group ESG Risk and Sustainability function
to drive the continual enhancement of
our ESG risk management framework,
processes and capabilities across the Group.
Please refer to our Sustainability Report 2022 for more
information on our ESG risk management efforts.
In consultation with Group Risk
Management, our banking subsidiaries
adapt the Group risk management
framework and policies to comply with
the Group’s risk standards and/or local
regulatory requirements, whichever is
stricter. Approving authority and limit
structures, designed to ensure proper
ownership and accountability, are also
consistent with that of the Group.
Great Eastern Holdings (GEH) and Bank
OCBC NISP are listed companies. Their
annual reports contain information
on their risk management frameworks
and practices. Their risk management
frameworks, policies and practices are
appropriately aligned with the Group’s
risk standards. For information on GEH’s
risk management, please refer to Note 38
in the Group’s Financial Statements.
Risk Governance
and Organisation
Figure 1 illustrates the risk governance
and oversight structure across the Group.
The Board of Directors has ultimate
responsibility for the effective management
of risk. It establishes the corporate
strategy and approves the risk appetite
within which senior management
executes the strategy.
The Board Risk Management Committee
(BRMC) is the designated board committee
overseeing risk management matters.
It ensures that the Group’s overall risk
management philosophy and principles
are aligned with the corporate strategy
and within the approved risk appetite.
The Committee has oversight of credit,
market, liquidity, information security
and digital, operational, conduct, money
laundering and terrorism financing, legal,
regulatory, strategic, ESG and fiduciary
risks, as well as any other category of risk
that may be delegated by the Board or
deemed necessary by the Committee. It
also ensures that the necessary overall
risk management organisation is in place
and effective.
Based on the approved risk appetite,
the BRMC provides quantitative and
qualitative guidance to major business
units and risk functions to guide risktaking. Senior management, functional
risk committees covering principal risk
types and the BRMC regularly review our
risk drivers, risk profiles across major lines
of business and risk types, risk management
frameworks and major risk policies, as well
as compliance matters. Please refer to the
Corporate Governance Chapter for more
information on the BRMC.
Dedicated Group risk committees for
major risk types have been established
to facilitate the BRMC’s risk oversight.
These committees are supported, where
appropriate, by local risk committees
that oversee the local risk positions,
approve local risk policies and ensure
that risk-taking activities remain within
the limits set by the Group.
The Group’s independent risk management
function, the Group Risk Management
Division (GRM), is headed by the Group
Chief Risk Officer (CRO), who is also the
Group Chief Information Security Officer
(CISO). The Group CRO is a member of the
Group Management Executive Committee
and also the functional risk committees.
GRM’s day-to-day functional responsibility
involves providing independent risk control
and managing credit, market, liquidity,
information security and digital, operational
and ESG risks. It provides regular risk reports
and updates on developments in material
risk drivers and potential vulnerabilities,
as well as recommended mitigating
actions, to senior management, risk
committees, the BRMC and Board. Risk
management staff work closely with the
business and other support units to
ensure that risks are well understood and
appropriately managed.
GRM oversees the New Product Approval
Process to ensure that risks are properly
and comprehensively identified, and
adequately addressed before implementation.
GRM also oversees the data management
framework so that comprehensive, accurate
and timely information can support
management decisions. With the increasing
use of Artificial Intelligence and Data
Analytics (AIDA) across the Group, GRM is
taking the lead in embedding the principles
of Fairness, Ethics, Accountability and
Transparency (FEAT) into our data and
model governance as we upgrade our
digital capabilities in keeping with
evolving industry practices.
OCBC Annual Report 2022
Risk Management 71
Figure 1: Risk Governance and Oversight Structure
(1) Group Chief Risk Officer (CRO) is also the Group Chief Information Security Officer (CISO)
Board Governance
Board of Directors
Board Risk Management Committee
(BRMC)
Other Board
Committees
Senior Management
Group Chief Executive Officer (CEO)
Group Chief Risk Officer (CRO)(1)
reports to the BRMC and CEO
Business and
Support Heads
Group Risk Management
headed by Group Chief Risk Officer
Subsidiary Functional Risk
Departments
Functional Risk
Departments
Risk and Control
Oversight
Independent
Assurance Group Audit
Senior Management
Committees Risk Committees Other
Management
Market Risk Committees
Management Committee
Credit Risk Management
Committee
Operational Risk
Management Committee
Asset Liability
Management Committee
Information Security and
Digital Risk Management Committee
72
Three Lines of Defence
All employees are responsible for identifying and managing risk; their accountability is embedded in our corporate culture and robust
internal control environment. This is operationalised through a three-line defence structure, which clearly delineates the roles,
responsibilities and accountability of risk ownership.
Three Lines of Defence
First Line Second Line Third Line
Day-to-day Risk Management Risk and Control Oversight Independent Assurance
Business and Support Units:
• Own and manage risks arising from
their business activities on a day-today basis.
• Carry out business activities that are
consistent with the Group’s strategy
and risk appetite.
• Operate within the approved
boundaries of our policies and limits,
and comply with applicable laws and
regulations.
Risk and Control Function:
• Independently and objectively
assesses the risk-taking activities of
the first line.
• Establishes relevant risk management
frameworks, policies, processes and
systems.
• Provides independent identification,
assessment, monitoring and reporting
of the Group’s risk profiles, portfolio
concentrations and material risk issues.
Group Audit:
• Independently assures the Group
CEO, Audit Committee and Board of
the adequacy and effectiveness of
our risk management and internal
control systems.
• Evaluates the overall risk awareness
and control consciousness of the
management in discharging its
supervisory and oversight
responsibilities.
Risk Appetite
Our objective is to manage our risks
prudently and sustainably for the
long-term viability of the Group. To that
end, the Board has established the Group’s
risk appetite, which defines the level and
nature of risks that we are willing to take
in the conduct of our business on behalf
of our shareholders while maintaining our
commitments to customers, debt holders,
employees, regulators and other stakeholders.
Business plans are developed taking into
account the forward-looking operating
environment and potential downside risks
and assessed against our risk appetite,
Risk Capacity
Risk Appetite
Business Plan
Business Plan
Demand for Risk and Financial Resources such as
Funding and Capital
Risk Appetite
Level and nature of risk deemed acceptable while ensuring
a sufficient buffer in the Risk and Financial Resources
Risk Capacity
Supply of Risk and Financial Resources such as
Funding and Capital
which in turn is a function of our capacity
to absorb risks, taking into account
capital, funding, and other resources. We
operationalise our risk appetite through
our policies, processes and limits.
Senior business and risk managers
participate in regular forums to review
macroeconomic and financial developments
and discuss the operating environment,
event risks and potential ‘dark clouds’
that may have a significant impact on
our earnings or solvency. These risks are
quantified via stress tests as well as
segment-specific and ad hoc event-specific
portfolio reviews. The results are used to
assess the potential impact of alternative
scenarios on our earnings and capital, as
well as vulnerabilities of material portfolios.
An Internal Capital Adequacy Assessment
Process (ICAAP) incorporating the results
of stress tests covering various risk types
is conducted annually. The objective is to
evaluate whether we are able to maintain
sound capital levels under a forwardlooking operating environment and against
severe stress scenarios. Appropriate
risk-mitigating actions are taken to
manage downside risks.
OCBC Annual Report 2022
Risk Management 73
Credit Risk Management
Credit risk arises from our lending
activities to retail, corporate and
institutional customers. It also includes
counterparty and issuer credit risks
arising from our underwriting, trading
and investment banking activities.
Credit Risk Management Approach
Our credit risk management framework
captures the complete credit risk
management cycle. It is operationalised
through policies and procedures that
cover the identification, assessment,
measurement and monitoring – as well
as the control and mitigation – of credit
risk at the enterprise level.
Our credit risk management approach
varies according to the characteristics
and nature of the relevant portfolios or
customer segments. Specific policies and
procedures have been established for
major customer segments. Please refer
to Table 1 for more information.
Table 1: Credit Risk Management Approach for Major Customer Segments
Consumers and Small Businesses Corporate and Institutional Customers Private Banking Customers
• Manage credit risks on a portfolio
basis.
• Extend credits through credit
programmes with predefined
acquisition strategies, product
structures and portfolio and
transaction limits, as well as
customer selection, lending and
collateral criteria.
• Use application models for
efficient, objective and consistent
credit decisioning.
• Use bankruptcy and credit bureau
checks, along with systems and
processes such as source
identification of credit origination
and independent verification of
documentation for credit screening
and fraud detection purposes.
• Use comprehensive risk management
information systems (MIS), behavioural
models and stress testing for
monitoring and early identification
of potentially weak credits.
• Assess credits individually with
robust independent evaluation
carried out by experienced
credit officers.
• Use predefined target market and
risk acceptance criteria to guide
credit extensions.
• Make credit decisions after
comprehensive qualitative and
quantitative risk assessment,
including a thorough understanding
of the customer and customer
group’s interdependencies.
• Business and credit risk units to
jointly approve credits to ensure
objectivity and shared risk ownership.
• Conduct regular reviews and
forward-looking stress tests at
borrower and portfolio levels to
monitor credit quality and identify
potential weak credits early.
• Assess credits individually with
robust independent evaluation
carried out by experienced
credit officers.
• Use predefined risk acceptance
criteria, availability of acceptable
collateral and stipulated loan
advance ratio and margin
requirements to guide credit
extensions.
• Business and credit risk units to
jointly approve credits to ensure
objectivity and shared risk ownership.
• Take prompt remedial actions through
timely and disciplined execution of
margin calls, top-up provisions,
stop-loss and force-selling.
74
Counterparty Credit Risk
Management
Counterparty credit risk, typically
arising from our trading and/or
banking activities in derivatives and
debt securities, is the risk that a
counterparty may default on its
obligations during the term of the
financial contract. The credit exposure
to a counterparty is measured as the
sum of current mark-to-market value
of the transactions plus an appropriate
add-on for potential future exposures
in response to market price changes.
Counterparty credit risk also covers
settlement risk, which is the risk of
loss during the settlement process due
to a counterparty’s failure to fulfil its
obligation after the Bank has performed
its obligation under a contract or
agreement at the settlement date.
We have a dedicated risk management
function to manage counterparty credit
risk on a current and forward-looking
basis across multiple dimensions – on the
individual counterparty level, country and
sector portfolio level, and product level –
as guided by established policies and
procedures. Each counterparty is subject
to robust credit assessment, including
the suitability and appropriateness of the
product offered. Credit risk mitigation
tools are also used to manage counterparty
credit risk where appropriate. Please
refer to the Credit Risk Mitigation section
for details.
We manage our credit exposures
independently through daily limit excess
monitoring, excess escalation, pre-deal
excess approval, and timely risk reporting.
In addition, we have an established policy
and process to manage wrong-way risk. This
risk may occur when the credit exposure to a
counterparty is adversely correlated with the
credit quality of the same counterparty.
• Portfolio Modelling: This includes
using internal rating models to quantify
the exposure risk, default risk and
potential losses of our borrowers.
Please refer to Table 2 for information
on our internal rating models. We also
use stress test models to simulate the
potential increase in our credit losses
and Credit Risk Weighted Assets (CRWA)
under stressed scenarios.
• Portfolio Reporting: This includes
internal and external reporting of
portfolio risk information to the
respective stakeholders. These reports
provide a better understanding of how
the credit portfolio quality trends are
evolving in response to the changing
operating environment and downside
risks. Regular risk reports covering
detailed credit exposures, credit
migration, expected losses and risk
concentrations by business segment
and geography are provided to the
Credit Risk Management Committee,
Group CEO, BRMC and Board for making
timely and better-informed decisions.
With the insights provided by portfolio
modelling and reporting, we will allocate
appropriate risk and financial resources
such as funding and capital to support
growth opportunities. We will also use
these insights to set credit concentration
limits to manage the potential downside
risks from adverse changes in the operating
environment. The design of such credit
concentration limits takes into consideration
direct risk drivers, such as economic sector,
industry and geographic location, and
indirect risk drivers, such as collateral type
or credit protection by a single counterparty
arising from credit risk mitigation.
ESG Risk Management
Managing ESG risks is an integral part
of our credit risk management process.
We have in place a responsible financing
framework that defines our approach
and commitment to managing ESG risks
associated with our lending activities. The
framework is operationalised through
supporting policies and procedures that
integrate ESG considerations – including
the requirements of the Equator Principles
and the MAS Environmental Risk
Management Guidelines for Banks –
within our credit risk evaluation and
approval process. Transactions with high
ESG risks are subject to enhanced due
diligence and approval requirements,
including escalation of transactions with
significant reputational risks to the
Reputational Risk Review Group. We
review our framework regularly to reflect
the evolving nature of ESG risk management
practices.
Please refer to our Sustainability Report 2022 for more
information on Responsible Financing.
Credit Portfolio Management
Credit portfolio management focuses
on managing the collective or aggregate
risk of our credit portfolios, instead of
the credit risk of individual borrowers. We
have developed and implemented a range
of capabilities to better understand, measure
and monitor credit risk at the portfolio
level. These capabilities include:
• Portfolio Segmentation: This is the
process of grouping credit exposures
that are similar in nature. It involves
using attributes that represent
common business drivers, such as
location, industry and product type,
as well as common risk drivers such as
exposure to material downside risks
like a property bubble.
OCBC Annual Report 2022
Risk Management 75
Key Components of Internal Ratings Based (IRB) Models
IRB Models and Portfolios PD LGD and EAD
A-IRB approach covers major retail
portfolios such as residential
mortgages, credit cards, auto loans,
small business and margin lending
• Estimated based on the application
and behaviour scores of obligors.
• PD models are calibrated to reflect
the expected long-run average
one-year default rate over an
economic cycle.
• Product, collateral and geographical
characteristics are major factors.
• LGD models are calibrated to reflect
the economic loss under downturn
conditions.
• EAD models are calibrated to reflect
the default-weighted average and
economic downturn conditions.
F-IRB (Non-Supervisory Slotting)
approach covers major wholesale
portfolios such as sovereigns, banks,
non-bank financial institutions,
corporate real estate (including
income producing real estate) and
general corporates
• PD models are statistical based or
expert judgement models that use
both quantitative and qualitative
factors to assess an obligor’s
repayment capacity and calibrated
to reflect the expected long-run
average one-year default rate over
an economic cycle.
• Expert judgement models based on
inputs from internal credit experts
are typically used for portfolios with
low default rates.
• Estimated based on rules prescribed
in MAS Notice 637.
F-IRB (Supervisory Slotting) approach
covers other specialised lending
portfolios such as project finance,
object finance and commodities
finance
• Obligors are mapped to the five
supervisory slotting categories
prescribed in MAS Notice 637 based
on regulatory loan classifications.
• Estimated based on rules prescribed
in MAS Notice 637.
Internal credit rating models and their
parameters – probability of default
(PD), loss given default (LGD) and
exposure at default (EAD) – are used in
limit setting, credit approval, portfolio
monitoring and reporting, remedial
management, stress testing and the
internal assessment of capital
adequacy and portfolio allowances.
Our Model Risk Management Framework
governs the development, validation,
application and maintenance of rating
models. Models are developed with the
active participation of credit experts
from risk taking and risk control units.
They are subject to independent
validation before implementation
and annually after that to ensure that
performance standards, which take
into consideration regulatory
requirements and industry best
practices, are continually met. In
addition, Group Audit reviews the
robustness of the rating process and
the effectiveness of the independent
validation process annually. Approval
for the adoption and continued use of
material models rests with the BRMC.
In addition, models that are used in the
regulatory capital assessment must be
approved by the regulators.
While our internal risk grades are not
explicitly mapped to external credit
ratings, they may correlate with
external credit ratings in terms of the
PD ranges because the factors used
to rate obligors are similar. As such,
an obligor rated poorly by an external
credit rating agency is likely to have a
weak internal risk rating as well.
The table below describes the approach
used to estimate the key parameters
for Advanced Internal Ratings-Based
(A-IRB) and Foundation Internal
Ratings-Based (F-IRB) credit risk
models used to calculate the CRWA.
Table 2: Internal Rating Models
76
Credit Risk Mitigation
We use a range of credit risk mitigation
tools such as requiring collateral, buying
credit protection and establishing netting
arrangements to reduce credit risk exposures.
However, risk mitigation is not a substitute
for a proper assessment of the obligor’s
ability to repay, which should remain the
primary repayment source.
Our credit policies set out the key
considerations for eligible credit risk
mitigants. These criteria include legal
certainty and enforceability, correlation,
liquidity, marketability, counterparty risk
of the credit protection provider and
collateral-specific minimum operational
requirements. Eligible physical and
financial collateral include cash, real
estate, marketable securities, standby
letters of credit and credit insurance.
We apply appropriate haircuts to the
market value of the collateral to reflect its
underlying nature, quality, liquidity and
volatility and independently value the
collateral on a regular basis. We monitor
our collateral holdings to ensure
diversification across asset classes and
markets. Guarantees from individuals,
corporates and institutions are accepted
as a form of support. Where guarantees
are recognised as credit risk mitigants via
the PD substitution approach, eligibility
criteria and guidelines are in place.
Netting, collateral arrangements, early
termination options and central clearing
mechanisms are common risk mitigation
tools for managing counterparty credit
risk. Netting agreements, in approved
netting jurisdictions, allow us to reduce
credit risk exposure by offsetting what we
owe a counterparty against what is due
from that counterparty in the event of a
default. Collateral arrangements are
typically covered under market standard
documentation such as the International
Swaps and Derivatives Association (ISDA)
and Credit Support Annexes (CSA) or
Global Master Repurchase Agreements
(GMRA). Such arrangements will require
additional collateral to be posted if the
mark-to-market exposures exceed the
agreed threshold amount. We apply a
haircut to the value of the eligible
collateral to cover potential adverse
market volatility; the agreed threshold
amount may be subject to regulatory
margin requirements where applicable.
ISDA agreements may also contain rating
triggers to allow for termination of
transactions or require posting of
additional collateral in the event of a
rating downgrade. Given our current
investment grade rating, there would
be a minimal increase in collateral to
be posted if there is a one-notch rating
downgrade. Where available, we also
clear Over-the-Counter (OTC) derivatives
transactions through approved central
clearing counterparties: The counterparty’s
credit risk is thereby replaced by that of a
highly regulated and relatively better
credit rated central clearing counterparty.
Remedial Management
Processes are in place to foster early
identification of vulnerable borrowers.
The quality of our credit portfolios is
proactively monitored and discussed at
various risk forums. Action plans to
remediate deteriorating trends are
worked out and reviewed at such forums.
Relief programs in Singapore and
Malaysia have largely ended and portfolio
performance has mostly normalised,
with customers resuming their regular
repayments. In other markets such as
Hong Kong and Indonesia, we will
continue to monitor and engage the
borrowers to ensure a smooth transition
after the reliefs expire.
Our categories for credit exposures are
“Pass”, “Special Mention” or “NonPerforming Asset” (NPA). NPAs are
further categorised into “Substandard”,
“Doubtful” or “Loss” in accordance with
MAS Notice 612 on Credit Files, Grading
and Provisioning (MAS Notice 612). The
categorisation of credit exposures is based
on our assessment of borrowers’ ability
to meet their financial obligations from
normal sources of income and their
creditworthiness in the long term. We
categorise retail borrowers into the
respective MAS loan grades at the facility
level, in line with MAS Notice 612. An NPA
may be upgraded to performing status
when there is an established trend of credit
improvement, supported by an assessment
of the borrower’s repayment capability,
cash flows and financial position.
We classify our credit exposures as
restructured assets when we grant
non-commercial concessions to borrowers
who are unable to meet their original
repayment obligations. We further
classify a restructured credit exposure
into the appropriate non-performing
grade based on our assessment of the
borrower’s financial condition and ability
to repay under the restructured terms.
Such credit exposure must comply fully
with the restructured terms for a
reasonable period before it can be
restored to performing status in
accordance with MAS Notice 612.
Dedicated remedial management units
manage the restructuring, work-out and
recovery of NPAs for wholesale portfolios.
The objective is to rehabilitate NPAs where
possible or maximise recoveries for NPAs
that are on an exit strategy. For retail
portfolios, we develop appropriate
risk-based and time-based collections
strategies to maximise recoveries while
trying to minimise any non-financial
impact to our customers. We use data
such as delinquency buckets and adverse
status tags for delinquent consumer
loans to constantly analyse, fine-tune
and prioritise our collection efforts.
OCBC Annual Report 2022
Risk Management 77
Market Risk Management
Market risks arise primarily from our
trading, client servicing and balance
sheet management activities.
Market Risk Management Approach
Our market risk management framework
covers the identification, assessment,
measurement, monitoring and control
of risks. Group-level market risk policies
and procedures have been established to
provide common guidelines and standards
for managing market risks. We regularly
review our market risk management strategy
and limits – established within our risk
appetite and in line with our business
strategies – taking into account prevailing
macroeconomic and market conditions.
Market Risk Identification
Our internal New Product Approval Process
ensures that market risk is properly
identified and quantified, allowing us
to manage and mitigate such risks.
Market Risk Measurements
Value-At-Risk
Value-at-risk (VaR) is a key metric used to
quantify market risk exposures arising
from our trading activities. VaR is
measured and monitored by individual
market risk components, namely interest
rate risk, foreign exchange risk, equity risk
and credit spread risk, as well as at the
consolidated level. Our VaR model is based
on the historical simulation approach,
calibrated at the 99% confidence level
and a one-day holding period. A 99%
confidence level means that, statistically,
losses on a single trading day may exceed
VaR on average, once every 100 days.
Table 3 provides a summary of the
Group’s trading VaR profile by risk
types as at 31 December 2022 and
31 December 2021.
Other Risk Measures
As our main market risk arises from
interest rate movements, Present Value
of a Basis Point (PV01) – which measures
the change in value of interest ratesensitive exposures resulting from a one
basis point increase across the entire
yield curve – is an important measure
that is monitored on a daily basis.
Table 3: VaR by Risk Type – Trading Portfolio
2022 2021
SGD Million End of the period Average Minimum Maximum End of the period Average Minimum Maximum
Interest Rate VaR 4.89 5.25 1.43 7.96 4.11 4.38 2.15 12.30
Foreign Exchange VaR 3.62 1.71 0.40 6.76 0.63 1.74 0.59 5.75
Equity VaR 0.97 1.99 0.61 4.91 1.21 2.05 0.55 6.36
Credit Spread VaR 5.76 3.62 1.91 6.78 2.01 2.67 1.42 7.02
Diversification Effect (1) (6.92) (5.82) NM (2) NM (2) (4.93) (5.53) NM (2) NM (2)
Aggregate VaR 8.32 6.76 2.84 11.07 3.03 5.32 2.49 18.14
(1) Diversification effect is computed as the difference between Aggregate VaR and the sum of asset class VaRs.
(2) Not meaningful as the minimum and maximum VaRs may have occurred on different days for different asset classes.
Credit Loss Allowances
We maintain sufficient allowances to absorb credit losses inherent in our loan portfolios. Allowance for Expected Credit Losses (ECL)
is recognised for credit-impaired and non-credit-impaired exposures in accordance with Singapore Financial Reporting Standard
(International) 9: Financial Instruments (SFRS(I) 9) and MAS Notice 612 through a forward-looking ECL model.
We assess our ECL allowances on a forward-looking basis and based on the three stages of credit risk below.
Please refer to Note 2.12 in the Group’s Financial Statements for more information on impairment allowances.
Stages of Credit Risk and Expected Credit Losses
Non-Credit-Impaired Credit-Impaired
Stage 2
Performing exposures with
significant increase in credit risk
since initial recognition
Lifetime ECL
Stage 3
Non-performing exposures
Lifetime ECL
Stage 1
Performing exposures with no
significant increase in credit risk
since initial recognition
12-month ECL
78
Interbank Offered Rates (IBOR)
Transition
The London Interbank Offered Rate (LIBOR),
a key benchmark used in international
financial markets, is being phased out
and replaced by Risk Free Rates (RFRs).
On 5 March 2021, the UK Financial
Conduct Authority (FCA) confirmed a
two-phase discontinuation approach
for LIBOR. All British pound, Euro, Swiss
franc and Japanese yen LIBORs, as well
as the 1-week and 2-month US dollar
LIBOR; have been discontinued since
31 December 2021. All remaining US
dollar LIBORs will be discontinued after
30 June 2023.
The expected discontinuation of LIBOR
directly impacts the viability of the
Singapore Dollar Swap Offer Rate (SOR),
which relies on US dollar LIBOR in its
computation. Like LIBOR, the Singapore
Interbank Offered Rate (SIBOR), a key
benchmark widely used in retail loans, is
subject to expert judgement due to a lack
of underlying transactions. The Singapore
Overnight Rate Average (SORA) has been
identified as the alternative benchmark
to SOR and SIBOR. MAS has established
an industry-led Steering Committee
for SOR & SIBOR Transition to SORA
(SC-STS), to oversee the coordination and
implementation of the transition efforts.
Other than VaR and PV01, we use risk
metrics such as notional positions, Profit
& Loss (P&L) for One Basis Point Move in
Credit Spreads (CS01) and other risk
variables for specific exposure types.
Stress Testing and Scenario Analysis
We perform stress testing and scenario
analyses to quantify and assess potential
losses arising from low-probability but
plausible extreme market conditions. We
regularly review and fine-tune the stress
scenarios to ensure that they remain
relevant to our trading activities and risk
profile, as well as prevailing and forecasted
economic conditions. These analyses
determine if potential losses from such
extreme market conditions are within
our risk tolerance. In addition to regular
stress scenarios, we also use ad hoc
event-specific stress scenarios to assess
the potential impact of specific market
conditions on our market risk exposures.
Risk Monitoring and Control
Limits
Trading units may only undertake authorised
trading activities for approved products.
All trading risk positions are monitored
on a daily basis against approved and
allocated limits. Trading activities are
conducted within approved mandates
and dynamically hedged to remain within
limits. Hedge effectiveness is enforced
through independent limit monitoring
to ensure compliance with market risk
limits. Limits are approved to reflect
available and anticipated trading
opportunities, with clearly defined
exception escalation procedures.
Exceptions, including temporary
breaches, are promptly reported and
escalated to senior management for
resolution. We also manage market risk
exposure holistically by using multiple
risk limits (VaR and risk sensitivities),
P&L stop loss and other measures.
Model Validation
Model validation is an integral part of our
risk control process. Financial models are used
to price financial instruments and calculate
VaR. We ensure that the models used are
fit for their intended purposes through
periodic independent validation and
reviews. To enhance the integrity of the
trading P&L and risk measures generated,
we source market rates independently for
risk measurement and valuation.
Back-testing
To ensure the continued integrity of our
VaR models, we regularly back-test the
VaR estimates against actual daily trading
P&Ls and hypothetical P&Ls to confirm
that the models do not underestimate
our market risk exposures. The charts
below illustrate the Frequency Distribution
of Group Trading Book’s Daily Total VaR
and P&L.
Frequency Distribution of Group Trading Book Daily Total VaR
(One Day Holding Period) for FY 2022
Number of Trading Days
Frequency Distribution of Group Trading Daily P&L
for FY 2022
SGD Million
0 – 6 6 – 12 12 – 18 18 – 24
180
150
120
90
60
30
0
Number of Trading Days
SGD Million
(28) – (24) (24) – (20) (20) – (16) (16) – (12) (12) – (8) (8) – (4) (4) – (0) 0 – 4 4 – 8 8 – 12 12 – 16
150
125
100
75
50
25
0
OCBC Annual Report 2022
Risk Management 79
To ensure a smooth transition from
LIBOR to RFRs and SOR and SIBOR to
SORA, we have established an internal
Steering Committee to coordinate efforts
across various business, control and
support functions. Clear timelines and
deliverables have been established to
keep pace with industry transition
roadmaps and regulatory timelines.
We have implemented the necessary
system upgrades and modifications to
ensure the readiness of our infrastructure
and processes. We have also assessed the
adequacy of provisions relating to the
permanent discontinuation of benchmarks
in loan documentation, derivatives
contracts, debt issuances and other
relevant contracts. With respect to the
transition of SOR contracts, all retail loans
referencing SOR have transitioned to
SORA, fixed rates or other benchmarks,
with the last transition completed on
18 Oct 2022 in line with the industry.
As for corporate loans and derivatives
referencing SOR, transition is in progress
and expected to be completed by the
first half of 2023 in line with industry
guidelines. Appropriate adjustments will
be made as recommended by the industry
to reflect the differences between SOR
and SORA. For SIBOR, the transition will
be completed in 2024 in line with the
roadmap established by the industry. No
significant impact is expected from the
transition of SOR and SIBOR to SORA.
We will continue to engage our customers
to help them understand how their
existing contracts may be affected by
SOR and USD LIBOR cessation, taking
reasonable efforts to remediate their
legacy SOR/USD LIBOR loans.
Asset Liability Management
Asset liability management is the strategic
management of our balance sheet structure
and liquidity requirements. It covers
liquidity sourcing and diversification, as
well as interest rate and structural foreign
exchange management.
Asset Liability Management Approach
Our asset liability management framework
focuses on managing the exposures arising
from the balance sheet. We monitor our
liquidity risk, interest rate risk in the
banking book (IRRBB) and structural
foreign exchange risk profiles against
approved risk limits under both businessas-usual and stressed scenarios. These
are based on the standards established in
our framework, policies and procedures,
which are reviewed regularly to ensure
that they remain relevant in the context
of prevailing market practices and
regulatory guidelines.
Liquidity Risk
The objective of liquidity risk management
is to ensure that we have sufficient funds
to meet the required contractual and
regulatory financial obligations and to
undertake new transactions.
Liquidity monitoring is performed on daily
basis within a framework for projecting
cash flows on both contractual and
behavioural bases. Indicators such as
liquidity and deposit concentration ratios
are used to establish the optimal funding
mix and asset composition. Funding
strategies are established to provide
effective diversification and stability in
funding sources across tenors, products
and geographies. Simulations of liquidity
exposures under stressed market scenarios
are performed and the results are used to
adjust liquidity risk management strategies,
policies and positions, as well as to develop
contingency funding plans. We maintain
liquid assets in excess of regulatory
requirements to strengthen our ability to
meet liquidity needs during a crisis. These
liquid assets comprise central bank
reserves and marketable securities.
Interest Rate Risk in the Banking Book
The primary goal of the management of
IRRBB is to ensure that interest rate risk
exposures are consistent with our risk
appetite and maintained within the
defined risk tolerances. The material
sources of IRRBB are repricing risk, yield
curve risk, basis risk and optionality risk.
We use a range of techniques to measure
IRRBB from both the earnings and economic
value perspectives on a monthly basis.
One measure involves the assessment of
the impact of various interest rate scenarios
on our net interest income and the banking
book’s Economic Value of Equity (EVE).
Other measures include interest rate
sensitivity measures such as PV01 and
repricing gap profile analysis. We also
use behavioural models to assess interest
rate risks in relation to loan prepayment,
time deposit early redemption and the
profile of non-maturity deposits. These
measurements facilitate the calibration of
appropriate IRRBB management, hedging
strategies, policies and positions.
Structural Foreign Exchange Risk
Structural foreign exchange exposure
arises primarily from our net investment in
overseas branches, subsidiaries and other
strategic and property assets. We manage
structural foreign exchange risk through
hedging instruments, which include the
use of derivatives and matched funding for
foreign currency investments.
Other Risks
Non-structural foreign exchange exposures
in our banking book are largely transferred
to our trading book for foreign exchange
risk management. In addition, we are
exposed to credit spread risk through
the holding of high-quality liquid assets
(HQLA) in our banking book to comply
with the Liquidity Coverage Ratio (LCR).
While HQLA have low default risk, their
value could be sensitive to changes in
credit spreads. This risk is monitored
against approved CS01 limits on a daily
basis and subject to historical and
anticipatory stress testing. The other
risk residing in our banking book is
non-strategic equity price risk arising
from our equity investments in listed
and non-listed companies. Non-strategic
equity investments form an insignificant
portion of our overall securities portfolio,
excluding securities held by GEH.
80
Information Security and
Digital Risk Management
Information security and digital risk is
a business risk that comprises the risk
domains of information, cyber and
technology risks. Effective management
of information security and digital risk is
critical to minimising any impact on our
customers and any financial, operational,
reputational, legal and/or regulatory
impact on the Group.
Information Security and Digital
Risk Management Approach
We adopt a whole-of-organisational
approach to managing information
security and digital risk so as to achieve
resilience for the Group. The key components
of our risk management approach are:
Framework and Policies
A framework supported by robust
policies establishes the governance and
oversight structure and defines the roles
and responsibilities across the three
independent lines of defence. It also
sets out the risk management processes
to monitor, assess and respond to
information security and digital risk,
including communication protocols.
We regularly update our framework
and policies to align with applicable
regulatory requirements such as 2021
MAS Technology Risk Management
Guidelines, and industry leading practices
such as ISO/IEC Information Security,
Cybersecurity and Privacy Protection.
Multi-Layered Controls
We have preventive, detective and
response capabilities in place to sustain
and enhance existing defences against
information security and digital risk. A
24-by-7 Cybersecurity Operations Centre
and a Technology Command Centre
monitor our networks and systems for
cyber threats and any disruption of
essential financial services. Existing
measures are reviewed and tested
regularly with new capabilities added
where necessary to address evolving
threats. Various controls have been
implemented to safeguard against data
loss and ensure the confidentiality,
integrity and availability of our
information assets.
Risk Awareness, Training and
Testing Programmes
Our mandatory cyber and information
security awareness e-learning, regular
risk awareness broadcasts and social
engineering testing programmes serve
to raise the knowledge and vigilance of
our staff as a strong defence against
cyber threats and information security
breaches. In addition to our Cybersecurity
Certification Pathway, we have also rolled
out an extensive group-wide Cyber Smart
Programme for all staff, to improve their
vigilance and relevant competencies. We
educate our customers through security
advisories and enhance cyber risk
awareness of selected outsourced
services providers by familiarising them
with the control expectations of the Group.
Incident Response and Crisis
Management
There are robust incident response
and crisis management processes to
minimise the disruption of essential
financial services during times of crisis.
We conduct simulation exercises
regularly to improve the readiness of
our cybersecurity incident response
team to handle cybersecurity events.
Crisis management exercises based
on plausible information security and
digital risk-related scenarios are also
conducted regularly to enhance the
preparedness of senior management.
Additionally, to better manage any
potential downstream implications for
the Bank, we have formalised a process
to facilitate prompt triage and responses
in the event that relevant third parties
suffer cyber-attack or data loss incidents.
Cyber and Network Security Insurance
We have relevant cyber and network
security insurance to cover damages
arising from specific cyber-attacks
and technology disruption scenarios
such as cyber extortion and business
interruption losses due to a security
breach or system failure.
Separately, we continue to actively
engage – and share information security
and digital risk-related updates with –
regulatory agencies in Singapore, Malaysia
and Hong Kong. We do so with the ABS
Standing Committee on Cyber Security
and the Financial Services Information
Sharing and Analysis Centre as well.
Operational Risk
Management
Operational risk is inherent in all banking
products, activities, processes and systems.
The effective management of operational
risk is a fundamental element of our risk
management programme that serves to
enhance our corporate culture.
Operational Risk
Management Approach
We manage both expected and unexpected
losses, including those caused by catastrophic
events, through a robust groupwide
framework that is aligned with regulatory
requirements and industry standards. The
framework is supported by a comprehensive
suite of policies and procedures to identify,
assess, measure, monitor and control the
operational risks arising from the Group’s
business activities and operations. The
roles across the three lines of defence
are clearly defined in these policies and
procedures to ensure clear accountability
and responsibility in the fulfilling of control
expectations. A comprehensive insurance
programme is also part of our risk mitigation
strategy.
The Board and senior management
exercise robust oversight of operational
risk management and set the tone from
the top in promoting a strong corporate
culture. Our operational risk profile,
comprising key risk indicators, operational
risk events, material issues and trends, is
regularly reported to senior management,
the BRMC and Board via risk committees
such as the Operational Risk Management
Committee.
OCBC Annual Report 2022
Risk Management 81
Key Risks Additional Risk Management Measures
Fraud Risk • Whistleblowing channels and awareness programmes for both employees and customers to build
awareness of fraud risks and report suspicious events.
• Robust anti-fraud measures utilising transaction monitoring to detect and alert customers to
suspicious account activities, with an additional capability to prevent the completion of such
transactions.
• A comprehensive governance and anti-fraud response model to expedite incident handling through
the Dynamic Response Committee (DRC) and Anti-Fraud Standing Committee (AFSC).
• Continuous strengthening of surveillance systems in response to changes in fraud/scam typologies
and the regulatory landscape.
• Independent review by Group Audit of all fraud and whistleblowing cases.
Money Laundering,
Financing of
Terrorism and
Sanctions Risk
• Risk assessment methodologies that leverage existing monitoring and screening platforms to assess
customer, product and geographical risks.
• Risk surveillance capabilities that leverage artificial intelligence and data analytics for the dynamic
monitoring and detection of emerging financial crime trends and typologies.
Third-Party Risk • Designated functional specialists across various functions within the Bank who provide guidance in
their respective areas of expertise throughout the third-party risk management process.
• Active engagement with the ABS Outsourcing Advisory Committee as well as continual tracking and
assessment of industry developments.
• Regular outreach to our service providers to raise their awareness of operational risks.
Physical and People
Security Risk
• Active monitoring of external events that may pose a threat to OCBC locations, people and assets.
• Advisories and response procedures to better prepare the Bank and our employees to handle risk
events, including risks posed to employees undertaking business travel.
• Regular physical security and country risk assessments to identify potential physical security risks,
associated threats and vulnerabilities.
Conduct Risk • New initiatives to promote good culture and conduct, effective risk governance and employee
accountability. These include peer recognition programmes, the Employee Pulse Survey, the Code of
Conduct Annual Assessment and enhancements to the Group Disciplinary Framework.
• Active monitoring of culture and conduct-related matters such as customer complaint trends, staff
attrition rates, regulatory breaches and whistleblowing investigations.
• An Employee Conduct Triggers (ECT) Programme featuring clear and measurable conduct indicators.
The Board also receives – through the
Group CEO – an annual assurance report
on the adequacy and effectiveness of our
internal controls and risk management
systems. The report highlights any key
control deficiencies and accompanying
remedial plans.
Various forums and working groups
such as the Operational Risk Partners
Forum and Emerging Operational Risk
Forum are established to foster
continuous engagement with internal
and external stakeholders, facilitating
awareness and understanding of
operational risk. Targeted and specialised
training, including certified courses
recognised by the Institute of Banking
and Finance (IBF) and International
Compliance Training Academy (ICA),
are available to raise staff competency.
Apart from the risk management
approach mentioned above, we have
put in place additional risk management
measures to address the following key
subject-specific risks:
82
Key Risks Additional Risk Management Measures
Business Continuity
Risk
• Robust recovery strategies and business recovery plans that are reviewed and tested annually.
• Annual attestation to senior management, the BRMC and Board on the maturity of the business
continuity programme, key initiatives and alignment with MAS guidelines.
Unauthorised
Trading Risk
• Trade surveillance and investigation by an independent control assurance function to detect and
address potential control issues so as to prevent rogue or unauthorised trading.
Regulatory Risk • A Regulatory Compliance Matrix that provides a central platform to map applicable compliance
laws, rules and standards to the relevant units in OCBC Group.
• A risk assessment methodology to identify business activities with a higher level of compliance risk.
Compliance testing and reviews are performed to determine if the established processes and
procedures are effective in managing the risk.
• Designated Divisional Compliance Officers at business units to provide insights and perspective on
risk mitigation and compliance within their functions.
Legal Risk • Providing legal advisory services that balance risk and opportunities for businesses to grow sustainably.
• Managing litigation or dispute resolution processes as well as the making of trademark filings.
• Advisory on data protection and compliance with applicable data privacy regulation.
Fiduciary Risk • Standards relating to fiduciary or fiduciary-like business activities such as Fair Dealing, Insider
Trading and Chinese Wall and Code of Conduct to guide decisions and behaviour throughout
the organisation.
Reputational Risk • Dedicated committees such as the Fair Dealing Committee and Reputational Risk Review Group,
helmed by senior management, provide oversight and focus on areas such as fair dealing and
responsible financing to manage our responsibilities towards stakeholders and protect our
reputation.
• Guidelines to advise staff on how to use social media responsibly and appropriately.
For more information on how the Bank is managing the Fraud, Money Laundering and Financing of Terrorism Risks, please refer to our Sustainability Report 2022.
OCBC Annual Report 2022
Risk Management 83
investments in unconsolidated major
stake companies that are financial
institutions in accordance with MAS
Notice 637’s definition of an insurance
subsidiary. The regulatory adjustments
applied to these investments are in
accordance with MAS Notice 637
paragraphs 6.1.3(p), 6.2.3(e) and 6.3.3(e).
The Stand-alone Pillar 3 Disclosures
Report is located in the Capital and
Regulatory section of OCBC’s website
under Fourth Quarter and Full Year 2022
(https://www.ocbc.com/group/investors/
investor-information.page#Capital-andregulatory-disclosures).
(1) Valuation Governance Framework does not apply to Great Eastern Holdings Limited and other non-bank entities with the exception of OCBC Securities Private Limited and PT OCBC Securitas.
Pillar 3 Disclosures
(OCBC Group – As at 31 December 2022)
Introduction
In accordance with Pillar 3 disclosure
requirements under Monetary Authority
of Singapore (MAS) Notice 637 on Risk
Based Capital Adequacy Requirements,
Notice 651 on Liquidity Coverage Ratio
Disclosure and Notice 653 on Net
Stable Funding Ratio Disclosure for
Banks incorporated in Singapore,
relevant quantitative and qualitative
disclosures have been included in the
Stand-alone Pillar 3 Disclosures Report
and this Annual Report under the Risk
Management, Corporate Governance,
Capital Management Chapters and the
Notes to Financial Statements. The
Pillar 3 disclosures are to enable market
participants to better understand and
compare capital adequacy and risk
profiles across banks via improved
consistency in public disclosures.
Scope of Consolidation
The consolidation basis used for
regulatory capital computation is similar
to that used for financial reporting
except for Great Eastern Holdings
Limited and its insurance subsidiaries,
which are excluded from regulatory
consolidation and are treated as
Overview Of Disclosures
To read the quantitative and qualitative Pillar 3 disclosures, please refer to this table:
Disclosure Requirement Location of Disclosure
Overview of Risk Management and RWA
Key Metrics Pillar 3 Disclosures Report Section 4
Risk Management Approach OCBC Annual Report 2022
– Risk Management Chapter
– Corporate Governance Chapter
– Capital Management Chapter
Overview of Risk Weighted Assets (RWA) Pillar 3 Disclosures Report Section 11
Linkages between Financial Statements and Regulatory Exposures
Differences between Accounting and Regulatory Scopes of
Consolidation and Mapping of Financial Statement
Categories with Regulatory Risk Categories
Pillar 3 Disclosures Report Section 7.1
Main Sources of Differences between Regulatory Exposure
Amounts and Carrying Amounts in Financial Statements
Pillar 3 Disclosures Report Section 7.2
Qualitative Disclosure of Differences between Carrying
Amounts in Financial Statements and Regulatory
Exposure Amounts
Pillar 3 Disclosures Report Sections 3 and 7
OCBC Annual Report 2022
– Notes to Financial Statements, Fair Values of Financial
Instruments: Valuation Governance Framework (1) and
Fair Values
– Notes to Financial Statements, Summary of significant
accounting policies: Critical Accounting Estimates and
Judgements, Fair value estimation
Prudent Valuation Adjustments Pillar 3 Disclosures Report Section 7.3
84
Disclosure Requirement Location of Disclosure
Credit Risk
General Qualitative Disclosures about Credit Risk OCBC Annual Report 2022
– Risk Management Chapter, Credit Risk Management
Credit Quality of Assets Pillar 3 Disclosures Report Section 9.1
Changes in Stock of Defaulted Loans and Debt Securities Pillar 3 Disclosures Report Section 9.2
Additional Disclosures related to the Credit Quality of Assets Pillar 3 Disclosures Report Sections 9.3, 9.4 and 9.5
OCBC Annual Report 2022
– Risk Management Chapter, Credit Risk Management:
Remedial Management
– Notes to Financial Statements, Summary of significant
accounting policies: Impairment of Assets
– Notes to Financial Statements, Risk Management:
Credit Risk
Qualitative Disclosures related to CRM Techniques OCBC Annual Report 2022
– Risk Management Chapter, Credit Risk Management:
Credit Risk Mitigation
– Risk Management Chapter, Credit Risk Management:
Credit Portfolio Management
– Notes to Financial Statements, Risk Management:
Credit Risk, Collateral
– Notes to Financial Statements, Offsetting Financial
Assets and Financial Liabilities
Overview of Credit Risk Mitigation (CRM) Techniques Pillar 3 Disclosures Report Section 13.5
Qualitative Disclosures on the use of External Credit Ratings
under the Standardised Approach (SA) Credit Risk (CR)
Pillar 3 Disclosures Report Section 10
(SA)(CR) and (SA) Equity Exposures (EQ) – Credit Risk Exposure
and CRM Effects
Pillar 3 Disclosures Report Section 13.1
(SA)(CR) and (SA)(EQ) – Exposures by Asset Classes and
Risk Weights
Pillar 3 Disclosures Report Section 13.2
Qualitative Disclosures for Internal Ratings-Based Approach
(IRBA) Models
OCBC Annual Report 2022
– Risk Management Chapter, Credit Risk Management:
Internal Rating Models
– Risk Management Chapter, Credit Risk Management:
Key Components of Internal Ratings Based (IRB) Models
IRBA – Credit Risk Exposures by Portfolio and Probability of
Default (PD) Range
Pillar 3 Disclosures Report Sections 13.3 and 13.4
IRBA – Effect on RWA of Credit Derivatives used as CRM Pillar 3 Disclosures Report Section 13.6
IRBA – RWA Flow Statement for Credit Risk Exposures Pillar 3 Disclosures Report Section 12
IRBA – Backtesting of PD per Portfolio Pillar 3 Disclosures Report Section 14
IRBA – Specialised Lending and Equities under the
Simple Risk Weight Method
Pillar 3 Disclosures Report Section 15
OCBC Annual Report 2022
Pillar 3 Disclosures 85
Disclosure Requirement Location of Disclosure
Counterparty Credit Risk (CCR)
Qualitative Disclosures Related to Counterparty Credit Risk (CCR) OCBC Annual Report 2022
– Risk Management Chapter, Credit Risk Management:
Counterparty Credit Risk Management
– Risk Management Chapter, Credit Risk Management:
Credit Risk Mitigation
Analysis of CCR Exposure by Approach Pillar 3 Disclosures Report Section 16.1
Credit Valuation Adjustments (CVA) Risk Capital Requirements Pillar 3 Disclosures Report Section 16.2
Exposures to Central Counterparties Pillar 3 Disclosures Report Section 16.3
Standardised Approach – CCR Exposures by Portfolio and
Risk Weights
Pillar 3 Disclosures Report Section 16.4
IRBA – CCR Exposures by Portfolio and PD Range Pillar 3 Disclosures Report Sections 16.5 and 16.6
Composition of Collateral for CCR Exposure Pillar 3 Disclosures Report Section 16.7
Credit Derivative Exposures Pillar 3 Disclosures Report Section 16.8
RWA Flow Statements under the CCR Internal Models Method Pillar 3 Disclosures Report Section 2
Securitisation
Qualitative Disclosure Related to Securitisation Exposures Pillar 3 Disclosures Report Sections 10 and 17
Securitisation Exposures in the Banking and/or Trading Book
Securitisation Exposures in the Banking Book and Associated
Regulatory Capital Requirements – A Reporting Bank Acting as
Originator/ Sponsor/ Investor
Market Risk
Qualitative Disclosure Related to Market Risk Pillar 3 Disclosures Report Section 10
OCBC Annual Report 2022
– Risk Management Chapter, Market Risk Management
Qualitative Disclosures Related to Internal
Models Approach (IMA)
Pillar 3 Disclosures Report Section 18
Market Risk under Standardised Approach
RWA Flow Statements of Market Risk Exposures under IMA Pillar 3 Disclosures Report Section 2
IMA Values for Trading Portfolios Pillar 3 Disclosures Report Section 18
Comparison of VaR Estimates with Gains or Losses OCBC Annual Report 2022
– Risk Management Chapter, Market Risk Management:
Market Risk Measurements
– Risk Management Chapter, Market Risk Management:
Risk Monitoring and Control
86
Disclosure Requirement Location of Disclosure
Operational Risk
Operational Risk Pillar 3 Disclosures Report Section 10
OCBC Annual Report 2022
– Risk Management Section, Operational Risk Management
Interest Rate Risk in the Banking Book
Interest Rate Risk in the Banking Book Pillar 3 Disclosures Report Section 19
OCBC Annual Report 2022
– Risk Management Chapter, Asset Liability Management:
Interest Rate Risk in the Banking Book
– Notes to Financial Statements, Risk Management: Market
Risk and Asset Liability Management, Interest Rate Risk
Remuneration
Remuneration OCBC Annual Report 2022
– Corporate Governance Chapter related to Remuneration
Composition of Capital
Reconciliation of Regulatory Capital to Balance Sheet Pillar 3 Disclosures Report Section 6.1
Composition of Regulatory Capital Pillar 3 Disclosures Report Section 6.2
Main Features of Regulatory Capital Instruments Pillar 3 Disclosures Report Section 6.3
Leverage Ratio
Leverage Ratio Summary Comparison Table Pillar 3 Disclosures Report Section 8.1
Leverage Ratio Common Disclosure Table Pillar 3 Disclosures Report Section 8.2
Macroprudential Supervisory Measures
Disclosure of Global Systemically Important Bank
(G-SIB) Indicators
Pillar 3 Disclosures Report Section 5.1
Geographical Distribution of Credit Exposures Used in
the Countercyclical Capital Buffer
Pillar 3 Disclosures Report Section 5.2
Liquidity Coverage Ratio
Liquidity Coverage Ratio Pillar 3 Disclosures Report Section 20
Net Stable Funding Ratio
Net Stable Funding Ratio Pillar 3 Disclosures Report Section 21
Others
Attestation Statement Pillar 3 Disclosures Report Sections 1 and 2
Overview of Disclosure Policy Pillar 3 Disclosures Report Section 2
Pillar 3 Disclosures
OCBC Annual Report 2022
87
Financial Report
89 Management Discussion and Analysis
Financial Statements
103 Directors’ Statement
109 Independent Auditor’s Report
116 Income Statements
117 Statements of Comprehensive Income
118 Balance Sheets
119 Statement of Changes in Equity – Group
121 Statement of Changes in Equity – Bank
122 Consolidated Cash Flow Statement
123 Notes to the Financial Statements
Overview
2022
$ million
2021
$ million
+/(-)
%
Selected Income Statement Items
Net interest income 7,688 5,855 31
Non-interest income 3,987 4,741 (16)
Total income 11,675 10,596 10
Operating expenses (5,026) (4,764) 5
Operating profit before allowances and amortisation 6,649 5,832 14
Amortisation of intangible assets (104) (103) 1
Allowances for loans and other assets (584) (873) (33)
Operating profit after allowances and amortisation 5,961 4,856 23
Share of results of associates, net of tax 978 824 19
Profit before income tax 6,939 5,680 22
Net profit attributable to equity holders of the Bank 5,748 4,858 18
Cash basis net profit attributable to equity holders of the Bank (1) 5,852 4,961 18
Selected Balance Sheet Items
Ordinary equity 51,387 51,463 –
Equity attributable to equity holders of the Bank 53,087 52,663 1
Total assets 559,956 542,187 3
Assets excluding life insurance fund investment securities and other assets 461,961 442,091 4
Net loans to customers 291,467 286,281 2
Deposits of non-bank customers 350,081 342,395 2
Per Ordinary Share ($)
Basic earnings (2) 1.27 1.07
Diluted earnings (2) 1.27 1.07
Net asset value 11.43 11.46
Key Financial Ratios (%)
Return on equity (2)(3) 11.1 9.6
Return on assets (4) 1.25 1.13
Net interest margin 1.91 1.54
Non-interest income to total income 34.1 44.7
Cost-to-income 43.0 45.0
Loans-to-deposits 83.3 83.6
Non-performing loan ratio 1.2 1.5
Total capital adequacy ratio (CAR) (5) 17.7 17.6
Tier 1 CAR (5) 15.9 16.0
Common Equity Tier 1 CAR (5) 15.2 15.5
Leverage ratio (5)(6) 7.2 7.7
Singapore dollar liquidity coverage ratio (5)(7) 325 308
All-currency liquidity coverage ratio (5)(7) 152 151
Net stable funding ratio (5)(8) 117 121
(1) Excludes amortisation of intangible assets.
(2) Calculated based on net profit less distributions on other equity instruments paid and estimated to be due at the end of the financial year.
(3) Other equity instruments and non-controlling interests are not included in the computation for return on equity.
(4) Computation of return on assets excludes life insurance fund investment securities and other assets.
(5) Public disclosures required under MAS Notice 637, MAS Notice 651 and MAS Notice 653 can be found in the Capital and Regulatory Disclosures section of the Bank’s Investor Relations
website (https://www.ocbc.com/group/investors/investor-information#pillarthreedisclosures).
(6) The Group’s leverage ratio is computed based on MAS Notice 637.
(7) The Group’s liquidity coverage ratios (“LCR”) are computed based on MAS Notice 649 and reported based on the average LCR for the respective years.
(8) The Group’s net stable funding ratio is computed based on MAS Notice 652.
OCBC Annual Report 2022
89
Management Discussion and Analysis
Management Discussion and Analysis
Overview (continued)
The Group’s net profit for the financial year ended 31 December 2022 increased 18% to a record $5.75 billion, from $4.86 billion a year ago,
driven by strong growth in net interest income and lower allowances.
The strong performance reflected the strength and agility of OCBC’s well-diversified business franchise that was well-positioned to
capture opportunities in a rapidly changing operating environment. The Group’s record earnings were supported by strong growth in net
interest income which more than offset weaker non-interest income. Disciplined cost management drove cost-to-income ratio lower,
while allowances declined from improving credit conditions and robust portfolio quality. Wealth management fee income was softer as
macro headwinds and market volatilities lowered client investment activity, although net new money inflows were higher year-on-year.
Great Eastern Holdings’ (GEH) underlying insurance business remained strong. However, profit from insurance declined as a result of
unrealised valuation losses arising from unfavourable movement in the discount rates used to value longer-end duration insurance
contract liabilities in the fourth quarter. The Group continue to maintain sound capital, funding and liquidity positions to capture growth
opportunities while ensuring sufficient buffers for uncertainties. The 2022 total dividend was raised to 68 cents, supported by resilient
earnings and strong capital position.
Net interest income grew 31% to a record $7.69 billion, underpinned by a 37-basis point expansion in net interest margin and 6% growth
in average assets.
Non-interest income was $3.99 billion, down 16% from the previous year. Net fee income was $1.85 billion, 18% lower than a year ago.
The decline was largely from softer wealth management fees attributable to prevailing risk-off investment sentiments. This was partly
offset by an increase in fees from loan and trade-related activities.
Net trading income improved 9% to $834 million, compared to $763 million a year ago, from higher non-customer flow treasury income
partly driven by gains from hedging activities.
Net loss from the sale of investment securities of $206 million, compared to net gain of $92 million last year, was mainly attributable to
bond portfolio rebalancing and positioning amid changing market conditions.
GEH’s underlying insurance business remained resilient with a 7% growth in operating profit. GEH’s embedded value, a measure of the
long-term economic value of the existing business of a life insurance company was $17.9 billion as at 31 December 2022. Total weighted
new sales were $1.91 billion with new business embedded value (NBEV) 9% higher at $875 million and the NBEV margin increased to
45.8%. However, profit from insurance fell 11% to $1.19 billion from $1.33 billion in the previous year, largely from unrealised valuation
losses in the fourth quarter due to unfavourable movement in the discount rates used to value its longer-end duration insurance
contract liabilities.
The Group’s wealth management income, comprising consolidated income from insurance, private banking, premier private client,
premier banking, asset management and stockbroking was $3.89 billion, as compared to $4.01 billion last year, and contributed 33% to
the Group’s total income. As at 31 December 2022, Group wealth management assets under management was higher at $258 billion
compared to $257 billion a year ago, driven by continued growth in net new money inflows which offset negative market valuation.
Operating expenses grew 5% to $5.03 billion, led by higher staff and IT-related costs. The increases were largely attributable to annual
salary adjustments and headcount growth to strengthen the talent pool, coupled with the Group’s continued investments to enhance
technology capabilities in support of the strategic priorities to drive growth. Cost-to-income ratio improved to 43.0% from 45.0% in 2021.
Net allowances declined 33% to $584 million. A drop in allowances for impaired assets was partly offset by increased allowances for
non-impaired assets arising from macro-economic variables updates and additional overlays to buffer for uncertainties.
Share of results of associates rose 19% to $978 million from $824 million in the previous year.
Full year return on equity improved to 11.1% from 9.6% in the previous year. Earnings per share rose 18% to $1.27 from $1.07 in the
prior year.
90
Overview (continued)
Allowances and Asset Quality
As at 31 December 2022, total non-performing assets (NPA) were $3.49 billion, 20% lower than a year ago. NPAs declined from the previous
year as higher recoveries and upgrades largely from Malaysia and Indonesia following exits from relief programmes more than offset new
NPA formation during the year. New NPA formation more than halved from a year ago, driven by overall improvement in the credit
environment and asset quality. The NPL ratio was stable at 1.2%, while the allowance coverage against total NPAs was raised to 114%.
For 2022, total allowances were lower at $584 million and represented 16-basis points of loans, as compared to $873 million and 29-basis
points in the preceding year. The decline was mainly due to lower allowances for impaired assets, partly offset by increased allowances for
non-impaired assets arising from macro-economic variables updates and additional overlays to buffer for uncertainties.
Funding, Liquidity and Capital Position
As at 31 December 2022, customer loans were $295 billion. On a constant currency basis, loans grew 4.5% from a year ago. In 2022, loan
growth was largely driven by lending in Singapore, Australia, the United States and United Kingdom. Sustainable financing commitments
rose 30% from a year ago to $44 billion, well on track to achieve the Group’s target of $50 billion by 2025.
Customer deposits rose 2% year-on-year to $350 billion, led by a rise in fixed deposits. Loans-to-deposits ratio was 83.3% as compared to
83.6% in the previous year.
As at 31 December 2022, Group CET1 CAR was 15.2%, while the leverage ratio was 7.2%.
Dividend
The Board has proposed a final dividend of 40 cents per share, an increase of 43% or 12 cents from a year ago. This brings 2022 total
dividend to 68 cents, up 28% or 15 cents from the previous year. This represents a payout ratio of 53% against net profit, which exceeds
49% a year ago. The Scrip Dividend Scheme is not applicable.
The increase is supported by OCBC’s resilient earnings growth and strong capital position. Going forward, OCBC targets to deliver a
dividend payout ratio of 50%, barring any unforeseen circumstances.
OCBC Annual Report 2022
Management Discussion and Analysis 91
Net Interest Income
Average Balance Sheet
2022 2021
Average
Balance
$ million
Interest
$ million
Average
Rate
%
Average
Balance
$ million
Interest
$ million
Average
Rate
%
Interest earning assets
Loans to customers 289,708 8,852 3.06 272,302 5,786 2.12
Placements with and loans to banks 49,804 1,314 2.64 44,428 448 1.01
Other interest earning assets 62,100 1,424 2.29 62,959 1,191 1.89
401,612 11,590 2.89 379,689 7,425 1.96
Interest bearing liabilities
Deposits of non-bank customers 347,287 3,223 0.93 323,120 1,300 0.40
Deposits and balances of banks 12,814 195 1.52 10,171 68 0.67
Other borrowings 19,590 484 2.47 21,941 202 0.92
379,691 3,902 1.03 355,232 1,570 0.44
Net interest income/margin (1) 7,688 1.91 5,855 1.54
Volume and Rate Analysis
Increase/(decrease) for 2022 over 2021 due to change in:
Volume
$ million
Rate
$ million
Net change
$ million
Interest income
Loans to customers 370 2,696 3,066
Placements with and loans to banks 54 812 866
Other interest earning assets (16) 249 233
408 3,757 4,165
Interest expense
Deposits of non-bank customers 97 1,826 1,923
Deposits and balances of banks 18 109 127
Other borrowings (22) 304 282
93 2,239 2,332
Impact on net interest income 315 1,518 1,833
Due to change in number of days –
Net interest income 1,833
(1) Net interest margin is net interest income as a percentage of interest earning assets.
92
Non-Interest Income
2022
$ million
2021
$ million
+/(-)
%
Gross fee and commission income
Brokerage 103 141 (27)
Credit card 337 287 17
Fund management 119 133 (11)
Guarantees 14 14 1
Investment banking 100 106 (5)
Loan-related 180 179 –
Service charges 87 79 10
Trade-related and remittances 298 286 4
Wealth management 919 1,310 (30)
Others 50 46 9
2,207 2,581 (15)
Fee and commission expense (356) (336) 6
Fees and commissions (net) 1,851 2,245 (18)
Dividends 125 113 11
Net trading income 834 763 9
Income from life and general insurance
Profit from life insurance 971 1,137 (15)
Premium income from general insurance 218 197 11
Sub-total 1,189 1,334 (11)
Other income
Disposal of investment securities (206) 92 nm
Disposal of plant and equipment (1) (1) 48
Disposal of properties 100 108 (8)
Rental and property-related income 78 66 18
Others 17 21 (19)
Sub-total (12) 286 nm
Total non-interest income 3,987 4,741 (16)
(1) “nm” denotes not meaningful.
OCBC Annual Report 2022
Management Discussion and Analysis 93
Operating Expenses
2022
$ million
2021
$ million
+/(-)
%
Staff costs 3,233 3,028 7
Property and equipment
Depreciation 426 412 3
Maintenance 156 145 8
Rental expenses 7 7 (6)
Others 330 304 9
919 868 6
Other operating expenses 874 868 1
Total operating expenses 5,026 4,764 5
Group staff strength
Period end 31,604 30,809 3
Average 31,269 30,610 2
Allowances for Loans and Other Assets
2022
$ million
2021
$ million
+/(-)
%
Allowances/(write-back):
Impaired loans
Singapore (30) 42 nm
Malaysia (23) 262 nm
Indonesia 2 213 (99)
Greater China 107 218 (51)
Others 80 117 (31)
136 852 (84)
Impaired other assets 80 3 nm
Non-impaired loans 369 15 nm
Non-impaired other assets (1) 3 nm
Allowances for loans and other assets 584 873 (33)
(1) “nm” denotes not meaningful.
94
Loans to Customers
2022
$ million
2021
$ million
+/(-)
%
By Industry
Agriculture, mining and quarrying 8,193 8,094 1
Manufacturing 15,052 15,642 (4)
Building and construction 89,299 81,375 10
Housing loans 62,015 61,733 –
General commerce 29,209 30,159 (3)
Transport, storage and communication 13,017 13,423 (3)
Financial institutions, investment and holding companies 24,387 25,365 (4)
Professionals and individuals 34,752 36,854 (6)
Others 19,056 17,071 12
294,980 289,716 2
By Currency
Singapore Dollar 107,270 102,131 5
United States Dollar 70,884 73,022 (3)
Malaysian Ringgit 18,413 20,189 (9)
Indonesian Rupiah 8,732 8,720 –
Hong Kong Dollar 36,295 34,691 5
Chinese Renminbi 7,358 6,688 10
Others 46,028 44,275 4
294,980 289,716 2
By Geography (1)
Singapore 119,925 115,620 4
Malaysia 25,077 27,611 (9)
Indonesia 18,600 18,918 (2)
Greater China 72,756 74,120 (2)
Other Asia Pacific 21,734 19,293 13
Rest of the World 36,888 34,154 8
294,980 289,716 2
(1) Loans by geography are determined based on where the credit risk resides, which may be different from the borrower’s country of residence or the booking location of the loans.
OCBC Annual Report 2022
Management Discussion and Analysis 95
Non-Performing Assets
Total NPAs
$ million
(1) Substandard
$ million
Doubtful
$ million
Loss
$ million
NPLs
$ million
(2) NPL Ratio
%
(2)
Singapore
2022 437 202 154 81 383 0.3
2021 606 300 206 100 551 0.5
Malaysia
2022 981 522 188 271 941 3.8
2021 1,516 1,126 166 224 1,467 5.3
Indonesia
2022 778 343 252 183 778 4.2
2021 1,216 722 255 189 1,208 6.4
Greater China
2022 901 444 431 26 901 1.2
2021 586 117 447 22 586 0.8
Other Asia Pacific
2022 96 41 54 1 96 0.4
2021 186 62 124 # 186 1.0
Rest of the World
2022 293 30 263 # 284 0.8
2021 228 21 207 # 217 0.6
Group
2022 3,486 1,582 1,342 562 3,383 1.2
2021 4,338 2,398 1,405 535 4,215 1.5
(1) Refer to non-performing assets. Comprise loans to customers, debt securities and contingent liabilities.
(2) Refer to non-performing loans. Exclude debt securities and contingent liabilities.
(3) # represents amounts less than $0.5 million.
96
Non-Performing Assets (continued)
2022 2021
$ million
% of
gross loans $ million
% of
gross loans
NPLs by Industry
Loans and advances
Agriculture, mining and quarrying 56 0.7 96 1.2
Manufacturing 614 4.1 840 5.4
Building and construction 592 0.7 330 0.4
Housing loans 579 0.9 1,002 1.6
General commerce 392 1.3 594 2.0
Transport, storage and communication 392 3.0 491 3.7
Financial institutions, investment and holding companies 131 0.5 89 0.4
Professionals and individuals 128 0.4 179 0.5
Others 499 2.6 594 3.5
Total NPLs 3,383 1.2 4,215 1.5
Classified debt securities – 6
Classified contingent liabilities 103 117
Total NPAs 3,486 4,338
2022 2021
$ million % $ million %
NPAs by Period Overdue
Over 180 days 968 28 927 21
Over 90 to 180 days 396 11 145 3
30 to 90 days 296 9 179 4
Less than 30 days 383 11 1,018 24
Not overdue 1,443 41 2,069 48
3,486 100 4,338 100
OCBC Annual Report 2022
Management Discussion and Analysis 97
Deposits
2022
$ million
2021
$ million
+/(-)
%
Deposits of non-bank customers 350,081 342,395 2
Deposits and balances of banks 10,046 8,239 22
360,127 350,634 3
Non-Bank Deposits by Product
Fixed deposits 133,415 91,338 46
Savings deposits 69,036 78,566 (12)
Current accounts 112,245 138,077 (19)
Others 35,385 34,414 3
350,081 342,395 2
Non-Bank Deposits by Currency
Singapore Dollar 130,205 133,157 (2)
United States Dollar 119,527 109,842 9
Malaysian Ringgit 21,278 22,603 (6)
Indonesian Rupiah 11,196 12,197 (8)
Hong Kong Dollar 26,210 23,381 12
Chinese Renminbi 8,837 10,311 (14)
Others 32,828 30,904 6
350,081 342,395 2
98
Performance by Business Segment
OCBC Group’s businesses are presented in the following customer segments and business activities: Global Consumer/Private Banking,
Global Wholesale Banking, Global Treasury and Markets and Insurance.
Profit before Income Tax by Business Segment
2022
$ million
2021
$ million
+/(-)
%
Global Consumer/Private Banking 1,537 1,110 38
Global Wholesale Banking 3,002 1,688 78
Global Treasury and Markets 649 864 (25)
Insurance 881 1,224 (28)
Others 870 794 9
Profit before income tax 6,939 5,680 22
OCBC Annual Report 2022
Management Discussion and Analysis 99
Performance by Business Segment (continued)
Global Consumer/Private Banking
Global Consumer/Private Banking provides a full range of products and services to individual customers. At Global Consumer Banking, the
products and services offered include deposit products (checking accounts, savings and fixed deposits), consumer loans (housing loans
and other personal loans), credit cards, wealth management products (unit trusts, bancassurance products and structured deposits) and
brokerage services. Private Banking caters to the specialised banking needs of high net worth individuals, offering wealth management
expertise, including investment advice and portfolio management services, estate and trust planning, and wealth structuring.
Global Consumer/Private Banking’s 2022 profit before income tax rose 38% to $1.54 billion, driven by net interest income growth amid a
rising interest rate environment and lower allowances. This was partly offset by a decline in wealth management and brokerage fee
income and higher expenses.
Global Wholesale Banking
Global Wholesale Banking serves institutional customers ranging from large corporates and the public sector to small and medium
enterprises. The business provides a full range of financing solutions including long-term project financing, short-term credit, working
capital and trade financing, as well as customised and structured equity-linked financing. It also provides customers with a broad range of
products and services such as cash management and custodian services, capital market solutions, corporate finance services and advisory
banking, and treasury products.
Global Wholesale Banking’s profit before income tax rose 78% to $3.00 billion in 2022, from $1.69 billion a year ago. The higher profit was
led by growth in net interest income and lower allowances, partly offset by a decline in income from investment banking activities and an
increase in expenses.
Global Treasury and Markets
Global Treasury and Markets is responsible for the management of the Group’s asset and liability interest rate positions, engages in
foreign exchange activities, money market operations, fixed income and derivatives trading, and offers structured treasury products and
financial solutions to meet customers’ investment and hedging needs. Income from treasury products and services offered to customers
in Global Consumer/Private Banking and Global Wholesale Banking, is reflected in the respective business segments.
Global Treasury’s profit before income tax was down 25% to $649 million in 2022, mainly attributable to lower net interest income,
realised losses from its fixed income portfolio, partly offset by an increase in net trading income.
Insurance
The Group’s insurance business, including its fund management activities, is undertaken by 87.9%-owned subsidiary GEH and its
subsidiaries, which provide both life and general insurance products to its customers mainly in Singapore and Malaysia.
GEH’s profit before income tax was $881 million in 2022, down 28% from $1.22 billion in the previous year, mainly attributable to
lower net valuation gains in its insurance funds largely due to unrealised mark-to-market losses on its insurance contract liabilities in
the fourth quarter.
After tax and non-controlling interests, GEH’s contribution to the Group’s net profit was $643 million in 2022, lower than the $932 million
a year ago.
Others
Others comprise mainly property holding, investment holding and items not attributable to the business segments described above.
Where there are material changes in the organisational structure and management reporting methodologies, segment information for
prior periods is reclassified to allow comparability.
100
Performance by Geographical Segment
2022 2021
$ million % $ million %
Total income
Singapore 6,738 58 5,955 56
Malaysia 1,668 14 1,619 15
Indonesia 1,016 9 940 9
Greater China 1,558 13 1,453 14
Other Asia Pacific 251 2 262 3
Rest of the World 444 4 367 3
11,675 100 10,596 100
Operating profit before allowances and amortisation
Singapore 3,771 57 3,118 53
Malaysia 1,135 17 1,088 19
Indonesia 547 8 517 9
Greater China 721 11 680 12
Other Asia Pacific 176 3 197 3
Rest of the World 299 4 232 4
6,649 100 5,832 100
Profit before income tax
Singapore 3,568 51 3,039 53
Malaysia 1,239 18 860 15
Indonesia 325 5 325 6
Greater China 1,353 20 1,243 22
Other Asia Pacific 239 3 102 2
Rest of the World 215 3 111 2
6,939 100 5,680 100
Total assets
Singapore 323,392 58 317,491 59
Malaysia 65,280 12 66,997 12
Indonesia 21,047 4 20,954 4
Greater China 93,291 17 88,031 16
Other Asia Pacific 20,321 3 18,631 3
Rest of the World 36,625 6 30,083 6
559,956 100 542,187 100
The geographical segment analysis is based on the location where assets or transactions are booked. The geographical information is
stated after elimination of intra-group transactions and balances.
OCBC Annual Report 2022
Management Discussion and Analysis 101
Capital Adequacy Ratios
The Group remained strongly capitalised, with a Common Equity Tier 1 (CET1) capital adequacy ratio (CAR) of 15.2%, and Tier 1 and Total
CAR of 15.9% and 17.7% respectively. These ratios were well above the regulatory minima of 6.5%, 8% and 10%, respectively, for 2022.
102
The directors present this statement to the members of the Bank together with the audited consolidated financial statements of the
Group and the income statement, statement of comprehensive income, balance sheet and statement of changes in equity of the Bank for
the financial year ended 31 December 2022.
In our opinion:
(a) the financial statements set out on pages 116 to 252 are drawn up so as to give a true and fair view of the financial position of the
Group and of the Bank as at 31 December 2022, the financial performance and changes in equity of the Group and of the Bank for
the financial year ended on that date, and cash flows of the Group for the financial year ended on that date, in accordance with the
provisions of the Singapore Companies Act 1967 (the Act) and Singapore Financial Reporting Standards (International); and
(b) at the date of this statement, there are reasonable grounds to believe that the Bank will be able to pay its debts as and when they
fall due.
The Board of Directors has, on the date of this statement, authorised these financial statements for issue.
Directors
The directors of the Bank in office at the date of this statement are as follows:
Andrew Lee Kok Keng, Chairman (appointed on 18 February 2022)
Chong Chuan Neo (appointed on 18 February 2022)
Chua Kim Chiu
Andrew Khoo Cheng Hoe
Lee Tih Shih
Christina Hon Kwee Fong (Christina Ong)
Pramukti Surjaudaja
Tan Yen Yen
Helen Wong Pik Kuen (appointed on 7 February 2023)
Chua Kim Chiu, Lee Tih Shih and Tan Yen Yen will retire by rotation under Article 98 of the Constitution at the forthcoming annual general
meeting of the Bank and, being eligible, will offer themselves for re-election thereat.
Helen Wong Pik Kuen will retire under Article 104 of the Constitution at the forthcoming annual general meeting of the Bank and, being
eligible, will offer herself for re-election thereat.
Arrangements to Enable Directors to Acquire Shares and Debentures
Neither at the end of, nor at any time during the financial year, was the Bank a party to any arrangement whose objects are, or one of
whose objects is, to enable the directors of the Bank to acquire benefits by means of the acquisition of shares in, or debentures of, the
Bank or any other body corporate, other than as disclosed in this statement.
OCBC Annual Report 2022
103
Directors’ Statement
For the financial year ended 31 December 2022
Directors’ Statement
Directors’ Interests in Shares or Debentures
According to the register of directors’ shareholdings, the directors holding office at the end of the financial year had interests in shares in
the Bank and its related corporations, as follows:
Direct interest Deemed interest (1)
At 31.12.2022
At 1.1.2022/
Date of appointment At 31.12.2022
At 1.1.2022/
Date of appointment
BANK
Ordinary shares
Ooi Sang Kuang (2) 67,202 61,202 – –
Andrew Lee Kok Keng 257,431 167,910 – –
Chong Chuan Neo – – – –
Chua Kim Chiu 26,663 20,663 – –
Andrew Khoo Cheng Hoe 12,151 7,236 – –
Koh Beng Seng (3) 13,644 7,644 – –
Lee Tih Shih 11,656,000 11,650,000 – –
Christina Hon Kwee Fong (Christina Ong) 37,240 31,240 – –
Pramukti Surjaudaja 91,050 85,050 – –
Tan Yen Yen 12,000 6,000 – –
Wee Joo Yeow (4) 89,627 83,627 4,892 4,892
Options to acquire ordinary shares under the OCBC Share Option Scheme 2001
Andrew Lee Kok Keng 310,824 400,345 – –
(1) Ordinary shares held by spouse.
(2) Mr Ooi Sang Kuang stepped down from the Board of Directors on 31 January 2023.
(3) Mr Koh Beng Seng stepped down from the Board of Directors on 3 February 2023.
(4) Mr Wee Joo Yeow stepped down from the Board of Directors on 1 January 2023.
Save as disclosed above, no director holding office at the end of the financial year had any interest in shares in, or debentures of, the Bank
or any of its related corporations either at the beginning of the financial year, date of appointment, or at the end of the financial year.
There were no changes to any of the above-mentioned interests between the end of the financial year and 21 January 2023.
Share-Based Compensation Plans
The Bank’s share-based compensation plans are administered by the Remuneration Committee, which as at the date of this
statement comprises:
Christina Hon Kwee Fong (Christina Ong), Chairman
Andrew Khoo Cheng Hoe
Andrew Lee Kok Keng
Pramukti Surjaudaja
Under the share-based compensation plans, no options, rights or awards have been granted to controlling shareholders of the Bank or
their associates, nor has any participant received 5% or more of the total number of options, rights or awards available under each
respective scheme or plan during the financial year. No options or rights were granted at a discount during the financial year. The persons
to whom the options, rights or awards were issued have no right by virtue of these options, rights or awards to participate in any share
issue of any other company. The disclosure requirement in Rule 852(1)(c) of the SGX Listing Manual relating to the grant of options to
directors and employees of the parent company and its subsidiaries is not applicable to the Bank’s share-based compensation plans.
104
Share-Based Compensation Plans (continued)
The Bank’s share-based compensation plans are as follows:
(a) OCBC Share Option Scheme 2001
The OCBC Share Option Scheme 2001 (2001 Scheme), which was implemented in 2001, was extended for a period of 10 years from
2011 to 2021, with the approval of shareholders at an extraordinary general meeting of the Bank which was held on 15 April 2011.
Executives of the Group ranked Manager and above and non-executive directors of the Group were eligible to participate in this
scheme. The Bank will either issue new shares or transfer treasury shares to the participants upon the exercise of their options.
The 2001 Scheme expired on 2 August 2021. No further options may be granted by the Bank under the 2001 Scheme following its
expiry. However, the expiration of the 2001 Scheme does not affect the options which have been granted and accepted before the
expiry of the 2001 Scheme, whether such options have been exercised (whether fully or partially) or not.
Particulars of Options 2012, 2013, 2014, 2015, 2015CT, 2016, 2016A, 2017, 2017SL, 2017DM and 2018 were set out in the Directors'
Reports/Directors’ Statements for the financial years ended 31 December 2012 to 2018.
No share options were granted under the 2001 Scheme during the financial year.
Details of unissued ordinary shares under the 2001 Scheme, options exercised during the financial year and options outstanding and
exercisable at 31 December 2022 are as follows:
Options Exercise period
Acquisition
price ($)
Options
exercised
Treasury
shares
transferred
At 31.12.2022
Outstanding Exercisable
2012 15.03.2013 to 13.03.2022 8.556 973,074 973,074 – –
2013 15.03.2014 to 13.03.2023 10.018 751,080 751,080 1,683,699 1,683,699
2014 15.03.2015 to 13.03.2024 9.169 557,401 557,401 1,435,084 1,435,084
2015 16.03.2016 to 15.03.2025 10.378 1,288,283 1,288,283 2,684,276 2,684,276
2015CT 30.06.2016 to 29.06.2025 10.254 – – 31,779 31,779
2016 16.03.2017 to 15.03.2026 8.814 739,332 739,332 2,858,870 2,858,870
2016A 16.03.2017 to 15.03.2026 8.814 – – 85,202 85,202
2017 23.03.2018 to 22.03.2027 9.598 2,233,233 2,227,330 3,855,136 3,855,136
2017SL 04.08.2018 to 03.08.2027 11.378 – – 18,943 18,943
2017DM 29.12.2018 to 28.12.2027 12.316 – – 5,673 5,673
2018 22.03.2019 to 21.03.2028 13.340 – – 5,718,697 5,718,697
6,542,403 6,536,500 18,377,359 18,377,359
OCBC Annual Report 2022
Directors’ Statement 105
Share-Based Compensation Plans (continued)
(b) OCBC Employee Share Purchase Plan
The OCBC Employee Share Purchase Plan (ESP Plan), which was implemented in 2004, was extended for a period of 10 years from
19 May 2014 up to 18 May 2024 (both dates inclusive), with the approval of shareholders at an extraordinary general meeting of
the Bank which was held on 24 April 2014. The further extension of, and alterations to, the ESP Plan, are intended to be tabled for
shareholders’ approval at the forthcoming annual general meeting of the Bank. If approved by shareholders, the ESP Plan will be
extended for a further period of 10 years from 19 May 2024 up to 18 May 2034 (both dates inclusive).
Employees of the Group who have attained the age of 21 years and have been employed for not less than six months are eligible to
participate in the ESP Plan.
At an extraordinary general meeting held on 17 April 2009, alterations to the ESP Plan were approved to enable two (but not more
than two) Offering Periods to be outstanding on any date. Since each Offering Period currently consists of a 24-month period, these
alterations will enable the Bank to prescribe Offering Periods once every 12 months (instead of once every 24 months as was
previously the case).
In July 2022, the Bank launched its seventeenth offering under the ESP Plan, which commenced on 1 September 2022 and will
expire on 31 August 2024. Under the seventeenth offering, 6,872 employees enrolled to participate in the ESP Plan to acquire
8,738,996 ordinary shares at S$12.07 per ordinary share. The acquisition price is equal to the average of the last traded price of the
ordinary shares of the Bank on the Singapore Exchange over five consecutive trading days immediately preceding the price fixing
date. Particulars of the first to sixteenth offerings under the ESP Plan were set out in the Directors’ Reports/Directors’ Statements
for the financial years ended 31 December 2004 to 2021. During the financial year, 9,581,017 ordinary shares were delivered to
participants under the ESP Plan. As at the end of the financial year, there were (i) rights to acquire 6,677,912 ordinary shares at
S$11.58 per ordinary share granted under the sixteenth offering (which will expire on 31 August 2023) outstanding, and (ii) rights
to acquire 8,229,792 ordinary shares at S$12.07 per ordinary share granted under the seventeenth offering (which will expire on
31 August 2024) outstanding. Further details on the ESP Plan can be found in Note 13.3 of the Notes to the Financial Statements.
(c) OCBC Deferred Share Plan
The Bank implemented the OCBC Deferred Share Plan (DSP) in 2003. The DSP was a discretionary incentive and retention award
programme extended to executives of the Group at the absolute discretion of the Remuneration Committee. The DSP was terminated
with effect from 29 April 2021, following the adoption of the OCBC Deferred Share Plan 2021 at the annual general meeting of the
Bank held on 29 April 2021. However, the termination of the DSP does not affect the awards which have been granted, whether such
awards have been released (whether fully or partially) or not.
In light of the Bank’s transition to the new DSP 2021, no awards were granted under the DSP during the financial year ended
31 December 2022. Existing awards were adjusted following the declarations of a final dividend for the financial year ended
31 December 2021, and an interim dividend for the financial year ended 31 December 2022, resulting in an additional 254,170
ordinary shares being subject to awards under the DSP (including an additional 4,652 ordinary shares being subject to awards held
by Ms Helen Wong Pik Kuen, who was appointed as a director of the Bank on 7 February 2023). During the financial year, 9,734,401
deferred shares were released to grantees, of which 97,671 deferred shares were released to Ms Helen Wong Pik Kuen.
106
Share-Based Compensation Plans (continued)
(d) OCBC Deferred Share Plan 2021
The OCBC Deferred Share Plan 2021 (DSP 2021) was adopted at the annual general meeting of the Bank held on 29 April 2021 to
replace the DSP under which no new ordinary shares may be issued. By implementing the DSP 2021, which permits new ordinary
shares to be issued, the Bank has greater flexibility in its methods for delivery of ordinary shares, as this can be effected through an
issue of new ordinary shares, in addition to the transfer of existing ordinary shares (including treasury shares). The objectives of the
DSP 2021 are otherwise the same as those for the DSP, which is to align the interests of Group executives with the sustained business
performance of the Bank by way of awards of deferred shares as part of variable performance already earned for the previous year.
Awards over an aggregate of 9,232,761 ordinary shares (including awards over 170,557 ordinary shares granted to Ms Helen Wong Pik Kuen
who was appointed as a director of the Bank on 7 February 2023) were granted to eligible executives under the DSP 2021 during the
financial year ended 31 December 2022, and awards over an aggregate of 16,996,021 ordinary shares (including awards over 312,299
ordinary shares granted to Ms Helen Wong Pik Kuen) have been granted under the DSP 2021 since the commencement of the plan to
the end of the financial year ended 31 December 2022. No ordinary shares were released under the DSP 2021 during the financial
year ended 31 December 2022. An aggregate of 16,913,030 ordinary shares (including 332,389 ordinary shares comprised in awards
granted to Ms Helen Wong Pik Kuen) are comprised in awards which are outstanding and have not been released under the DSP 2021
as at the end of the financial year ended 31 December 2022. Existing awards were adjusted following the declarations of a final
dividend for the financial year ended 31 December 2021, and an interim dividend for the financial year ended 31 December 2022,
resulting in an additional 790,461 ordinary shares being subject to awards under the DSP 2021 (including an additional 15,114
ordinary shares being subject to awards held by Ms Helen Wong Pik Kuen).
Details of options granted under the 2001 Scheme and share awards granted under the DSP and DSP 2021 to directors of the Bank are
as follows:
Name
Options/
awards granted during
the financial year ended
31.12.2022
Aggregate
number of options/
awards granted
since commencement
of scheme/plan to
31.12.2022
Aggregate
number of options
exercised/awards
released since
commencement of
scheme/plan to
31.12.2022
Aggregate
number of options/
awards outstanding at
31.12.2022
2001 Scheme
Andrew Lee Kok Keng – 724,065 413,241 310,824 (1)
DSP
Helen Wong Pik Kuen – 179,789 (2) 97,671 102,324
DSP 2021
Helen Wong Pik Kuen 170,557 (2) 312,299 (2) – 332,389
(1) These details have already been disclosed in the section on “Directors’ interests in shares or debentures” above.
(2) Does not include additional ordinary shares arising from subsequent adjustments to share awards under the DSP/DSP 2021 following the declarations of dividends by the Bank.
There were no changes to the above-mentioned interests between the end of the financial year and 21 January 2023.
Except as disclosed above, no options under the 2001 Scheme, no acquisition rights under the ESP Plan and no share awards under the
DSP 2021 were granted to any of the directors of the Bank who held office during the financial year ended 31 December 2022 or who held
office as at the date of this statement.
Except as disclosed above, there were no unissued shares of the Bank or its subsidiaries under options granted by the Bank or its
subsidiaries as at the end of the financial year.
OCBC Annual Report 2022
Directors’ Statement 107
Audit Committee
The members of the Audit Committee as at the date of this statement are:
Chua Kim Chiu, Chairman
Chong Chuan Neo (appointed on 18 February 2022)
Tan Yen Yen
The Audit Committee performed the functions specified in the Act, the SGX Listing Manual, the Banking (Corporate Governance)
Regulations 2005, the MAS Guidelines for Corporate Governance and the Code of Corporate Governance 2018. In performing these
functions, the Audit Committee reviewed with the Bank's external and internal auditors their audit plans and findings, including their
examination and evaluation of the system of internal accounting controls and the internal audit programme. The Audit Committee also
reviewed the external auditor’s independence, objectivity and performance.
The Audit Committee also reviewed, inter alia, the following:
(a) response of the Bank’s management and the assistance provided by officers of the Bank to the external and internal auditors;
(b) the CEO and CFO’s assurances regarding the integrity of the financial statements and the adequacy and effectiveness of the Bank’s
risk management and internal control systems; and
(c) the financial statements of the Group and the Bank and the auditor’s report thereon, including key audit matters, prior to their
submission to the Board of Directors.
The Audit Committee has full access to, and the cooperation of, the management and has been given the resources required for it to
discharge its functions. It has full authority and discretion to invite any director and executive officer to attend its meetings.
The Audit Committee has recommended to the Board of Directors that the auditor, PricewaterhouseCoopers LLP, be nominated for
re-appointment as the auditor of the Bank at the forthcoming annual general meeting of the Bank.
Auditor
PricewaterhouseCoopers LLP has indicated its willingness to accept re-appointment as the auditor of the Bank at the forthcoming annual
general meeting of the Bank.
On behalf of the Board of Directors,
Andrew Lee Kok Keng Helen Wong Pik Kuen
Director Director
Singapore
23 February 2023
108
Report on the Audit of the Financial Statements
Our Opinion
In our opinion, the accompanying consolidated financial statements of Oversea-Chinese Banking Corporation Limited (“the Bank”) and its
subsidiaries (“the Group”) and the balance sheet, income statement, statement of comprehensive income and statement of changes in
equity of the Bank are properly drawn up in accordance with the provisions of the Companies Act 1967 (“the Act”) and Singapore Financial
Reporting Standards (International) (“SFRS(I)s”) so as to give a true and fair view of the consolidated financial position of the Group and
the financial position of the Bank as at 31 December 2022 and of the consolidated financial performance, consolidated changes in equity
and consolidated cash flows of the Group and of the financial performance and changes in equity of the Bank for the financial year ended
on that date.
What We Have Audited
The financial statements of the Bank and the Group comprise:
• the income statements of the Group and of the Bank for the financial year ended 31 December 2022;
• the statements of comprehensive income of the Group and of the Bank for the financial year then ended;
• the balance sheets of the Group and of the Bank as at 31 December 2022;
• the statement of changes in equity of the Group for the financial year then ended;
• the statement of changes in equity of the Bank for the financial year then ended;
• the consolidated cash flow statement of the Group for the financial year then ended; and
• the notes to the financial statements, including a summary of significant accounting policies.
Basis for Opinion
We conducted our audit in accordance with Singapore Standards on Auditing (“SSAs”). Our responsibilities under those standards are
further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We are independent of the Group in accordance with the Accounting and Corporate Regulatory Authority Code of Professional Conduct
and Ethics for Public Accountants and Accounting Entities (“ACRA Code”) together with the ethical requirements that are relevant to our
audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these
requirements and the ACRA Code.
Our Audit Approach
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the accompanying financial
statements. In particular, we considered where management made subjective judgements; for example, in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our
audits, we also addressed the risk of management override of internal controls, including among other matters consideration of whether
there was evidence of bias that represented a risk of material misstatement due to fraud.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial
statements for the financial year ended 31 December 2022. These matters were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
OCBC Annual Report 2022
109
Independent Auditor’s Report
To The Members Of Oversea-Chinese Banking Corporation Limited
Independent Auditor’s Report
Key Audit Matter How Our Audit Addressed the Key Audit Matter
Impairment of loans to customers
(Refer to Notes 2.25, 26, 28 and 30 to the
financial statements)
The Group’s allowances on non-impaired loans and
impaired loans are S$2,205 million and S$1,308 million
respectively as at 31 December 2022. These allowances
are determined by the Group based on the Expected
Credit Losses (“ECL”) framework under SFRS(I) 9
Financial Instruments (“SFRS(I) 9”).
ECL on non-credit-impaired loans to customers
In respect of the ECL on non-credit impaired loans to
customers, the Group utilises models which are reliant
on internal and external data as well as a number of
estimates. We considered this a key audit matter due
to the inherent estimation uncertainty in this area
which involves significant judgement and assumptions
that relate to, amongst others:
• determining whether a significant increase in
credit risk (“SICR”) has occurred;
• estimating forward-looking macroeconomic
scenarios; and
• identifying and determining post model
adjustments to the ECL models.
Further, the current significant events (e.g.
economic and geopolitical developments) have
increased the uncertainty of these estimates and
degree of judgement required to be exercised in
estimating the ECL.
ECL on credit-impaired loans to customers
As at 31 December 2022, 56% (S$732 million) of the
Group’s ECL on credit-impaired loans to customers
relates to the Global Wholesale Banking (“GWB”)
loan portfolio.
We focused on this area because of the highly
subjective judgements and assumptions applied by
management in determining the necessity for, and
estimating the amount of, the ECL allowances against
credit-impaired loans to customers. Significant
judgements were also required for the credit grading
of borrowers in accordance with MAS Notice 612.
ECL on non-credit-impaired loans to customers
We assessed the design and evaluated the operating effectiveness of key
controls over the ECL on non-credit-impaired loans to customers. These
controls include:
• review and approval of forward-looking information used in the
ECL models;
• use of reliable and accurate critical data elements in the ECL models;
• review and approval of the ECL results, including post model
adjustments applied;
• independent validation of the ECL models and review of model
validation results by management; and
• general IT controls over the ECL system as well as IT application controls
over the completeness and accuracy of data flows from source systems
to the ECL systems.
We determined that we could rely on these controls for the purposes of
our audit.
For a sample of the Group’s ECL models, we examined the model
methodologies and assessed the reasonableness of key judgements and
assumptions made by management in the model and parameters used.
We also reviewed the results of independent model validation conducted
by the Group's model validation function as part of our assessment of the
ECL models.
We also assessed the reasonableness of criteria used to determine a SICR
and accuracy and timeliness of allocation of exposures into Stage 1 and
Stage 2 based on quantitative and qualitative criteria.
Through the course of our work, we challenged the rationale and calculation
basis of post model adjustments.
Overall, we assessed the methodologies and key assumptions made by the Group
to estimate the ECL on non-credit-impaired loans to customers to be reasonable.
ECL on credit-impaired loans to customers
We assessed the design effectiveness and tested the operating
effectiveness of key controls over credit grading, credit monitoring and
management’s determination of the ECL allowances for loans to customers.
These controls include:
• oversight and review of credit risk by the Credit Risk
Management Committee;
• credit portfolio review and monitoring;
• collateral monitoring and valuation;
• monitoring of loan covenants and breaches; and
• classification of loans to customers in accordance with MAS Notice 612.
We determined that we could rely on these controls for the purposes of
our audit.
110
Key Audit Matter How Our Audit Addressed the Key Audit Matter
Impairment of loans to customers (continued)
ECL on credit-impaired loans to customers (continued)
For GWB’s credit-impaired loan portfolio, significant
management judgement and estimation include:
• identifying credit-impaired exposures;
• assessing the future performance of the
borrowers and recoverable cash flows; and
• determining collateral values and timing
of realisation.
Current significant events (e.g. economic and
geopolitical developments) added complexity to the
estimation of the ECL allowances. The outcome and
corresponding impact of these events are uncertain.
ECL on credit-impaired loans to customers (continued)
We selected a sample of credit exposures in the GWB loan portfolio and
performed credit file reviews to assess the appropriateness of credit grading
in accordance with the requirements of MAS Notice 612. In that process, we
have also considered management’s assessment on the impact of current
significant events in the identification of credit-impaired exposures.
Where there was objective evidence of impairment, we assessed whether
the ECL allowances were recognised on a timely basis and evaluated the
amount of such impairment. Our work includes:
• considering the background facts and the latest circumstances in
relation to the borrower;
• examining and challenging management’s key assumptions applied on
expected future cash flows of the borrower, including amounts and
timing of recoveries;
• comparing the realisable value of collateral against externally derived
evidence including independent valuation reports, where available; and
• testing the calculation of impairment.
For a sample of non-credit-impaired loans to customers which had not been
classified by management as credit-impaired, we challenged management’s
key assumptions on whether their classification was appropriate, based on
our understanding of the customers, business environment and other
external evidence where available.
Based on the procedures performed, we have assessed that the ECL
allowances for credit-impaired loans to customers were within an
acceptable range of estimates.
Key Audit Matter How Our Audit Addressed the Key Audit Matter
Valuation of financial instruments measured at fair
value – Levels 2 and 3
(Refer to Notes 2.25 and 41.3 to the financial statements)
As at 31 December 2022, the Group had financial assets
of S$62 billion and financial liabilities of S$17 billion
measured at fair value which were classified as Level 2.
These represent 35% of the financial assets and 96% of
the financial liabilities measured at fair value respectively.
We considered valuation of Level 2 financial instruments
to be a key audit matter due to their financial significance
to the Group as well as the judgement required in relation
to the application of the appropriate models, assumptions
and inputs.
The Group also had financial assets of S$7 billion and
financial liabilities of S$283 million measured at fair value
which were classified as Level 3. These represent 4% of the
financial assets and 2% of the financial liabilities
measured at fair value respectively.
We assessed the design and tested the operating effectiveness of key
controls over the Group’s financial instruments valuation processes,
including the controls over:
• management’s testing and approval of valuation models;
• the completeness and accuracy of the data feeds and other inputs into
valuation models;
• follow-up on collateral disputes, which takes into account counterparty
valuations, to identify possible indicators of inappropriate valuations by
the Group; and
• governance mechanisms and monitoring over the valuation processes
by the Market Risk Management Committee, including over valuation
adjustments.
We determined that we could rely on the controls for the purposes of our audit.
Together with our valuation specialists, we compared the Group’s valuation
of Level 2 financial instruments to our own estimates on a sampling basis.
This involved sourcing inputs from market data providers or external
sources and using our own valuation models, and investigating the root
cause for material variances at the instrument level.
OCBC Annual Report 2022
Independent Auditor’s Report 111
Key Audit Matter How Our Audit Addressed the Key Audit Matter
Valuation of financial instruments measured at fair
value – Levels 2 and 3 (continued)
We focused on the valuation of Level 3 financial assets
and financial liabilities, as management makes
significant judgements and assumptions (using
valuation models) when valuing these financial
instruments, as they are complex or illiquid and the
external evidence supporting the Group’s valuations
are limited due to the lack of a liquid market.
For a sample of Level 3 financial instruments, with the assistance of our
valuation specialists, we assessed the reasonableness of the methodologies
used and the key assumptions made.
For all financial instruments at Levels 2 and 3, we also performed:
• procedures on collateral disputes, which takes into account
counterparty valuations, to identify possible indicators of inappropriate
valuations by the Group; and
• assessed the adequacy of the Group’s financial statements disclosures
in the context of the relevant accounting standards.
Overall, the valuation of Levels 2 and 3 financial instruments measured at
fair value was within a reasonable range of outcomes.
Key Audit Matter How Our Audit Addressed the Key Audit Matter
Impairment of goodwill
(Refer to Notes 2.25 and 36 to the financial statements)
The Group has a significant amount of goodwill arising
from its business acquisitions. As at 31 December 2022,
the carrying amount of goodwill on the Group’s
balance sheet amounted to S$4,440 million.
In performing the impairment assessment of the
carrying amount of goodwill, significant judgement is
made by management in estimating the recoverable
amounts of the relevant cash generating units (“CGUs”).
For the Banking CGUs, this involves the estimation of
discounted cash flows, where the significant
assumptions used in the assessment include:
• forecasts of future cash flows;
• inputs to determine the risk-adjusted discount
rates; and
• perpetual growth rates.
For the Insurance CGU, the Group applies the appraisal
value technique, which comprises the embedded value
of in-force business and the estimated value of
projected distributable profits from new businesses.
The key assumptions used in this assessment include:
• investment returns based on long term strategic
asset mix and expected future returns; and
• risk-adjusted discount rates.
Given the level of complexity and extent of judgement
involved, we considered this to be a key audit matter.
We assessed the appropriateness of management’s identification of the
Group’s CGUs and methodology used in the estimation of recoverable
amounts. We also evaluated the key assumptions used and applied
sensitivity analysis to the key assumptions to determine whether any
possible change in these key assumptions would result in an impairment.
Banking CGUs
Together with our valuation specialists, we evaluated:
• management’s cash flow projections by comparing previous forecasts
to actual results;
• the methodology and external data sources used in deriving the
discount rates and growth rates; and
• the growth rate assumptions against the Group’s historical
performance and available external industry and economic indicators.
Insurance CGU
Together with our actuarial specialists, we evaluated:
• the methodologies in estimating the appraisal value; and
• the key assumptions including the investment returns and the
risk-adjusted discount rates used in deriving the appraisal value.
We found the key assumptions and estimates made by management to be
reasonable based on our audit procedures performed.
112
Key Audit Matter How Our Audit Addressed the Key Audit Matter
Valuation of life insurance contract liabilities
(Refer to Notes 2.25, 22 and 38.4 to the
financial statements)
The Group’s insurance operations are conducted
through Great Eastern Holdings Limited and its
subsidiaries (“GEH”).
Management’s valuation of life insurance contract
liabilities uses complex actuarial methods and models.
The valuation process involves significant judgement
about the assumptions of uncertain future events,
including: mortality, morbidity, expense, lapse,
surrender and interest rates.
In addition to historical experience, management
judgement is involved in the application of these
assumptions. Changes in these assumptions used
could result in a material impact to the valuation of the
life insurance contract liabilities and the related
movements in the consolidated profit or loss statement
of the Group.
We performed the following audit procedures to address this matter:
• we understood the actuarial valuation process, including model
changes and assumptions setting;
• we tested the design and operating effectiveness of controls over the
accuracy and completeness of the data used;
• we understood the valuation methodologies used, identified changes in
methodologies from the previous valuation and assessed the
reasonableness and impact for material changes identified. We carried
out these procedures by applying our industry knowledge and
experience and assessed whether the methodologies and changes to
those methodologies are consistent with recognised actuarial practices
and expectations derived from market experience;
• we performed an independent review of model inputs on a sample
basis to assess that the methodologies and key assumptions have been
applied appropriately; and
• we assessed the reasonableness of the key assumptions used by
management including: mortality, morbidity, expense, lapse, surrender
and interest rates, by comparing against GEH’s historical experiences
and market observable data, where applicable.
Based on the work performed and the evidence obtained, we found the
methodologies and key assumptions used by management to be reasonable.
OCBC Annual Report 2022
Independent Auditor’s Report 113
Other Information
Management is responsible for the other information. The other information comprises the Directors’ Statement (but does not include the
financial statements and our auditor’s report thereon), which we obtained prior to the date of this auditor’s report, and the other sections
of the annual report (“the Other Sections”), which are expected to be made available to us after that date.
Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance
conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing
so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the
audit, or otherwise appears to be materially misstated.
If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, we
conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report
in this regard.
When we read the Other Sections, if we conclude that there is a material misstatement therein, we are required to communicate the
matter to the directors and take appropriate actions in accordance with SSAs.
Responsibilities of Management and Directors for the Financial Statements
Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the provisions of
the Act and SFRS(I)s, and for devising and maintaining a system of internal accounting controls sufficient to provide a reasonable assurance
that assets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are
recorded as necessary to permit the preparation of true and fair financial statements and to maintain accountability of assets.
In preparing the financial statements, management is responsible for assessing the Group’s ability to continue as a going concern, disclosing,
as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to
liquidate the Group or to cease operations, or has no realistic alternative but to do so.
The directors’ responsibilities include overseeing the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
114 Independent Auditor’s Report
As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout the
audit. We also:
• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform
audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud
may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures
made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence
obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s ability
to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our
conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the
financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the
Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and
performance of the group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding independence, and to
communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where
applicable, related safeguards.
From the matters communicated with the directors, we determine those matters that were of most significance in the audit of the
financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor’s report
unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a
matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
In our opinion, the accounting and other records required by the Act to be kept by the Bank and by those subsidiary corporations
incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.
The engagement partner on the audit resulting in this independent auditor’s report is Lian Wee Cheow.
PricewaterhouseCoopers LLP
Public Accountants and Chartered Accountants
Singapore, 23 February 2023
OCBC Annual Report 2022
Independent Auditor’s Report 115
GROUP BANK
2022 2021 2022 2021
Note $ million $ million $ million $ million
Interest income 11,590 7,425 7,421 3,919
Interest expense (3,902) (1,570) (2,869) (708)
Net interest income 3 7,688 5,855 4,552 3,211
Profit from life insurance (1) 4 971 1,137 – –
Premium income from general insurance 218 197 – –
Fees and commissions (net) 5 1,851 2,245 879 969
Dividends 6 125 113 1,481 1,049
Net trading income 7 834 763 336 249
Other income 8 (12) 286 2 143
Non-interest income 3,987 4,741 2,698 2,410
Total income 11,675 10,596 7,250 5,621
Staff costs (3,233) (3,028) (1,154) (1,093)
Other operating expenses (1,793) (1,736) (1,238) (1,131)
Total operating expenses 9 (5,026) (4,764) (2,392) (2,224)
Operating profit before allowances and amortisation 6,649 5,832 4,858 3,397
Amortisation of intangible assets 36 (104) (103) – –
Allowances for loans and other assets 10 (584) (873) (210) (442)
Operating profit after allowances and amortisation 5,961 4,856 4,648 2,955
Share of results of associates, net of tax 978 824 – –
Profit before income tax 6,939 5,680 4,648 2,955
Income tax expense 11 (1,057) (648) (503) (229)
Profit for the year 5,882 5,032 4,145 2,726
Attributable to:
Equity holders of the Bank 5,748 4,858
Non-controlling interests 134 174
5,882 5,032
Earnings per share ($) 12
Basic 1.27 1.07
Diluted 1.27 1.07
(1) Comprised premium and investment income of $12,245 million (2021: $19,506 million) and insurance claims, commission and other expenses of $11,246 million (2021: $18,285 million) for
the Group. Refer to Note 4.
The accompanying notes form an integral part of these financial statements.
116
Income Statements
For the financial year ended 31 December 2022
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Profit for the year 5,882 5,032 4,145 2,726
Other comprehensive income:
Items that may be reclassified subsequently to income statement:
Financial assets, at FVOCI (1)
Fair value losses for the year (2,164) (694) (807) (326)
Reclassification of (gains)/losses to income statement
– on disposal 264 (131) 149 (34)
– on impairment (#) 3 2 4
Tax on net movements 247 98 28 11
Cash flow hedges (2) (#) (22) (7)
Currency translation on foreign operations (873) 110 (109) (34)
Other comprehensive income of associates (656) 339 – –
Items that will not be reclassified subsequently to income statement:
Currency translation on foreign operations (54) (1) – –
Equity instruments, at FVOCI (1), net change in fair value (207) 134 (12) 44
Defined benefit plans remeasurements 2 (1) – –
Own credit 1 1 1 1
Total other comprehensive income, net of tax (3,442) (142) (770) (341)
Total comprehensive income for the year, net of tax 2,440 4,890 3,375 2,385
Total comprehensive income attributable to:
Equity holders of the Bank 2,490 4,735
Non-controlling interests (50) 155
2,440 4,890
(1) Fair value through other comprehensive income.
(2) # represents amounts less than $0.5 million.
The accompanying notes form an integral part of these financial statements.
OCBC Annual Report 2022
117
Statements of Comprehensive Income
For the financial year ended 31 December 2022
Statements of Comprehensive Income
GROUP BANK
2022 2021 2022 2021
Note $ million $ million $ million $ million
EQUITY
Attributable to equity holders of the Bank
Share capital 13 18,048 18,040 18,048 18,040
Other equity instruments 14 1,696 1,198 1,696 1,198
Capital reserves 15 792 782 560 559
Fair value reserves (1,006) 848 (674) (25)
Revenue reserves 16 33,557 31,795 17,286 15,825
53,087 52,663 36,916 35,597
Non-controlling interests 1,581 1,675 – –
Total equity 54,668 54,338 36,916 35,597
LIABILITIES
Deposits of non-bank customers 17 350,081 342,395 223,310 221,213
Deposits and balances of banks 17 10,046 8,239 7,691 6,708
Due to subsidiaries – – 36,522 28,250
Due to associates 236 431 197 230
Trading portfolio liabilities 212 393 212 393
Derivative payables 18 16,048 9,070 14,300 7,656
Other liabilities 19 8,525 7,163 2,844 1,906
Current tax payables 995 905 566 458
Deferred tax liabilities 20 2,261 2,832 125 154
Debt issued 21 21,938 20,115 21,294 19,657
410,342 391,543 307,061 286,625
Life insurance fund liabilities 22 94,946 96,306 – –
Total liabilities 505,288 487,849 307,061 286,625
Total equity and liabilities 559,956 542,187 343,977 322,222
ASSETS
Cash and placements with central banks 23 34,966 27,919 27,812 22,863
Singapore government treasury bills and securities 24 17,096 11,112 15,889 10,106
Other government treasury bills and securities 24 22,271 26,159 8,165 9,710
Placements with and loans to banks 25 30,244 25,462 18,680 17,516
Loans to customers 26 291,467 286,281 201,110 189,401
Debt and equity securities 29 28,010 34,015 16,621 20,031
Assets held for sale 1 11 – 1
Derivative receivables 18 15,605 9,267 13,742 7,812
Other assets 31 6,635 6,334 2,538 2,339
Deferred tax assets 20 437 280 104 88
Associates 32 6,340 6,170 2,228 2,262
Subsidiaries 33 – – 33,923 37,018
Property, plant and equipment 34 3,483 3,506 818 735
Investment property 35 763 801 480 473
Goodwill and other intangible assets 36 4,643 4,774 1,867 1,867
461,961 442,091 343,977 322,222
Life insurance fund investment securities and other assets 22 97,995 100,096 – –
Total assets 559,956 542,187 343,977 322,222
The accompanying notes form an integral part of these financial statements.
118
Balance Sheets
As at 31 December 2022
Attributable to equity holders of the Bank
In $ million
Share
capital and
other equity
Capital
reserves (1)
Fair value
reserves
Revenue
reserves Total
Noncontrolling
interests
Total
equity
Balance at 1 January 2022 19,238 782 848 31,795 52,663 1,675 54,338
Total comprehensive income for the year
Profit for the year – – – 5,748 5,748 134 5,882
Other comprehensive income
Items that may be reclassified subsequently
to income statement:
Financial assets, at FVOCI
Fair value losses for the year – – (2,027) – (2,027) (137) (2,164)
Reclassification of (gains)/losses to income statement
– on disposal – – 254 – 254 10 264
– on impairment – – # – # (#) (#)
Tax on net movements – – 224 – 224 23 247
Cash flow hedges – – – (2) (2) – (2)
Currency translation on foreign operations – – – (873) (873) – (873)
Other comprehensive income of associates – – (87) (569) (656) – (656)
Items that will not be reclassified subsequently
to income statement:
Currency translation on foreign operations – – – – – (54) (54)
Equity instruments, at FVOCI, net change in fair value – – (218) 37 (181) (26) (207)
Defined benefit plans remeasurements – – – 2 2 # 2
Own credit – – – 1 1 – 1
Total other comprehensive income, net of tax – – (1,854) (1,404) (3,258) (184) (3,442)
Total comprehensive income for the year – – (1,854) 4,344 2,490 (50) 2,440
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Transfers 7 12 – (19) – – –
Buy-back of shares for holding as treasury shares (250) – – – (250) – (250)
Dividends and distributions – – – (2,576) (2,576) (44) (2,620)
DSP reserve from dividends on unvested shares – – – 13 13 – 13
Perpetual capital securities issued 498 – – – 498 – 498
Share-based payments for staff costs – 8 – – 8 – 8
Shares issued to non-executive directors 1 – – – 1 – 1
Shares transferred to DSP Trust – (13) – – (13) – (13)
Shares vested under DSP Scheme – 103 – – 103 – 103
Treasury shares transferred/sold 250 (100) – – 150 – 150
Total contributions by and distributions to owners 506 10 – (2,582) (2,066) (44) (2,110)
Balance at 31 December 2022 19,744 792 (1,006) 33,557 53,087 1,581 54,668
Included in the balances:
Share of reserves of associates – – 86 3,380 3,466 – 3,466
(1) Included regulatory loss allowance reserve of $444 million at 1 January 2022 and $455 million at 31 December 2022.
(2) # represents amounts less than $0.5 million.
An analysis of the movements in each component within “Share capital”, “Other equity instruments”, “Capital reserves” and “Revenue
reserves” is presented in Notes 13 to 16.
The accompanying notes form an integral part of these financial statements.
OCBC Annual Report 2022
119
Statement of Changes in Equity – Group
For the financial year ended 31 December 2022
Statement of Changes in Equity – Group
Attributable to equity holders of the Bank
In $ million
Share
capital and
other equity
Capital
reserves (1)
Fair value
reserves
Revenue
reserves Total
Noncontrolling
interests
Total
equity
Balance at 1 January 2021 19,031 1,229 1,358 28,004 49,622 1,554 51,176
Total comprehensive income for the year
Profit for the year – – – 4,858 4,858 174 5,032
Other comprehensive income
Items that may be reclassified subsequently
to income statement:
Financial assets, at FVOCI
Fair value losses for the year – – (664) – (664) (30) (694)
Reclassification of (gains)/losses to income statement
– on disposal – – (122) – (122) (9) (131)
– on impairment – – 3 – 3 (#) 3
Tax on net movements – – 91 – 91 7 98
Cash flow hedges – – – (#) (#) – (#)
Currency translation on foreign operations – – – 110 110 – 110
Other comprehensive income of associates – – 127 212 339 – 339
Items that will not be reclassified subsequently
to income statement:
Currency translation on foreign operations – – – – – (1) (1)
Equity instruments, at FVOCI, net change in fair value – – 55 65 120 14 134
Defined benefit plans remeasurements – – – (1) (1) (#) (1)
Own credit – – – 1 1 – 1
Total other comprehensive income, net of tax – – (510) 387 (123) (19) (142)
Total comprehensive income for the year – – (510) 5,245 4,735 155 4,890
Transactions with owners, recorded directly in equity
Contributions by and distributions to owners
Transfers 13 (436) – 423 – – –
Buy-back of shares for holding as treasury shares (406) – – – (406) – (406)
Dividends and distributions – – – (1,886) (1,886) (34) (1,920)
Shares issued in lieu of ordinary dividends 376 – – – 376 – 376
DSP reserve from dividends on unvested shares – – – 10 10 – 10
Share-based payments for staff costs – 9 – – 9 – 9
Shares issued to non-executive directors 1 – – – 1 – 1
Shares issued under Share Option Scheme 1 – – – 1 – 1
Shares transferred to DSP Trust 83 (93) – – (10) – (10)
Shares vested under DSP Scheme – 73 – – 73 – 73
Treasury shares transferred/sold 139 – – – 139 – 139
Total contributions by and distributions to owners 207 (447) – (1,453) (1,693) (34) (1,727)
Changes in interests in subsidiaries that
do not result in loss of control – – – (1) (1) (#) (1)
Total changes in interests in subsidiaries – – – (1) (1) (#) (1)
Balance at 31 December 2021 19,238 782 848 31,795 52,663 1,675 54,338
Included in the balances:
Share of reserves of associates – – 174 3,115 3,289 – 3,289
(1) Included regulatory loss allowance reserve of $874 million at 1 January 2021 and $444 million at 31 December 2021.
(2) # represents amounts less than $0.5 million.
An analysis of the movements in each component within “Share capital”, “Other equity instruments”, “Capital reserves” and “Revenue
reserves” is presented in Notes 13 to 16.
The accompanying notes form an integral part of these financial statements.
120
In $ million
Share
capital and
other equity
Capital
reserves (1)
Fair value
reserves
Revenue
reserves
Total
equity
Balance at 1 January 2022 19,238 559 (25) 15,825 35,597
Profit for the year – – – 4,145 4,145
Other comprehensive income – – (649) (121) (770)
Total comprehensive income for the year (2) – – (649) 4,024 3,375
Transfers 7 (7) – – –
Buy-back of shares for holding as treasury shares (250) – – – (250)
Dividends and distributions – – – (2,576) (2,576)
DSP reserve from dividends on unvested shares – – – 13 13
Perpetual capital securities issued 498 – – – 498
Share-based payments for staff costs – 8 – – 8
Shares issued to non-executive directors 1 – – – 1
Treasury shares transferred/sold 250 – – – 250
Balance at 31 December 2022 19,744 560 (674) 17,286 36,916
Balance at 1 January 2021 19,031 994 300 14,560 34,885
Profit for the year – – – 2,726 2,726
Other comprehensive income – – (325) (16) (341)
Total comprehensive income for the year (2) – – (325) 2,710 2,385
Transfers 13 (444) – 431 –
Buy-back of shares for holding as treasury shares (406) – – – (406)
Dividends and distributions – – – (1,886) (1,886)
Shares issued in lieu of ordinary dividends 376 – – – 376
DSP reserve from dividends on unvested shares – – – 10 10
Share-based payments for staff costs – 9 – – 9
Shares issued to non-executive directors 1 – – – 1
Shares issued under Share Option Scheme 1 – – – 1
Shares transferred to DSP Trust 83 – – – 83
Treasury shares transferred/sold 139 – – – 139
Balance at 31 December 2021 19,238 559 (25) 15,825 35,597
(1) Included regulatory loss allowance reserve of $444 million at 1 January 2022 (1 January 2021: $874 million) and $444 million at 31 December 2022 (31 December 2021: $444 million).
(2) Refer to Statements of Comprehensive Income for detailed breakdown.
An analysis of the movements in each component within “Share capital”, “Other equity instruments”, “Capital reserves” and “Revenue
reserves” is presented in Notes 13 to 16.
The accompanying notes form an integral part of these financial statements.
OCBC Annual Report 2022
121
Statement of Changes in Equity – Bank
For the financial year ended 31 December 2022
Statement of Changes in Equity – Bank
In $ million 2022 2021
Cash flows from operating activities
Profit before income tax 6,939 5,680
Adjustments for non-cash items:
Allowances for loans and other assets 584 873
Amortisation of intangible assets 104 103
Change in hedging transactions, fair value through profit or loss securities and debt issued 130 104
Depreciation of property and equipment and interest expense on lease liabilities 429 416
Net loss/(gain) on disposal of government, debt and equity securities 206 (92)
Net gain on disposal of property and equipment (99) (107)
Share-based costs 80 73
Share of results of associates, net of tax (978) (824)
Items relating to life insurance fund
Surplus before income tax 999 1,221
Surplus transferred from life insurance fund (971) (1,137)
Operating profit before change in operating assets and liabilities 7,423 6,310
Change in operating assets and liabilities:
Deposits of non-bank customers 7,518 27,510
Deposits and balances of banks 1,807 (1,347)
Derivative payables and other liabilities 7,798 (6,908)
Trading portfolio liabilities (181) 55
Restricted balances with central banks 229 (764)
Government securities and treasury bills (2,913) 1,614
Fair value through profit or loss securities 1,931 (7,059)
Placements with and loans to banks (4,782) 7,354
Loans to customers (5,795) (23,685)
Derivative receivables and other assets (5,443) 4,087
Net change in other assets and liabilities of life insurance fund 2,507 8,029
Cash provided by operating activities 10,099 15,196
Income tax paid (1) (1,167) (913)
Net cash provided by operating activities 8,932 14,283
Cash flows from investing activities
Dividends from associates 145 138
Investment in associates – (514)
Purchases of debt and equity securities (11,622) (12,475)
Purchases of life insurance fund investment securities (37,237) (41,636)
Purchases of property and equipment (479) (443)
Proceeds from disposal of debt and equity securities 13,582 12,642
Proceeds from disposal of life insurance fund investment securities 33,970 34,345
Proceeds from disposal of property and equipment 128 152
Net cash used in investing activities (1,513) (7,791)
Cash flows from financing activities
Changes in non-controlling interests – (1)
Buy-back of shares for holding as treasury shares (250) (406)
Dividends and distributions paid (2,620) (1,544)
Net issue/(redemption) of other debt issued (Note 21.6) 1,897 (3,840)
Net proceeds from perpetual capital securities issued 498 –
Repayments of lease liabilities (89) (91)
Proceeds from subordinated debt issued (Note 21.6) 1,042 –
Proceeds from treasury shares transferred/sold under the Bank’s employee share schemes 150 140
Redemption of subordinated debt issued (Note 21.6) – (400)
Net cash provided by/(used in) financing activities 628 (6,142)
Net change in cash and cash equivalents 8,047 350
Net currency translation adjustments (773) 282
Cash and cash equivalents at 1 January 22,710 22,078
Cash and cash equivalents at 31 December (Note 23) 29,984 22,710
(1) In 2022, the Group paid income tax of $1,167 million (2021: $913 million), of which $576 million (2021: $280 million) was paid in Singapore and $591 million (2021: $633 million) in
other jurisdictions.
The accompanying notes form an integral part of these financial statements.
122
Consolidated Cash Flow Statement
For the financial year ended 31 December 2022
These notes form an integral part of the financial statements.
The Board of Directors of Oversea-Chinese Banking Corporation
Limited authorised these financial statements for issue on
23 February 2023.
1. General
Oversea-Chinese Banking Corporation Limited (the Bank) is
incorporated and domiciled in Singapore and is listed on the
Singapore Exchange Securities Trading Limited. The address of
the Bank’s registered office is 63 Chulia Street, #10-00 OCBC
Centre East, Singapore 049514.
The consolidated financial statements relate to the Bank and its
subsidiaries (together referred to as the Group) and the Group's
interests in associates. The Group is principally engaged in the
business of banking, life insurance, general insurance, asset
management, investment holding, futures and stockbroking.
2. Summary of Significant
Accounting Policies
2.1 Basis of Preparation
The financial statements have been prepared in accordance with
Singapore Financial Reporting Standards (International) (SFRS(I))
as required by the Singapore Companies Act 1967 (the Act).
The financial statements are presented in Singapore Dollar,
rounded to the nearest million unless otherwise stated. #
represents amounts less than $0.5 million. The financial
statements have been prepared under the historical cost
convention, except as disclosed in the accounting policies below.
The preparation of financial statements in conformity with SFRS(I)
requires management to exercise its judgement, use estimates
and make assumptions in the application of accounting policies
on the reported amounts of assets, liabilities, revenues and
expenses. Although these estimates are based on management’s
best knowledge of current events and actions, actual results
may ultimately differ from these estimates. Critical accounting
estimates and assumptions used that are significant to the
financial statements, and areas involving a high degree of
judgement or complexity, are disclosed in Note 2.25.
The following new/revised financial reporting standards and
interpretations were applied with effect from 1 January 2022:
SFRS(I) Title
Various Annual Improvements to SFRS(I)s
2018-2020
SFRS(I) 3 (Amendments) Reference to the Conceptual
Framework
SFRS(I) 1-16 (Amendments) Property, Plant and Equipment
– Proceeds before Intended Use
SFRS(I) 1-37 (Amendments) Onerous Contracts – Cost of
Fulfilling a Contract
The initial application of the above standards (including their
consequential amendments) and interpretations did not have
any material impact on the Group’s financial statements.
2.2 Basis of Consolidation
2.2.1 Subsidiaries
Subsidiaries are entities over which the Group controls when it is
exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through
its power over the entity.
Subsidiaries are consolidated from the date when control is
transferred to the Group and cease to be consolidated on the
date when that control ceases. The Group reassesses whether it
controls an investee if facts and circumstances indicate that there
have been changes to its power, its rights to variable returns or its
ability to use its power to affect its returns.
In preparing the consolidated financial statements, intra-group
transactions and balances, together with unrealised income and
expenses arising from the intra-group transactions among group
companies are eliminated. Unrealised losses are also eliminated
unless the transaction provides evidence of an impairment of the
asset transferred. Where necessary, adjustments are made to the
financial statements of subsidiaries to ensure consistency of
accounting policies within the Group.
Non-controlling interests (NCI) represent the equity in subsidiaries
not attributable, directly or indirectly, to shareholders of the Bank,
and are presented separately from equity attributable to equity
holders of the Bank. For NCI that arise through minority unit
holders' interest in the insurance subsidiaries of Great Eastern
Holdings Limited (GEH) consolidated investment funds, they are
recognised as a liability. These interests qualify as a financial
liability as they give the holder the right to put the instrument
back to the issuer for cash. Changes in these liabilities are
recognised in the income statement as expenses.
The Group applies the acquisition method to account for business
combinations. The cost of an acquisition is measured at the fair
value of the assets given, equity instruments issued or liabilities
incurred or assumed at the date of exchange. Acquisition-related
costs are expensed as incurred. Identifiable assets acquired and
liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the
acquisition date. The Group recognises any NCI either at fair
value or at the NCI’s proportionate share of the recognised
amounts of the acquiree’s identifiable net assets at the date of
acquisition on an acquisition-by-acquisition basis.
The excess of the fair value of the sum of consideration
transferred, the recognised amount of any NCI in the acquiree
and the acquisition-date fair values of any previously held equity
interest in the acquiree over the fair value of the identifiable net
assets acquired is recognised as goodwill at the date of acquisition.
When the excess is negative, a bargain purchase gain is recognised
immediately in the income statements.
OCBC Annual Report 2022
123
Notes to the Financial Statements
For the financial year ended 31 December 2022
Notes to the Financial Statements
2. Summary of Significant
Accounting Policies (continued)
2.2 Basis of Consolidation (continued)
2.2.1 Subsidiaries (continued)
Business combinations arising from transfers of interests in
entities that are under the control of the shareholder that controls
the Group are accounted for as if the acquisition has occurred at
the beginning of the earliest comparative year presented or, if
later, at the date that common control was established; for this
purpose comparatives are reclassified. The assets and liabilities
acquired are recognised at the carrying amounts recognised
previously in the Group controlling shareholder’s consolidated
financial statements. The components of equity of the acquired
entities are added to the same components within the Group’s
equity and any gain/loss arising is recognised directly in equity.
2.2.2 Structured Entities
A structured entity is an entity in which voting or similar rights
are not the dominant factor in deciding control and is generally
established for a narrow and well-defined objective.
For the purpose of disclosure, the Group is considered to be the
sponsor of a structured entity if it has a key role in establishing
the structured entity or its name appears in the overall structure
of the structured entity.
2.2.3 Associates and Joint Ventures
Associates are entities over which the Group has significant
influence, but not control or joint control, over the financial
and operating policies of these entities. Significant influence is
presumed to exist when the Group holds 20% or more of the
voting power of another entity.
Joint ventures are arrangements to undertake economic activities
in which the Group has joint control and rights to the net assets
of the entities.
Investments in associates and joint ventures are accounted for in
the consolidated financial statements using the equity method of
accounting. If the investment in an associate is held by, or is held
indirectly through, an entity that is a venture capital organisation,
or a mutual fund, unit trust and similar entities including
investment-linked insurance funds, the Group may elect to
measure that investment at fair value through profit or loss in
accordance with SFRS(I) 9 Financial Instruments. The Group will
make this election separately for each associate, at initial
recognition of the associate.
Under equity accounting, the investment is initially recognised
at cost, and the carrying amount is adjusted for post-acquisition
changes of the Group’s share of the net assets of the entity until
the date the significant influence or joint control ceases. The
Group’s investment in associates and joint ventures includes
goodwill identified on acquisition, where applicable. When the
Group’s share of losses equals or exceeds its interests in the
associates and joint ventures, including any other unsecured
receivables, the Group does not recognise further losses, unless it
has incurred obligations or made payments on behalf of the entities.
In applying the equity method of accounting, unrealised gains on
transactions between the Group and its associates and joint
ventures are eliminated to the extent of the Group’s interests in
these entities. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred. Where necessary, adjustments are made to the
financial statements of associates and joint ventures to ensure
consistency of accounting policies with those of the Group.
The results of associates and joint ventures are taken from audited
financial statements or unaudited management accounts of the
entities concerned, made up to dates of not more than three
months prior to the reporting date of the Group.
The investment in an associate or joint venture is derecognised
when the Group ceases to have significant influence or joint
control, respectively, over the investee. Amounts previously
recognised in other comprehensive income (OCI) in respect of the
investee are transferred to the income statement. Any retained
interest in the entity is re-measured at its fair value. The difference
between the carrying amount of the retained interest at the
date when significant influence or joint control ceases, and its
corresponding fair value, is recognised in the income statement.
2.2.4 Life Insurance Companies
Certain subsidiaries of the Group engaged in life insurance
business are structured into one or more long-term life insurance
funds, and shareholders’ funds. All premiums received, investment
returns, claims and expenses, and changes in liabilities to
policyholders are accounted for within the related life insurance
fund. Any surplus, which is determined by the appointed
Actuary after taking into account these items, may either be
distributed to the shareholders and the policyholders according
to a predetermined formula or retained within the life insurance
funds. The amount is presented as “Profit from life insurance”
in the Group’s consolidated income statement.
2.2.5 Investments in Subsidiaries, Associates and Joint
Ventures by the Bank
These investments are stated in the Bank’s balance sheet at cost
less any impairment in value after the date of acquisition.
2.3 Currency Translation
2.3.1 Foreign Currency Transactions
Transactions in foreign currencies are recorded in the respective
functional currencies of the Bank and its subsidiaries at the
exchange rates prevailing on the transaction dates. Monetary
items denominated in foreign currencies are translated to the
respective entities’ functional currencies at the exchange rates
prevailing at the reporting date. Exchange differences arising on
settlement and translation of such items are recognised in the
income statement.
124
2. Summary of Significant
Accounting Policies (continued)
2.3 Currency Translation (continued)
2.3.1 Foreign Currency Transactions (continued)
Non-monetary items denominated in foreign currencies that are
measured at fair value are translated at the exchange rate on
the date the fair value is determined. Exchange differences on
non-monetary items such as equity investments classified as fair
value through other comprehensive income (FVOCI) financial
assets are recognised in OCI and presented in the fair value
reserve within equity.
2.3.2 Foreign Operations
The assets and liabilities of foreign operations, including goodwill
and fair value adjustment arising on the acquisition of a foreign
operation, are translated to Singapore Dollar at exchange rates
prevailing at the reporting date. The income and expenses of
foreign operations are translated to Singapore Dollar at average
exchange rates for the year, which approximate the exchange
rates at the dates of the transactions.
Differences arising from the translation of a foreign operation are
recognised in OCI and presented in the currency translation reserve
within equity. When a foreign operation is disposed of, in part or
in full, the relevant amount in the currency translation reserve is
included in the income statement on disposal of the operation.
2.4 Cash and Cash Equivalents
In the consolidated cash flow statement, cash and cash equivalents
comprise cash on hand, money market placements, reverse repo and
other balances with central banks which are generally short-term
financial instruments or repayable on demand.
2.5 Financial Instruments
2.5.1 Recognition
The Group initially recognises derivative financial instruments
(forwards, futures, swaps and options) on the trade date. It
initially recognises non-derivative financial instruments (loans
and advances, deposits and debts issued, and regular way
purchases and sales of financial assets) on the settlement date.
Regular-way purchases and sales are those settled within the
time period established by regulation or market convention.
2.5.2 De-Recognition
Financial assets are de-recognised when the Group’s contractual
rights to the cash flows from the financial assets expire or when
the Group transfers the financial asset to another party without
retaining control or transfers substantially all the risks and
rewards of ownership of the asset. Financial liabilities are
de-recognised when the Group’s obligations specified in the
contract expire or are discharged or cancelled.
2.5.3 Modifications
The original terms of a financial instrument may be renegotiated
or otherwise modified, resulting in changes to its contractual
cash flows. Where the extent of changes as a result of the
modification or renegotiation is substantial, the existing financial
instrument is derecognised and a new instrument (with new terms
including a new effective interest rate) recognised. In all other
cases, the modified contractual cash flows of the existing
instrument are discounted at the original effective interest rate to
arrive at a new carrying amount and the resulting modification
gain or loss is recognised in profit or loss.
Interest Rate Benchmark Reform (IBOR Reform)
If the basis for determining the contractual cash flows of a
financial asset or financial liability measured at amortised cost
changes as a result of IBOR reform, the Group updates the effective
interest rate of the financial asset or financial liability to reflect the
change that is required by the reform. A change in the basis for
determining the contractual cash flows is required by IBOR reform
if the following conditions are met:
• the change is necessary as a direct consequence of the reform; and
• the new basis for determining the contractual cash flows is
economically equivalent to the previous basis – i.e. the basis
immediately before the change.
If there are changes to the terms of a financial asset or financial
liability in addition to changes to the basis for determining the
contractual cash flows required by interest rate benchmark reform,
the Group first updates the effective interest rate of the financial
asset or financial liability to reflect the change that is required by
interest rate benchmark reform. After that, the Group applies the
accounting policy for modifications set out above to account for the
additional changes.
2.5.4 Offsetting
Financial assets and liabilities are offset and the net amount
presented in the balance sheet when there is a legally enforceable
right to offset the amounts and an intention to settle on a net
basis or realise the asset and settle the liability simultaneously.
Income and expenses are presented on a net basis only when
permitted by the accounting standards.
2.5.5 Sale and Repurchase Agreements (Including Securities
Lending and Borrowing)
Repurchase agreements (repos) are regarded as collateralised
borrowing. The securities sold under repos are treated as pledged
assets and remain as assets on the balance sheets. The amount
borrowed is recorded as a liability. Reverse repos are treated as
collateralised lending and the amount of securities purchased is
included in placements with central banks, loans to banks and
non-bank customers. The difference between the amount received
and the amount paid under repos and reverse repos is amortised
as interest expense and interest income respectively.
Securities lending and borrowing transactions are generally
secured, with collateral taking the form of securities or cash. The
transfer of securities to or from counterparties is not reflected on
the balance sheet. Cash collateral paid or received is recorded as an
asset or a liability respectively.
OCBC Annual Report 2022
Notes to the Financial Statements 125
2. Summary of Significant
Accounting Policies (continued)
2.6 Non-Derivative Financial Assets
Classification and Measurement of Financial Assets
A non-derivative financial asset is initially recognised at fair
value and is subsequently measured either at amortised cost,
fair value through other comprehensive income (FVOCI) or fair
value through profit or loss (FVTPL). Directly attributable
transaction costs are included as part of the initial cost for
financial instruments that are not subsequently measured at
fair value through profit or loss.
(a) Business Model Assessment
The Group makes an assessment of the objective of a business
model in which an asset is held at a portfolio level because
this best reflects the way the business is managed, and
information is provided to management. The information
considered includes:
• the stated policies and objectives for the portfolio and the
operation of those policies in practice. In particular, whether
management’s strategy focuses on earning contractual
interest income, maintaining a particular interest rate
profile, matching the duration of the financial assets to
the duration of the liabilities that are funding those
assets or realising cash flows through the sale of
the assets;
• how the performance of the portfolio is evaluated and
reported to the Group’s management;
• the risks that affect the performance of the business model
(and the financial assets held within that business model)
and its strategy of how those risks are managed;
• how managers of the business are compensated (e.g.
whether compensation is based on the fair value of the
assets managed or the contractual cash flows collected); and
• the frequency, volume and timing of sales in prior periods,
the reasons for such sales and its expectations about future
sales activity. However, information about sales activity is
not considered in isolation, but as part of an overall
assessment of how the Group’s stated objective for
managing the financial assets is achieved and how cash
flows are realised.
Financial assets that are held for trading and whose performance
is evaluated or managed on a fair value basis are measured at
FVTPL because they are neither within the business model to
hold the assets to collect contractual cash flows, nor within the
business model to hold the assets both to collect contractual cash
flows and to sell.
(b) Assessment of Whether Contractual Cash Flows are
Solely Payments of Principal and Interest
For the purposes of this assessment, “principal” is defined as the
fair value of the financial asset on initial recognition. “Interest”
is defined as consideration for the time value of money and for
the credit risk associated with the principal amount outstanding
during a particular period of time and for other basic lending risks
and costs (e.g. liquidity risk and administrative costs), as well as a
profit margin.
2.6.1 Debt Instruments Measured at Amortised Cost
A debt financial instrument is measured at amortised cost if it
meets both of the following conditions and is not designated
at FVTPL:
• it is held within a business model whose objective is to
hold the asset until maturity to collect contractual cash
flows; and
• its contractual terms give rise to cash flows that are
solely payments of principal and interest on the
principal outstanding.
Debt instruments classified as amortised cost are subject to
impairment assessment using the expected credit loss model
in accordance with SFRS(I) 9. Interest earned whilst holding the
financial assets is included in interest income.
2.6.2 Debt Instruments Measured at FVOCI
A debt financial instrument is measured at FVOCI if it meets both
of the following conditions and is not designated at FVTPL:
• it is held within a business model whose objective is
achieved by both collecting contractual cash flows and
selling the financial asset; and
• its contractual terms give rise to cash flows that are
solely payments of principal and interest on the
principal outstanding.
Debt instruments classified as FVOCI are subject to impairment
assessment using the expected credit loss model in accordance
with SFRS(I) 9. Interest earned while holding the financial assets
is included in interest income.
At the reporting date, the Group recognises unrealised fair
value gains and losses on revaluing these assets in OCI and
presents the cumulative gains and losses in fair value reserve
within equity, except for the recognition of impairment gains
or losses, interest income and foreign exchange gains and losses,
which are recognised in the income statement. At maturity
or upon disposal, the cumulative gain or loss previously
recognised in OCI is reclassified from fair value reserve to the
income statement.
2.6.3 Debt Instruments Measured at FVTPL
Debt instruments that do not meet the requirements to be
measured at amortised cost or at FVOCI are measured at
FVTPL. At the reporting date, the Group recognises realised
and unrealised gains and losses as trading income in the
income statement. Interest earned while holding the assets is
included in interest income.
126
2. Summary of Significant
Accounting Policies (continued)
2.6 Non-Derivative Financial Assets (continued)
Classification and Measurement of Financial Assets (continued)
(b) Assessment of Whether Contractual Cash Flows are Solely
Payments of Principal and Interest (continued)
2.6.4 Designation at FVTPL
On initial recognition, the Group may irrevocably designate a
financial asset at FVTPL notwithstanding that it would otherwise
meet the requirements to be measured at amortised cost or
at FVOCI, if doing so, it eliminates or significantly reduces an
accounting mismatch that would otherwise arise. Upon designation,
financial assets are measured at fair value on each reporting date
until maturity or derecognition. Realised and unrealised fair value
changes are recognised in the income statement.
2.6.5 Equity Instruments
Equity instruments held for trading are classified as FVTPL. Equity
instruments that are not held for trading may be classified as
FVOCI based on an irrevocable election on initial recognition on an
investment-by-investment basis.
At the reporting date, realised and unrealised fair value gains or
losses on revaluing the equity instruments classified as FVTPL are
recognised in the income statement. Realised and unrealised fair
value gains or losses on revaluing the equity instruments classified
as FVOCI are recognised in OCI and are never reclassified to the
income statement.
Dividend earned while holding the equity instruments classified as
FVTPL is recognised as dividend income in the income statement.
Dividend from equity instruments classified as FVOCI is recognised
as dividend income in the income statement unless the dividend
clearly represents a recovery of part of the cost of the investment.
2.6.6 Reclassification
Financial assets are not reclassified subsequent to their initial
recognition, except in the period when the Group changes its
business model for managing its financial assets.
2.7 Derivative Financial Instruments
All derivative financial instruments are recognised initially and
subsequently measured at fair value on the balance sheet as an
asset or liability depending on whether it is a receivable or a
payable, respectively. The resulting gain or loss is recognised
immediately in profit or loss unless it qualifies for recognition in
other comprehensive income under cash flow or net investment
hedge accounting.
Fair values reflect the exit price of the instrument and include
adjustments to take into account the credit risk of the Group
and the counterparty where appropriate. An embedded
derivative is not separated from the host contract that is a
financial asset. However, it is separated from the host contract
that is a financial liability or a non-financial and treated as a
stand-alone financial derivative.
The Group enters into hedging derivative transactions to manage
exposures to interest rate, foreign currency and credit risks arising
from its core banking activities of lending and accepting deposits.
The Group applies fair value, cash flow or net investment hedge
accounting when the transactions meet the specified criteria for
hedge accounting.
Before applying any hedge accounting, the Group determines
whether an economic relationship exists between the hedged
item and the hedging instrument by considering qualitative
characteristics or quantitative analysis of these items. In its
qualitative assessment, the Group considers whether the critical
terms of its hedged item and the hedging instrument are closely
aligned and evaluates whether the fair values of the hedged item
and the hedging instrument respond in an offsetting manner to
similar risks. Where economic hedge relationships meet the
hedge accounting criteria, the Group establishes its hedge ratio
by aligning the principal amount of the hedging instrument to
the extent of its hedged item.
In a fair value hedging relationship, the Group mainly uses interest
rate swaps, interest rate futures and cross currency swaps to
hedge its exposure to changes in the fair value of fixed rate
instruments and its foreign currency risk exposure. For qualifying
fair value hedges, changes in the fair values of the derivative and
of the hedged item relating to the hedged risk are recognised in
the income statement. If the hedge relationship is terminated, the
fair value adjustment to the hedged item continues to be reported
as part of the carrying amount of the asset or liability and is
amortised to the income statement as a yield adjustment over the
remaining maturity of the asset or liability.
In a cash flow hedging relationship, the Group mainly uses interest
rate swaps to hedge the variability in the cash flows of variable
rate asset or liability resulting from changes in interest rates. For
qualifying cash flow hedges, the effective portion of the change in
fair value of the derivative is recognised in the cash flow hedge
reserve in equity. The gain or loss relating to the ineffective
portion is recognised immediately in the income statement.
Amounts accumulated in the cash flow hedge reserve remain in
equity until the hedged cash flows is recognised in the income
statement. When the hedged cash flows are no longer expected
to occur, the cumulative gain or loss in the hedge reserve is
immediately transferred to the income statement.
“Hedge ineffectiveness” represents the amount by which the
changes in the fair value of the hedging instrument differ from
changes in the fair value of a benchmark hedging instrument that
is a perfect match. The amount of hedge ineffectiveness is
recognised immediately in profit or loss. The sources of
ineffectiveness for both fair value hedges and cash flow hedges
include imperfect economic relationship or mis-matching of key
terms between the hedging instrument and the hedged item as
well as the effect of credit risk existing in the hedging instrument.
OCBC Annual Report 2022
Notes to the Financial Statements 127
2. Summary of Significant
Accounting Policies (continued)
2.7 Derivative Financial Instruments (continued)
The hedged risk in the Group’s net investment hedges is the foreign
currency exposure that arises from a net investment in subsidiaries
and foreign operations that have a different functional currency
from that of the Bank. The risk arises from the fluctuation in spot
exchange rates between the functional currency of the subsidiaries
and the Bank’s functional currency. The Group uses a mixture of
derivative financial instruments and liabilities to manage its foreign
currency exposure in its net investment hedges. For hedges of net
investments in foreign operations which are accounted for in a
similar way as cash flow hedges, the gain or loss relating to the
effective portion of the hedging instrument is recognised in equity
and that relating to the ineffective portion is recognised in the
income statement immediately. Gains and losses accumulated in
equity are transferred to income statement on disposal of the
foreign operations. The main source of ineffectiveness for the
Group’s net investment hedge is the use of a hedging instrument
denominated in a proxy currency that is not perfectly correlated to
the actual currency to which the Group is exposed.
Specific Policies for Hedges Affected by IBOR Reform
(As Defined in Note 2.5.3)
For the purpose of evaluating whether there is an economic
relationship between the hedged item and the hedging
instrument, the Group assumes that the benchmark interest rate is
not altered as a result of IBOR reform. The Group will cease to apply
the specific policy for assessing the economic relationship between
the hedged item and the hedging instrument when the
uncertainty arising from IBOR reform is no longer present with
respect to the timing and the amount of the interest rate
benchmark-based cash flows of the hedged item or hedging
instrument, or when the hedging relationship is discontinued.
When the basis for determining the contractual cash flows of the
hedged item or hedging instrument changes as a result of IBOR
reform, the Group amends the hedge documentation of that
hedging relationship to reflect the change(s) required by IBOR
reform. For this purpose, the hedge designation is amended only to
make one or more of the following changes:
• designating an alternative benchmark rate as the hedged risk;
• updating the description of the hedged item, including the
description of the designated portion of the cash flows or fair
value being hedged;
• updating the description of the hedging instrument; or
• updating the description of how the entity will assess hedge
effectiveness.
The Group amends the formal hedge documentation by the end of
the reporting period during which a change required by IBOR reform
is made to the hedged risk, hedged item or hedging instrument.
These amendments in the formal hedge documentation do not
constitute the discontinuation of the hedging relationship or the
designation of a new hedging relationship.
If changes are made in addition to those changes required by IBOR
reform described above, the Group first considers whether those
additional changes result in the discontinuation of the hedge
accounting relationship. If the additional changes do not result in
the discontinuation of the hedge accounting relationship, then the
Group amends the formal hedge documentation for changes
required by IBOR reform as mentioned above.
2.8 Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses. The cost of an item of
property, plant and equipment includes the purchase price and
costs directly attributable to bringing the asset to the location and
condition necessary for it to be capable of operating in the manner
intended by management.
Subsequent expenditure relating to property, plant and equipment
is added to the carrying amount of the asset when it is probable
that future economic benefits, in excess of the standard of
performance of the asset before the expenditure was made, will
flow to the Group and the cost can be reliably measured. Other
subsequent expenditure is recognised in the income statement
during the financial year in which the expenditure is incurred.
The residual values, useful lives and depreciation methods of
property, plant and equipment are reviewed and adjusted as
appropriate, at each reporting date, to ensure that they reflect the
expected economic benefits derived from these assets.
Property, plant and equipment are depreciated on a straight-line
basis over their estimated useful lives as follows:
Furniture and fixtures – 5 to 10 years
Office equipment – 5 to 10 years
Computers – 3 to 10 years
Renovation – 8 years or remaining lease term,
whichever is shorter
Motor vehicles – 5 years
Freehold land and leasehold land with leases of more than 100
years to expiry are not depreciated. Buildings and other leasehold
land are depreciated over 50 years or the period of the lease,
whichever is shorter.
An item of property, plant and equipment is de-recognised upon
disposal or when no future economic benefit is expected from its use.
Any gain or loss arising on de-recognition of the asset is included in
the income statement in the year the asset is de-recognised.
2.9 Investment Property
Investment property is property held either for rental income or for
capital appreciation or for both. Investment properties, other than
those held under the Group’s life insurance funds, are stated at cost
less accumulated depreciation and impairment losses. Freehold land
and leasehold land with leases of more than 100 years to expiry are
not depreciated. Buildings and other leasehold land are depreciated
over 50 years or the period of the lease, whichever is shorter.
128
2. Summary of Significant
Accounting Policies (continued)
2.9 Investment Property (continued)
Investment property held under the Group’s life insurance fund is
stated at fair value at the reporting date and collectively form an
asset class which is an integral part of the overall investment
strategy for the asset-liability management of the life insurance
business. The fair value of the investment property is determined
based on objective valuations undertaken by independent valuers
at the reporting date. Changes in the carrying amount resulting
from revaluation are recognised in the income statement of the
life insurance fund.
2.10 Goodwill and Other Intangible Assets
2.10.1 Goodwill
Goodwill on acquisition of subsidiaries represents the excess of the
sum of the consideration transferred, the amount of any noncontrolling interest in the acquiree and the acquisition-date fair
value of any previously held equity interest over the fair value of
the identifiable net assets acquired.
Goodwill is stated at cost less impairment loss. Impairment test is
carried out annually, or when there is indication that the goodwill
may be impaired.
Gains or losses on disposal of subsidiaries and associates include
the carrying amount of goodwill relating to the entity sold.
2.10.2 Intangible Assets
Intangible assets other than goodwill are separately identifiable
intangible items arising from acquisitions and are stated at cost
less accumulated amortisation and impairment losses. Intangible
assets with finite useful lives are amortised over their estimated
useful lives. The estimated useful lives range from 6 to 20 years.
The useful life of an intangible asset is reviewed at least at each
financial year end.
2.11 Non-Current Assets Held for Sale
Non-current assets that are expected to be recovered through sale
rather than through continuing use are classified as held for sale.
Immediately before classification as held for sale, the assets are
measured in accordance with the Group’s accounting policies.
Thereafter, the assets are generally measured at the lower of their
carrying amount and fair value less cost to sell.
2.12 Impairment of Assets
(I) Financial Assets
Impairment allowances for financial assets are assessed using a
forward-looking expected credit loss (ECL) model in accordance
with the requirements of SFRS(I) 9.
2.12.1 Scope
Under SFRS(I) 9, the ECL model is applied to debt financial assets
measured at amortised cost or FVOCI and off-balance sheet loan
commitments and financial guarantees.
2.12.2 Expected Credit Loss Impairment Model
Under SFRS(I) 9, credit loss allowances are measured on each
reporting date according to a three-stage expected credit loss
impairment model:
• Stage 1 – On initial recognition and at a subsequent reporting
date, where there is no significant increase in credit risk, the
expected credit loss will be that resulting from default events
that are possible over the next 12 months.
• Stage 2 – Where there is a significant increase in credit risk
since the initial recognition, the expected credit loss will be
that resulting from default events that are possible over the
expected life of the asset.
• Stage 3 – When a financial asset exhibits objective evidence of
impairment and is considered to be credit-impaired, the credit
loss allowance will be the full lifetime expected credit loss.
2.12.3 Measurement
ECLs are a probability-weighted estimate of credit losses. They are
measured based on the cash shortfalls as elaborated below:
(a) Financial assets that are not credit-impaired (Stage 1 and
Stage 2) at the reporting date: The present value of all cash
shortfalls (i.e. the cash flows due to the entity in accordance
with the contract less the cash flows that the Group expects
to receive);
(b) Financial assets that are credit-impaired (Stage 3) at the
reporting date: The gross carrying amount less the present
value of cash flows that the Group expects to receive;
(c) Undrawn loan commitments: The contractual cash flows that
are due to the Group if the commitment is drawn down less
the cash flows that the Group expects to receive; and
(d) Financial guarantee contracts: The expected payments to
reimburse the holder less any amounts that the Group expects
to recover.
The key inputs used in the measurement of ECL are:
• Probability of default (PD) – This is an estimate (as a
percentage) of the likelihood of default over a time period
such as one year or the exposure’s expected life time.
• Loss given default (LGD) – This is an estimate (as a percentage)
of the loss arising on default. It is based on the difference
between the contractual cash flows due and those that the
Group would expect to receive, including from any collateral.
• Exposure at default (EAD) – This is an estimate (as an amount)
of the exposure at a future default date, taking into account
expected changes in the exposure after the reporting date,
including repayments of principal and interest as well as
expected drawdowns on committed facilities.
For Stage 1 exposures, ECL is calculated by multiplying the
12-month PD by LGD and EAD. For Stage 2 and Stage 3 exposures,
ECL is calculated by multiplying lifetime PD by LGD and EAD.
Loans to customers that are collectively assessed are grouped on
the basis of shared credit risk characteristics such as loan type,
industry, geographical location of the borrower, collateral type and
other relevant factors.
OCBC Annual Report 2022
Notes to the Financial Statements 129
2. Summary of Significant
Accounting Policies (continued)
2.12 Impairment of Assets (continued)
(I) Financial Assets (continued)
2.12.3 Measurement (continued)
All key inputs (PD, LGD and EAD) used to estimate Stage 1 and
Stage 2 credit loss allowances are modelled based on three
macroeconomic scenarios (or changes in macroeconomic
variables) that are most closely correlated with credit losses in
the relevant portfolio.
The three macroeconomic scenarios represent a most likely
“Base” outcome, and two other less likely “Upside” and
“Downside” scenarios. These scenarios are probability-weighted
and underlying key macroeconomic assumptions are based on
independent external and in-house views. The assumptions are
subject to regular management reviews to reflect current
economic situations.
Each macroeconomic scenario used in the expected credit loss
calculation includes a projection of all relevant macroeconomic
variables used in the models for the lifetime period, reverting to
long-run averages generally after 3 to 5 year periods. Depending
on their usage in the models, macroeconomic variables are
projected at a country or more granular level which differ by
portfolio. The primary macroeconomic variables adopted are
Gross Domestic Product, Unemployment rate, Property Price
Index and Interest rate.
The definition of default used in the measurement of expected
credit losses is consistent with the definition of default used for
credit risk management purposes. The default definition has been
applied consistently to model the PD, LGD and EAD throughout
Group’s expected credit loss calculations.
The Group considers a financial asset to be in default by assessing
both quantitative and qualitative criteria such as days past due
and the terms of financial covenants. A default occurs when the
borrower or bond issuer is unlikely to pay its credit obligations to
the Group in full, without recourse by the Group to actions such as
realising security (if any is held) or when the financial asset is more
than 90 days past due.
A financial asset is considered to be no longer in default when
there is an established trend of credit improvement, supported by
an assessment of the borrower’s repayment capability, cash flows
and financial position.
The maximum period considered when estimating ECLs is the
maximum contractual period over which the Group is exposed to
credit risk.
Financial assets are written off against their related impairment
allowances when all feasible recovery actions have been exhausted
or when the recovery prospects are considered remote.
2.12.4 Movement Between Stages
Movements between Stage 1 and Stage 2 are based on whether
an instrument’s credit risk as at the reporting date has increased
significantly since its initial recognition.
The Group considers both qualitative and quantitative parameters
in the assessment of whether this is a significant increase in credit
risk. These include the following:
(a) The Group has established thresholds for significant increases
in credit risk based on both a relative and absolute change in
lifetime PD relative to initial recognition.
(b) The Group conducts qualitative assessment to ascertain if
there has been significant increase in credit risk.
(c) The Group uses days past due as a further indication of
significant increase in credit risk.
Movements between Stage 2 and Stage 3 are based on
whether financial assets are credit-impaired as at the
reporting date. The determination of whether a financial asset
is credit-impaired under SFRS(I) 9 will be based on objective
evidence of impairment.
The assessments for a significant increase in credit risk since
initial recognition and credit-impairment are performed
independently as at each reporting period. Assets can move in
both directions through the stages of the impairment model.
After a financial asset has migrated to Stage 2, if it is no longer
considered that credit risk has significantly increased relative to
initial recognition in a subsequent reporting period, it will move
back to Stage 1. A modification of the terms of a financial asset
that does not result in derecognition will result in the financial
asset being transferred out of Stage 3 if the indicators of it being
identified as credit-impaired is no longer met and that the
evidence for its transfer out of Stage 3 solely relates to events
such as up-to-date and timely payment occurring in the
subsequent periods.
If a modified financial asset results in derecognition,
the new financial asset will be recognised under Stage 1,
unless it is assessed to be credit-impaired at the time of
the modification.
2.12.5 Regulatory Requirement
Under MAS 612 requirement, the Group is required to maintain a
minimum regulatory loss allowance (MRLA) of 1% of the gross
carrying amount of selected credit exposures, net of collateral.
Where the accounting loss allowance of selected non-creditimpaired exposures computed under SFRS(I) 9 is less than the
MRLA, the Group shall maintain the difference in a nondistributable regulatory loss allowance reserve (RLAR) account
through the appropriation of revenue reserves. Where the
aggregated accounting loss allowance and RLAR exceeds the
MRLA, the Group may transfer the excess amount in the RLAR
to revenue reserves.
130
2. Summary of Significant
Accounting Policies (continued)
2.12 Impairment of Assets (continued)
(II) Other Assets
2.12.6 Goodwill
For the purpose of impairment testing, goodwill is allocated to
each of the Group’s Cash Generating Units (CGU) expected to
benefit from synergies of the business combination. The Group’s
CGUs correspond with the business segments identified in the
primary segment report.
Impairment loss on goodwill cannot be reversed in
subsequent periods.
2.12.7 Investments in Subsidiaries and Associates
Property, Plant and Equipment
Investment Property
Intangible Assets
Investments in subsidiaries and associates, property, plant
and equipment, investment property and intangible assets,
are reviewed for impairment on the reporting date or whenever
there is any indication that the carrying amount of an asset
may not be recoverable. If such an indication exists, the carrying
amount of the asset is written down to its recoverable amount (i.e.
the higher of the fair value less cost to sell and the value in use).
The impairment loss is recognised in the income statement,
and is reversed only if there has been a change in the estimates
used to determine the asset’s recoverable amount since the last
impairment loss was recognised. The carrying amount of an asset
is increased to its revised recoverable amount, provided that this
amount does not exceed the carrying amount that would have
been determined (net of amortisation or depreciation) if no
impairment loss had been recognised for the asset in prior years.
2.13 Insurance Receivables
Insurance receivables are recognised when due. They are
measured at initial recognition at the fair value received or
receivable. Subsequent to initial recognition, insurance
receivables are measured at amortised cost, using the effective
interest method. A loss allowance is measured at an amount
equal to lifetime expected credit losses, with the impairment
loss recognised in the income statement. Insurance receivables
are derecognised when the derecognition criteria for financial
assets has been met. The Group’s insurance receivables include
outstanding premiums, policy loans and reinsurance receivables.
Policy loans are loans and advances made to policyholders, and are
collateralised by the underlying policies.
2.14 Financial Liabilities
A non-derivative financial liability is initially recognised at fair
value less transaction costs and is subsequently measured at
amortised cost using the effective interest method except where it
is designated as FVTPL.
For financial liabilities designated at fair value, gains and losses
arising from changes in fair value are recognised in the net trading
income line in the income statement except for changes in fair
value attributable to the Group’s own credit risk where it is
presented directly within other comprehensive income. Amounts
recorded in OCI related to this credit risk are not subject to
recycling in profit or loss, but are transferred to unappropriated
profit when realised. Financial liabilities are held at fair value
through profit or loss when:
(a) they are acquired or incurred for the purpose of selling or
repurchasing in the near term;
(b) the fair value option designation eliminates or significantly
reduces accounting mismatch that would otherwise arise; or
(c) the financial liability contains an embedded derivative that
would otherwise need to be separately recorded.
2.15 Provisions and Other Liabilities
2.15.1 Provisions
Provisions are recognised when there is a present legal or
constructive obligation as a result of past events, it is probable that
an outflow of resources will be required to settle the obligation, and
a reliable estimate of the amount can be made. Where a provision is
expected to be reimbursed, for example under an insurance
contract, the reimbursement is recognised as a separate asset only
when it is virtually certain that reimbursement will be received.
Provision for insurance agents’ retirement benefits, including
deferred benefits, is calculated according to terms and conditions
stipulated in the respective agent’s agreement. The deferred/
retirement benefit accumulated at the reporting date includes
accrued interest.
2.15.2 Policy Benefits
Policy benefits are recognised when a policyholder exercises the
option to deposit the survival benefits with the life insurance
subsidiaries when the benefit falls due. Policy benefits are interest
bearing at rates adjusted from time to time by the life insurance
subsidiaries. Interest payable on policy benefits is recognised in the
income statements as incurred.
2.16 Insurance Contracts
Insurance contracts are those contracts where the Group (the
insurer), mainly the insurance subsidiaries of GEH, has accepted
significant insurance risk from the policyholders by agreeing to
compensate the policyholders if a specified uncertain future event
(the insured event) adversely affects the policyholders. As a general
guideline, the Group determines whether it has significant
insurance risk, by comparing benefits paid with benefits payable if
the insured event did not occur. Insurance contracts can also
transfer financial risk.
Once a contract has been classified as an insurance contract, it
remains an insurance contract for the remainder of its lifetime,
even if the insurance risk reduces significantly during this period,
unless all rights and obligations are extinguished or expired.
OCBC Annual Report 2022
Notes to the Financial Statements 131
2. Summary of Significant
Accounting Policies (continued)
2.16 Insurance Contracts (continued)
For the purpose of SFRS(I) 4 Insurance Contracts, the Group adopts
maximum policy benefits as the proxy for insurance risk and cash
surrender value or discounted maturity value as the proxy for the
realisable value of the insurance contract. The Group defines
insurance risk to be significant when the ratio of the insurance
risk over the deposit component is not less than 105% of the
deposit component at inception of the insurance contract.
Based on this definition, all policy contracts issued by insurance
subsidiaries within the Group are considered insurance contracts
as at the reporting date.
Certain subsidiaries within the Group, primarily GEH and its
subsidiaries (GEH Group), write insurance contracts in accordance
with insurance regulations prevailing in their respective
jurisdictions. Disclosures on the various insurance contract
liabilities are classified into the principal components, as follows:
(a) Life insurance contract liabilities, comprising
• Participating Fund contract liabilities;
• Non-participating Fund contract liabilities; and
• Investment-linked Fund contract liabilities.
(b) Non-life insurance contract liabilities
(c) Reinsurance contracts
Life Insurance Contract Liabilities
Insurance contracts are recognised and measured in accordance
with the terms and conditions of the respective contracts and are
based on guidelines laid down by the respective insurance
regulations. Premiums, claims and benefit payments, acquisition
and management expenses and valuation of future policy benefit
payments or premium reserves as the case may be, are
recognised in the income statements of the respective insurance
subsidiaries.
The valuation of insurance contract liabilities is determined
according to the Insurance Regulations:
(a) Singapore Insurance Act 1966, Insurance (Valuation and
Capital) Regulations 2004 for insurance funds regulated in
Singapore (MAS Regulations); and
(b) Risk-Based Capital Framework for Insurers for insurance
funds regulated in Malaysia.
Life insurance contract liabilities are recognised when contracts
are entered into and premiums are charged. These liabilities are
measured by using the gross premium valuation method. The
liability is determined as the sum of the present value of future
guaranteed and, where relevant, appropriate level of nonguaranteed benefits and expenses, less the present value of
future gross considerations arising from the policy discounted
at the appropriate discount rate. The liability is based on best
estimate assumptions and with due regard to significant recent
experience. An appropriate risk margin allowance for adverse
deviation from expected experience is made in the valuation of
non-participating life policies, the guaranteed benefit liabilities of
participating life policies and liabilities of non-unit investmentlinked policies.
The liability in respect of participating insurance contracts is based
on the higher of the guaranteed benefit liabilities or the total
benefit liabilities at the contract level derived as stated above.
In the case of life policies where part of, or all the premiums are
accumulated in a fund, the accumulated amounts, as declared to
policyholders are shown as liabilities if the accumulated amounts
are higher than the amounts as calculated using the gross
premium valuation method.
In the case of short-term life policies covering contingencies other
than death or survival, the liability for such life insurance contracts
comprises the provision for unearned premiums and unexpired
risks, together with provision for claims outstanding, including an
estimate of the incurred claims that have not yet been reported to
the Group.
Risk Transfer
The Group issues a variety of short and long duration insurance
contracts which transfer risks from the policyholders to the Group
to protect policyholders from the consequences of insured events
such as death, disability, illness, accident, including survival. These
contracts may transfer both insurance and investment risk or
insurance risk alone, from the policyholders to the Group.
For non-participating policy contracts other than medical
insurance policy contracts, the payout to policyholders upon the
occurrence of the insured event is pre-determined and the transfer
of risk is absolute. For medical insurance policy contracts, the
payout is dependent on the actual medical costs incurred upon the
occurrence of the insured event.
Contracts which transfer insurance risk alone from policyholders to
the Group are commonly known as investment linked policies. As
part of the pricing for these contracts, the insurance subsidiaries
within the Group include certain charges and fees to cover for
expenses and insured risk. The net investment returns derived
from the variety of investment funds as selected by the
policyholders accrue directly to the policyholders.
The Group issues investment linked contracts as an insurance
contract which insure human life events such as death or survival
over a long duration; coupled with an embedded derivative linking
death benefit payments on the contract to the value of a pool of
investments within the investment linked fund set up by the
insurance subsidiary. As an embedded derivative meets the
definition of an insurance contract it need not be separately
accounted for from the host insurance contract. The liability
valuation for such contracts is adjusted for changes in the fair
value of the underlying assets at frequencies in accordance with
the terms and conditions of the insurance contracts.
132
2. Summary of Significant Accounting Policies (continued)
2.16 Insurance Contracts (continued)
Life Insurance Contract Liabilities (continued)
The table below provides the key underlying assumptions used for valuation of life insurance contract liabilities.
Singapore Malaysia
Valuation method (1) Gross premium valuation
For Participating Fund, the method that produces
the higher reserves of:
(i) Guaranteed and non-guaranteed cash flows
discounted at the appropriate rate of return
reflecting the strategic asset allocation;
(ii) Guaranteed cash flows discounted using the
interest rate outlined below; and
(iii) Total assets less all liabilities except insurance
contract liabilities of the Participant fund.
Gross premium valuation
For Participating Fund, the method that produces
the higher reserves of:
(i) Guaranteed and non-guaranteed cash flows
discounted at the appropriate rate of return
reflecting the strategic asset allocation, i.e.
Total Benefit Reserves; and
(ii) Guaranteed cash flows discounted using
Malaysia Government Securities zero coupon
spot yields (as outlined below).
For Asset Share Participating Products, the Total
Benefit Reserves will be further adjusted in
accordance with the value of Policy Asset.
Discount rate (1) For policies denominated in SGD/USD:
(i) Singapore Government Securities/ US
Treasury yields for cash flows up to 20 years
and 30 years respectively;
(ii) Ultimate forward rate of 3.8% applicable for
cash flows beyond 60 years;
(iii) Extrapolated yields in between; and
(iv) Adjustments for matching adjustment and
illiquidity premium according to MAS Notice
133, if any.
Malaysia Government Securities yields determined
based on the following:
(i) For cash flows with duration less than 15
years, Malaysia Government Securities zero
coupon spot yields of matching duration; and
(ii) For cash flows with duration 15 years or more,
Malaysia Government Securities zero coupon
spot yields of 15 years to maturity.
Mortality, Disability,
Dread disease, Expenses,
Lapse and surrenders (1)
Participating Fund:
– Best estimates for Gross Premium Valuation
method (i); and
– Best estimates plus provision for adverse
deviation (PAD) for Gross Premium Valuation
method (ii).
Non-Participating and Non-Unit reserves of
Investment-linked Fund:
Best estimates plus provision for adverse deviation
(PAD).
Participating Fund:
– Best estimates for Gross Premium Valuation
method (i); and
– Best estimates plus provision for risk of
adverse deviation (PRAD) for Gross Premium
Valuation method (ii).
Non-Participating and Non-Unit reserves of
Investment-linked Fund:
Best estimates plus provision for risk of adverse
deviation (PRAD).
(1) Refer to Note 2.25 on Critical Accounting Estimates and Judgements.
OCBC Annual Report 2022
Notes to the Financial Statements 133
2. Summary of Significant
Accounting Policies (continued)
2.16 Insurance Contracts (continued)
Life Insurance Contract Liabilities (continued)
Subsequent Measurement of Life Insurance Contract
Liabilities
Adjustments to liabilities at each reporting date are recorded
in the income statement. Profits originating from the release
in margins for adverse deviations are recognised in the income
statement over the lives of the contracts, whereas losses are
fully recognised in the income statements during the first year.
Derecognition of Life Insurance Contract Liabilities
The liability is extinguished when the contract expires, is
discharged or is cancelled.
Benefits and Claims
Insurance contract benefits reflect the cost of all maturities,
surrenders, withdrawals and claims arising during the period,
as well as policyholder dividends accrued in anticipation of
dividend declarations. Accident and health claims incurred
include all losses occurring during the period, whether reported
or not, related handling costs, a reduction for recoveries, and
any adjustments to claims outstanding from previous years.
Claims handling costs include internal and external costs
incurred in connection with the negotiation and settlement
of claims and are included in operating expenses.
Insurance Contracts and Investment Contracts with
Discretionary Participating Features (DPF)
A significant portion of insurance contracts issued by subsidiaries
within the Group contain discretionary participating features.
These contracts are classified as participating policies. In addition
to guaranteed benefits payable upon insured events associated
with human life such as death or disability, the contracts entitle
the policyholder to receive benefits, which could vary according
to investment performance of the fund. The Group does not
recognise the guaranteed components separately from the
discretionary participating features.
Profits to shareholders from the participating fund are allocated
from the surplus or surplus capital, determined from the results
of the annual actuarial valuation parameters which are set out
in the insurance regulations of the respective jurisdiction in
which the insurance subsidiaries operate. The results of the
annual actuarial valuation also determine the liabilities relating
to all the policyholders’ benefits of the participating fund. The
provisions in the Articles of Association of the Group’s insurance
subsidiaries are applied in conjunction with the prescriptions in
the respective insurance regulations, such that the distribution
for any year to policyholders of the participating fund and
shareholders approximate 90% and 10% respectively of total
distribution from the participating fund. Any surplus that is
not allocated is recognised as unallocated surplus. The
unallocated surplus forms part of the life insurance contract
liabilities. The annual declaration of the quantum of policyholder
bonus and correspondingly the profits to shareholders to be
distributed out of the participating fund is approved by the
board of directors of each insurance subsidiary under the
advice of the Appointed Actuary of the respective subsidiary,
in accordance with the insurance regulations and the Articles
of Association of the respective subsidiaries.
Liability Adequacy Test
Each insurance subsidiary within the Group is required by the
respective insurance regulations and accounting standards to
carry out a liability adequacy test using current estimates of
future cash flows relating to its insurance contracts; the process
is referred to as the gross premium valuation or bonus reserve
valuation, depending on the jurisdiction in which the insurance
subsidiary operates.
The liability adequacy test is applied to both the guaranteed
benefits and the discretionary participating features;
the assumptions are based on best estimates, the basis
adopted is prescribed by the insurance regulations of the
respective jurisdiction in which the insurance subsidiary
operates. The Group performs liability adequacy tests on its
actuarial reserves to ensure that the carrying amount of
provisions is sufficient to cover estimated future cash flows.
When performing the liability adequacy test, the Group
discounts all contractual cash flows and compares this
amount against the carrying amount of the liability. Any
deficiency is charged to the income statement.
Non-Life Insurance Contract Liabilities
The Group caters to the protection needs of individuals and
business owners through a wide range of general insurance
products including but not limited to fire, motor, marine and
aviation, workmen’s compensation, personal accident, health,
and other property and casualty lines.
Non-life insurance contract liabilities include claim liabilities and
premium liabilities.
Claim Liabilities
Claim liabilities are based on the estimated ultimate cost of all
claims incurred but not settled at the reporting date, whether
reported or not, together with related claims handling costs and
reduction for the expected value of salvage and other recoveries.
Delays can be experienced in the notification and settlement of
certain types of claims, therefore, the ultimate cost of these
claims cannot be known with certainty at the reporting date. The
liabilities are calculated at the reporting date using a range of
standard actuarial claim projection techniques based on
empirical data and current assumptions that may include a
provision for adverse deviation. The liabilities are derecognised
when the contracts expire, are discharged or are cancelled.
134
2. Summary of Significant
Accounting Policies (continued)
2.16 Insurance Contracts (continued)
Non-Life Insurance Contract Liabilities (continued)
Claim Liabilities (continued)
The valuation of non-life insurance claim liabilities at the reporting
date is based on best estimates of the ultimate settlement cost of
claims plus a provision for adverse deviation. The provision for
adverse deviation is set at 75% level of sufficiency for Singapore,
Malaysia and Indonesia. The valuation methods used include the
Paid and Incurred Loss Development methods (also known as the
Link Ratio methods), the Paid and Incurred Bornhuetter-Ferguson
methods and the Expected Loss Ratio method. For Singapore and
Malaysia, the claim liabilities are not discounted for the time value
of money. However, for Indonesia, the claim liabilities are
discounted for the time value of money.
Premium Liabilities
Premium liabilities are the higher of the aggregate of the Unearned
Premium Reserves (UPR) for all lines of business and the best
estimate value of the Unexpired Risk Reserves (URR) plus the
required provision of risk margin for adverse deviation as required
by the regulations.
In determining the unearned premium reserve at the reporting
date, the method that most accurately reflects the actual unearned
premium is used. For Singapore, the 1/365th method for all classes
of business is used, and for Malaysia and Indonesia, the 25%
method is used for marine cargo, and the 1/365th method is used
for all other classes of business.
Further provisions are made if expected future cash flows of
unexpired insurance contracts with a provision for adverse
deviation exceed the unearned premiums of these contracts.
Reinsurance Contracts
The Group cedes insurance risk in the normal course of business
for all of its businesses. Reinsurance assets represent amounts
receivable in respect of ceded insurance liabilities. These amounts
are estimated in a manner consistent with the reinsured insurance
contract liabilities, the outstanding claims provision or settled claims
associated with the reinsurer’s policies and are in accordance with
the related reinsurance contract. Reinsurance assets arising from
ceding of an in-force book and gross onerous contracts are
recognised in the same period when the gross liabilities are accrued.
Reinsurance assets are reviewed for impairment at each reporting
date or more frequently when an indication of impairment arises
during the financial year. Impairment occurs when there is
objective evidence as a result of an event that occurred after
initial recognition of the reinsurance asset that the Group may
not receive part or all outstanding amounts under the terms of
the contract. The impairment loss is recorded in the income
statements. Gains or losses on reinsurance are recognised in
the income statements immediately at the date of contract and
are not amortised. Ceded reinsurance arrangements do not relieve
the Group from its obligations to policyholders.
The Group also assumes reinsurance risk in the normal course of
business for life insurance and non-life insurance contracts where
applicable. Premiums and claims on assumed reinsurance are
recognised as revenue or expenses in the same manner as they
would be if the reinsurance were considered direct business, taking
into account the product classification of the reinsured business.
Reinsurance liabilities represent balances due under reinsurance
contracts. Amounts payable are estimated in a manner consistent
with the related reinsurance contract. Premiums and claims are
presented on a gross basis for both ceded and assumed
reinsurance. Reinsurance assets or liabilities are derecognised
when the contractual rights are extinguished or expire or when
the contract is transferred to another party.
2.17 Share Capital and Dividend
Ordinary shares, non-cumulative non-convertible preference
shares and perpetual capital securities are classified as equity
on the balance sheet.
Incremental costs directly attributable to the issue of new capital
securities are shown in equity as a deduction from the proceeds.
Where share capital recognised as equity is repurchased (treasury
shares), the amount of the consideration paid, including directly
attributable costs, is presented as a deduction from equity.
Treasury shares which are subsequently reissued, sold or cancelled,
are recognised as changes in equity.
Interim dividends on ordinary shares and dividends on preference
shares are recorded in the year in which they are declared payable
by the Board of Directors. Final dividends are recorded in the year
when the dividends are approved by shareholders at the annual
general meeting.
2.18 Leases
2.18.1 As Lessee
At the inception of a contract, the Group assesses if the contract
contains a lease. A contract contains a lease if the contract conveys
the right to control the use of an identified asset for a period of
time in exchange for consideration. Reassessment is only required
when the terms and conditions of the contract are changed.
Right-of-Use Assets
The Group recognises a right-of-use (ROU) asset and lease liability
at the date which the underlying asset is available for use. ROU
assets are measured at cost which comprises the initial
measurement of lease liabilities adjusted for any lease payments
made at or before the commencement date and lease incentive
received. Any initial direct costs that would not have been incurred
if the lease had not been obtained are added to the carrying
amount of the ROU assets.
OCBC Annual Report 2022
Notes to the Financial Statements 135
2. Summary of Significant
Accounting Policies (continued)
2.18 Leases (continued)
2.18.1 As Lessee (continued)
Right-of-Use Assets (continued)
These ROU assets are subsequently depreciated using the
straight-line method from the commencement date to the
earlier of the end of the useful life of the ROU asset or the end
of the lease term.
ROU assets are presented within “Property, plant and equipment”.
Lease Liabilities
The initial measurement of lease liability is measured at the
present value of the lease payments discounted using the
implicit rate in the lease, if the rate can be readily determined.
If that rate cannot be readily determined, the Group shall use
its incremental borrowing rate.
Lease liability is subsequently measured at amortised cost using
the effective interest method. Lease liability shall be remeasured
when there is modification in the scope or the consideration of
the lease that was not part of the original term.
Short-Term Leases and Low-Value Assets
The Group has elected to not recognise ROU assets and
lease liabilities for short-term leases that have lease terms
of 12 months or less and leases of low-value leases, except for
sublease arrangements. Lease payments relating to these leases
are expensed to profit or loss on a straight-line basis over the
lease term.
2.18.2 As Lessor
Rental income on tenanted areas of the buildings owned by the
Group is recognised in the income statement on a straight-line
basis over the term of the lease. Lease incentives granted are
recognised as an integral part of the total rental income, over
the term of the lease.
2.19 Recognition of Income and Expense
2.19.1 Interest Income and Expense
Interest income or expense is recognised using the effective
interest method.
The effective interest rate is the rate that exactly discounts
estimated future cash payments or receipts through the expected
life of the financial instrument to the gross carrying amount of the
financial asset or amortised cost of the financial liability.
In calculating the interest income and expense, the effective interest
rate is applied to the gross carrying amount of the asset (when the
asset is not credit-impaired) or to the amortised cost of the liability.
However, for financial assets that have become credit-impaired
subsequent to initial recognition, interest income is calculated by
applying the effective interest rate to the amortised cost of the
financial asset. If the asset is no longer credit-impaired, then the
calculation of interest income reverts to the gross basis.
2.19.2 Premiums and Commissions from Insurance Business
Life Insurance Business
First year premiums of insurance policies are recognised from
inception date and subsequent renewal premiums are recognised
when due. Single premiums are recognised on the dates on which
the policies are effective. Premiums from the investment-linked
business, universal life and certain Takaful non-participating
products are recognised as revenue when payment is received.
Commission is recognised as an expense when incurred.
Non-Life Insurance Business
Premiums from the non-life insurance business are recognised
as revenue upon commencement of insurance cover. Premiums
pertaining to periods after the reporting date are adjusted through
the movement in premium liabilities. Commission is recognised as
an expense when incurred, typically upon the risk underwritten as
reflected in the premium recognised.
Premiums ceded out and the corresponding commission income
from non-life insurance contracts are recognised in the income
statement upon receipt of acceptance confirmation from the
ceding company or in accordance with provisions incorporated in
the treaty contracts. Premiums ceded out pertaining to periods
after the reporting date are adjusted through the movement in
unexpired risk reserve.
2.19.3 Fees and Commissions
The Group earns fees and commissions from a range of services
rendered to its customers. Fees and commissions are recognised
when the Group has satisfied its performance obligations in
providing the services to the customer. Transaction based fees
and commissions are generally recognised upon the completion
of a transaction. For services provided over a period of time or
credit risk undertaken, fees and commissions are amortised
over the relevant period.
Expenses are offset against gross fees and commissions in the
income statement only when they are directly related.
2.19.4 Dividends
Dividends from equity securities, subsidiaries and associates are
recognised when the right to receive payment is established.
2.19.5 Employee Benefits
The Group’s compensation package for staff consists of base
salaries, allowances, defined contribution plans such as the Central
Provident Fund, defined benefit plans, commissions, cash bonuses,
and share-based compensation plans. These are recognised in the
income statement when incurred. Employee leave entitlements are
estimated according to the terms of employment contract and
accrued on the reporting date.
For defined benefit plans, the liability recognised in the balance
sheet is the present value of the defined benefit obligation at the
reporting date less the fair value of plan assets, adjusted for
unrecognised actuarial gains or losses and past service costs.
Remeasurements of defined benefit plans are recognised in OCI
in the period in which they arise.
136
2. Summary of Significant
Accounting Policies (continued)
2.19 Recognition of Income and Expense (continued)
2.19.5 Employee Benefits (continued)
Share-based compensation plans include the Bank’s Share
Option Schemes, the Employee Share Purchase Plan (ESP Plan)
and the Deferred Share Plan (DSP). Equity instruments granted
are recognised as expense in the income statement based on the
fair value of the equity instrument at the date of the grant. The
expense is recognised over the vesting period of the grant, with
corresponding entries to equity.
At each reporting date, the Group revises its estimates of the
number of equity instruments expected to be vested, and the
impact of the change to the original estimates, if any, is recognised
in the income statement, with a corresponding adjustment to
equity over the remaining vesting period.
The Group accrues for interest on the monthly contributions made
by employees to the savings-based ESP Plan. For the DSP, a trust is
set up to administer the shares. The DSP Trust is consolidated in
the Group’s financial statements.
Proceeds received upon the exercise of options and acquisition
rights, net of any directly attributable transaction costs, are
credited to share capital.
2.20 Income Tax Expense
Income tax expense is recognised in the income statement
except to the extent that it relates to items recognised directly
in equity, in which case it is recognised in equity or in other
comprehensive income.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the reporting date, and any adjustment to tax payable in respect
of previous years.
Deferred tax is recognised on temporary differences between
the carrying amounts of assets and liabilities and the amounts
used for tax computation. Deferred tax is not recognised for the
following temporary differences: the initial recognition of goodwill,
the initial recognition of assets or liabilities in a transaction that
is not a business combination and that does not affect accounting
or taxable profit, and differences relating to investments in
subsidiaries, associates and joint ventures to the extent that they
probably will not reverse in the foreseeable future. Deferred tax is
measured at the tax rates that are expected to be applied to the
temporary differences when they reverse, based on the laws that
have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised to the extent that it is probable
that future taxable profits will be available for utilisation against
the temporary differences. Deferred tax assets are reviewed at
each reporting date and are reduced to the extent that it is no
longer probable that the related tax benefit will be realised.
Unrecognised deferred tax assets are reassessed at each reporting
date and recognised to the extent that it has become probable
that future taxable profits will be available against which they can
be used.
In determining the amount of current and deferred tax, the
Group takes into account the impact of uncertain tax positions
and whether additional taxes and interest may be due. The Group
believes that its accruals for tax liabilities are adequate for all
open tax years based on its assessment of many factors, including
interpretations of tax law and prior experience. This assessment
relies on estimates and assumptions and may involve a series of
judgements about future events. New information may become
available that causes the Group to change its judgement regarding
the adequacy of existing tax liabilities; such changes to tax
liabilities will impact tax expense in the period that such a
determination is made.
2.21 Fiduciary Activities
The Group acts as trustees and in other fiduciary capacities that
result in the holding or placing of assets on behalf of individuals,
trusts, retirement benefit plans and other institutions. The assets
and income from these assets do not belong to the Group, and are
therefore excluded from these financial statements.
2.22 Earnings Per Share
The Group presents basic and diluted earnings per share data
for its ordinary shares. Basic earnings per share is calculated by
dividing the profit or loss attributable to ordinary shareholders
of the Bank by the weighted-average number of ordinary shares
outstanding during the year, adjusted for own shares held. Diluted
earnings per share is determined by adjusting the profit or loss
attributable to ordinary shareholders and the weighted-average
number of ordinary shares outstanding, adjusted for own shares
held, for the effects of all dilutive potential ordinary shares, which
comprise share options granted to employees.
2.23 Segment Reporting
The Group’s business segments represent the key customer and
product groups, as follows: Global Consumer/Private Banking,
Global Wholesale Banking, Global Treasury and Markets and
Insurance. All operating segments’ results are reviewed regularly
by the senior management to make decisions about resources to
be allocated to the segment and to assess its performance, and for
which discrete financial information is available. In determining the
segment results, balance sheet items are internally transfer priced
and revenues and expenses are attributed to each segment based
on internal management reporting policies. Transactions between
business segments are recorded within the segment as if they are
third party transactions and are eliminated on consolidation.
A geographical segment engages in providing products and services
within a particular economic environment that is subject to different
risks from those of other economic environments. Geographical
segment information is prepared based on the country in which the
transactions are booked and presented after elimination of
intra-group transactions and balances.
OCBC Annual Report 2022
Notes to the Financial Statements 137
2. Summary of Significant
Accounting Policies (continued)
2.24 Government Grants
Government grants related to assets are initially recognised by
deducting the grant in arriving at the carrying amount of the asset
if there is reasonable assurance that they will be received and the
Group will comply with the conditions associated with the grant.
The grant is recognised in profit or loss over the life of a
depreciable asset through reduced depreciation expense.
Grants that compensate the Group for expenses incurred are
recognised in profit or loss by deducting the grant from the
related expense.
Grants that are not related to assets or expenses incurred are
recognised in profit or loss as other income.
2.25 Critical Accounting Estimates and Judgements
Certain estimates are made in the preparation of the financial
statements. These often require management judgement in
determining the appropriate methodology for valuation of assets
and liabilities. A brief description of the Group’s critical accounting
estimates is set out below.
2.25.1 Impairment of Financial Assets
In determining whether the credit risk of the Group’s financial
exposures has increased significantly since initial recognition, the
Group considers quantitative and qualitative information such as
the Group’s historical credit assessment experience and available
forward-looking information. Expected credit losses (ECL)
estimates are based on probability-weighted forward-looking
economic scenarios. The parameters used in ECL measurement
(probability of default, loss given default and exposure at default)
incorporates forward-looking information. The determination of
the forward-looking economic scenarios and incorporation of
forward-looking information into ECL measurement requires
management to exercise judgement based on its assessment of
current macroeconomic conditions.
Allowances for Non-Credit-Impaired Loans to Customers
As of 31 December 2022, the forward-looking scenarios used in the
ECL model have been updated from those as of 31 December 2021,
which reflects the latest macroeconomic view. Additionally,
post-model adjustments were made to address events that are not
incorporated in the baseline ECL. These post-model adjustments
were reviewed and approved in accordance with the Group’s ECL
framework, and include:
• Post-model adjustments were made to more accurately reflect
the continued weakness of certain industries and segments
due to either travel restrictions or geopolitical events.
• As indicated in Note 2.12.3, Stages 1 and 2 ECL are modelled
based on a central baseline forecast with its upper and lower
bound to represent forecasting ranges. However, the central
forecast with its upper/lower range may not factor in
significant emerging risks and macroeconomic events that
are expected but uncertain in terms of impact and timing.
Such events have the potential to trigger a recession but are
not adequately captured in existing forecasts. Therefore, the
Group added an additional scenario in the computation of
ECL. As such events are global in nature, these are modelled
as a top-down post-model adjustment.
Sensitivity of ECL
ECL is estimated to increase by $1,310 million (2021: $1,286
million) should all the exposures in Stage 1 (12-month ECL)
move to Stage 2 (lifetime ECL).
The Group’s allowances for financial assets are disclosed in
Note 30.
Allowances for Credit-Impaired Loans to Customers
In respect of credit-impaired exposures, management judgement
and estimation are applied in, amongst others, identifying
impaired exposures, estimating the related recoverable cash flows
and where applicable, determining collateral values and timing of
realisation. Judgements and assumptions in respect of these
matters have been updated to reflect the relevant information as
of 31 December 2022.
The Group’s allowances for credit-impaired loans to customers are
disclosed in Note 28.
2.25.2 Fair Value Estimation
Fair value is derived from quoted market prices or valuation
techniques which maximise the use of relevant observable inputs
and minimise the use of unobservable inputs. The fair values of
financial instruments that are not traded in an active market (for
example, over-the-counter derivatives) are determined by using
valuation techniques. Where unobservable data inputs have a
significant impact on the value obtained from the valuation model,
such a financial instrument is initially recognised at the transaction
price, which is the best indicator of fair value. The difference
between the transaction price and the model value, commonly
referred to as “day one profit or loss” is not recognised immediately
in the income statement.
The timing of recognition of deferred day one profit or loss is
determined individually. It is amortised over the life of the
transaction, released when the instrument’s fair value can be
determined using market observable inputs, or when the
transaction is derecognised.
138
2. Summary of Significant
Accounting Policies (continued)
2.25 Critical Accounting Estimates and Judgements
(continued)
2.25.3 Liabilities of Insurance Business
The estimation of the ultimate liabilities arising from claims
made under life and non-life insurance contracts is one of the
Group’s critical accounting estimates. There are several sources
of uncertainty that need to be considered in the estimation of
the liabilities that the Group will ultimately be required to pay
as claims.
For life insurance contracts, estimates are made for future deaths,
morbidity, disabilities, lapses, voluntary terminations, investment
returns, administration expenses and discount rates. The Group
relies on standard industry and national mortality and morbidity
tables which represent historical experience, and makes
appropriate adjustments for its respective risk exposures and
portfolio experience in deriving the mortality and morbidity
estimates. These estimates provide the basis for the valuation of
the future benefits to be paid to policyholders, and to ensure
adequate provisions which are monitored against current and
future premiums. For those contracts that insure risk on longevity
and disability, estimates are made based on recent past experience
and emerging trends. Epidemics and changing patterns of
lifestyle could result in significant changes to the expected
future exposures. Each year, these estimates are assessed for
adequacy and changes will be reflected as adjustments to
insurance contract liabilities.
For non-life insurance contracts, estimates have to be made for
both the expected ultimate cost of claims reported at the reporting
date and for the expected ultimate cost of claims incurred but not
yet reported (IBNR) at the reporting date.
Generally, claim liabilities are determined based upon the
Group’s past claims experience, existing knowledge of events,
the terms and conditions of the relevant policies and interpretation
of circumstances. Estimations are made with reference to the
past experience with similar cases, historical claims development
trends, legislative changes, judicial decisions and economic
conditions. It is certain that actual claim liabilities will not exactly
develop as projected and may vary from the Group’s projections.
The estimates of claim liabilities are therefore sensitive to
various factors and uncertainties. The establishment of technical
provisions is an inherently uncertain process and, as a consequence
of this uncertainty, the eventual settlement of claim liabilities may
vary from the initial estimates.
2.25.4 Impairment of Goodwill and Other Intangible Assets
The Group performs an annual review of the carrying amount
of its goodwill and other intangible assets, against the recoverable
amounts of the CGU to which the goodwill and other intangible
assets have been allocated. Recoverable amounts of banking CGUs
are determined based on the present value of estimated future
cash flows expected to arise from the respective CGUs’ continuing
operations. The recoverable amount of insurance CGU is
determined using the appraisal value method. Management
exercises its judgement in estimating the future cash flows,
growth rates and discount rates used in computing the recoverable
amounts of the CGUs.
In light of current macroeconomic conditions, management
reassessed the assumptions applied in estimating the future
cash flows, including growth rates and discount rates used in
computing the recoverable amount, and determined that no
impairment should be recognised during the year.
2.25.5 Income Taxes
The Group is subject to income taxes in several jurisdictions.
Significant judgement is required in determining the capital
allowances and deductibility of certain expenses in estimating
the income tax liabilities. There are many transactions and
calculations for which the ultimate tax determination is uncertain
during the ordinary course of business. The Group recognises
liabilities for anticipated tax issues based on estimates of whether
additional taxes will be due. Where the final tax outcome of these
matters is different from the amounts that were initially recorded,
such differences will impact the income tax and deferred tax
balances in the period in which the determination is made.
2.25.6 Insurance Contract Classification
Contracts are classified as insurance contracts where significant
insurance risk is transferred from the policyholder to the Group.
The Group exercises judgement about the level of insurance risk
transferred. The level of insurance risk is assessed by considering
whether upon the occurrence of the insured event, the Group is
required to pay significant additional benefits. These additional
benefits include claims liability and assessment costs, but exclude
the loss of the ability to charge the policyholder for future services.
The assessment covers the whole of the expected term of the
contract where such additional benefits could be payable. Some
contracts contain options for the policyholder to purchase
insurance risk protection at a later date; these insurance risks
are deemed not significant.
OCBC Annual Report 2022
Notes to the Financial Statements 139
3. Net Interest Income
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Interest income
Loans to customers 8,852 5,786 5,555 3,103
Placements with and loans to banks 1,314 448 1,153 318
Other interest-earning assets 1,424 1,191 713 498
11,590 7,425 7,421 3,919
Interest expense
Deposits of non-bank customers (3,223) (1,300) (1,866) (468)
Deposits and balances of banks (195) (68) (541) (66)
Other borrowings (484) (202) (462) (174)
(3,902) (1,570) (2,869) (708)
Analysed by classification of financial instruments
Income – Assets at amortised cost 9,976 5,963 6,620 3,249
Income – Assets at FVOCI 1,322 1,173 576 455
Income – Assets mandatorily measured at FVTPL 292 289 225 215
Expense – Liabilities not at fair value through profit or loss (3,892) (1,565) (2,859) (703)
Expense – Liabilities mandatorily measured at FVTPL (10) (5) (10) (5)
Net interest income 7,688 5,855 4,552 3,211
Included in interest income were interest of $28 million (2021: $31 million) and $13 million (2021: $15 million) on impaired assets for the
Group and Bank respectively.
The Group’s and Bank’s interest expenses on lease liabilities were not significant for the financial years ended 31 December 2022 and
31 December 2021.
140
4. Profit from Life Insurance
GROUP
2022 2021
$ million $ million
Income
Annual 8,332 8,209
Single 9,840 10,380
Gross premiums 18,172 18,589
Reinsurance (695) (602)
Premium income (net) 17,477 17,987
Investment income (net) (1) (5,232) 1,519
Total income 12,245 19,506
Expenses
Gross claims, surrenders and annuities (10,933) (11,215)
Claims, surrenders and annuities recovered from reinsurers 535 443
Net claims, surrenders and annuities (10,398) (10,772)
Net change in life insurance contract liabilities 832 (4,196)
Commission and agency expenses (1,292) (1,401)
Depreciation – property, plant and equipment (Note 34) (78) (71)
Other expenses (310) (1,845)
Total expenses (11,246) (18,285)
Surplus from operations 999 1,221
Income tax expense (28) (84)
Profit from life insurance 971 1,137
(1) Includes net loss from financial instruments measured at fair value through profit or loss of $5.58 billion (2021: net gain of $1.05 billion).
Profit from life insurance is presented net of tax in the income statement as the tax liability is borne by the respective life funds.
OCBC Annual Report 2022
Notes to the Financial Statements 141
5. Fees and Commissions (Net)
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Gross fee and commission income
Brokerage 103 141 2 2
Credit card 337 287 295 246
Fund management 119 133 – –
Guarantees 14 14 6 7
Investment banking 100 106 87 89
Loan-related 180 179 118 116
Service charges 87 79 64 60
Trade-related and remittances 298 286 208 199
Wealth management (1) 919 1,310 302 406
Others 50 46 10 6
2,207 2,581 1,092 1,131
Fee and commission expense (356) (336) (213) (162)
Fees and commissions (net) 1,851 2,245 879 969
(1) Includes trust and custodian fees.
6. Dividends
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Subsidiaries – – 1,261 861
Associates – – 138 130
FVTPL securities 95 75 82 57
FVOCI securities 30 38 # 1
125 113 1,481 1,049
142
7. Net Trading Income
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Foreign exchange (1) 761 389 308 52
Hedging activities (2)
Hedging instruments 65 (145) (52) (232)
Hedged items (61) 145 56 231
Net gain/(loss) from fair value hedge ineffectiveness 4 (#) 4 (1)
Net gain from interest rate and other derivative financial instruments (3) 259 341 127 202
Net (loss)/gain from non-derivative financial instruments (4) (191) 45 (104) 8
Others 1 (12) 1 (12)
834 763 336 249
(1) “Foreign exchange” include gains and losses from spot and forward contracts and translation of foreign currency denominated assets and liabilities.
(2) “Hedging activities” arise from the use of derivatives to hedge exposures to interest rate and foreign exchange risks, which are inherent in the underlying “Hedged items”.
(3) “Interest rate and other derivatives” include gains and losses from interest rate derivative instruments, equity options and other derivative instruments.
(4) “Non-derivative financial instruments” include trading gains and losses from fair value financial instruments which are either designated at initial recognition or mandatorily measured
at FVTPL.
8. Other Income
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Disposal of investment securities (206) 92 (149) 34
Disposal of plant and equipment (1) (1) (1) (1)
Disposal of properties 100 108 25 29
Rental and property-related income 78 66 55 33
Others 17 21 72 48
(12) 286 2 143
OCBC Annual Report 2022
Notes to the Financial Statements 143
9. Staff Costs and Other Operating Expenses
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
9.1 Staff costs (1)
Salaries and other costs 2,909 2,723 1,031 974
Share-based expenses 79 72 28 26
Contribution to defined contribution plans 236 223 88 85
3,224 3,018 1,147 1,085
Directors’ emoluments:
Remuneration of Bank’s directors 2 4 2 4
Fees of Bank’s directors (2) 7 6 5 4
9 10 7 8
Total staff costs 3,233 3,028 1,154 1,093
9.2 Other operating expenses
Property and equipment: (3)
Depreciation 426 412 201 190
Maintenance and rental (4) 163 152 104 97
Others (5) 330 304 201 178
919 868 506 465
Auditors’ remuneration:
Payable to auditor of the Bank 7 6 3 3
Payable to associated firms of auditor of the Bank 4 4 1 #
Payable to other auditors # # # #
11 10 4 3
Other fees:
Payable to auditor of the Bank (6) 3 2 2 #
Payable to associated firms of auditor of the Bank 1 1 # 1
4 3 2 1
Hub processing charges – – 326 287
General insurance claims 119 98 – –
Others (7) 740 757 400 375
859 855 726 662
Total other operating expenses 1,793 1,736 1,238 1,131
9.3 Staff costs and other operating expenses 5,026 4,764 2,392 2,224
(1) Grants provided by governments to provide wage support to employers due to the COVID-19 pandemic are recognised as a reduction in staff costs.
(2) Includes remuneration shares amounting to $1 million (2021: $1 million) issued to directors.
(3) Direct operating expenses on investment property that generated rental income for the Group and the Bank amounted to $18 million and $5 million (2021: $18 million and $6 million)
respectively. Direct operating expenses on investment property that did not generate rental income for the Group and the Bank amounted to $2 million and $# million (2021: $3 million and
$2 million) respectively.
(4) Includes expenses relating to short-term leases of $11 million and $5 million for the Group and the Bank (2021: $11 million and $5 million) respectively, and low-value assets of $4 million
and $1 million (2021: $5 million and $1 million) for the Group and the Bank respectively.
(5) Property tax rebates received from government are recognised as a reduction in property and equipment expense.
(6) Other fees payable to auditor of the Bank relate mainly to engagements in connection with the Bank’s note issuances, taxation compliance and advisory services, miscellaneous attestations
and audit certifications.
(7) Included in other expenses were printing, stationery, communication, advertisement and promotion expenses and legal and professional fees.
144
10. Allowances for Loans and Other Assets
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Allowances/(write-back):
Impaired loans (Note 28) 136 852 40 354
Impaired other assets 80 3 1 3
Non-impaired loans 369 15 169 81
Non-impaired other assets (1) 3 # 4
Allowances for loans and other assets 584 873 210 442
11. Income Tax Expense
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Current tax expense 1,144 883 533 386
Deferred tax credit (Note 20) (52) (173) (24) (106)
1,092 710 509 280
Over provision in prior years (35) (62) (6) (51)
Charge to income statements 1,057 648 503 229
The tax on operating profit differs from the amount that would arise using the Singapore corporate tax rate as follows:
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Operating profit after allowances and amortisation 5,961 4,856 4,648 2,955
Prima facie tax calculated at tax rate of 17% 1,013 826 790 502
Effect of:
Different tax rates in other countries 190 103 43 22
Income not subject to tax (12) (35) (219) (176)
Income taxed at concessionary rates (135) (94) (126) (80)
Singapore life insurance funds (51) (89) – –
Non-deductible expenses and losses 17 (19) # (8)
Others 70 18 21 20
1,092 710 509 280
The deferred tax credit comprised:
Accelerated tax depreciation 3 7 (2) 7
Depreciable assets acquired in business combinations (10) (11) (1) (2)
Tax losses (29) 1 (7) –
Unrealised losses on financial assets (9) (18) (4) (7)
Allowances for assets (53) (146) (24) (101)
Other temporary differences 46 (6) 14 (3)
(52) (173) (24) (106)
OCBC Annual Report 2022
Notes to the Financial Statements 145
12. Earnings Per Share
GROUP
2022 2021
$ million $ million
Profit attributable to equity holders of the Bank 5,748 4,858
Perpetual capital securities distributions declared in respect of the period (56) (46)
Profit attributable to ordinary equity holders of the Bank after other equity distributions 5,692 4,812
Weighted average number of ordinary shares (million)
For basic earnings per share 4,494 4,489
Adjustment for assumed conversion of share options and acquisition rights 3 5
For diluted earnings per share 4,497 4,494
Earnings per share ($)
Basic 1.27 1.07
Diluted 1.27 1.07
Basic earnings per share is calculated by dividing profit attributable to ordinary equity holders of the Bank net of preference dividends and
perpetual capital securities distributions by the weighted average number of ordinary shares in issue during the financial year.
For the purpose of calculating the diluted earnings per ordinary share, the weighted average number of ordinary shares in issue is adjusted
to take into account the dilutive effect arising from share options and acquisition rights, with the potential ordinary shares weighted for
the period outstanding.
146
13. Share Capital
13.1 Share Capital
2022 2021
GROUP AND BANK Shares (million) Shares (million)
Ordinary shares
At 1 January 4,515 4,476
Shares issued in lieu of ordinary dividends – 32
Shares issued to non-executive directors # #
Deferred Share Plan – 7
Share Option Scheme – #
At 31 December 4,515 4,515
Treasury shares
At 1 January (23) (2)
Share buyback (21) (34)
Share Option Scheme 6 7
Share Purchase Plan 10 6
Treasury shares transferred to DSP Trust 8 –
At 31 December (20) (23)
2022 2021
GROUP AND BANK $ million $ million
Issued share capital, at 31 December 18,048 18,040
(1) # represents less than 500,000 shares.
The holders of ordinary shares (excluding treasury shares) are entitled to receive dividends as declared from time to time and to one vote
per share at meetings of the Bank. All shares (excluding treasury shares) rank equally with regard to the Bank’s residual assets.
The issued ordinary shares have no par value and qualify as Common Equity Tier 1 capital for the Group.
All issued shares were fully paid.
Subsidiaries and associates of the Group did not hold shares in the capital of the Bank as at 31 December 2022 and 31 December 2021.
13.2 Share Option Scheme
Executives of the Group ranked Manager and above and non-executive directors of the Group are eligible to participate in the OCBC Share
Option Scheme 2001 (2001 Scheme). The Bank has ceased granting share options under the 2001 Scheme effective from financial year
2018 remuneration. Share options granted in prior years continue to be outstanding until the options lapse or are exercised by the
recipients. Options granted to Group executives are exercisable for up to 10 years, while options granted to non-executive Directors are
exercisable for up to five years.
For the financial years ended 31 December 2022 and 31 December 2021, no options were granted under the 2001 Scheme.
OCBC Annual Report 2022
Notes to the Financial Statements 147
13. Share Capital (continued)
13.2 Share Option Scheme (continued)
Movements in the number of shares under options and the average acquisition prices are as follows:
2022 2021
Number
of shares
under options
(‘000)
Average
price
Number
of shares
under options
(‘000)
Average
price
At 1 January 25,111 $10.450 32,914 $10.239
Exercised (6,542) $9.520 (7,364) $9.367
Forfeited/lapsed (192) $12.585 (439) $12.753
At 31 December 18,377 $10.760 25,111 $10.450
Exercisable options at 31 December 18,377 $10.760 25,111 $10.450
Average share price underlying the options exercised $12.245 $11.841
At 31 December 2022, the weighted average remaining contractual life of outstanding share options was 3.5 years (2021: 4.2 years). The
aggregate number of shares under outstanding options held by a director of the Bank was 310,824 (2021: nil).
13.3 Employee Share Purchase Plan
The OCBC Employee Share Purchase Plan (ESP Plan) was implemented for all employees of the participating companies in the Group,
including executive Directors.
The ESP Plan is a saving-based share ownership plan to help employees own ordinary shares in the Bank through their monthly contributions
via deductions from payroll and/or from Central Provident Fund. The employees have the option to convert the contributions to ordinary
shares after one year or to withdraw the contributions at any time. As a further incentive to employees to enrol in the ESP Plan, the Bank
pays interest on the amounts saved at a preferential interest rate. The duration of the offering period is 24 months.
In July 2022, the Bank launched its seventeenth offering of ESP Plan for Group employees, which commenced on 1 September 2022
and will expire on 31 August 2024. Under the offering, the Bank granted rights to acquire 8,738,996 (2021: 8,469,427) ordinary shares
in the Bank. For the financial years ended 31 December 2022 and 31 December 2021, no rights were granted to directors of the Bank
to acquire ordinary shares in the Bank. The fair value of rights, determined using the binomial valuation model, was $7.9 million (2021:
$10.8 million). Significant inputs to the valuation model are set out below:
2022 2021
Acquisition price ($) 12.07 11.58
Share price ($) 12.24 12.42
Expected volatility based on last 250 days historical volatility as of acceptance date (%) 16.51 17.11
Risk-free rate based on 2-year swap rate (%) 2.45 0.35
Expected dividend yield (%) 4.05 4.00
148
13. Share Capital (continued)
13.3 Employee Share Purchase Plan (continued)
Movements in the number of acquisition rights of the ESP Plan are as follows:
2022 2021
Number of
acquisition
rights
(‘000)
Average
price
Number of
acquisition
rights
(‘000)
Average
price
At 1 January 17,850 $10.147 18,090 $9.761
Exercised and conversion upon expiry (9,581) $9.036 (6,467) $10.982
Forfeited (2,100) $11.129 (2,242) $10.039
Subscription 8,739 $12.070 8,469 $11.580
At 31 December 14,908 $11.851 17,850 $10.147
Average share price underlying acquisition rights exercised/converted $11.986 $12.041
At 31 December 2022, the weighted average remaining contractual life of outstanding acquisition rights was 1.2 years (2021: 1.0 years). At
31 December 2022 and 31 December 2021, no acquisition rights were held by directors of the Bank.
13.4 Deferred Share Plan
The OCBC Deferred Share Plan (DSP) aims to increase the performance-orientation and retention factor in compensation packages of
executives, and foster an ownership culture within the organisation. It also aligns the interests of executives with the sustained business
performance of the Bank. Group executives holding the rank or equivalent rank of Assistant Manager and above, and any Group Executive
Director selected by the Remuneration Committee, are eligible to participate in the DSP.
Half (50%) of the share awards will vest after two years with the remaining 50% vesting at the end of three years in accordance with the
guidelines established under the DSP. Prior to the vesting date, the executives will not be accorded voting rights for the shares.
The Bank adopted the OCBC Deferred Share Plan 2021 (DSP 2021) on 29 April 2021 to replace the DSP, which was terminated on the same
day. The termination of the DSP does not affect the awards which have been granted, whether such awards have been released (whether
fully or partially) or not. By implementing the DSP 2021, which permits new ordinary shares to be issued, the Bank has greater flexibility in
its methods for delivery of ordinary shares, as this can be effected through an issue of new ordinary shares, in addition to the transfer of
existing ordinary shares (including treasury shares).
During the year, 9,734,401 (2021: 7,188,161) deferred shares were released to employees under the DSP. No deferred shares were released
to directors of the Bank who held office at 31 December 2022 and 31 December 2021. At 31 December 2022 and 31 December 2021, no
directors of the Bank had deemed interest in deferred shares.
Total awards of 9,232,761 (2021: 7,763,260) ordinary shares were granted and accepted by eligible executives under the DSP 2021 for the
financial year ended 31 December 2022. No awards of ordinary shares were granted and accepted by directors of the Bank for the financial
year ended 31 December 2022 and 31 December 2021. The fair value of the shares at grant date was $108.1 million (2021: $94.2 million).
The accounting treatment of share-based compensation plan is set out in Note 2.19.5.
OCBC Annual Report 2022
Notes to the Financial Statements 149
14. Other Equity Instruments
GROUP AND BANK
2022 2021
Note $ million $ million
SGD1,000 million 4.0% non-cumulative non-convertible perpetual
capital securities (4.0% Capital Securities) (a) 998 998
SGD200 million 3.0% non-cumulative non-convertible perpetual
capital securities (3.0% Capital Securities) (b) 200 200
SGD500 million 3.9% non-cumulative non-convertible perpetual
capital securities (3.9% Capital Securities) (c) 498 –
1,696 1,198
(a) The 4.0% Capital Securities issued by the Bank on 24 August 2018 are non-cumulative non-convertible perpetual capital securities.
They qualify as Additional Tier 1 capital of the Bank under the requirements of MAS.
The 4.0% Capital Securities may, subject to MAS approval, be redeemed at the option of the Bank: (i) on 24 August 2023 (the First
Reset Date) or any distribution payment date falling after the First Reset Date; (ii) upon the occurrence of a tax event; or (iii) if the
4.0% Capital Securities would no longer qualify as eligible capital. The terms of the 4.0% Capital Securities may also be varied, subject
to MAS approval, so that the 4.0% Capital Securities remain as Additional Tier 1 capital of the Bank. If the Bank is determined by the
MAS to be non-viable, the 4.0% Capital Securities will be written off in whole or in part.
The 4.0% Capital Securities pay distributions to holders semi-annually in arrear in February and August at a fixed rate of 4.0% per annum
from the issue date to the First Reset Date. If the 4.0% Capital Securities are not redeemed on the First Reset Date, the distribution
rate will be reset on the First Reset Date and each date falling every five years thereafter to a fixed rate per annum equal to the
aggregate of the then-prevailing five-year SGD Swap Offer Rate and the initial spread of 1.811%. Distributions may be cancelled by
the Bank at its sole discretion, subject to the provisions of the terms and conditions. The Bank is also not obliged to pay distributions
to holders under certain circumstances. Any distributions which are not paid, in accordance with the terms and conditions of the 4.0%
Capital Securities, are non-cumulative and will not compound. These constitute unsecured and subordinated obligations, ranking
senior only to ordinary shares of the Bank.
(b) The 3.0% Capital Securities issued by the Bank on 30 September 2020 are non-cumulative non-convertible perpetual capital securities.
They qualify as Additional Tier 1 capital of the Bank under the requirements of MAS.
The 3.0% Capital Securities may, subject to MAS approval, be redeemed at the option of the Bank on or after 30 September 2030
(First Reset Date), and each date falling every 10 years after the First Reset Date. The terms include a non-viability loss-absorbing
feature. Under this feature, OCBC must write off the securities when: (1) the MAS notifies the Bank in writing that it is of the opinion
that a write-off is necessary, without which the Bank would become non-viable; or (2) a decision by the MAS to make a public sector
injection of capital, or equivalent support, without which the Bank would have become non-viable, as determined by the MAS. The
Bank will, in consultation with or as directed by MAS, determine the amount to be written off in order for the non-viability event to
cease to continue. In addition to the first call in 2030, the 3.0% Capital Securities may also be redeemed if a qualifying tax event or a
change of qualification event occurs.
The 3.0% Capital Securities bear a fixed distribution rate of 3.0% per annum from the issue date to the First Reset Date and will be
reset every 10 years thereafter to a fixed rate equal to the then-prevailing 10-year SGD Swap Offer Rate plus 2.19%. The non-cumulative
distributions may only be paid out of distributable reserves semi-annually in March and September, unless cancelled by the Bank at
its option. These constitute unsecured and subordinated obligations, ranking senior only to ordinary shares of the Bank.
150
14. Other Equity Instruments (continued)
(c) The 3.9% Capital Securities issued by the Bank on 8 June 2022 are non-cumulative non-convertible perpetual capital securities. They
qualify as Additional Tier 1 capital of the Bank under the requirements of MAS.
The 3.9% Capital Securities may, subject to MAS approval, be redeemed at the option of the Bank on 8 June 2027 (First Reset Date),
or any distribution payment date falling after the First Reset Date. The terms include a non-viability loss-absorbing feature. Under
this feature, OCBC must write off the securities when: (1) the MAS notifies the Bank in writing that it is of the opinion that a write-off
is necessary, without which the Bank would become non-viable; or (2) a decision by the MAS to make a public sector injection of
capital, or equivalent support, without which the Bank would have become non-viable, as determined by the MAS. The Bank will,
in consultation with or as directed by MAS, determine the amount to be written off in order for the non-viability event to cease to
continue. In addition to the first call in 2027, the 3.9% Capital Securities may also be redeemed if a qualifying tax event or a change
of qualification event occurs.
The 3.9% Capital Securities bear a fixed distribution rate of 3.9% per annum from the issue date to the First Reset Date and will be
reset every five years thereafter to a fixed rate equal to the then-prevailing five-year SORA-OIS rate plus 1.416%. The non-cumulative
distributions may only be paid out of distributable reserves semi-annually in June and December, unless cancelled by the Bank at its
option. These constitute unsecured and subordinated obligations, ranking senior only to ordinary shares of the Bank.
15. Capital Reserves
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
At 1 January 782 1,229 559 994
Share-based payments for staff costs 8 9 8 9
Shares transferred to DSP Trust (113) (93) – –
Shares vested under DSP Scheme 103 73 – –
Transfer from/(to) unappropriated profit (Note 16.1) 19 (423) – (431)
Transfer to share capital (7) (13) (7) (13)
At 31 December 792 782 560 559
Capital reserves include regulatory loss allowance reserve and statutory reserves set aside by the Group’s banking and stockbroking
entities in accordance with the respective laws and regulations. Capital reserves also include the Bank’s employee share schemes’ reserves
and deferred shares held by DSP Trust.
16. Revenue Reserves
GROUP BANK
2022 2021 2022 2021
Note $ million $ million $ million $ million
Unappropriated profit 16.1 33,984 30,785 16,119 14,535
General reserves 16.2 1,355 1,349 1,406 1,400
Cash flow hedge reserves 16.3 (3) (1) (28) (7)
Currency translation reserves 16.4 (1,778) (336) (210) (101)
Own credit reserves (1) (2) (1) (2)
At 31 December 33,557 31,795 17,286 15,825
OCBC Annual Report 2022
Notes to the Financial Statements 151
16. Revenue Reserves (continued)
16.1 Unappropriated Profit
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Profit attributable to equity holders of the Bank 5,748 4,858 4,145 2,726
Add:
Unappropriated profit at 1 January 30,785 27,321 14,535 13,235
Total amount available for appropriation 36,533 32,179 18,680 15,961
Appropriated as follows:
Ordinary dividends:
Final tax-exempt dividend of 28 cents paid for the previous
financial year (2021: tax-exempt dividend of 15.9 cents) (1,260) (712) (1,260) (712)
Interim tax-exempt dividend of 28 cents paid for the current
financial year (2021: tax-exempt dividend of 25 cents) (1,260) (1,128) (1,260) (1,128)
Distributions for other equity instruments:
4.0% perpetual capital securities (40) (40) (40) (40)
3.0% perpetual capital securities (6) (6) (6) (6)
3.9% perpetual capital securities (10) – (10) –
Transfer (to)/from:
Capital reserves (Note 15) (19) 423 – 431
Fair value reserves 37 64 8 23
General reserves (Note 16.2) 7 6 7 6
Others 2 (1) (#) –
(2,549) (1,394) (2,561) (1,426)
At 31 December 33,984 30,785 16,119 14,535
At the annual general meeting to be held, a final tax-exempt dividend of 40 cents per ordinary share in respect of the financial year
ended 31 December 2022, totalling $1,798 million, will be proposed. The dividends will be accounted for as a distribution in the 2023
financial statements.
152
16. Revenue Reserves (continued)
16.2 General Reserves
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
At 1 January 1,349 1,345 1,400 1,396
DSP reserve from dividends on unvested shares 13 10 13 10
Transfer to unappropriated profit (Note 16.1) (7) (6) (7) (6)
At 31 December 1,355 1,349 1,406 1,400
The general reserves have not been earmarked for any specific purpose, and include merger reserves arising from common control
transactions, as well as dividends on unvested shares under the DSP.
16.3 Cash Flow Hedge Reserves
The cash flow hedge reserves comprise the effective portion of the cumulative net change in the fair value of hedging instruments used in
cash flow hedges pending subsequent recognition of the hedged cash flows. The cash flow hedges principally consist of interest rate
contracts that are used to hedge against the variability in cash flows of certain floating rate liabilities.
16.4 Currency Translation Reserves
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
At 1 January (336) (658) (101) (67)
Movements for the year (1,471) 389 (111) (33)
Gain/(loss) from foreign currency net investment hedges 29 (67) 2 (1)
At 31 December (1,778) (336) (210) (101)
Currency translation reserves comprise differences arising from the translation of the net assets of foreign operations and the effective
portion of the hedge on exposure in foreign operations.
Refer to Note 38.3 Currency risk – Structural foreign exchange risk for management of structural foreign exchange risk.
17. Deposits and Balances of Non-Bank Customers and Banks
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Deposits of non-bank customers
Current accounts 112,245 138,077 65,250 72,297
Savings deposits 69,036 78,566 57,364 64,711
Term deposits 128,443 86,046 65,764 49,008
Structured deposits 4,972 5,292 1,693 2,605
Certificates of deposit issued 23,979 25,566 23,445 25,060
Other deposits 11,406 8,848 9,794 7,532
350,081 342,395 223,310 221,213
Deposits and balances of banks 10,046 8,239 7,691 6,708
360,127 350,634 231,001 227,921
OCBC Annual Report 2022
Notes to the Financial Statements 153
18. Derivative Financial Instruments
The derivative financial instruments shown in the following tables are held for both trading and hedging purposes. The contractual or
underlying principal amounts of these derivative financial instruments and their corresponding gross positive (derivative receivables) and
negative (derivative payables) fair values at the reporting date are analysed below.
2022 2021
GROUP ($ million)
Principal
notional
amount
Derivative
receivables
Derivative
payables
Principal
notional
amount
Derivative
receivables
Derivative
payables
Foreign exchange derivatives (FED)
Forwards 45,985 473 512 46,848 344 339
Swaps 437,131 5,734 6,076 433,075 3,359 3,071
OTC options 66,376 495 476 72,241 241 240
Exchange traded futures – – – 27 # –
549,492 6,702 7,064 552,191 3,944 3,650
Interest rate derivatives (IRD)
Swaps 506,660 8,110 8,069 450,397 4,231 4,342
OTC options 12,276 62 72 4,243 24 28
Exchange traded options 67 1 – – – –
Exchange traded futures 12,499 10 1 8,625 1 2
531,502 8,183 8,142 463,265 4,256 4,372
Equity derivatives
Swaps 3,688 369 508 5,685 443 470
OTC options 5,339 231 200 10,945 543 498
Exchange traded futures 216 1 1 286 # #
Others 103 # 7 – – –
9,346 601 716 16,916 986 968
Credit derivatives
Swaps – protection buyer 3,993 6 37 1,552 3 20
Swaps – protection seller 3,310 30 6 1,171 19 3
7,303 36 43 2,723 22 23
Other derivatives
Precious metals 741 9 9 800 7 8
OTC options 8,544 74 74 8,399 50 47
Commodity swaps 3 # # 20 2 2
9,288 83 83 9,219 59 57
Total 1,106,931 15,605 16,048 1,044,314 9,267 9,070
Included items designated for hedges:
Fair value/cash flow hedge – FED 2,735 80 73 2,415 32 77
Fair value/cash flow hedge – IRD 15,596 203 277 10,215 90 87
Hedge of net investments – FED 1,430 – 238 3,642 49 180
19,761 283 588 16,272 171 344
For the fair value hedges, the carrying amount at 31 December 2022 relating to the assets and liabilities designated as hedged items were
$9,563 million and $8,601 million (2021: $6,550 million and $6,169 million) respectively. The hedged items were mainly fixed-rate debt
securities held (financial assets) and debt securities issued (financial liabilities).
For the cash flow hedges, the carrying amount at 31 December 2022 relating to the assets and liabilities designated as hedged items were
$nil (2021: $2,379 million and $2,186 million respectively). The hedged items were mainly bonds, variable rate loans (financial assets) and
deposits (financial liabilities) at 31 December 2021.
154
18. Derivative Financial Instruments (continued)
2022 2021
BANK ($ million)
Principal
notional
amount
Derivative
receivables
Derivative
payables
Principal
notional
amount
Derivative
receivables
Derivative
payables
Foreign exchange derivatives (FED)
Forwards 30,624 294 361 27,759 176 163
Swaps 362,328 4,482 4,813 377,160 2,772 2,583
OTC options 63,795 472 463 50,077 163 162
Exchange traded futures – – – 27 # –
456,747 5,248 5,637 455,023 3,111 2,908
Interest rate derivatives (IRD)
Swaps 375,121 7,754 7,795 330,104 3,878 3,954
OTC options 11,431 63 72 3,597 25 28
Exchange traded options 67 1 – – – –
Exchange traded futures 11,807 9 # 8,247 # 1
398,426 7,827 7,867 341,948 3,903 3,983
Equity derivatives
Swaps 3,581 366 501 5,233 406 434
OTC options 4,708 192 170 8,250 345 282
Exchange traded futures 176 # 1 265 # #
Others 103 # 7 – – –
8,568 558 679 13,748 751 716
Credit derivatives
Swaps – protection buyer 3,779 5 37 1,440 # 20
Swaps – protection seller 3,106 30 5 1,060 19 –
6,885 35 42 2,500 19 20
Other derivatives
Precious metals 79 1 2 121 1 2
OTC options 8,372 73 73 6,686 27 27
8,451 74 75 6,807 28 29
Total 879,077 13,742 14,300 820,026 7,812 7,656
Included items designated for hedges:
Fair value/cash flow hedge – FED 3,254 64 257 4,873 68 229
Fair value hedge – IRD 9,874 107 251 5,529 78 45
Hedge of net investments – FED 174 – 29 770 2 19
13,302 171 537 11,172 148 293
OCBC Annual Report 2022
Notes to the Financial Statements 155
19. Other Liabilities
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Bills payable 473 490 400 337
Interest payable 1,121 328 726 193
Lease liabilities 216 228 70 49
Precious metal liabilities 1,281 1,363 21 23
Sundry creditors 3,606 3,138 862 659
Others 1,828 1,616 765 645
8,525 7,163 2,844 1,906
At 31 December 2022, reinsurance liabilities included in “Others” amounted to $116 million (2021: $108 million) for the Group.
20. Deferred Tax
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
At 1 January 2,552 1,685 66 182
Currency translation and others 14 2 6 1
Net credit to income statements (Note 11) (52) (173) (24) (106)
(Over)/under provision in prior years (1) 2 – 1
Net credit to equity (294) (87) (27) (12)
Net change in life insurance fund tax (395) 1,123 – –
At 31 December 1,824 2,552 21 66
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current
tax liabilities and when the deferred income taxes relate to the same fiscal authority.
156
20. Deferred Tax (continued)
The deferred tax assets and liabilities are to be recovered and settled after one year and the following amounts, determined after
appropriate offsetting, are shown in the balance sheets:
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Deferred tax liabilities
Accelerated tax depreciation 123 114 71 73
Unrealised gains on investments 26 216 – #
Depreciable assets acquired in business combination 110 121 34 36
Provision for policy liabilities 1,898 2,244 – –
Regulatory loss allowance reserve 63 62 63 62
Others 199 197 4 2
2,419 2,954 172 173
Amount offset against deferred tax assets (158) (122) (47) (19)
2,261 2,832 125 154
Deferred tax assets
Allowances for impairment of assets (281) (254) (85) (64)
Tax losses (34) (8) (13) (6)
Unrealised losses on financial assets (179) (16) (38) (8)
Others (101) (124) (15) (29)
(595) (402) (151) (107)
Amount offset against deferred tax liabilities 158 122 47 19
(437) (280) (104) (88)
Net deferred tax liabilities 1,824 2,552 21 66
Deferred income tax assets are recognised for tax losses carried forward only to the extent that realisation of the related tax benefit
through future taxable profits is probable. At 31 December 2022, unutilised tax losses carried forward for which no deferred income tax
has been recognised amounted to $63 million (2021: $68 million) for the Group, $6 million (2021: nil) for the Bank. These tax losses have
no expiry date except for an amount of $61 million (2021: $57 million) which will expire between the years 2023 and 2030 (2021: years
2022 and 2029).
OCBC Annual Report 2022
Notes to the Financial Statements 157
21. Debt Issued
GROUP BANK
2022 2021 2022 2021
Note $ million $ million $ million $ million
Unsecured
Subordinated debt 21.1 3,484 2,730 3,484 2,730
Fixed and floating rate notes 21.2 3,202 2,771 2,558 2,313
Commercial paper 21.3 10,759 8,668 10,759 8,668
Structured notes 21.4 2,713 2,425 2,713 2,425
20,158 16,594 19,514 16,136
Secured
Covered bonds 21.5 1,780 3,521 1,780 3,521
Total debt issued 21,938 20,115 21,294 19,657
21.1 Subordinated Debt
GROUP
2022 2021
Note Issue date Maturity date $ million $ million
Issued by the Bank:
USD1 billion 4.25% notes (a) 19 Jun 2014 19 Jun 2024 1,298 1,402
USD1 billion 1.832% notes (b) 10 Sep 2020 10 Sep 2030 1,220 1,328
USD0.75 billion 4.602% notes (c) 15 Jun 2022 15 Jun 2032 966 –
Total subordinated debt 3,484 2,730
(a) The subordinated notes can be written off in whole or in part if the MAS determines that the Bank would become non-viable. Interest
is payable semi-annually on 19 June and 19 December each year at 4.25% per annum. The Bank had entered into interest rate swaps
to manage the risk of the subordinated notes and the cumulative fair value change of the risk hedged is included in the carrying
amount. The subordinated notes qualify as Tier 2 capital for the Group.
(b) The subordinated notes are redeemable in whole at the option of the Bank on 10 September 2025. They can be written off in
whole or in part if the MAS determines that the Bank would become non-viable. Interest is payable semi-annually on 10 March and
10 September each year at 1.832% per annum up to 10 September 2025, and thereafter at a fixed rate per annum equal to the then
prevailing 5-year U.S. Treasury Rate plus 1.58% if the redemption option is not exercised. The Bank had entered into interest rate
swaps to manage the risk of the subordinated notes and the cumulative fair value change of the risk hedged is included in the
carrying amount. The subordinated notes qualify as Tier 2 capital for the Group.
(c) The subordinated notes are redeemable in whole at the option of the Bank on 15 June 2027. They can be written off in whole or in
part if the MAS determines that the Bank would become non-viable. Interest is payable semi-annually on 15 June and 15 December
each year at 4.602% per annum up to 15 June 2027, and thereafter at a fixed rate per annum equal to the then prevailing 5-year U.S.
Treasury Rate plus 1.575% if the redemption option is not exercised. The Bank had entered into interest rate swaps to manage the risk
of the subordinated notes and the cumulative fair value change of the risk hedged is included in the carrying amount. The
subordinated notes qualify as Tier 2 capital for the Group.
158
21. Debt Issued (continued)
21.2 Fixed and Floating Rate Notes
GROUP
2022 2021
Note Issue date Maturity date $ million $ million
Issued by the Bank:
AUD250 million fixed rate notes (a) 20 Jan 2022 20 Jan 2023 228 –
AUD700 million floating rate notes (b) 23 May 2019 – 15 Jan 2020 23 May 2022 – 686
AUD500 million floating rate notes (b) 5 Dec 2019 5 Dec 2022 – 490
AUD200 million floating rate notes (c) 4 Sep 2020 4 Sep 2023 182 196
AUD460 million floating rate notes (c) 18 Mar 2021 – 25 Mar 2021 18 Mar 2024 419 451
AUD500 million floating rate notes (c) 12 Aug 2021 12 Aug 2024 455 490
AUD700 million floating rate notes (c) 14 Apr 2022 14 Apr 2025 637 –
AUD500 million floating rate notes (c) 11 Aug 2022 11 Aug 2025 455 –
AUD200 million floating rate notes (c) 19 Aug 2022 – 30 Aug 2022 20 Nov 2023 182 –
2,558 2,313
Issued by Pac Lease Berhad:
MYR50 million 3.45% fixed rate notes (b) 6 Mar 2020 7 Mar 2022 – 16
MYR50 million 3.00% fixed rate notes (b) 22 Dec 2020 22 Jun 2022 – 16
MYR50 million 3.20% fixed rate notes (d) 30 Jul 2021 2 Aug 2023 15 16
MYR30 million 3.28% fixed rate notes (d) 13 Aug 2021 14 Feb 2024 9 10
MYR80 million 3.48% fixed rate notes (d) 17 Dec 2021 18 Jun 2024 25 26
MYR50 million 4.05% fixed rate notes (d) 28 Jun 2022 10 Jan 2024 15 –
64 84
Issued by OCBC Wing Hang Bank (China) Limited:
CNY730 million 3.50% fixed rate bonds (e) 24 May 2021 24 May 2024 142 157
CNY1.02 billion 3.32% fixed rate bonds (e) 22 Nov 2021 22 Nov 2024 198 217
CNY750 million 2.99% fixed rate bonds (e) 30 May 2022 30 May 2025 144 –
CNY500 million 3.24% fixed rate bonds (e) 17 Nov 2022 17 Nov 2025 96 –
580 374
Total fixed and floating rate notes 3,202 2,771
(a) Interest is payable quarterly at 0.705% per annum.
(b) The notes and bonds were fully redeemed on their respective maturity dates.
(c) Interest is payable quarterly at the 3-month Bank Bill Swap reference rate plus 0.26% to 0.82% per annum.
(d) Interest is payable semi-annually.
(e) Interest is payable annually.
OCBC Annual Report 2022
Notes to the Financial Statements 159
21. Debt Issued (continued)
21.3 Commercial Paper
GROUP
2022 2021
$ million $ million
Issued by the Bank 10,759 8,668
The Bank issued the commercial paper under its USD10 billion ECP programme and USD25 billion USCP programme. The notes
outstanding as at 31 December 2022 (2021: 31 December 2021) were issued between 9 February 2022 (2021: 14 April 2021) and
12 December 2022 (2021: 10 November 2021), and mature between 3 January 2023 (2021: 3 January 2022) and 22 May 2023 (2021:
23 September 2022). The commercial papers are zero-coupon papers, or floating coupon rate papers pegged to monthly or quarterly
market rates.
21.4 Structured Notes
GROUP
2022 2021
Issue date Maturity date $ million $ million
Issued by the Bank:
Credit linked notes 1 Oct 2012 – 30 Dec 2022 17 Jan 2023 – 9 Dec 2027 912 986
Fixed rate notes 9 Oct 2012 – 27 Dec 2012 9 Oct 2037 – 28 Dec 2037 107 108
Bond linked notes 12 Oct 2016 – 27 Dec 2022 20 Dec 2022 – 24 May 2027 130 109
Index linked notes Not applicable Not applicable – 2
Fund linked notes 27 Sep 2018 – 11 Nov 2022 30 Mar 2023 – 20 Mar 2029 71 49
Participation notes 14 Jun 2019 – 29 Dec 2022 17 Jan 2023 – 7 Jul 2028 1,491 1,171
Equity linked notes 6 Sep 2022 – 19 Dec 2022 16 Mar 2023 – 22 Dec 2023 2 –
2,713 2,425
The structured notes were issued by the Bank under its Structured Note and Global Medium Term Notes Programmes and were measured
at amortised cost, except for $909 million (2021: $983 million) included under credit linked notes and $131 million (2021: $109 million)
included under bond linked notes as at 31 December 2022 which were measured at fair value through profit or loss.
In accordance with SFRS(I) 9, to the extent that the underlying economic characteristics and risks of the embedded derivatives were not
closely related to the economic characteristics and risks of the host contract, and where such embedded derivatives would meet the
definition of a derivative, the Group bifurcated such embedded derivatives and recognised these separately from the host contracts. The
bifurcated embedded derivatives were fair valued through profit or loss, and were included as part of the Group’s derivatives in the
financial statements.
160
21. Debt Issued (continued)
21.5 Covered Bonds
GROUP
2022 2021
Issue date Maturity date $ million $ million
Issued by the Bank:
EUR1 billion 0.25% fixed rate bonds 21 Mar 2017 – 5 Oct 2017 21 Mar 2022 – 5 Oct 2022 – 1,531
EUR500 million 0.375% fixed rate bonds 1 Mar 2018 1 Mar 2023 712 767
EUR500 million 0.625% fixed rate bonds 18 Apr 2018 18 Apr 2025 663 767
GBP250 million floating rate bonds 14 Mar 2018 14 Mar 2023 405 456
1,780 3,521
The covered bonds were issued by the Bank under its USD10 billion Global Covered Bond Programme. The Covered Bond Guarantor,
Red Sail Pte. Ltd., guarantees the payments of interest and principal. The guarantee is secured by a portfolio of Singapore housing loans
transferred from OCBC Bank to Red Sail Pte. Ltd. (Note 46.2). Interest for the EUR and GBP covered bonds is payable annually and quarterly,
respectively, and in arrear.
21.6 Reconciliation of Movements of Liabilities to Cash Flow Arising from Financing Activities
GROUP ($ million)
Subordinated
debt
Fixed and
floating rate
notes
Commercial
paper
Structured
notes
Covered
bonds Total
At 1 January 2021 3,145 3,551 12,057 1,869 3,733 24,355
Cash flows (400) (754) (3,643) 557 – (4,240)
Non-cash changes
Currency translation 59 (26) 242 (3) 61 333
Others (74) (#) 12 2 (273) (333)
At 31 December 2021/1 January 2022 2,730 2,771 8,668 2,425 3,521 20,115
Cash flows 1,042 635 2,341 377 (1,456) 2,939
Non-cash changes
Currency translation (52) (204) (290) (73) (118) (737)
Others (236) (#) 40 (16) (167) (379)
At 31 December 2022 3,484 3,202 10,759 2,713 1,780 21,938
OCBC Annual Report 2022
Notes to the Financial Statements 161
22. Life Insurance Fund Liabilities and Assets
GROUP
2022 2021
$ million $ million
Life insurance fund liabilities
Movements in life insurance fund
At 1 January 87,246 83,469
Currency translation (1,429) (427)
Net change in life insurance contract liabilities (832) 4,204
At 31 December 84,985 87,246
Policy benefits 5,794 5,487
Others 4,167 3,573
94,946 96,306
Life insurance fund investment securities and other assets
Deposits with banks and financial institutions 8,709 5,973
Loans 479 591
Securities 80,765 86,806
Investment property 1,881 1,884
Others (1) 6,161 4,842
97,995 100,096
Life insurance fund balances included under the following balance sheet items:
Liabilities
Current tax 133 188
Deferred tax 1,906 2,467
Other liabilities 65 76
Assets
Cash and placements with central banks # #
Placements with and loans to banks 2,136 2,228
Property, plant and equipment and intangible assets 654 681
The following contracts were entered into under the life insurance fund:
Capital commitment authorised and contracted 162 149
Derivative financial instruments (principal notional amount) 34,316 36,740
Derivative receivables 723 356
Derivative payables 275 109
Minimum lease payment receivable 72 75
(1) Others mainly comprise interest receivable, deposits collected, prepayments, investment debtors and sundry debtors.
162
23. Cash and Placements with Central Banks
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Cash on hand 778 633 422 330
Non-restricted balances with central banks 852 1,810 840 1,780
Money market placements and reverse repos with central banks 28,354 20,267 23,028 16,988
Cash and cash equivalents 29,984 22,710 24,290 19,098
Restricted balances with central banks – mandatory reserve deposits 4,983 5,211 3,523 3,767
Gross cash and placements with central banks 34,967 27,921 27,813 22,865
Allowances for non-impaired placements with central banks (1) (2) (1) (2)
Net cash and placements with central banks 34,966 27,919 27,812 22,863
24. Government Treasury Bills and Securities
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Singapore government treasury bills and securities 17,096 11,112 15,889 10,106
Other government treasury bills and securities 22,271 26,159 8,165 9,710
Total government treasury bills and securities 39,367 37,271 24,054 19,816
25. Placements with and Loans to Banks
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Certificates of deposit held 13,202 7,867 7,402 5,877
Placements with and loans to banks 12,551 14,440 9,062 10,845
Market bills purchased 1,223 732 1,223 732
Reverse repos 1,137 201 997 67
Balances with banks 28,113 23,240 18,684 17,521
Bank balances of life insurance fund 2,136 2,228 – –
Placements with and loans to banks 30,249 25,468 18,684 17,521
Allowances for non-impaired placements with and loans to banks (5) (6) (4) (5)
Net placements with and loans to banks 30,244 25,462 18,680 17,516
OCBC Annual Report 2022
Notes to the Financial Statements 163
26. Loans to Customers
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Gross loans 294,980 289,716 203,092 191,370
Allowances
Impaired loans (Note 28) (1,308) (1,535) (583) (722)
Non-impaired loans (Note 30) (2,205) (1,900) (1,399) (1,247)
Net loans 291,467 286,281 201,110 189,401
26.1 Analysed by Product
Overdrafts 5,200 5,028 364 390
Short-term and revolving loans 63,162 66,748 34,345 32,703
Syndicated and term loans 127,867 119,632 103,346 94,273
Housing and commercial property loans 69,152 68,849 46,079 44,661
Car, credit card and share margin loans 4,551 4,614 3,159 3,174
Bills receivable 4,849 7,351 3,437 5,923
Others 20,199 17,494 12,362 10,246
294,980 289,716 203,092 191,370
26.2 Analysed by Industry
Agriculture, mining and quarrying 8,193 8,094 5,835 5,330
Manufacturing 15,052 15,642 7,548 8,383
Building and construction 89,299 81,375 73,765 66,198
Housing loans 62,015 61,733 44,065 42,812
General commerce 29,209 30,159 22,162 23,032
Transport, storage and communication 13,017 13,423 10,993 10,913
Financial institutions, investment and holding companies 24,387 25,365 7,144 6,854
Professionals and individuals 34,752 36,854 16,381 14,635
Others 19,056 17,071 15,199 13,213
294,980 289,716 203,092 191,370
164
27. Non-Performing Assets
Non-performing assets (NPAs) comprise non-performing loans, debt securities and contingents that are classified as Substandard,
Doubtful and Loss in accordance with MAS Notice 612 (2021: MAS Notices 612 and 612A).
$ million Substandard Doubtful Loss Total
GROUP
2022
Classified loans 1,543 1,282 558 3,383
Classified debt securities – – – –
Classified contingents 39 60 4 103
Total classified assets 1,582 1,342 562 3,486
Allowances for impaired assets (218) (863) (229) (1,310)
Net classified assets 1,364 479 333 2,176
2021
Classified loans 2,351 1,331 533 4,215
Classified debt securities 4 – 2 6
Classified contingents 43 74 # 117
Total classified assets 2,398 1,405 535 4,338
Allowances for impaired assets (531) (831) (175) (1,537)
Net classified assets 1,867 574 360 2,801
BANK
2022
Classified loans 337 749 83 1,169
Classified debt securities – – – –
Classified contingents 12 51 – 63
Total classified assets 349 800 83 1,232
Allowances for impaired assets (38) (540) (5) (583)
Net classified assets 311 260 78 649
2021
Classified loans 494 917 99 1,510
Classified debt securities – – – –
Classified contingents 11 50 – 61
Total classified assets 505 967 99 1,571
Allowances for impaired assets (73) (642) (7) (722)
Net classified assets 432 325 92 849
OCBC Annual Report 2022
Notes to the Financial Statements 165
27. Non-Performing Assets (continued)
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
27.1 Analysed by Period Overdue
Over 180 days 968 927 364 386
Over 90 days to 180 days 396 145 106 48
30 days to 90 days 296 179 52 55
Less than 30 days 383 1,018 20 189
No overdue 1,443 2,069 690 893
3,486 4,338 1,232 1,571
27.2 Analysed by Collateral Type
Property 1,628 2,031 171 269
Fixed deposit 16 16 11 #
Stock and shares 4 50 2 34
Motor vehicles 13 17 # #
Secured – Others 598 421 410 345
Unsecured – Corporate and other guarantees 286 497 280 484
Unsecured – Clean 941 1,306 358 439
3,486 4,338 1,232 1,571
27.3 Analysed by Industry
Agriculture, mining and quarrying 56 96 36 41
Manufacturing 614 852 72 91
Building and construction 615 368 55 75
Housing loans 579 1,002 137 253
General commerce 434 637 86 148
Transport, storage and communication 403 501 377 448
Financial institutions, investment and holding companies 138 93 – –
Professionals and individuals 128 179 31 43
Others 519 610 438 472
3,486 4,338 1,232 1,571
166
27. Non-Performing Assets (continued)
27.4 Restructured/Renegotiated Loans
Non-performing restructured loans by loan classification and the related allowances are shown below. The restructured loans as a
percentage of total non-performing loans were 26.0% (2021: 31.0%) and 22.4% (2021: 24.8%) for the Group and the Bank respectively.
2022 2021
Amount Allowance Amount Allowance
$ million $ million $ million $ million
GROUP
Substandard 389 150 816 295
Doubtful 350 211 407 238
Loss 140 98 85 37
879 459 1,308 570
BANK
Substandard 121 49 156 29
Doubtful 140 119 218 200
Loss 1 # 1 #
262 168 375 229
28. Allowances for Impaired Loans to Customers
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
At 1 January 1,535 1,812 722 1,393
Currency translation (63) 44 (30) 26
Net write-offs (1) (282) (1,153) (144) (1,042)
Net allowances (Note 10) 136 852 40 354
Interest recognition on impaired loans (28) (31) (13) (15)
Transfers 10 11 8 6
At 31 December (Note 26) 1,308 1,535 583 722
(1) Comprise mainly bad debts written off for the Group and the Bank of $406 million and $201 million (2021: $1,267 million and $1,107 million) respectively, and bad debts recovered for the
Group and Bank of $91 million and $58 million (2021: $85 million and $66 million) respectively.
OCBC Annual Report 2022
Notes to the Financial Statements 167
28. Allowances for Impaired Loans to Customers (continued)
Analysed by Industry
Cumulative allowances for
impaired loans
Net allowances
for impaired loans
charged/(write-back)
to income statements
2022 2021 2022 2021
$ million $ million $ million $ million
GROUP
Agriculture, mining and quarrying 33 67 (17) (7)
Manufacturing 277 283 59 138
Building and construction 104 136 56 116
Housing loans 95 155 (32) 110
General commerce 156 226 (9) 198
Transport, storage and communication 228 283 10 (4)
Financial institutions, investment and holding companies 104 31 73 1
Professionals and individuals 48 70 (13) 40
Others 263 284 9 260
1,308 1,535 136 852
BANK
Agriculture, mining and quarrying 30 32 (18) (21)
Manufacturing 18 35 (18) 24
Building and construction 9 44 32 35
Housing loans 1 5 (5) 1
General commerce 57 82 (2) 87
Transport, storage and communication 214 252 15 (13)
Financial institutions, investment and holding companies – – – (#)
Professionals and individuals 21 33 (4) 4
Others 233 239 40 237
583 722 40 354
168
29. Debt and Equity Securities
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Debt securities 22,956 28,045 13,635 16,763
Equity securities 1,696 2,568 548 1,065
Investment funds 3,358 3,402 2,438 2,203
Total securities 28,010 34,015 16,621 20,031
Allowances for non-impaired debt securities (#) (#) (#) (#)
28,010 34,015 16,621 20,031
Debt Securities Analysis:
29.1 By Credit Ratings
Investment grade (AAA to BBB) 15,640 18,983 10,306 12,718
Non-investment grade (BB to C) 28 66 28 66
Non-rated 7,288 8,996 3,301 3,979
22,956 28,045 13,635 16,763
29.2 By Credit Quality
Pass 22,954 28,038 13,635 16,763
Special mention 2 1 – –
Substandard – 4 – –
Doubtful – – – –
Loss – 2 – –
22,956 28,045 13,635 16,763
Debt and Equity Securities Analysis:
29.3 By Industry
Agriculture, mining and quarrying 309 538 219 284
Manufacturing 1,413 2,073 1,170 1,627
Building and construction 1,966 2,234 1,256 1,421
General commerce 658 733 327 395
Transport, storage and communication 1,665 2,421 1,047 1,447
Financial institutions, investment and holding companies 18,873 21,484 10,811 12,231
Others 3,126 4,532 1,791 2,626
28,010 34,015 16,621 20,031
OCBC Annual Report 2022
Notes to the Financial Statements 169
30. Allowances for Financial Assets
The following tables show reconciliations from the opening to the closing balance of expected credit loss (ECL).
$ million Stage 1 Stage 2 Stage 3 Total
GROUP
At 1 January 2021 967 940 1,815 3,722
Transfer to Stage 1 563 (546) (17) –
Transfer to Stage 2 (1) (617) 665 (48) –
Transfer to Stage 3 (3) (206) 209 –
Remeasurement (2) (554) 592 687 725
New financial assets originated or purchased (1) 933 – – 933
Financial assets that have been derecognised (387) (436) – (823)
Changes in models (3) (10) 18 – 8
Write-offs – – (1,153) (1,153)
Foreign exchange and other movements 2 2 44 48
At 31 December 2021/1 January 2022 894 1,029 1,537 3,460
Transfer to Stage 1 584 (561) (23) –
Transfer to Stage 2 (520) 582 (62) –
Transfer to Stage 3 (1) (113) 114 –
Remeasurement (2) (408) 538 89 219
New financial assets originated or purchased 1,079 – – 1,079
Financial assets that have been derecognised (510) (340) – (850)
Changes in models (3) (1) 4 – 3
Write-offs – – (282) (282)
Foreign exchange and other movements (10) (20) (63) (93)
At 31 December 2022 1,107 1,119 1,310 3,536
BANK
At 1 January 2021 717 460 1,393 2,570
Transfer to Stage 1 371 (358) (13) –
Transfer to Stage 2 (1) (389) 402 (13) –
Transfer to Stage 3 (2) (104) 106 –
Remeasurement (2) (400) 429 265 294
New financial assets originated or purchased (1) 620 – – 620
Financial assets that have been derecognised (218) (279) – (497)
Changes in models (3) 3 2 – 5
Write-offs – – (1,042) (1,042)
Foreign exchange and other movements 3 3 26 32
At 31 December 2021/1 January 2022 705 555 722 1,982
Transfer to Stage 1 378 (363) (15) –
Transfer to Stage 2 (279) 307 (28) –
Transfer to Stage 3 (1) (22) 23 –
Remeasurement (2) (284) 267 55 38
New financial assets originated or purchased 640 – – 640
Financial assets that have been derecognised (267) (208) – (475)
Changes in models (3) – – – –
Write-offs – – (144) (144)
Foreign exchange and other movements (5) (10) (30) (45)
At 31 December 2022 887 526 583 1,996
(1) Comparatives have been reclassified to conform to current year’s presentation.
(2) Remeasurement includes the changes in model inputs or assumptions such as changes in the forward-looking macroeconomic variables, partial repayments, additional drawdowns on
existing facilities, changes in the measurement after a transfer between stages 1, 2 and 3, and the unwinding impact of time value of money.
(3) Changes in models include significant changes to the quantitative models used to estimate the impacts of the expected credit losses.
170
30. Allowances for Financial Assets (continued)
Analysed by Main Class of Financial Instruments
Loans to customers at amortised cost (1)
$ million Stage 1 Stage 2 Stage 3 Total
GROUP
At 1 January 2021 954 936 1,812 3,702
Transfer to Stage 1 562 (545) (17) –
Transfer to Stage 2 (2) (613) 661 (48) –
Transfer to Stage 3 (3) (204) 207 –
Remeasurement (3) (553) 579 690 716
New financial assets originated or purchased (2) 913 – – 913
Financial assets that have been derecognised (373) (429) – (802)
Changes in models (4) (8) 18 # 10
Write-offs – – (1,153) (1,153)
Foreign exchange and other movements 2 3 44 49
At 31 December 2021/1 January 2022 881 1,019 1,535 3,435
Transfer to Stage 1 582 (559) (23) –
Transfer to Stage 2 (519) 581 (62) –
Transfer to Stage 3 (1) (113) 114 –
Remeasurement (3) (407) 537 89 219
New financial assets originated or purchased 1,063 – – 1,063
Financial assets that have been derecognised (495) (337) – (832)
Changes in models (4) (1) 4 – 3
Write-offs – – (282) (282)
Foreign exchange and other movements (10) (20) (63) (93)
At 31 December 2022 1,093 1,112 1,308 3,513
BANK
At 1 January 2021 713 459 1,393 2,565
Transfer to Stage 1 370 (357) (13) –
Transfer to Stage 2 (2) (385) 398 (13) –
Transfer to Stage 3 (2) (104) 106 –
Remeasurement (3) (400) 426 265 291
New financial assets originated or purchased (2) 603 – – 603
Financial assets that have been derecognised (208) (277) – (485)
Changes in models (4) 3 2 – 5
Write-offs – – (1,042) (1,042)
Foreign exchange and other movements 2 4 26 32
At 31 December 2021/1 January 2022 696 551 722 1,969
Transfer to Stage 1 377 (362) (15) –
Transfer to Stage 2 (278) 306 (28) –
Transfer to Stage 3 (1) (22) 23 –
Remeasurement (3) (281) 264 55 38
New financial assets originated or purchased 625 – – 625
Financial assets that have been derecognised (256) (206) – (462)
Changes in models (4) – – – –
Write-offs – – (144) (144)
Foreign exchange and other movements (4) (10) (30) (44)
At 31 December 2022 878 521 583 1,982
(1) Includes ECL on contingent liabilities and other credit commitments.
(2) Comparatives have been reclassified to conform to current year’s presentation.
(3) Remeasurement includes the changes in model inputs or assumptions such as changes in the forward-looking macroeconomic variables, partial repayments, additional drawdowns on
existing facilities, changes in the measurement after a transfer between stages 1, 2 and 3, and the unwinding impact of time value of money.
(4) Changes in models include significant changes to the quantitative models used to estimate the impacts of the expected credit losses.
OCBC Annual Report 2022
Notes to the Financial Statements 171
30. Allowances for Financial Assets (continued)
The following tables set out information about the credit quality of financial assets.
2022 2021
$ million Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
GROUP
Cash and placements with central banks (Note 23)
Pass 34,143 46 – 34,189 27,232 56 – 27,288
Loss allowances (#) (1) – (1) (#) (2) – (2)
Carrying amount 34,143 45 – 34,188 27,232 54 – 27,286
Government treasury bills and securities – Amortised cost (Note 39)
Pass/Carrying amount 705 251 – 956 334 13 – 347
Government treasury bills and securities – FVOCI (1) (Note 39)
Pass 34,826 188 – 35,014 32,909 83 – 32,992
Loss allowances (#) (#) – (#) (#) – – (#)
Placements with and loans to banks – Amortised cost (Note 39)
Pass 16,927 120 – 17,047 17,454 139 – 17,593
Special mention – – – – – 8 – 8
16,927 120 – 17,047 17,454 147 – 17,601
Loss allowances (5) (#) – (5) (6) (#) – (6)
Carrying amount 16,922 120 – 17,042 17,448 147 – 17,595
Placements with and loans to banks – FVOCI (1) (Note 39)
Pass 11,722 603 – 12,325 5,573 1,536 – 7,109
Loss allowances (2) (#) – (2) (2) (#) – (2)
Loans to customers – Amortised cost (Note 39)
Pass 255,421 33,948 – 289,369 252,523 26,685 – 279,208
Special mention – 2,205 – 2,205 – 6,244 – 6,244
Substandard – – 1,543 1,543 – – 2,351 2,351
Doubtful – – 1,282 1,282 – – 1,331 1,331
Loss – – 558 558 – – 533 533
255,421 36,153 3,383 294,957 252,523 32,929 4,215 289,667
Loss allowances (896) (803) (1,252) (2,951) (776) (779) (1,482) (3,037)
Carrying amount 254,525 35,350 2,131 292,006 251,747 32,150 2,733 286,630
Loans to customers – FVOCI (1) (Note 39)
Pass – – – – 2 – – 2
Loss allowances – – – – (#) – – (#)
Debt securities – Amortised cost (Note 39)
Pass 307 – – 307 331 – – 331
Loss allowances (#) – – (#) (#) – – (#)
Carrying amount 307 – – 307 331 – – 331
Debt securities – FVOCI (1) (Note 39)
Pass 19,020 908 – 19,928 22,478 1,124 – 23,602
Special mention – – – – – – – –
Substandard – – – – – – 4 4
Doubtful – – – – – – 2 2
19,020 908 – 19,928 22,478 1,124 6 23,608
Loss allowances (7) (6) (2) (15) (6) (7) (2) (15)
For loan commitments and financial guarantee contracts, the amounts in the table represent the amounts committed or guaranteed, respectively.
Loan commitments and contingent liabilities
Pass 129,666 14,205 – 143,871 118,370 12,922 – 131,292
Special mention – 388 – 388 – 654 – 654
Substandard – – 605 605 – – 641 641
Doubtful – – 530 530 – – 487 487
Loss – – 184 184 – – 188 188
129,666 14,593 1,319 145,578 118,370 13,576 1,316 133,262
Allowances for contingent liabilities and
credit commitments (Note 39) (197) (309) (56) (562) (105) (240) (53) (398)
(1) In accordance with SFRS(I) 9, for financial asset measured at FVOCI, any impairment is recognised in profit or loss together with a credit to fair value reserves within equity (without adjusting
the carrying amount of the financial asset).
172
30. Allowances for Financial Assets (continued)
2022 2021
$ million Stage 1 Stage 2 Stage 3 Total Stage 1 Stage 2 Stage 3 Total
BANK
Cash and placements with central banks (Note 23)
Pass 27,345 46 – 27,391 22,478 57 – 22,535
Loss allowances (#) (1) – (1) (#) (2) – (2)
Carrying amount 27,345 45 – 27,390 22,478 55 – 22,533
Government treasury bills and securities – Amortised cost (Note 39)
Pass/Carrying amount 705 251 – 956 334 13 – 347
Government treasury bills and securities – FVOCI (1) (Note 39)
Pass 20,259 187 – 20,446 16,585 83 – 16,668
Loss allowances (#) (#) – (#) (#) (#) – (#)
Placements with and loans to banks – Amortised cost (Note 39)
Pass (2) 11,171 111 – 11,282 11,506 138 – 11,644
Loss allowances (4) (#) – (4) (5) (#) – (5)
Carrying amount 11,167 111 – 11,278 11,501 138 – 11,639
Placements with and loans to banks – FVOCI (1) (Note 39)
Pass 6,020 526 – 6,546 3,845 1,274 – 5,119
Loss allowances (2) (#) – (2) (#) (#) – (#)
Loans to customers – Amortised cost (Note 39)
Pass 178,340 22,384 – 200,724 167,580 20,139 – 187,719
Special mention – 1,176 – 1,176 – 2,094 – 2,094
Substandard – – 337 337 – – 494 494
Doubtful – – 749 749 – – 917 917
Loss – – 83 83 – – 99 99
178,340 23,560 1,169 203,069 167,580 22,233 1,510 191,323
Loss allowances (753) (365) (540) (1,658) (638) (392) (679) (1,709)
Carrying amount 177,587 23,195 629 201,411 166,942 21,841 831 189,614
Debt securities – Amortised cost (Note 39)
Pass 307 – – 307 331 – – 331
Loss allowances (#) – – (#) (#) – – (#)
Carrying amount 307 – – 307 331 – – 331
Debt securities – FVOCI (1) (Note 39)
Pass 10,868 566 – 11,434 12,495 568 – 13,063
Loss allowances (3) (4) – (7) (2) (3) – (5)
For loan commitments and financial guarantee contracts, the amounts in the table represent the amounts committed or guaranteed, respectively.
Loan commitments and contingent liabilities
Pass 97,201 9,149 – 106,350 86,416 9,510 – 95,926
Special mention – 1,421 – 1,421 – 480 – 480
Substandard – – 562 562 – – 581 581
Doubtful – – 488 488 – – 441 441
Loss – – 161 161 – – 177 177
97,201 10,570 1,211 108,982 86,416 9,990 1,199 97,605
Allowances for contingent liabilities and
credit commitments (Note 39) (125) (156) (43) (324) (59) (158) (43) (260)
(1) In accordance with SFRS(I) 9, for financial asset measured at FVOCI, any impairment is recognised in profit or loss together with a credit to fair value reserves within equity (without adjusting
the carrying amount of the financial asset).
(2) Comparatives have been reclassified to conform to current year’s presentation.
OCBC Annual Report 2022
Notes to the Financial Statements 173
31. Other Assets
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Interest receivable 1,514 889 1,070 481
Sundry debtors (net) 1,000 922 22 87
Deposits and prepayments 1,424 1,911 967 1,391
Others 2,697 2,612 479 380
6,635 6,334 2,538 2,339
At 31 December 2022, reinsurance assets included in “Others” amounted to $463 million (2021: $467 million) for the Group.
32. Associates
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Quoted equity security, at cost 2,601 2,601 2,157 2,157
Unquoted equity securities, at cost 144 145 65 65
2,745 2,746 2,222 2,222
Share of post-acquisition reserves 3,466 3,289 – –
Unquoted equity security, at fair value 122 95 – –
Net carrying amount 6,333 6,130 2,222 2,222
Amounts due from associates (unsecured) 7 40 6 40
Allowances for non-impaired amounts due from associates (#) (#) (#) (#)
7 40 6 40
Investments in and amounts due from associates 6,340 6,170 2,228 2,262
174
32. Associates (continued)
32.1 List of Principal Associates
The Group’s principal associates are as follows:
Name of associates
Country of
incorporation/
Principal place
of business Nature of the relationship with the Group
Effective % interest held (3)
2022 2021
Quoted
Bank of Ningbo Co., Ltd. (1) People’s Republic
of China
A commercial bank, which enables the Group to
expand its bilateral business in offshore
financing, trade finance and private banking. 20 20
Unquoted
Maxwealth Fund Management
Company Limited (1)
People’s Republic
of China
A privately held asset manager that
manufactures and distributes mutual funds in
Greater China. 29 29
Network for Electronic Transfers
(Singapore) Pte Ltd (2)
Singapore An electronic payment services company, which
enables the Group to extend funds transfer
services to its broad customer base. 33 33
(1) Audited by PricewaterhouseCoopers for the financial year ended 31 December 2022 (31 December 2021: Ernst & Young).
(2) Audited by KPMG LLP.
(3) Rounded to the nearest percentage.
As at 31 December 2022, the fair value (Level 1 of the fair value hierarchy) of the investments in Bank of Ningbo was $8.28 billion
(2021: $10.74 billion). The carrying amount of the Group’s interests was $5.89 billion (2021: $5.70 billion).
Bank of Ningbo is listed on the Shenzhen Stock Exchange and its ability to transfer funds to the Group is subject to local listing and
statutory regulations.
OCBC Annual Report 2022
Notes to the Financial Statements 175
32. Associates (continued)
32.2 Financial Information of Material Associate
The table below provides the financial information of the Group’s material associate:
Bank of Ningbo Co., Ltd.
$ million 2022 2021
Selected income statement information
Revenue 11,827 11,007
Net profit attributable to equity holders 4,734 4,087
Selected balance sheet information
Total assets 451,307 427,123
Equity attributable to shareholders 32,459 31,785
Equity attributable to ordinary shareholders 29,426 28,519
Reconciliation of associate’s total ordinary shareholders’ equity to the carrying amount
in the Group’s financial statements
Group’s interests in net assets of investee at beginning of the year 5,704 4,199
Group’s share of:
– shareholders’ equity in current year 320 1,119
Dividends (134) (128)
Subscription of shares – 514
Carrying amount of interest in investee at end of the year 5,890 5,704
Dividends received during the year 134 128
176
32. Associates (continued)
32.2 Financial Information of Material Associate (continued)
In addition to the interests in associate disclosed above, the Group also has interests in individually immaterial associates that are
accounted for using the equity method.
$ million 2022 2021
At 31 December:
Aggregate carrying amount of individually immaterial associates 321 331
For the year ended:
Aggregate amounts of the Group's share of:
Net profit from continuing operations 63 40
Other comprehensive income (61) 3
Total comprehensive income 2 43
Dividends received during the year 11 9
The Group’s share of contingent liabilities in respect of all its associates is as follows:
$ million 2022 2021
At 31 December:
Share of contingent liabilities incurred jointly with other investors of associates 16,748 13,029
33. Subsidiaries
BANK
2022 2021
$ million $ million
Investments in subsidiaries, at cost
Quoted securities 1,970 1,970
Unquoted securities 13,142 13,149
Allowance for impairment (33) (31)
Net carrying amount 15,079 15,088
Amount due from subsidiaries
Term to maturity of one year or less 8,951 8,842
Term to maturity of more than one year 9,893 13,088
18,844 21,930
Of which:
Unsecured 18,268 21,354
Secured 576 576
18,844 21,930
Investments in and amount due from subsidiaries 33,923 37,018
At 31 December 2022, the fair values (Level 1 of the fair value hierarchy) of the Group’s interests in its quoted subsidiaries, Great Eastern
Holdings Limited and PT Bank OCBC NISP Tbk, were $7.70 billion (2021: $8.38 billion) and $1.25 billion (2021: $1.23 billion) respectively.
OCBC Annual Report 2022
Notes to the Financial Statements 177
33. Subsidiaries (continued)
33.1 List of Principal Subsidiaries
Principal subsidiaries of the Group are as follows:
Name of subsidiaries
Country of
incorporation/
Principal place of
business
Proportion of ownership interests
and voting rights held
by the Group (%)
Proportion of ownership interests
and voting rights held by
non-controlling interests (%)
2022 (1) 2021 (1) 2022 (1) 2021 (1)
Banking
Banco OCBC Weng Hang, S.A. Macau SAR 100 100 – –
Bank of Singapore Limited Singapore 100 100 – –
OCBC Al-Amin Bank Berhad Malaysia 100 100 – –
OCBC Bank (Malaysia) Berhad Malaysia 100 100 – –
OCBC Wing Hang Bank (China) Limited People’s Republic
of China 100 100 – –
OCBC Wing Hang Bank Limited Hong Kong SAR 100 100 – –
PT Bank OCBC NISP Tbk Indonesia 85 85 15 15
Insurance
Great Eastern General Insurance Limited Singapore 88 88 12 12
Great Eastern General Insurance (Malaysia) Berhad Malaysia 88 88 12 12
Great Eastern Life Assurance (Malaysia) Berhad Malaysia 88 88 12 12
The Great Eastern Life Assurance Company Limited Singapore 88 88 12 12
Asset management and investment holding
Lion Global Investors Limited Singapore 92 92 8 8
Great Eastern Holdings Limited Singapore 88 88 12 12
Stockbroking
OCBC Securities Private Limited Singapore 100 100 – –
(1) Rounded to the nearest percentage.
The principal subsidiaries listed above are audited by PricewaterhouseCoopers LLP Singapore and its associated firms.
The Group’s subsidiaries do not have significant restrictions on its ability to access or use its assets and settle its liabilities other than
those resulting from their respective local statutory, regulatory, supervisory and banking requirements within which its subsidiaries
operate. These requirements require the Group’s subsidiaries to maintain minimum levels of regulatory capital, liquid assets, and
exposure limits. In addition, Great Eastern Holdings Limited and other insurance subsidiaries are subject to their respective local
insurance laws and regulations, while the Group’s banking subsidiaries are subject to prudential regulatory requirements imposed by
local regulators.
178
33. Subsidiaries (continued)
33.2 Non-Controlling Interests in Subsidiaries
The following table summarises the financial information, before intercompany eliminations, relating to principal subsidiaries with
material NCI.
PT Bank OCBC NISP Tbk Great Eastern Holdings Limited
$ million 2022 2021 2022 2021
Net assets attributable to NCI 418 440 1,237 1,215
Total comprehensive income attributable to NCI (14) 38 59 115
Dividends paid to NCI during the year 7 – 37 34
Summarised financial information
Total assets 20,097 19,883 107,918 110,390
Total liabilities (17,294) (16,935) (98,387) (100,254)
Total net assets 2,803 2,948 9,531 10,136
Revenue 978 909 12,595 19,964
Profit 259 253 787 1,133
Other comprehensive income (84) (12) (1,076) (160)
Total comprehensive income 175 241 (289) 973
Cash flows (used in)/provided by operating activities (1,001) 2,347 3,709 4,274
Cash flows (used in)/provided by investing activities 1,239 (2,043) (2,888) (4,081)
Cash flows (used in)/provided by financing activities (44) (83) (331) (725)
Effect of currency translation reserve adjustment 28 7 – –
Net changes in cash and cash equivalents 222 228 490 (532)
33.3 Consolidated Structured Entities
The Bank has established a USD10 billion Global Covered Bond Programme (the Programme). Under the Programme, the Bank may from
time to time issue covered bonds (the Covered Bonds). The payments of interest and principal under the Covered Bonds are guaranteed by
the Covered Bond Guarantor, Red Sail Pte. Ltd. (the CBG). The Covered Bonds issued under the Programme will predominantly be backed by
a portfolio of Singapore housing loans transferred from the Bank to the CBG. Integral to the Programme structure, the Bank provides
funding and hedging facilities to the CBG.
OCBC Annual Report 2022
Notes to the Financial Statements 179
34. Property, Plant and Equipment
2022 2021
GROUP ($ million)
Propertyrelated
Computerrelated (1) Others Total
Propertyrelated
Computerrelated (1) Others Total
Cost
At 1 January 3,739 3,039 670 7,448 3,764 2,739 656 7,159
Currency translation (53) (48) (10) (111) 32 (1) 1 32
Additions/modifications 100 399 52 551 89 335 52 476
Disposals/terminations and other transfers (87) (97) (24) (208) (115) (34) (39) (188)
Net transfer from/(to):
Assets held for sale – – (#) (#) (10) – (#) (10)
Investment property (Note 35) 16 – (1) 15 (21) – (#) (21)
At 31 December 3,715 3,293 687 7,695 3,739 3,039 670 7,448
Accumulated depreciation
At 1 January (1,155) (2,211) (513) (3,879) (1,031) (1,993) (505) (3,529)
Currency translation 22 43 8 73 (11) 2 (#) (9)
Disposals/terminations and other transfers 72 92 32 196 45 32 36 113
Depreciation charge (141) (229) (36) (406) (141) (213) (36) (390)
Depreciation charge to profit from life
insurance (Note 4) (24) (45) (9) (78) (24) (39) (8) (71)
Net transfer (from)/to:
Assets held for sale – – # # 2 – # 2
Investment property (Note 35) (8) – – (8) 5 – – 5
At 31 December (1,234) (2,350) (518) (4,102) (1,155) (2,211) (513) (3,879)
Accumulated impairment losses
At 1 January (62) (#) (1) (63) (62) (#) (1) (63)
Currency translation 2 – # 2 # – # #
Impairment charge to income statement (49) – – (49) – – – –
At 31 December (109) (#) (1) (110) (62) (#) (1) (63)
Net carrying amount, at 31 December (2) 2,372 943 168 3,483 2,522 828 156 3,506
Freehold property 350 409
Leasehold property 1,820 1,885
Net carrying amount 2,170 2,294
(1) Includes computer software of $703 million (2021: $618 million). The cost and accumulated depreciation are $2,312 million (2021: $2,079 million) and $1,609 million (2021: $1,461 million)
respectively.
(2) Includes ROU assets comprising property-related of $202 million (2021: $228 million), computer-related of $13 million (2021: $1 million) and others of $2 million (2021: $2 million).
180
34. Property, Plant and Equipment (continued)
2022 2021
BANK ($ million)
Propertyrelated
Computerrelated (1) Others Total
Propertyrelated
Computerrelated (1) Others Total
Cost
At 1 January 422 1,607 197 2,226 425 1,447 188 2,060
Currency translation (2) (#) (1) (3) # (#) (#) (#)
Additions 44 220 29 293 21 174 30 225
Disposals/terminations and other transfers (35) (10) (11) (56) (19) (14) (21) (54)
Net transfer to investment property (Note 35) (22) – – (22) (5) – – (5)
At 31 December 407 1,817 214 2,438 422 1,607 197 2,226
Accumulated depreciation
At 1 January (165) (1,183) (142) (1,490) (148) (1,062) (151) (1,361)
Currency translation 1 # 1 2 # # # #
Disposals/terminations and other transfers 35 10 10 55 18 12 21 51
Depreciation charge (37) (143) (13) (193) (37) (133) (12) (182)
Net transfer to investment property (Note 35) 6 – – 6 2 – – 2
At 31 December (160) (1,316) (144) (1,620) (165) (1,183) (142) (1,490)
Accumulated impairment losses
At 1 January (1) – – (1) (1) – – (1)
Write-back to income statement 1 – – 1 – – – –
At 31 December – – – – (1) – – (1)
Net carrying amount, at 31 December (2) 247 501 70 818 256 424 55 735
Freehold property 31 42
Leasehold property 155 167
Net carrying amount 186 209
(1) Includes computer software of $429 million (2021: $368 million). The cost and accumulated depreciation are $1,437 million (2021: $1,261 million) and $1,008 million (2021: $893 million)
respectively.
(2) Includes ROU assets comprising property-related of $60 million (2021: $47 million), computer-related of $10 million (2021: $1 million) and others of $1 million (2021: $# million).
OCBC Annual Report 2022
Notes to the Financial Statements 181
35. Investment Property
GROUP BANK
$ million 2022 2021 2022 2021
Cost
At 1 January 1,053 1,049 602 602
Currency translation (7) 4 – –
Additions 1 7 – 7
Disposals and other transfers (13) (23) (2) (9)
Net transfer (to)/from:
Property, plant and equipment (Note 34) (15) 21 22 5
Assets held for sale (1) (5) – (3)
At 31 December 1,018 1,053 622 602
Accumulated depreciation
At 1 January (251) (235) (128) (123)
Currency translation 2 (1) – –
Disposals and other transfers 5 10 (#) 4
Depreciation charge (20) (22) (8) (8)
Net transfer to/(from):
Property, plant and equipment (Note 34) 8 (5) (6) (2)
Assets held for sale 1 2 – 1
At 31 December (255) (251) (142) (128)
Accumulated impairment losses
At 1 January (1) (1) (1) (1)
Write-back to income statement 1 # 1 #
At 31 December – (1) – (1)
Net carrying amount
Freehold property 540 525 167 159
Leasehold property 223 276 313 314
At 31 December 763 801 480 473
Fair value hierarchy
Level 2 906 875 310 242
Level 3 1,862 1,933 1,099 1,103
Market value 2,768 2,808 1,409 1,345
Market values for properties under Level 2 of the fair value hierarchy are determined based on the direct market comparison method.
Such valuation is derived from price per square metre for comparable buildings market data with insignificant valuation adjustment,
if necessary.
Market values for properties under Level 3 of the fair value hierarchy are determined using a combination of direct market comparison
and investment methods. The key unobservable inputs used in these valuations are the capitalisation rates and rental yields.
182
36. Goodwill and Other Intangible Assets
GROUP BANK
$ million 2022 2021 2022 2021
Goodwill
At 1 January 4,467 4,431 1,867 1,867
Currency translation (27) 36 – –
At 31 December 4,440 4,467 1,867 1,867
Intangible assets
At 1 January 307 406
Amortisation charged to income statement:
– Core deposit relationships (1) (42) (41)
– Customer relationships (2) (15) (15)
– Distribution platform (#) (#)
– Life insurance business (3) (47) (47)
Currency translation # 4
At 31 December 203 307
Total goodwill and other intangible assets 4,643 4,774 1,867 1,867
Analysed as follows:
Goodwill from acquisition of subsidiaries/business 4,440 4,467 1,867 1,867
Intangible assets, at cost 1,568 1,571 – –
Accumulated amortisation for intangible assets (1,365) (1,264) – –
4,643 4,774 1,867 1,867
(1) Core deposit relationships, arising from the acquisition of OCBC Wing Hang, are determined to have an estimated useful life of 10 years. At 31 December 2022, these have a remaining useful
life of 1.5 years (2021: 2.5 years).
(2) Customer relationships, arising from the acquisition of Bank of Singapore Limited and Barclays WIM, are determined to have an estimated useful life of 10 years. At 31 December 2022, these
have a remaining useful life of up to 4 years (2021: 5 years).
(3) The value of in-force insurance business of the Group is amortised over a useful life of 20 years. At 31 December 2022, the intangible asset has a remaining useful life of 2 years (2021: 3 years).
OCBC Annual Report 2022
Notes to the Financial Statements 183
36. Goodwill and Other Intangible Assets (continued)
Impairment Tests for Goodwill
For impairment testing, goodwill is allocated to the Group’s cash-generating units (CGU) identified mainly to business segments as follows:
$ million
Cash Generating Units
Basis of determining
recoverable value
Carrying amount
2022 2021
Goodwill attributed to Banking CGU
Global Consumer Financial Services 844 844
Global Wholesale Banking 570 570
Global Treasury 524 524
Value-in-use 1,938 1,938
Great Eastern Holdings Limited Appraisal value 427 427
Bank of Singapore Limited Value-in-use 809 814
Lion Global Investors Limited Value-in-use 30 30
OCBC Wing Hang Bank Limited Value-in-use 1,066 1,073
PT Bank OCBC NISP Tbk Value-in-use 160 175
Others Value-in-use 10 10
4,440 4,467
The value-in-use calculations apply a discounted cash flow model using cash flow projections based on financial budgets and forecasts
approved by management covering a five-year period. The cash flow projections are discounted at a pre-tax discount rate that includes a
reasonable risk premium at the date of assessment of the respective CGU. Cash flows beyond the fifth year are extrapolated using the
estimated terminal growth rates (weighted average growth rate to extrapolate cash flows beyond the projected years). The terminal growth
rate for each CGU used does not exceed management’s expectation of the long-term average growth rate of the respective industry and
country in which the CGU operates. The discount rates and terminal growth rates used are tabulated below for applicable CGUs.
Banking CGU Bank of Singapore Limited
OCBC Wing Hang
Bank Limited PT Bank OCBC NISP Tbk
2022 2021 2022 2021 2022 2021 2022 2021
Discount rate 7.1% 8.6% 8.3% 9.5% 8.7% 9.6% 14.7% 16.5%
Terminal growth rate 2.0% 2.0% 2.0% 2.0% 2.6% 2.6% 4.0% 4.0%
For the insurance CGU, the Group applies the appraisal value technique for its value-in-use calculation. This technique is commonly
used to determine the economic value of an insurance business, which comprises two components: embedded value of in-force business
and existing structural value (value of future sales). The embedded value of the life insurance business is the present value of projected
distributable profits (cash flows) of the in-force business. The cash flows represent a deterministic approach based on assumptions as to
future operating experience discounted at a risk adjusted rate of 6.00% (2021: 6.00%) and 7.75% (2021: 7.75%) for Singapore and Malaysia
respectively. The assumptions take into account the recent experience of, and expected future outlook for the life insurance business
of the CGU. Investment returns assumed are based on long term strategic asset mix and their expected future returns. The existing
structural value is the value of projected distributable profits from new businesses, which is calculated based on new businesses sold for
the nine months ended up to 30 September and applying a new business multiplier to the value of future sales.
A reasonably possible change in key assumptions will not cause the carrying amount to materially exceed the recoverable amount.
184
37. Segment Information
37.1 Business Segments
$ million
Global
Consumer/
Private
Banking
Global
Wholesale
Banking
Global
Treasury and
Markets Insurance Others Group
Year ended 31 December 2022
Net interest income 2,522 4,002 702 112 350 7,688
Non-interest income 1,588 823 288 1,176 112 3,987
Total income 4,110 4,825 990 1,288 462 11,675
Operating profit before allowances and amortisation 1,516 3,325 650 932 226 6,649
Amortisation of intangible assets (15) – – (47) (42) (104)
Allowances for loans and other assets 36 (323) (1) (4) (292) (584)
Operating profit after allowances and amortisation 1,537 3,002 649 881 (108) 5,961
Share of results of associates, net of tax – – – – 978 978
Profit before income tax 1,537 3,002 649 881 870 6,939
Other information:
Capital expenditure 116 10 1 70 355 552
Depreciation 88 12 2 9 315 426
At 31 December 2022
Segment assets 138,515 189,710 110,471 108,370 41,319 588,385
Unallocated assets 437
Elimination (28,866)
Total assets 559,956
Segment liabilities 178,231 152,108 76,610 96,123 27,826 530,898
Unallocated liabilities 3,256
Elimination (28,866)
Total liabilities 505,288
Other information:
Gross non-bank loans 106,769 185,629 1,728 3 851 294,980
NPAs 886 2,591 – 2 7 3,486
OCBC Annual Report 2022
Notes to the Financial Statements 185
37. Segment Information (continued)
37.1 Business Segments (continued)
$ million
Global
Consumer/
Private
Banking
Global
Wholesale
Banking
Global
Treasury and
Markets Insurance Others Group
Year ended 31 December 2021
Net interest income 1,663 2,736 972 98 386 5,855
Non-interest income 2,055 907 237 1,496 46 4,741
Total income 3,718 3,643 1,209 1,594 432 10,596
Operating profit before allowances and amortisation 1,181 2,267 868 1,270 246 5,832
Amortisation of intangible assets (15) – – (47) (41) (103)
Allowances for loans and other assets (56) (579) (4) 1 (235) (873)
Operating profit after allowances and amortisation 1,110 1,688 864 1,224 (30) 4,856
Share of results of associates, net of tax – – – – 824 824
Profit before income tax 1,110 1,688 864 1,224 794 5,680
Other information:
Capital expenditure 74 14 1 105 290 484
Depreciation 85 11 2 8 306 412
At 31 December 2021
Segment assets 131,443 184,050 94,832 110,950 39,960 561,235
Unallocated assets 280
Elimination (19,328)
Total assets 542,187
Segment liabilities 167,679 151,384 59,917 97,356 27,104 503,440
Unallocated liabilities 3,737
Elimination (19,328)
Total liabilities 487,849
Other information:
Gross non-bank loans 109,972 177,670 1,274 3 797 289,716
NPAs 1,184 3,143 – 4 7 4,338
OCBC Group’s businesses are presented in the following customer segments and business activities: Global Consumer/Private Banking,
Global Wholesale Banking, Global Treasury and Markets and Insurance.
Global Consumer/Private Banking
Global Consumer/Private Banking provides a full range of products and services to individual customers. At Global Consumer Banking,
the products and services offered include deposit products (checking accounts, savings and fixed deposits), consumer loans (housing loans
and other personal loans), credit cards, wealth management products (unit trusts, bancassurance products and structured deposits) and
brokerage services. Private Banking caters to the specialised banking needs of high net worth individuals, offering wealth management
expertise, including investment advice and portfolio management services, estate and trust planning, and wealth structuring.
Global Wholesale Banking
Global Wholesale Banking serves institutional customers ranging from large corporates and the public sector to small and medium
enterprises. The business provides a full range of financing solutions including long-term project financing, short-term credit, working
capital and trade financing, as well as customised and structured equity-linked financing. It also provides customers with a broad range of
products and services such as cash management and custodian services, capital market solutions, corporate finance services and advisory
banking, and treasury products.
186
37. Segment Information (continued)
37.1 Business Segments (continued)
Global Treasury and Markets
Global Treasury and Markets is responsible for the management of the Group’s asset and liability interest rate positions, engages in
foreign exchange activities, money market operations, fixed income and derivatives trading, and offers structured treasury products and
financial solutions to meet customers’ investment and hedging needs. Income from treasury products and services offered to customers
in Global Consumer/Private Banking and Global Wholesale Banking, is reflected in the respective business segments.
Insurance
The Group’s insurance business, including its fund management activities, is undertaken by the Bank’s subsidiary Great Eastern Holdings
Limited and its subsidiaries, which provide both life and general insurance products to its customers mainly in Singapore and Malaysia.
Others
Others comprise mainly property holding, investment holding and items not attributable to the business segments described above.
The business segment information is prepared based on internal management reports, which are used by senior management for
decision-making and performance management. The following management reporting methodologies are adopted:
(a) income and expenses are attributable to each segment based on the internal management reporting policies;
(b) in determining the segment results, balance sheet items are internally transfer priced; and
(c) transactions between business segments are recorded within the segment as if they are third party transactions and are eliminated
on consolidation.
Where there are material changes in the organisational structure and management reporting methodologies, segment information for
prior periods is reclassified to allow comparability. There are no material items of income or expense between the business segments.
37.2 Geographical Segments
$ million
Total
income
Profit before
income tax
Income tax
expenses
Capital
expenditure
Total
assets
Total
liabilities
2022
Singapore 6,738 3,568 431 381 323,392 328,187
Malaysia 1,668 1,239 355 49 65,280 53,189
Indonesia 1,016 325 67 76 21,047 18,136
Greater China 1,558 1,353 73 39 93,291 62,711
Other Asia Pacific 251 239 75 4 20,321 10,473
Rest of the World 444 215 56 3 36,625 32,592
11,675 6,939 1,057 552 559,956 505,288
2021
Singapore 5,955 3,039 271 332 317,491 311,738
Malaysia 1,619 860 173 73 66,997 55,450
Indonesia 940 325 72 43 20,954 17,650
Greater China 1,453 1,243 75 29 88,031 60,128
Other Asia Pacific 262 102 29 5 18,631 10,644
Rest of the World 367 111 28 2 30,083 32,239
10,596 5,680 648 484 542,187 487,849
The Group’s operations are in six main geographical areas. The geographical information is prepared based on the country in which the
transactions are booked. It would not be materially different if it is based on the country in which the counterparty or assets are located.
The geographical information is stated after elimination of intra-group transactions and balances.
OCBC Annual Report 2022
Notes to the Financial Statements 187
38. Risk Management
38.1 Overview
The Group’s risk management framework comprises strong governance, sound policies and methodologies, and professionals, supported
by fit-for-purpose technology, infrastructure and data. The framework is underpinned by a strong corporate culture that emphasises
accountability, ownership, integrity and high ethical standards. The Group engages in business that are consistent with the corporate
strategy and risk appetite, are well understood and are appropriately priced to provide the Group with an adequate return.
The Board of Directors (Board) has ultimate responsibility for the effective management of risk. It establishes the corporate strategy and
approves the risk appetite within which senior management executes the strategy.
The Board Risk Management Committee (BRMC) is the designated board committee overseeing risk management matters. It ensures
that the Group’s overall risk management philosophy and principles are aligned with the corporate strategy and within the approved
risk appetite. The Committee has oversight of credit, market, liquidity, information security and digital, operational, conduct, money
laundering and terrorism financing, legal, regulatory, strategic, ESG and fiduciary risks, as well as any other category of risk that may be
delegated by the Board or deemed necessary by the Committee. It also ensures that the necessary overall risk management organisation
is in place and effective. Based on the approved risk appetite, the BRMC provides quantitative and qualitative guidance to major business
units and risk functions to guide risk-taking. Senior management, functional risk committees covering principal risk types and the BRMC
regularly review the Group’s risk drivers, risk profiles across major lines of business and risk types, risk management frameworks and
major risk policies, as well as compliance matters.
The Group’s independent risk management function, the Group Risk Management Division (GRM), is headed by the Group Chief Risk
Officer (CRO) who is also the Group Chief Information Security Officer (CISO). The Group CRO is a member of the Group Management
Executive Committee and also the functional risk committees. GRM’s day-to-day functional responsibility involves providing independent
risk control and managing credit, market, liquidity, information security and digital, operational and ESG risks. It provides regular risk
reports and updates on developments in material risk drivers, potential vulnerabilities, as well as recommended mitigating actions, to
the senior management, risk committees, the BRMC and Board. Risk management staff work closely with the business and other support
units to ensure that risks are well understood and appropriately managed.
GRM oversees the New Product Approval Process to ensure that risks are properly and comprehensively identified, and adequately
addressed before implementation. GRM also oversees the data management framework so that comprehensive, accurate and timely
information can support management decisions. With the increasing use of Artificial Intelligence and Data Analytics (AIDA) across the
Group, GRM is taking the lead in embedding the principles of Fairness, Ethics, Accountability and Transparency (FEAT) into our data
and model governance as the Group upgrades its digital capabilities in keeping with evolving industry practices.
The table below shows the value-at-risk (VaR) by risk type for the Group’s trading portfolio.
2022 2021
$ million
End of the
period Average Minimum Maximum
End of the
period Average Minimum Maximum
Interest rate VaR 4.89 5.25 1.43 7.96 4.11 4.38 2.15 12.30
Foreign exchange VaR 3.62 1.71 0.40 6.76 0.63 1.74 0.59 5.75
Equity VaR 0.97 1.99 0.61 4.91 1.21 2.05 0.55 6.36
Credit spread VaR 5.76 3.62 1.91 6.78 2.01 2.67 1.42 7.02
Diversification effect (1) (6.92) (5.82) NM (2) NM (2) (4.93) (5.53) NM (2) NM (2)
Aggregate VaR 8.32 6.76 2.84 11.07 3.03 5.32 2.49 18.14
(1) Diversification effect is computed as the difference between Aggregate VaR and the sum of asset class VaRs.
(2) Not meaningful as the minimum and maximum VaRs may have occurred on different days for different asset classes.
188
38. Risk Management (continued)
38.2 Credit Risk
Credit risk is the risk of losing principal and/or income due to the failure of an obligor or counterparty to meet its financial or contractual
obligations or an adverse change in the credit profile of an obligor or counterparty. Credit risk arises from the Group’s lending activities to
retail, corporate and institutional customers. It also includes counterparty and issuer credit risks arising from the Group’s underwriting,
trading and investment banking activities.
Maximum Exposure to Credit Risk
The following table presents the Group’s maximum exposure to credit risk of on-balance sheet and off-balance sheet financial
instruments, without taking into account of any collateral held or other credit enhancements. For on-balance sheet assets, the exposure to
credit risk equals their carrying amount. For contingent liabilities, the maximum exposure to credit risk is the maximum amount that the
Group would have to pay if the obligations of the instruments issued are called upon. For credit commitments, the maximum exposure to
credit risk is the full amount of the undrawn credit facilities granted to customers.
Carrying amount Average
$ million 2022 2021 2022 2021
Credit risk exposure of on-balance sheet assets:
Loans to customers 291,467 286,281 289,708 272,302
Placements with and loans to banks 30,244 25,462 24,611 26,742
Government treasury bills and securities 39,367 37,271 36,893 34,669
Debt securities 22,956 28,045 25,207 28,290
Amounts due from associates 7 40 5 38
Derivative receivables 15,605 9,267 21,048 15,269
Other assets, comprising interest receivables and sundry debtors 2,514 1,811 2,936 2,881
402,160 388,177 400,408 380,191
Credit risk exposure of off-balance sheet items:
Contingent liabilities 16,749 16,651 17,090 14,937
Credit commitments 183,704 171,062 177,664 164,594
200,453 187,713 194,754 179,531
Total maximum credit risk exposure 602,613 575,890 595,162 559,722
Collateral
The main types of collateral obtained by the Group are as follows:
• Residential property loans – Mortgages over residential properties
• Commercial property loans – Mortgages over commercial properties
• Derivatives – Cash and securities
• Car loans – Charges over the vehicles financed
• Share margin financing – Charges over listed securities including those of Singapore, Malaysia and Hong Kong
• Other loans – Securities and charges over business assets such as premises, inventories, trade receivables,
deposits, single premium insurance policies or marketable securities
OCBC Annual Report 2022
Notes to the Financial Statements 189
38. Risk Management (continued)
38.2 Credit Risk (continued)
Analysed by Geography
$ million
Derivative
receivables
(Note 18)
Government
treasury bills
and securities
(Note 24)
Balances
with banks
(Note 25)
Loans to
customers
(Note 26)
Nonperforming
assets
(Note 27)
Allowances
for impaired
assets
(Note 27)
Debt
securities
(Note 29)
GROUP
2022
Singapore 1,421 17,096 753 119,925 437 131 2,263
Malaysia 370 4,550 5,841 25,077 981 292 1,676
Indonesia 82 3,994 565 18,600 778 389 1,113
Greater China 2,424 3,702 12,867 72,756 901 246 8,982
Other Asia Pacific 861 5,248 3,114 21,734 96 29 5,892
Rest of the World 10,447 4,777 4,973 36,888 293 223 3,030
15,605 39,367 28,113 294,980 3,486 1,310 22,956
2021
Singapore 1,221 11,112 802 115,620 606 193 2,827
Malaysia 306 5,428 2,565 27,611 1,516 361 1,598
Indonesia 209 6,425 404 18,918 1,216 504 1,367
Greater China 1,614 4,373 14,027 74,120 586 270 14,461
Other Asia Pacific 599 5,393 1,813 19,293 186 44 4,909
Rest of the World 5,318 4,540 3,629 34,154 228 165 2,883
9,267 37,271 23,240 289,716 4,338 1,537 28,045
BANK
2022
Singapore 1,796 15,889 410 111,626 437 129 1,061
Malaysia 69 147 2,791 3,574 24 18 157
Indonesia 14 243 189 5,611 74 61 711
Greater China 989 1,362 9,355 33,784 419 202 4,337
Other Asia Pacific 726 5,122 2,987 18,879 86 27 5,140
Rest of the World 10,148 1,291 2,952 29,618 192 146 2,229
13,742 24,054 18,684 203,092 1,232 583 13,635
2021
Singapore 1,368 10,106 304 105,801 604 191 1,380
Malaysia 98 79 1,961 4,062 25 18 90
Indonesia 164 274 102 6,155 105 82 880
Greater China 681 2,285 11,964 33,108 469 234 7,901
Other Asia Pacific 470 5,381 1,685 16,005 173 43 4,194
Rest of the World 5,031 1,691 1,505 26,239 195 154 2,318
7,812 19,816 17,521 191,370 1,571 722 16,763
The analysis by geography is determined based on where the credit risk resides.
190
38. Risk Management (continued)
38.2 Credit Risk (continued)
Total Loans and Advances – Credit Quality
In addition to the credit grading of facilities under MAS Notice 612 (2021: MAS Notices 612 and 612A), loans and advances are categorised
into “neither past due nor impaired”, “past due but not impaired” and “impaired”.
Bank loans Non-bank loans
$ million 2022 2021 2022 2021
Neither past due nor impaired 28,113 23,240 291,059 284,855
Non-impaired – – 1,527 1,690
Impaired – – 1,505 1,714
Past due loans – – 3,032 3,404
Impaired but not past due – – 889 1,457
Gross loans 28,113 23,240 294,980 289,716
Allowances
Impaired loans – – (1,308) (1,535)
Non-impaired loans (5) (6) (2,205) (1,900)
Net loans 28,108 23,234 291,467 286,281
Past Due Loans
Analysis of past due loans by industry and geography are as follows:
Bank loans Non-bank loans
$ million 2022 2021 2022 2021
By industry
Agriculture, mining and quarrying – – 96 168
Manufacturing – – 548 767
Building and construction – – 391 330
General commerce – – 401 669
Transport, storage and communication – – 246 313
Financial institutions, investment and holding companies – – 136 56
Professionals and individuals (include housing loans) – – 1,094 963
Others – – 120 138
– – 3,032 3,404
By geography
Singapore – – 653 625
Malaysia – – 729 576
Indonesia – – 1,039 1,829
Greater China – – 472 280
Rest of the World – – 139 94
– – 3,032 3,404
OCBC Annual Report 2022
Notes to the Financial Statements 191
38. Risk Management (continued)
38.2 Credit Risk (continued)
Loans Past Due But Not Impaired
Certain loans and advances are past due but not impaired as the collateral values of these loans are in excess of the principal and interest
outstanding. Allowances for these loans may have been set aside. The Group’s non-bank loans which are past due but not impaired are
as follows:
$ million 2022 2021
Past due
Less than 30 days 884 1,188
30 to 90 days 310 224
Over 90 days 333 278
Past due but not impaired 1,527 1,690
Collateral and Other Credit Enhancements Obtained
Assets amounting to $853 million (2021: $116 million) were obtained by the Group during the year by taking possession of collateral held
as security, or by calling upon other credit enhancements and held at the reporting date.
Repossessed properties are made available for sale in an orderly fashion, with the proceeds used to reduce or repay the outstanding
indebtedness. The Group generally does not occupy the premises repossessed for its business use.
Country Risk
The Group’s country risk framework covers the assessment and rating of countries, as well as the maximum cross-border transfer risk
limit granted to any one country based on its risk rating. The risk covers all cross-border transactions including onshore non-local currency
transactions. Limits are allocated into maturity time-bands and vary according to the risk rating of the country and the political and
economic outlook. The Group’s main cross-border transfer risk exposures during the financial year were in Hong Kong SAR, People’s
Republic of China and Malaysia.
38.3 Market Risk and Asset Liability Management
Market risk is the risk of losing income and/or market value due to fluctuations in factors such as interest rates, foreign exchange rates,
credit spreads, equity and commodity prices or changes in volatilities, or correlation of such factors. Market risks arise primarily from the
Group’s trading, client servicing and balance sheet management activities. It also includes interest rate risk in the banking book (IRRBB)
which is the risk to income and/or capital arising from exposure to adverse changes in the interest rate environment.
The Group’s market risk management framework covers the identification, assessment, measurement, monitoring and control of risks.
Group-level market risk policies and procedures have been established to provide common guidelines and standards for managing market
risks. The Group regularly reviews its market risk management strategy and limits – established within the Group’s risk appetite and in
line with the Group’s business strategies – taking into account prevailing macroeconomic and market conditions.
Asset liability management is the strategic management of the Group’s balance sheet structure and liquidity requirements. It covers
liquidity sourcing and diversification as well as interest rate and structural foreign exchange management.
The Group’s asset liability management framework focuses on managing the exposures arising from the balance sheet. The Group
monitors its liquidity risk, IRRBB and structural foreign exchange risk profiles against approved risk limits under both business-as-usual
and stressed scenarios. These are based on the standards established in the Group’s framework, policies and procedures which are
reviewed regularly to ensure that they remain relevant in the context of prevailing market practices and regulatory guidelines.
192
38. Risk Management (continued)
38.3 Market Risk and Asset Liability Management (continued)
Interest Rate Risk
The primary goal of the management of IRRBB is to ensure that interest rate risk exposures are consistent with the Group’s risk appetite
and maintained within the defined risk tolerances. The material sources of IRRBB are repricing risk, yield curve risk, basis risk and
optionality risk.
A range of techniques are used to measure IRRBB from both the earnings and economic value perspectives. One measure involves the
assessment of the impact of various interest rate scenarios on the Group’s net interest income and the banking book’s Economic Value
of Equity (EVE). Other measures include interest rate sensitivity metrics such as PV01 and repricing gap profile analysis. The Group also
use behavioural models to assess interest rate risks in relation to loan prepayment, time deposit early redemption and the profile of
non-maturity deposits. These measurements facilitate the calibration of appropriate IRRBB management, hedging strategies, policies
and positions.
The impact on net interest income of the banking book is simulated under various interest rate scenarios and assumptions. Based
on a 100 bp parallel rise in yield curves on the Group's exposure to major currencies i.e. Singapore Dollar, US Dollar, Hong Kong Dollar
and Malaysian Ringgit, net interest income is estimated to increase by $742 million (2021: $669 million), or approximately +9.6%
(2021: +11.4%) of reported net interest income. The corresponding impact from a 100 bp decrease in interest rates is an estimated
reduction of $742 million (2021: $669 million) in net interest income, or approximately -9.6% (2021: -11.4%) of reported net
interest income.
The 1% rate shock impact on net interest income is based on the Group’s interest rate risk profile as at reporting date. It does not take
into account actions that would be taken by Global Treasury or the business units to mitigate the impact of this interest rate risk. The
projections also assume a constant balance sheet size and position.
Currency Risk
The Group’s major foreign exchange position for selected balance sheet items is shown below. “Others” include mainly Indonesian Rupiah,
Chinese Renminbi, Australian Dollar, Euro, Japanese Yen and Sterling Pound.
$ million SGD USD MYR HKD Others Total
Selected balance sheet items
2022
Loans to customers 106,119 70,231 17,926 36,120 61,071 291,467
Deposits of non-bank customers 130,205 119,527 21,278 26,210 52,861 350,081
2021
Loans to customers 101,047 72,414 19,537 34,595 58,688 286,281
Deposits of non-bank customers 133,157 109,842 22,603 23,381 53,412 342,395
OCBC Annual Report 2022
Notes to the Financial Statements 193
38. Risk Management (continued)
38.3 Market Risk and Asset Liability Management (continued)
Structural Foreign Exchange Risk
Structural foreign exchange exposure arises primarily from the Group’s non-SGD investment in overseas branches, subsidiaries and
associates, strategic investments, as well as property assets. The Group manages structural foreign exchange risk through hedging
instruments including the use of derivatives and matched funding for foreign currency investments. The table below shows the Group’s
structural foreign currency exposure at reporting date.
2022 2021
$ million
Structural
currency
exposure
Structural
currency
exposure –
hedged
Net
structural
currency
exposure
Structural
currency
exposure
Structural
currency
exposure –
hedged
Net
structural
currency
exposure
Hong Kong Dollar 7,011 – 7,011 7,234 – 7,234
Chinese Renminbi 8,357 – 8,357 8,182 – 8,182
US Dollar 3,931 3,434 497 4,024 3,185 839
Others 7,746 – 7,746 7,968 117 7,851
Total 27,045 3,434 23,611 27,408 3,302 24,106
Net Investment Hedges
The amounts relating to items designated as hedging instruments were as follows.
Carrying amount
$ million
Nominal
amount Assets Liabilities
2022
Foreign exchange derivatives 1,430 – 238
Subordinated debt 1,775 – 1,658
2021
Foreign exchange derivatives 3,642 49 180
The total change in fair value of the hedging instruments during the year was a gain of $30 million (2021: loss of $67 million) and the
change in value of the hedging instruments recognised in OCI was a gain of $30 million (2021: loss of $67 million). There was no gain or
loss recognised in other income arising from hedge ineffectiveness in 2022 (2021: nil).
194
38. Risk Management (continued)
38.3 Market Risk and Asset Liability Management (continued)
Liquidity Risk
Liquidity risk is the risk arising from the inability to meet financial and cash outflow obligations as they fall due without incurring
unacceptable costs or losses.
The objective of liquidity risk management is to ensure that the Group has sufficient funds to meet the required contractual and
regulatory financial obligations and to undertake new transactions.
Liquidity monitoring is performed on daily basis within a framework for projecting cash flows on contractual and behavioural bases.
Indicators such as liquidity and deposit concentration ratios are used to establish the optimal funding mix and asset composition.
Funding strategies are established to provide effective diversification and stability in funding sources across tenors, products and
geographies. Simulations of liquidity exposures under stressed market scenarios are performed and the results are used to adjust
liquidity risk management strategies, policies and positions, as well as to develop contingency funding plans.
The table below analyses the carrying amount of assets and liabilities of the Group into maturity time bands based on the remaining term
to contractual maturity as at the reporting date.
$ million
Within
1 week
1 week to
1 month
1 to 3
months
3 to 12
months
1 to 3
years
Over
3 years
No
specific
maturity Total
2022
Cash and placements with central banks 16,187 5,208 8,585 3 – – 4,983 34,966
Placements with and loans to banks 5,257 3,959 8,928 8,833 546 585 – 28,108
Loans to customers 21,925 36,231 21,047 33,916 54,199 124,149 – 291,467
Securities (1) 505 4,535 7,277 15,350 20,731 13,925 5,054 67,377
Derivative receivables 15,199 6 52 35 162 151 – 15,605
Other assets (2) 2,718 2,012 511 470 72 110 1,179 7,072
Associates # – 6 – – 1 6,333 6,340
Property, plant and equipment and
investment property (3) – 1 – – – – 3,592 3,593
Goodwill and other intangible assets – – – – – – 4,643 4,643
Total 61,791 51,952 46,406 58,607 75,710 138,921 25,784 459,171
Total life insurance fund assets 100,785
Total assets 559,956
Deposits of non-bank customers 201,584 38,932 46,777 56,773 4,242 1,773 – 350,081
Deposits and balances of banks 6,089 2,050 1,755 123 – 29 – 10,046
Trading portfolio liabilities – – 201 – – – 11 212
Derivative payables 15,248 3 116 85 442 154 – 16,048
Other liabilities (4) 2,687 2,075 981 2,598 233 122 1,217 9,913
Debt issued 739 1,148 7,567 4,709 6,400 1,375 – 21,938
Total 226,347 44,208 57,397 64,288 11,317 3,453 1,228 408,238
Total life insurance fund liabilities 97,050
Total liabilities 505,288
Net liquidity gap (164,556) 7,744 (10,991) (5,681) 64,393 135,468
(1) Securities comprise government, debt and equity securities. Securities at FVTPL (Note 39) are expected to be recovered or settled within 12 months.
(2) Other assets include deferred tax assets.
(3) Property, plant and equipment and investment property include assets held for sale.
(4) Other liabilities include amounts due to associates, current tax and deferred tax liabilities.
OCBC Annual Report 2022
Notes to the Financial Statements 195
38. Risk Management (continued)
38.3 Market Risk and Asset Liability Management (continued)
Liquidity Risk (continued)
$ million
Within
1 week
1 week to
1 month
1 to 3
months
3 to 12
months
1 to 3
years
Over
3 years
No
specific
maturity Total
2021
Cash and placements with central banks 13,629 2,436 6,643 – – – 5,211 27,919
Placements with and loans to banks 5,773 2,918 4,102 10,381 60 # – 23,234
Loans to customers 24,494 37,225 21,463 32,106 57,751 113,242 – 286,281
Securities (1) 64 2,303 4,421 14,242 22,993 21,293 5,970 71,286
Derivative receivables 8,922 6 99 30 120 90 – 9,267
Other assets (2) 3,336 972 721 542 64 102 877 6,614
Associates 1 – 4 35 – # 6,130 6,170
Property, plant and equipment and
investment property (3) 1 8 1 1 – – 3,627 3,638
Goodwill and other intangible assets – – – – – – 4,773 4,773
Total 56,220 45,868 37,454 57,337 80,988 134,727 26,588 439,182
Total life insurance fund assets 103,005
Total assets 542,187
Deposits of non-bank customers 229,550 30,704 41,873 37,392 1,907 969 – 342,395
Deposits and balances of banks 5,362 1,593 1,075 154 – 55 – 8,239
Trading portfolio liabilities – – 392 – – – 1 393
Derivative payables 8,670 1 1 84 145 169 – 9,070
Other liabilities (4) 3,206 1,133 826 1,865 268 219 1,083 8,600
Debt issued 782 1,511 4,488 5,805 4,759 2,770 – 20,115
Total 247,570 34,942 48,655 45,300 7,079 4,182 1,084 388,812
Total life insurance fund liabilities 99,037
Total liabilities 487,849
Net liquidity gap (191,350) 10,926 (11,201) 12,037 73,909 130,545
(1) Securities comprise government, debt and equity securities. Securities at FVTPL (Note 39) are expected to be recovered or settled within 12 months.
(2) Other assets include deferred tax assets.
(3) Property, plant and equipment and investment property include assets held for sale.
(4) Other liabilities include amounts due to associates, current tax and deferred tax liabilities.
As contractual maturities may not necessarily reflect the timing of actual cash flows of assets and liabilities, cash flows for profiling liquidity
risk are on contractual and behavioural bases. The cash flows of assets and liabilities may be different from their contractual terms.
Contractual Maturity for Financial Liabilities
The table below shows the undiscounted cash outflows of the Group’s financial liabilities by remaining contractual maturities, except for
trading portfolio liabilities which are profiled in accordance with the Group’s trading strategies. Information on cash outflows of gross
loan commitments is set out in Note 44. The behavioural cash flows of these liabilities could vary significantly from what is shown in
the table. For example, demand deposits of non-bank customers, such as current and savings deposits (Note 17) may exhibit a longer
behavioural maturity beyond the contractual profile. Similarly, loan commitments are not all expected to be drawn down immediately.
196
38. Risk Management (continued)
38.3 Market Risk and Asset Liability Management (continued)
Contractual Maturity for Financial Liabilities (continued)
$ million
Within
1 week
1 week to
1 month
1 to 3
months
3 to 12
months
1 to 3
years
Over
3 years Total
2022
Deposits of non-bank customers (1) 201,639 39,190 47,267 58,418 4,532 1,841 352,887
Deposits and balances of banks (1) 6,094 2,063 1,772 125 – 29 10,083
Trading portfolio liabilities – – 212 – – – 212
Other liabilities (2) 2,650 1,854 674 1,253 167 113 6,711
Debt issued 740 1,158 7,598 4,924 7,203 1,491 23,114
Derivatives
Trading 15,460 – – – – – 15,460
Hedging – Net settled # 5 46 88 174 26 339
Hedging – Gross settled
Outflow 39 35 873 778 2,116 – 3,841
Inflow (38) (32) (760) (792) (1,981) – (3,603)
226,584 44,273 57,682 64,794 12,211 3,500 409,044
2021
Deposits of non-bank customers (1) 229,563 30,765 41,946 37,567 2,022 1,020 342,883
Deposits and balances of banks (1) 5,364 1,594 1,076 154 – 55 8,243
Trading portfolio liabilities – – 393 – – – 393
Other liabilities (2) 3,177 1,048 749 1,039 226 171 6,410
Debt issued 783 1,512 4,508 5,910 4,910 2,966 20,589
Derivatives
Trading 8,726 – – – – – 8,726
Hedging – Net settled # 2 3 17 35 20 77
Hedging – Gross settled
Outflow 5 85 912 1,909 1,747 916 5,574
Inflow (1) (84) (960) (1,829) (1,610) (837) (5,321)
247,617 34,922 48,627 44,767 7,330 4,311 387,574
(1) Interest cash flows of bank and non-bank deposits are included in the respective deposit lines based on interest payment dates.
(2) Other liabilities include amounts due to associates.
Information Security and Digital Risk
Information security risk is the risk of compromising confidentiality, integrity and/or availability of information (in physical or digital form).
Digital risk encompasses cyber and technology risks. Cyber risk is the risk arising from malicious acts perpetrated by threat actors.
Technology risk is the risk of disruption, failure or irregularity in essential financial services arising from the use of information and
communication technologies.
Operational Risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes and systems, poor management, human error or
external events. This is a broad risk category that encompasses fraud risk, money laundering, terrorism financing and sanctions risk,
third-party risk, physical and people security risk, conduct risk, business continuity risk, unauthorised trading risk, regulatory risk, legal risk,
fiduciary risk and reputational risk.
OCBC Annual Report 2022
Notes to the Financial Statements 197
38. Risk Management (continued)
38.4 Insurance-Related Risk Management
This note sets out the risk management information of GEH Group.
Governance Framework
Managing risk is an integral part of GEH Group's core business. As stated in the Enterprise Risk Management (ERM) Framework, GEH
Group shall operate within parameters and limits that are calibrated to the risk appetite approved by the GEH Board, and pursue
appropriate risk-adjusted returns.
GEH Group Risk Management department spearheads the development and implementation of the ERM Framework for GEH Group.
GEH Board is responsible for overseeing GEH Group’s risk management initiatives. GEH Board may delegate this responsibility to the Risk
Management Committee (RMC) and Senior Management of GEH Group for the execution of these initiatives. At GEH Group level, detailed
risk management and oversight activities are undertaken by the following Group Management committees, all of which are chaired by
GEH Group Chief Executive Officer and comprise key Senior Management Executives, namely: Group Management Committee (GMC),
Group Investment Committee (Group IC), Group Asset-Liability Committee (Group ALC), Group Technology Strategy Committee (Group
TSC) and Group Product Management and Approval Committee (Group PMAC).
GMC is responsible for providing leadership, direction and functional oversight on all matters including sustainability performance of GEH
Group. In addition to complying with regulatory requirements, the GMC is also responsible for ensuring compliance and alignment with
Group Governance and Oversight Framework, i.e. Group standards and guidelines. The GMC is supported by the Group IC, Group ALC,
Group PMAC, Group TSC, Local Senior Management Team (SMT), Local ALC, Local Product Development Committee (PDC) and Local TSC.
Group IC is responsible for overseeing all investment management activities of GEH Group and ensuring that the interests and rights of
policyholders are not compromised.
Group ALC is responsible for balance sheet management. Specifically, Group ALC reviews and formulates frameworks, policies, processes
and methodologies relating to balance sheet management. Group ALC is also responsible for ensuring compliance and alignment with
Group Governance and Oversight Framework, i.e. Group standards and guidelines. Group ALC is supported by the local ALC.
Group TSC is responsible for assisting GMC in providing the overall strategic direction and approval of all IT related issues and initiatives,
including the digitalisation and transformation programs to support GEH Group’s strategic growth into the future. Group TSC is supported
by local TSC.
Group PMAC is responsible for reviewing, approving and managing new and existing products, ensuring the business operates within the
risk appetite in delivering the annual business targets. Local PDC is responsible for reviewing and endorsing new products at the local
operating subsidiaries.
Regulatory Framework
Insurers are required to comply with the Insurance Act and Regulations, as applicable, including guidelines on investment limits. The
responsibility for the formulation, establishment and approval of the policy for the investment of the funds rests with the respective
Board of Directors (Board) of the insurance subsidiaries. GEH Board exercises oversight on investments to safeguard the interests of
policyholders and shareholders.
Capital Management
The objectives of GEH’s capital management policy are to create shareholder value, deliver sustainable returns to shareholders, maintain a
strong capital position with sufficient buffer to meet policyholders’ obligations and regulatory requirements and make strategic
investments for business growth.
GEH Group had no significant changes in the policies and processes relating to its capital structure during the year.
198
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Regulatory Capital
GEH Group and its insurance subsidiaries are required to comply with the capital requirements prescribed by the insurance regulations of
the jurisdictions in which the subsidiaries operate. The Capital Adequacy Ratios of GEH Group and its insurance subsidiaries in Singapore,
Malaysia and Indonesia remained well above the regulatory minimum ratios under the Risk-based Capital Frameworks established by the
Monetary Authority of Singapore (MAS), Bank Negara Malaysia (BNM) and Otoritas Jasa Keuangan, Indonesia respectively.
GEH Group's approach to capital management aims to maintain an adequate level of capital to meet regulatory requirements, including
any additional amounts required by the regulators of GEH Group and its insurance subsidiaries. This involves managing asset, liability
decisions and the associated risks in a coordinated way by assessing and monitoring the available and required capital (by each regulated
entity) on a regular basis and, where appropriate, taking appropriate actions to adjust the asset liability position of GEH Group and/or its
subsidiaries in light of changes in economic conditions and risk characteristics.
The primary sources of capital of GEH Group are shareholders’ equity. GEH Group defines available capital as the amount of assets in
excess of liabilities measured in accordance with the insurance regulations of the respective jurisdictions in which the insurance
subsidiaries operate.
Dividend
GEH’s dividend policy aims to provide shareholders with a predictable and sustainable dividend return, payable on a half-yearly basis.
OCBC Annual Report 2022
Notes to the Financial Statements 199
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
The following sections provide details of GEH Group's exposure to insurance and key financial risks, as well as the objectives, policies and
processes for managing these risks.
There has been no change to GEH Group's exposure to these insurance and key financial risks or the manner in which it manages and
measures the risks.
Insurance Risk
The principal activity of GEH Group is the provision of insurance products and related financial advisory services. The products cover risks
such as mortality, morbidity (health, disability, critical illness, personal accident), property and casualty, investment saving protection and
wealth accumulation guarantees.
GEH Group's underwriting strategy is designed to ensure that risks are well diversified across the types of risk and level of insured benefits.
This is largely achieved through diversification across industry sectors and geography, the use of medical screening in order to ensure that
pricing takes into account current health conditions and family medical history, regular review of actual claims experience, as well as
detailed claims handling procedures. Underwriting limits are also established to enforce appropriate risk selection criteria. For example,
GEH Group has the right to reject renewal of insurance policy, impose deductibles and reject payment of fraudulent claims.
Risks inherent in GEH Group’s activities include but are not limited to the following.
Insurance Risks of Life Insurance Contracts
Insurance risks arise when GEH Group underwrites insurance contracts. While insurance risks may not vary significantly across the
geographical locations in which GEH Group currently operates, the types of risks insured, assumptions used in pricing the insurance
products and subsequent setting aside of provisions may give rise to potential shortfalls in provision for future claims and expenses when
actual claims experience are worse than projections. Assumptions that may cause insurance risks to be underestimated include
assumptions on policy lapses, mortality, morbidity and expenses.
GEH Group utilises reinsurance to manage the mortality and morbidity risks. GEH Group’s reinsurance management strategy and policy
are reviewed annually by RMC and GEH Group ALC. Reinsurance is structured according to the type of risk insured. Catastrophe
reinsurance is procured to limit catastrophic losses.
In general, reinsurance business will only be given to reinsurers with a minimum credit rating of S&P A- or equivalent. GEH Group limits its
risk to any one reinsurer by ceding different products to different reinsurers or to a panel of reinsurers.
GEH Group ALC reviews the actual experience of mortality, morbidity, lapses and surrenders, and expenses at least annually, and ensures
that the policies, guidelines and limits established for managing the risks remain adequate and appropriate.
A substantial portion of GEH Group’s life insurance funds is participating in nature. In the event of volatile investment climate and/or
unusual claims experience, the insurer has the option of revising the bonus payable to policyholders.
For non-participating funds, the risk is that the guaranteed policy benefits must be met even when investment portfolios perform below
expectations, or claims experience is higher than expected.
For investment-linked funds, the risk exposure for GEH Group is limited only to the underwriting aspect as all investment risks are borne
by the policyholders. Nevertheless, the fees earned by GEH Group for managing the investment-linked funds would fluctuate with the
changes in underlying fund values.
Stress testing is performed at least once a year to assess the solvency of the life insurance fund under various stress scenarios. The stress
scenarios include regulatory prescribed scenarios, as well as scenarios depicting drastic changes in key parameters such as new business
volume, market volatilities, expense patterns, mortality/morbidity patterns and lapse rates.
200
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Insurance Risk (continued)
Insurance Risks of Life Insurance Contracts (continued)
The table below sets out the distribution of the various life insurance risk as at the reporting date.
Gross Reinsurance
$ million With DPF (1) Without DPF Total With DPF Without DPF Total Net total
(a) By class of business
2022
Whole life 40,799 9,749 50,548 9 (23) (14) 50,534
Endowment 18,003 13,125 31,128 # (28) (28) 31,100
Term # 678 678 (#) (162) (162) 516
Accident and health 2 736 738 – (293) (293) 445
Annuity 23 366 389 – – – 389
Others 124 1,331 1,455 (1) (82) (83) 1,372
Total 58,951 25,985 84,936 8 (588) (580) 84,356
2021
Whole life 41,215 11,084 52,299 11 (27) (16) 52,283
Endowment 21,963 9,549 31,512 # (125) (125) 31,387
Term # 732 732 (#) (165) (165) 567
Accident and health 2 548 550 – (133) (133) 417
Annuity 26 444 470 – – – 470
Others 128 1,268 1,396 (1) (33) (34) 1,362
Total 63,334 23,625 86,959 10 (483) (473) 86,486
(b) By country
2022
Singapore 44,104 18,416 62,520 15 (252) (237) 62,283
Malaysia 14,514 6,768 21,282 (6) (333) (339) 20,943
Others 333 801 1,134 (1) (3) (4) 1,130
Total 58,951 25,985 84,936 8 (588) (580) 84,356
2021
Singapore 47,300 16,581 63,881 17 (311) (294) 63,587
Malaysia 15,676 6,366 22,042 (7) (168) (175) 21,867
Others 358 678 1,036 (#) (4) (4) 1,032
Total 63,334 23,625 86,959 10 (483) (473) 86,486
(1) DPF is defined as contracts with Discretionary Participating Features.
The sensitivity analysis below shows the impact of changes in key parameters on the value of policy liabilities, and hence on the income
statement and shareholders’ equity.
Sensitivity analysis produced are based on parameters set out as follows:
Change in assumptions
(a) Scenario 1 – Mortality and Major Illness + 25% for all future years
(b) Scenario 2 – Mortality and Major Illness – 25% for all future years
(c) Scenario 3 – Health and Disability + 25% for all future years
(d) Scenario 4 – Health and Disability – 25% for all future years
(e) Scenario 5 – Lapse and Surrender Rates + 25% for all future years
(f) Scenario 6 – Lapse and Surrender Rates – 25% for all future years
(g) Scenario 7 – Expenses + 30% for all future years
OCBC Annual Report 2022
Notes to the Financial Statements 201
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Insurance Risk (continued)
Insurance Risks of Life Insurance Contracts (continued)
Profit/(Loss) After Tax and Shareholders’ Equity Sensitivity for the Singapore Segment
Impact on 1-Year’s Profit/(Loss) After Tax and Shareholders’ Equity
Life Insurance Contracts
2022 2021
$ million
Gross
impact
Reinsurance
ceded
Net
impact
Gross
impact
Reinsurance
ceded
Net
impact
Scenario 1 (730) 354 (376) (754) 362 (392)
Scenario 2 492 (228) 264 526 (246) 280
Scenario 3 (278) 145 (133) (257) 141 (116)
Scenario 4 176 (62) 114 150 (45) 105
Scenario 5 99 (34) 65 92 (17) 75
Scenario 6 (143) 46 (97) (130) 30 (100)
Scenario 7 (56) 5 (51) (48) 3 (45)
Profit/(Loss) After Tax and Shareholders’ Equity Sensitivity for the Malaysia Segment
Impact on 1-Year’s Profit/(Loss) After Tax and Shareholders’ Equity
Life Insurance Contracts
2022 2021
$ million
Gross
impact
Reinsurance
ceded
Net
impact
Gross
impact
Reinsurance
ceded
Net
impact
Scenario 1 (127) – (127) (133) – (133)
Scenario 2 109 – 109 120 – 120
Scenario 3 (14) – (14) (23) – (23)
Scenario 4 13 – 13 20 – 20
Scenario 5 (28) – (28) (24) – (24)
Scenario 6 72 – 72 58 – 58
Scenario 7 (40) – (40) (35) – (35)
The tables above demonstrate the sensitivity of GEH Group’s profit or loss after tax to possible changes in individual actuarial valuation
assumptions, with all other variables held constant.
The method used, including the significant assumptions made, for performing the above sensitivity analysis did not change from the
previous year.
202
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Insurance Risk (continued)
Insurance Risk of Non-Life Insurance Contracts
Risks under non-life insurance policies usually cover a twelve-month duration. The risk inherent in non-life insurance contracts is
reflected in the insurance contract liabilities which include the premium and claims liabilities. The premium liabilities comprise reserve for
unexpired risks, while the claims liabilities comprise the loss reserves which include both provision for outstanding claims notified
and outstanding claims incurred but not reported.
The table below sets out the distribution of the various categories of the non-life insurance risk as at the reporting date.
2022 2021
Non-life insurance contracts
$ million
Gross
premium
liabilities
Reinsured
premium
liabilities
Net
premium
liabilities
Gross
premium
liabilities
Reinsured
premium
liabilities
Net
premium
liabilities
(a) By class of business
Fire 42 (18) 24 39 (16) 23
Motor 42 (5) 37 36 (2) 34
Marine and aviation 6 (3) 3 8 (4) 4
Workmen’s compensation 14 (4) 10 18 (6) 12
Personal accident and health 23 (1) 22 23 (2) 21
Miscellaneous 67 (47) 20 65 (44) 21
Total 194 (78) 116 189 (74) 115
(b) By country
Singapore 101 (48) 53 99 (47) 52
Malaysia 73 (22) 51 71 (19) 52
Indonesia 20 (8) 12 19 (8) 11
Total 194 (78) 116 189 (74) 115
2022 2021
Non-life insurance contracts
$ million
Gross
claims
liabilities
Reinsured
claims
liabilities
Net
claims
liabilities
Gross
claims
liabilities
Reinsured
claims
liabilities
Net
claims
liabilities
(a) By class of business
Fire 123 (95) 28 128 (105) 23
Motor 63 (5) 58 54 (6) 48
Marine and aviation 25 (19) 6 28 (21) 7
Workmen’s compensation 36 (13) 23 34 (13) 21
Personal accident and health 26 (4) 22 25 (5) 20
Miscellaneous 240 (209) 31 222 (190) 32
Total 513 (345) 168 491 (340) 151
(b) By country
Singapore 194 (123) 71 175 (113) 62
Malaysia 267 (189) 78 289 (216) 73
Indonesia 52 (33) 19 27 (11) 16
Total 513 (345) 168 491 (340) 151
OCBC Annual Report 2022
Notes to the Financial Statements 203
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Insurance Risk (continued)
Insurance Risk of Non-Life Insurance Contracts (continued)
Cumulative Claims Estimates and Cumulative Payments To-Date
The tables below show the cumulative claims estimates, including both claims notified and IBNR for each successive accident year, at each
reporting date, together with cumulative payments to date.
(i) Gross non-life insurance contract liabilities for 2022
$ million 2015 2016 2017 2018 2019 2020 2021 2022 Total
(a) Estimate of cumulative claims
Accident Year 195 202 219 188 221 273 258 266
One year later 195 213 213 163 227 239 226 –
Two years later 167 209 191 154 227 271 – –
Three years later 171 203 195 244 231 – – –
Four years later 170 201 196 245 – – – –
Five years later 170 201 193 – – – – –
Six years later 166 196 – – – – – –
Seven years later 164 – – – – – – –
Current estimate of cumulative claims 164 196 193 245 231 271 226 266
(b) Cumulative payments 160 193 175 138 191 204 143 82
(c) Non-life gross claim liabilities 4 3 18 107 40 67 83 184 506
Reserve for prior years 7
Non-life insurance contract liabilities, gross 513
204
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Insurance Risk (continued)
Insurance Risk of Non-Life Insurance Contracts (continued)
Cumulative Claims Estimates and Cumulative Payments To-Date (continued)
(ii) Non-life insurance contract liabilities, net of reinsurance of liabilities, for 2022
$ million 2015 2016 2017 2018 2019 2020 2021 2022 Total
(a) Estimate of cumulative claims
Accident Year 102 109 125 121 123 109 109 140
One year later 100 107 124 113 116 96 93 –
Two years later 96 105 120 110 115 97 – –
Three years later 92 102 119 111 117 – – –
Four years later 91 100 118 111 – – – –
Five years later 90 100 116 – – – – –
Six years later 88 97 – – – – – –
Seven years later 87 – – – – – – –
Current estimate of cumulative claims 87 97 116 111 117 97 93 140
(b) Cumulative payments 85 95 110 101 103 82 70 49
(c) Non-life net claim liabilities 2 2 6 10 14 15 23 91 163
Reserve for prior years 5
Non-life insurance contract liabilities, net 168
Key Assumptions
Non-life insurance contract liabilities are determined based on claims experience, knowledge of existing events, the terms and conditions
of the relevant policies and interpretation of circumstances. Of particular relevance is past experience with similar cases, trends in
historical claims, legislative changes, judicial decisions, economic conditions and claims handling procedures. The estimates of the non-life
insurance contract liabilities are therefore sensitive to various factors. The actual future premium and claims liabilities will not develop
exactly as projected and may vary from initial estimates.
Insurance risk of non-life insurance contracts is mitigated by achieving a large and well-diversified portfolio of insurance contracts across
various industries and geographical areas. The risks are further mitigated by careful selection and implementation of underwriting
strategies, which are designed to ensure that risks are diversified in terms of type of risk and level of insured benefits. Comprehensive
assessment of new and on-going claims, regular detailed review of claims handling procedures and frequent investigation of possible
fraudulent claims are established to further reduce the risk exposure of GEH Group. In addition, GEH Group enforces a policy of active
management and prompt pursuit of claims, to reduce its exposure to unpredictable future developments that can negatively impact
GEH Group.
GEH Group has also limited its exposure by imposing maximum claim amounts on certain contracts as well as the use of reinsurance
arrangements in order to limit exposure to catastrophic events such as hurricanes, earthquakes and flood damages.
OCBC Annual Report 2022
Notes to the Financial Statements 205
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Insurance Risk (continued)
Insurance Risk of Non-Life Insurance Contracts (continued)
The sensitivity analysis below shows the impact of changes in key assumptions on gross and net liabilities, profit before tax and equity.
Impact on
$ million
Change in
assumptions
Gross
liabilities
Net
liabilities
Profit
before tax Equity
2022
Provision for adverse deviation margin +20% 12 3 (3) (3)
Loss ratio (for latest year) +20% 75 41 (41) (33)
Claims handling expenses +20% 2 1 (1) (1)
2021
Provision for adverse deviation margin +20% 11 4 (4) (3)
Loss ratio (for latest year) +20% 67 37 (37) (29)
Claims handling expenses +20% 2 2 (2) (1)
The method used and significant assumptions made for deriving sensitivity information above did not change from the previous year.
Market and Credit Risk
Market risk arises when market values of assets and liabilities are adversely affected by changes in financial markets. Changes in interest
rates, foreign exchange rates, equity prices and prices of alternative investment assets can impact present and future earnings of the
insurance operations, as well as shareholders’ equity.
GEH Group is exposed to market risk through its investment portfolios, as well as in the mismatches between assets and liabilities of
the Insurance Funds. In the case of the third-party funds managed by its asset management subsidiary, Lion Global Investors Limited,
investment risks are borne by investors and GEH Group does not assume any liability in the event of occurrence of loss or write-down in
market valuations.
GEH Group ALC, Group IC and local ALCs actively manage market risks through the setting of investment policies and asset allocations,
approving portfolio construction, risk measurement methodologies, as well as hedging and alternative risk transfer strategies. Investment
limits are monitored at various levels to ensure that all investment activities are conducted within GEH Group’s risk appetite and in line
with GEH Group’s management principles and philosophies. Compliance with established limits forms an integral part of the risk
governance and financial reporting framework. The approach adopted by GEH Group in managing the various types of risk, including
interest rate risk, foreign exchange risk, equity price risk, credit risk, alternative investment risk and liquidity risk, is briefly described below.
(a) Interest Rate Risk (Including Asset Liability Mismatch)
GEH Group is exposed to interest rate risk through (i) investments in fixed income instruments and (ii) policy liabilities in the Insurance
Funds. Since the Shareholders’ Fund has exposure to investments in fixed income instruments but no exposure to insurance policy
liabilities, it will incur economic losses when interest rates rise. Given the long duration of policy liabilities and the uncertainties in the
cash flows of Insurance Funds, it is not possible to hold assets with duration that perfectly matches the duration of the policy liabilities.
This results in interest rate risk and asset liability mismatch risk, and these risks are managed and monitored by GEH Group ALC and the
local ALCs. The Insurance Funds will incur economic losses when interest rates drop as the duration of policy liabilities is generally longer
than the duration of fixed income assets.
Under Singapore regulations governed by the MAS, the discount rate used for discounting liability cash flows may include a positive
adjustment in the form of matching adjustment, or illiquidity premium, subject to certain conditions being met. As a result, the Singapore
non-participating funds could have losses when the magnitude of the adjustment decreases leading to higher discounted liabilities.
206
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Market and Credit Risk (continued)
(a) Interest Rate Risk (Including Asset Liability Mismatch) (continued)
Under Malaysia regulations governed by the BNM, liability cash flows with durations less than 15 years are discounted using the spot yield
of Malaysia Government Securities (MGS) with matching durations, while liability cash flows with durations of 15 years or more are
discounted using the 15 year MGS spot yield. As a result, the Malaysia non-participating fund could have losses when the MGS spot yield
decreases.
Managing Interest Rate Benchmark Reform
i) Overview
A fundamental reform of major interest rate benchmarks is being undertaken globally, including the replacement of some interbank
offered rates (IBOR) with alternative nearly risk-free rates (referred to as IBOR reform). GEH Group has moderate exposure to IBORs on its
financial instruments that will be reformed as part of this market-wide initiative. Most reforms affecting GEH Group had been completed
by the end of 2021. However, the transition deadlines for USD LIBOR and SIBOR have been extended to end June 2023 and end December
2024 respectively, hence some instruments referencing these rates may not be transited until those dates.
GEH Group anticipates that IBOR reform will have moderate operational, risk management and accounting impacts across all of its
business lines. The main risk to which GEH Group is exposed as a result of IBOR reform is operational. For example, the bilateral
renegotiation with private debt issuers, updating of contractual terms, updating of systems that use IBOR curves and revision of
operational controls related to the reform. Financial risk is predominantly limited to interest rate risk.
GEH Group has a cross-functional IBOR Working Group to manage its transition to alternative rates. The objectives of the IBOR Working
Group include evaluating the extent to which fixed income holdings, derivatives and liabilities reference IBOR cash flows, whether such
contracts need to be amended as a result of IBOR reform and how to manage communication about IBOR reform with counterparties.
ii) Non-Derivative Financial Assets
GEH Group’s IBOR exposures on bonds/FRNs holdings include SGD Swap Offer Rate (SOR), SIBOR and USD LIBOR are primarily at The Great
Eastern Life Assurance Company Limited. GEH Group also has corporate loans holdings indexed to SOR.
The alternative reference rate for SOR and SIBOR is the Singapore Overnight Rate Average (SORA); for USD LIBOR is the Secured Overnight
Financing Rate (SOFR). The changes to the contractual terms of financial assets indexed to SOR, SIBOR and USD LIBOR to incorporate new
benchmark rates are still in progress as at 31 December 2022.
GEH Group monitors the progress of transition from IBORs to new benchmark rates by reviewing the total amounts of contracts that have
yet to transition to an alternative benchmark rate and the amounts of such contracts that include an appropriate fallback clause. GEH
Group considers that a contract is not yet transitioned to an alternative benchmark rate when interest under the contract is indexed to a
benchmark rate that is still subject to IBOR reform, even if it includes a fallback clause that deals with the cessation of the existing IBOR
(referred to as an “unreformed contract”).
The following table shows the total amounts of unreformed non-derivative financial assets as at 31 December 2022. The amounts of
trading assets and investment securities are shown at their carrying amounts.
Gross carrying amount
$ million SOR USD LIBOR Total
Debt securities 692 970 1,662
Corporate loan 116 – 116
Total 808 970 1,778
iii) Non-Derivative Financial Liabilities
GEH Group does not have any floating-rate liabilities which would be impacted by the IBOR reform.
OCBC Annual Report 2022
Notes to the Financial Statements 207
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Market and Credit Risk (continued)
(a) Interest Rate Risk (Including Asset Liability Mismatch) (continued)
Managing Interest Rate Benchmark Reform (continued)
iv) Derivatives and Hedge Accounting
GEH Group holds derivatives for risk management and efficient portfolio management purposes, and are not designated in hedging
relationships. The instruments used principally include interest rate, cross-currency, and total return swaps, which have floating legs that
are indexed to various IBORs. Typically, derivative transactions that reference interest rate benchmarks incorporate standard terms such as
the 2006 ISDA Definitions published by ISDA. ISDA has reviewed such definitions in light of IBOR reform and issued an IBOR fallback
protocol on 23 October 2020 and a supplement to amend the 2006 ISDA Definitions effective 25 January 2021. This sets out how the
amendments to new alternative benchmark rates (e.g. SORA, SOFR) in the 2006 ISDA Definitions will be accomplished. The effect of the
supplement is to create fallback provisions in derivatives that describe what floating rates will apply on the permanent discontinuation of
certain key IBORs or on ISDA declaring a non-representative determination of an IBOR. GEH Group has adhered to the protocol to
implement the fallbacks to derivative contracts that were entered into before the effective date of the supplement, where the existing
derivative counterparties have also adhered to the protocol. All new derivative contracts entered into on or after the effective date of the
supplement that reference the 2006 ISDA Definitions will also include the fallback.
The following table shows the total amounts of unreformed derivative instruments as at 31 December 2022. For cross-currency swaps,
GEH Group used the notional amount of the receive leg of the swap. GEH Group expects both legs of cross-currency swaps to be reformed
simultaneously.
Notional amount
$ million SOR USD LIBOR Total
Derivatives 280 21 301
(b) Foreign Exchange Risk
The foreign exchange risk inherent in foreign currency fixed income portfolio is typically hedged using currency forwards and swaps
wherever practical and cost-effective. Foreign exchange instruments are also used for efficient portfolio management.
The SGD and MYR positions predominately arose from the entities within GEH Group with the same respective functional currencies.
GEH Group has no significant concentration of foreign exchange risk.
Limits are set on the total amount of foreign currency (net of liabilities) to cap GEH Group's foreign exchange risk.
208
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Market and Credit Risk (continued)
(b) Foreign Exchange Risk (continued)
The tables below show the foreign exchange position of GEH Group’s financial and insurance-related assets and liabilities by major currencies.
$ million SGD MYR USD Others Total
2022
Financial assets at FVOCI
Equity securities 232 250 203 977 1,662
Debt securities 3,558 1,242 3,285 408 8,493
Financial assets at FVTPL
Equity securities 879 6,608 668 3,336 11,491
Debt securities 21,008 14,833 11,718 3,526 51,085
Other investments 6,500 204 5,989 1,534 14,227
Financial assets at amortised cost
Debt securities 804 – 995 4 1,803
Derivative financial assets 671 # 56 35 762
Loans 222 145 – 114 481
Reinsurers' share of insurance contract liabilities 396 550 31 26 1,003
Insurance receivables 1,025 2,512 10 33 3,580
Other debtors 385 228 161 43 817
Cash and cash equivalents 6,820 1,509 886 393 9,608
Financial and insurance-related assets 42,500 28,081 24,002 10,429 105,012
Other creditors 1,385 491 89 32 1,997
Insurance payables 2,460 4,673 2 12 7,147
Derivative financial liabilities 84 5 97 106 292
Provision for agents’ retirement benefits 1 295 – – 296
Insurance contract liabilities 60,182 21,621 3,173 668 85,644
Financial and insurance-related liabilities 64,112 27,085 3,361 818 95,376
2021
Financial assets at FVOCI
Equity securities 479 251 259 1,213 2,202
Debt securities 2,020 1,077 3,645 751 7,493
Financial assets at FVTPL
Equity securities 1,118 7,123 1,015 4,420 13,676
Debt securities 18,220 15,034 13,894 5,016 52,164
Other investments 7,502 236 6,850 2,097 16,685
Financial assets at amortised cost
Debt securities – – 242 – 242
Derivative financial assets 333 1 17 19 370
Loans 323 250 – 19 592
Reinsurers' share of insurance contract liabilities 343 410 120 14 887
Insurance receivables 1,030 2,267 3 36 3,336
Other debtors 364 231 208 43 846
Cash and cash equivalents 6,429 1,630 668 391 9,118
Financial and insurance-related assets 38,161 28,510 26,921 14,019 107,611
Other creditors 1,328 397 57 29 1,811
Insurance payables 2,172 4,433 2 14 6,621
Derivative financial liabilities 12 1 51 47 111
Provision for agents’ retirement benefits # 291 – – 291
Insurance contract liabilities 61,296 22,402 3,267 674 87,639
Financial and insurance-related liabilities 64,808 27,524 3,377 764 96,473
OCBC Annual Report 2022
Notes to the Financial Statements 209
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Market and Credit Risk (continued)
(c) Equity Price Risk
Exposure to equity price risk exists in investment assets through direct equity, equity derivatives and fund investments, where GEH Group,
through investments, bears all or most of the equity volatility and investment risks. Equity price risk also exists in investment-linked
products where the revenues of the insurance operations are linked to the performances of underlying equity funds since this has an
impact on the level of fees earned. Limits are set for single security holdings as a percentage of total equity holdings.
(d) Credit Spread Risk
Exposure to credit spread risk exists in GEH Group’s bond investments. Credit spread is the difference between the quoted yields of a
credit and a government bond of the same maturity. Credit spreads widen when the default risk of credit bonds increases. Hence,
widening credit spreads will result in mark-to-market losses in GEH Group’s bond portfolio.
(e) Alternative Investment Risk
GEH Group is exposed to alternative investment risk through investments in real estate that it owns in Singapore and Malaysia, and
through real estate funds, private equities, infrastructure and hedge funds. A monitoring process is established to manage foreign
exchange, country and manager concentration risks. This process and the acquisition or divestment of alternative investments are
reviewed and approved by RMC and GEH Group IC.
(f) Commodity Risk
GEH Group does not have any exposure to commodity risk.
(g) Liquidity Risk
Liquidity risk arises when GEH Group is unable to meet its cash flow demands, or if the assets backing the liabilities cannot be sold quickly
enough without incurring significant losses. For an insurance company, the greatest liquidity needs typically arise from its insurance
liabilities. Demands for funds can usually be met through ongoing normal operations via premiums received, sale of assets or borrowings.
Unexpected demands for liquidity may be triggered by surrender of insurance policies due to negative publicity, deterioration of the
economy, adverse news on other companies in the same or similar lines of business, unanticipated policy claims, or other unexpected
cash demands from policyholders.
Expected liquidity demands are managed through a combination of treasury, investment and asset-liability management practices, which
are monitored on an ongoing basis. Actual and projected cash inflows and outflows are regularly monitored, and a reasonable amount of
liquid assets are maintained at all times. The projected cash flows from the in-force insurance policy contract liabilities consist of renewal
premiums, commissions, claims, maturities and surrenders. Renewal premiums, commissions, claims and maturities are generally stable
and predictable. Surrenders can be more uncertain although these have been quite stable over the past several years.
Unexpected liquidity demands are mitigated through product design, risk diversification, investment strategies and systematic
monitoring. Surrender penalty in insurance contracts also protects GEH Group from losses due to unexpected surrender trends and
reduces the sensitivity of surrenders to changes in interest rates.
The following tables show the expected recovery or settlement of financial and insurance-related assets and maturity profile of GEH
Group’s financial and insurance-related liabilities which are presented based on contractual undiscounted cash flows, except for insurance
contract liabilities which are presented based on discounted cash outflows resulting from recognised liabilities.
210
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Market and Credit Risk (continued)
(g) Liquidity Risk (continued)
$ million
Less than
1 year
1 to 5
years
Over 5
years
No specific
maturity Total
2022
Financial assets at FVOCI
Equity securities – – – 1,662 1,662
Debt securities 814 4,401 7,102 – 12,317
Financial assets at FVTPL
Equity securities – – – 11,491 11,491
Debt securities 7,340 20,032 41,647 1,185 70,204
Other investments 3 – – 14,227 14,230
Financial assets at amortised cost
Debt securities 789 846 640 – 2,275
Derivative financial assets 641 80 41 – 762
Loans 114 395 14 – 523
Reinsurers' share of insurance contract liabilities 449 389 165 – 1,003
Insurance receivables 770 532 – 2,278 3,580
Other debtors 817 – – – 817
Cash and cash equivalents 9,608 – – – 9,608
Financial and insurance-related assets 21,345 26,675 49,609 30,843 128,472
Other creditors 1,903 58 # 36 1,997
Insurance payables 7,125 22 – – 7,147
Derivative financial liabilities 221 12 59 – 292
Provision for agents’ retirement benefits 140 57 99 – 296
Insurance contract liabilities 16,751 20,366 48,522 5 85,644
Financial and insurance-related liabilities 26,140 20,515 48,680 41 95,376
2021
Financial assets at FVOCI
Equity securities – – – 2,202 2,202
Debt securities 497 2,668 6,889 – 10,054
Financial assets at FVTPL
Equity securities – – – 13,676 13,676
Debt securities 3,937 17,427 44,443 2,882 68,689
Other investments – – – 16,685 16,685
Financial assets at amortised cost
Debt securities 12 47 441 – 500
Derivative financial assets 221 149 – – 370
Loans 212 333 125 – 670
Reinsurers' share of insurance contract liabilities 548 258 81 – 887
Insurance receivables 611 348 1 2,376 3,336
Other debtors 845 1 – # 846
Cash and cash equivalents 9,118 – – – 9,118
Financial and insurance-related assets 16,001 21,231 51,980 37,821 127,033
Other creditors 1,809 2 # – 1,811
Insurance payables 6,614 7 – – 6,621
Derivative financial liabilities 74 37 – – 111
Provision for agents’ retirement benefits 134 58 99 – 291
Insurance contract liabilities 16,024 20,018 51,590 7 87,639
Financial and insurance-related liabilities 24,655 20,122 51,689 7 96,473
OCBC Annual Report 2022
Notes to the Financial Statements 211
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Market and Credit Risk (continued)
(g) Liquidity Risk (continued)
The following tables show the current/non-current classification of assets and liabilities:
$ million Current* Non-current Unit-linked Total
2022
Cash and cash equivalents 9,059 – 549 9,608
Other debtors 799 33 46 878
Insurance receivables 2,146 1,434 – 3,580
Asset held for sale 73 – – 73
Reinsurers' share of insurance contract liabilities 441 549 13 1,003
Loans 104 377 – 481
Derivative financial assets 631 121 10 762
Investments 15,126 65,561 8,073 88,760
Deferred tax assets – 58 – 58
Associates – 122 – 122
Intangible assets 43 161 – 204
Investment properties – 1,881 – 1,881
Property, plant and equipment 45 464 – 509
Assets 28,467 70,761 8,691 107,919
Insurance payables 7,124 23 – 7,147
Other creditors 1,909 150 51 2,110
Derivative financial liabilities 212 71 9 292
Income tax payable 239 – – 239
Provision for agents’ retirement benefits 20 276 – 296
Deferred tax liabilities (29) 2,061 # 2,032
Insurance contract liabilities 8,249 69,334 8,690 86,273
Liabilities 17,724 71,915 8,750 98,389
2021
Cash and cash equivalents 8,606 – 512 9,118
Other debtors 815 39 50 904
Insurance receivables 1,822 1,498 16 3,336
Reinsurers’ share of insurance contract liabilities 538 333 16 887
Loans 194 398 – 592
Derivative financial assets 212 149 9 370
Investments 11,616 71,825 9,021 92,462
Associates – 95 – 95
Intangible assets 35 160 – 195
Investment properties – 1,884 – 1,884
Property, plant and equipment 67 480 – 547
Assets 23,905 76,861 9,624 110,390
Insurance payables 6,594 7 20 6,621
Other creditors 1,780 76 69 1,925
Derivative financial liabilities 70 36 5 111
Income tax payable 329 – – 329
Provision for agents’ retirement benefits 22 264 5 291
Deferred tax liabilities 59 2,513 7 2,579
Insurance contract liabilities 6,512 72,193 9,693 88,398
Liabilities 15,366 75,089 9,799 100,254
(1) * represents expected recovery or settlement within 12 months from the reporting date.
212
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Market and Credit Risk (continued)
(h) Credit Risk
Credit risk is the risk of loss arising from an obligor failing to discharge an obligation. GEH Group is mainly exposed to credit risk through
(i) investments in cash and bonds, (ii) corporate lending activities and (iii) exposure to counterparty’s credit risk in derivative transactions
and reinsurance contracts. For all three types of exposures, financial loss may materialise as a result of a downgrading of credit rating or
default by the borrower or counterparty.
GEH group wide credit risk is managed by GEH Group ALC. GEH Group establishes internal limits by issuer and counterparty according
to their investment credit rating which are actively monitored to manage the credit and concentration risk, and are reviewed on a regular
basis. The creditworthiness of reinsurers is assessed on an annual basis by reviewing their financial strength through published credit
ratings and other publicly available information. The task of evaluating and monitoring credit risk at the GEH subsidiary level is
undertaken by Local ALCs.
Reinsurance is placed with counterparties that have a good credit rating and concentration of risk is mitigated through counterparty limits
that are reviewed and approved on an annual basis.
Credit risk arising from customer balances incurred on non-payment of premiums or contributions will only persist during the grace period
specified in the policy document or trust deed until expiry, when the policy is either paid up or terminated.
GEH Group issues unit-linked investment policies in which the policyholder bears the investment risk on the assets held in the unit-linked
funds as the policy benefits are directly linked to the value of the assets in the fund. Therefore, GEH Group has no material credit risk or
market risk on unit-linked financial assets.
The loans in GEH Group’s portfolio are generally secured by collateral, with a maximum loan-to-value ratio of 70%. The amount and type
of collateral required depend on an assessment of the credit risk of the counterparty. Guidelines on the collateral eligibility have been
established, and all collateral are revalued on a regular basis. GEH management monitors the market values of the collateral, requests
additional collateral when needed and performs an impairment valuation when applicable. The fair values of collateral, held by GEH
Group as lender, for which it is entitled to sell or pledge in the event of default is as tabulated below:
2022 2021
$ million Type of collateral Carrying amount Fair value Carrying amount Fair value
Policy loans Cash value of policies 2,278 5,280 2,356 5,115
Secured loans Properties 292 545 395 812
Secured loans Others # # # 1
Derivatives Cash 186 186 98 98
2,756 6,011 2,849 6,026
There were no securities lending arrangements as at 31 December 2022 (2021: nil).
As at the reporting date, no investments (2021: nil) were placed as collateral for currency hedging purposes.
OCBC Annual Report 2022
Notes to the Financial Statements 213
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Market and Credit Risk (continued)
(h) Credit Risk (continued)
The following table sets out information about the credit quality of loans and debt securities measured at amortised cost and debt
securities measured at FVOCI. The maximum exposure is shown on a gross basis, before the effect of mitigation through the use of master
netting or collateral agreements and the use of credit derivatives.
$ million
12-month
ECL
Lifetime ECL not
credit-impaired
Lifetime ECL
credit-impaired Total
2022
Loans at amortised cost
Investment grade* (BBB to AAA) 373 112 – 485
Not rated 2 – 36 38
375 112 36 523
Loss allowance (1) (6) (36) (43)
Carrying amount 374 106 – 480
Debt securities at amortised cost
Investment grade* (BBB to AAA) 1,802 – – 1,802
Loss allowance (1) – – (1)
Carrying amount 1,801 – – 1,801
Debt securities at FVOCI
Investment grade* (BBB to AAA) 8,362 29 – 8,391
Non investment grade* (C to BB) – 5 – 5
Not rated 97 – – 97
8,459 34 – 8,493
2021
Loans at amortised cost
Investment grade* (BBB to AAA) 479 122 – 601
Not rated 2 – 2 4
481 122 2 605
Loss allowance (1) (10) (2) (13)
Carrying amount 480 112 – 592
Debt securities at amortised cost
Investment grade* (BBB to AAA) 244 – – 244
Loss allowance (2) – – (2)
Carrying amount 242 – – 242
Debt securities at FVOCI
Investment grade* (BBB to AAA) 6,067 56 – 6,123
Non investment grade* (C to BB) – 10 3 13
Not rated 1,357 – – 1,357
7,424 66 3 7,493
(1) * Based on internal ratings grades which are equivalent to grades of external rating agencies.
214
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Market and Credit Risk (continued)
(h) Credit Risk (continued)
The following table sets out the credit analysis for financial assets that are not subjected to ECL.
$ million
Investment
grade*
(BBB to AAA)
Non
investment
grade*
(C to BB) Not rated Unit-linked
Not
subject to
credit risk
Total
carrying
amount
2022
Financial assets at FVOCI
Equity securities – – – – 1,662 1,662
Financial assets at FVTPL
Equity securities – – – 3,366 8,125 11,491
Debt securities 43,047 2,118 4,294 1,626 – 51,085
Other investments – – – 3,082 11,145 14,227
Derivative financial assets 717 – 36 9 – 762
Reinsurers' share of insurance contract liabilities – – 990 13 – 1,003
Insurance receivables 992 20 2,568 – – 3,580
Other debtors 4 1 766 46 – 817
Cash and cash equivalents 8,799 – 260 549 – 9,608
53,559 2,139 8,914 8,691 20,932 94,235
2021
Financial assets at FVOCI
Equity securities – – – – 2,202 2,202
Financial assets at FVTPL
Equity securities – – – 3,664 10,012 13,676
Debt securities 43,171 2,276 5,141 1,576 – 52,164
Other investments – – – 3,781 12,904 16,685
Derivative financial assets 350 – 11 9 – 370
Reinsurers' share of insurance contract liabilities – – 870 17 – 887
Insurance receivables 620 – 2,700 16 – 3,336
Other debtors 6 1 792 47 – 846
Cash and cash equivalents 8,491 – 116 511 – 9,118
52,638 2,277 9,630 9,621 25,118 99,284
(1) * Based on internal ratings grades which are equivalent to grades of external rating agencies.
OCBC Annual Report 2022
Notes to the Financial Statements 215
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Market and Credit Risk (continued)
(h) Credit Risk (continued)
Amounts Arising from ECL
ECL provisioning is the setting of allowance for credit-impaired and non-credit-impaired exposure in accordance to SFRS (I) 9 through
forward-looking ECL models.
Measurement of ECL – Explanation of Inputs, Assumptions and Estimation Techniques
The key inputs into the measurement of ECL are the following variables:
• probability of default (PD);
• loss given default (LGD); and
• exposure at default (EAD).
These parameters are derived from statistical models internally developed by GEH Group.
PD represents the likelihood of a borrower defaulting on its financial obligation, either over the next 12 months (12M PD), or over the
remaining lifetime (Lifetime PD) of the obligation. PD estimates are derived from PD models that incorporate both quantitative and
qualitative inputs, which are in turn derived from internal and external compiled data.
LGD is the magnitude of the likely loss incurred during a default. LGD is expressed as a percentage of loss per unit of exposure at the time
of default and represents an estimate of the economic loss in the event of the default of the counterparty. Factors in determining LGDs
include claim seniority, availability and quality of collateral, legal enforceability processes in the jurisdiction and industry of borrower and
prevailing market conditions. They are estimates at a certain date and are derived using statistical models. These statistical models are
developed using internally compiled data and incorporate both quantitative and qualitative factors. The model outputs are adjusted to
reflect forward-looking information whenever appropriate.
EAD represents the expected exposure in the event of a default. GEH Group derives the EAD based on the current exposure to the
counterparty and potential future exposure.
The ECL is determined by the PD, LGD and EAD for each individual exposure. The ECLs are first determined by the product of these three
components, which are then adjusted to take into account forward-looking information. The ECLs are finally discounted to the reporting
date. The discount rate used in the ECL calculation is the original effective interest rate or an approximation thereof.
Significant Increase in Credit Risk
To assess whether there is a significant increase in credit risk, GEH Group compares the risk of a default occurring on the asset as at
reporting date with the risk of default assessed at the date of initial recognition. GEH Group considers available reasonable and supportive
forward-looking information, which includes the following indicators:
– Internal credit rating;
– External credit rating;
– Actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant
change to the counterparty's ability to meet its obligations.
A movement of an obligor's credit rating along the rating scale represents a change in the credit risk as measured by the change in PD.
The criteria for assessing whether credit risk has increased significantly will be determined by changes in 12M PDs and other qualitative
factors. The credit risk of an obligor is deemed to have increased significantly since initial recognition if, based on GEH Group's quantitative
model, the 12M PD is determined to have more than doubled since origination, except when the obligor remains within the investment
grade ratings.
Using expert credit judgement and, where possible, relevant historical experience, GEH Group may determine that an obligor has
undergone a significant increase in credit risk based on qualitative factors that are indicative of such and whose effect may not otherwise
be fully reflected in its quantitative analysis on a timely basis. GEH Group uses the watch-list as an additional trigger for the identification
of significant increase in credit risk.
GEH Group considers an obligor to have relatively lower credit risk if it is of investment grade quality, taking into account both internal and
external credit ratings.
216
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Market and Credit Risk (continued)
(h) Credit Risk (continued)
Credit Risk Grades
GEH Group assigns each obligor to a credit risk grade that reflects the PD of the obligor. Credit risk grades are established based on
qualitative and quantitative factors that are indicative of default risk. These factors vary depending on the nature of the exposure and the
type of counterparty.
Credit risk grades are defined and calibrated such that the default risk increases as credit risk deteriorates. Each exposure is assigned with
a credit risk grade at initial recognition, based on available information on the borrower. Obligors are subject to ongoing monitoring and
review, and may be assigned with new credit risk grades that better reflects their creditworthiness. The monitoring typically involves the
use of information obtained during periodic review, including published financial statements, external rating (where available), as well as
qualitative information on an obligor’s industry, competitive positioning, management, financial policy and financial flexibility.
Definition of Default
GEH Group considers a financial asset to be in default by assessing the following criteria:
Quantitative Criteria
For insurance receivables, the obligor is said to be in default if it fails to make contractual payments within 6 months after it falls due (i.e.
after expiration of the maximum granted credit terms). For bonds and loans, the obligor is said to be in default if it fails to meet its
contractual obligation and there are non-payments on another debt obligation of the same issuer to GEH Group.
Qualitative Criteria
The counterparty is in bankruptcy or has indications of potentially significant financial difficulty such as lawsuits or similar actions that
threaten the financial viability of the counterparty; distressed exchange, merger or amalgamation without assumption or breach of
material loan covenants not rectified within a given timeframe, restructuring with expected principal haircut or a breach in material loan
covenant that is not rectified within given timeframe.
The criteria above have been applied to all financial instruments held by GEH Group and are consistent with the definition of default used
for credit risk management purposes. The default definition has been applied consistently to model the PD, EAD and LGD throughout GEH
Group's expected loss calculations.
Incorporating of Forward-Looking Information
GEH Group incorporates forward-looking information into both its assessment of whether the credit risk of an instrument has increased
significantly since its initial recognition and in its ECL measurement. GEH Group has performed historical analysis and identified key
economic variables impacting credit risk and ECLs for each portfolio.
These economic variables and their associated impact on the PD, EAD and LGD vary by financial instrument. Expert judgement has also
been applied in this process. Forecasts of these economic variables (the base economic scenario) are obtained from publicly available
economic databases published on a quarterly basis and provide the best estimate view of the economy over the next four to five years,
and based on such information to project the economic variables for the full remaining lifetime of each instrument, a mean reversion
approach is used. The impact of these economic variables on PDs, EADs and LGDs has been determined via regression analyses.
In addition to the base economic scenario, GEH Group uses multiple scenarios to ensure non-linear risks are captured. The number of
scenarios and the respective scenario attributes are reviewed at each reporting date. At 31 December 2022, GEH Group concluded that
two particular scenarios are capable of capturing non-linear risks inherent in all portfolios. The scenario weightings are determined by
expert credit judgement, taking into account the range of possible outcomes presented by the chosen scenarios. The assessment of
significant increase in credit risk is performed using the 12M PD under each scenario multiplied by the associated scenario weights. This
determines whether the financial instrument is in Stage 1, 2 or 3, and hence whether 12M or lifetime ECL should be applied. Following this
assessment, GEH Group measures ECL as either a probability-weighted 12M ECL (Stage 1), or a probability-weighted lifetime ECL (Stages 2
and 3). These probability-weighted ECLs are determined by running each scenario through the relevant ECL model and multiplying it by
the appropriate scenario weighting (as opposed to weighting the inputs).
As with any economic forecasts, the projections and likelihoods of occurrence are subject to a high degree of uncertainty and the actual
outcomes may be significantly different from projected outcomes. GEH Group considers these forecasts being representative of the best
estimates of the possible outcomes and has analysed the non-linear risks and asymmetries within the various portfolios of GEH Group to
establish that the chosen scenarios are appropriately representative of the range of possible scenarios.
The sensitivity of the ECL to the economic variable assumptions affecting the calculation of ECL was not material to GEH Group for the
year ended 31 December 2022.
OCBC Annual Report 2022
Notes to the Financial Statements 217
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Market and Credit Risk (continued)
(h) Credit Risk (continued)
Loss Allowance
The following tables show reconciliations from the opening to the closing balance of the loss allowance by class of financial instrument.
$ million
12-month
ECL
Lifetime ECL not
credit-impaired
Lifetime ECL
credit-impaired Total
Loans and other receivables at amortised cost
At 1 January 2021 1.4 3.5 42.3 47.2
Net remeasurement of loss allowance 0.3 0.8 (4.0) (2.9)
New financial assets purchased 0.1 – – 0.1
Financial assets that have been derecognised (0.3) – – (0.3)
Write-offs – – (36.0) (36.0)
Changes in models/risk parameters (0.6) 5.2 – 4.6
At 31 December 2021/1 January 2022 0.9 9.5 2.3 12.7
Net remeasurement of loss allowance – – 34.4 34.4
New financial assets purchased 0.6 3.7 – 4.3
Financial assets that have been derecognised (0.7) (4.2) – (4.9)
Changes in models/risk parameters (0.2) (2.5) – (2.7)
Foreign exchange and other movements – (0.6) – (0.6)
At 31 December 2022 0.6 5.9 36.7 43.2
Debt securities at amortised cost
At 1 January 2021 1.3 – – 1.3
Net remeasurement of loss allowance (0.4) – – (0.4)
New financial assets purchased 0.3 – – 0.3
Changes in models/risk parameters 0.5 – – 0.5
At 31 December 2021/1 January 2022 1.7 – – 1.7
Net remeasurement of loss allowance 0.1 – – 0.1
New financial assets purchased 0.6 – – 0.6
Financial assets that have been derecognised (1.2) – – (1.2)
Changes in models/risk parameters 0.1 – – 0.1
Foreign exchange and other movements (0.2) – – (0.2)
At 31 December 2022 1.1 – – 1.1
Debt securities at FVOCI
At 1 January 2021 10.8 1.2 2.8 14.8
Transfer to 12-month ECL (0.2) 0.2 – –
Additional allowance due to transfer – 1.0 – 1.0
Net remeasurement of loss allowance (0.4) – – (0.4)
New financial assets purchased 2.7 – – 2.7
Financial assets that have been derecognised (2.5) (0.1) – (2.6)
Changes in models/risk parameters (3.2) 2.1 – (1.1)
At 31 December 2021/1 January 2022 7.2 4.4 2.8 14.4
Net remeasurement of loss allowance 0.1 (0.1) – –
New financial assets purchased 4.0 2.4 – 6.4
Financial assets that have been derecognised (3.3) (3.1) – (6.4)
Changes in models/risk parameters (0.7) (0.9) – (1.6)
Foreign exchange and other movements – (0.2) – (0.2)
At 31 December 2022 7.3 2.5 2.8 12.6
(Decrease)/increase in provision for impairment of financial assets for the year
31 December 2022 (0.6) (4.7) 34.4 29.1
31 December 2021 (3.7) 9.2 (4.0) 1.5
218
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Market and Credit Risk (continued)
(h) Credit Risk (continued)
Loss Allowance (continued)
The carrying amount of outstanding premiums as at 31 December 2022 is $983.9 million (2021: $663.3 million). The ECL relating to
outstanding premiums as at 31 December 2022 was $9.1 million (2021: $8.0 million) for GEH Group. For the year ended 31 December
2022, the changes in credit loss recognised in the income statement was $1.1 million (2021: $0.5 million).
The changes in risk parameters may consist of management overlays, including but not limited to, the application of judgement to:
i) key economic variables including GDP growth projections;
ii) scenario weightings;
iii) obligor's credit rating to reflect a deterioration to credit risk;
iv) take into consideration government relief programmes; or
v) events arisen after post-model-run that require adjustment.
Loss allowances are reviewed quarterly, taking into consideration the effects of key variables.
(i) Concentration Risk
An important element of managing both market and credit risks is to actively manage concentration to specific issuers, counterparties,
industry sectors, countries and currencies. Both internal and regulatory limits are put in place to manage concentration risk. These limits
are reviewed on a regular basis by the respective management committees. GEH Group’s exposures are within the concentration limits set
by the respective local regulators.
GEH Group actively manages its investment mix to ensure that there is no significant concentration in market and credit risk.
OCBC Annual Report 2022
Notes to the Financial Statements 219
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Market and Credit Risk (continued)
(j) Sensitivity Analysis on Financial Risks
The sensitivity analysis below shows the impact on GEH Group's net profit after tax by applying possible shocks to each key variables, with
all other variables constant. Co-movement of key variables can significantly affect the fair values and/or amortised cost of financial assets.
To demonstrate the impact due to changes in each key variable, the variables are changed individually.
The impact on net profit after tax represents the effect caused by changes in fair value of financial assets whose fair values are recorded in
the income statement, and changes in valuation of insurance contract liabilities. The equity sensitivity represents the impact on net profit
after tax and the effect on changes in fair value of financial assets measured at FVOCI.
Market Risk Sensitivity Analysis
Impact on profit after tax Impact on equity
$ million 2022 2021 2022 2021
Change in variables:
(a) Interest rate (1)
+100 basis points 188.5 81.4 (197.8) (386.7)
–100 basis points (313.4) (312.4) 121.3 230.8
(b) Foreign currency
5% increase in market value of MYR denominated assets 0.1 0.1 0.1 0.1
5% decrease in market value of MYR denominated assets (0.1) (0.1) (0.1) (0.1)
5% increase in market value of USD denominated assets 12.1 0.7 12.1 0.7
5% decrease in market value of USD denominated assets (12.1) (0.7) (12.1) (0.7)
(c) Equity
20% increase in market indices
STI 31.2 51.3 68.8 129.9
KLCI 2.4 – 39.1 34.6
20% decrease in market indices
STI (31.2) (51.3) (68.8) (129.9)
KLCI (2.4) – (39.1) (34.6)
(d) Credit
Spread +100 basis points (72.7) (165.2) (315.8) (487.3)
Spread –100 basis points 79.0 208.4 352.5 583.6
(e) Alternative investments (2)
10% increase in market value of all alternative investments 71.0 72.1 72.6 73.9
10% decrease in market value of all alternative investments (71.0) (72.1) (72.6) (73.9)
(1) Comparatives have been reclassified to conform to current year’s presentation.
(2) Alternative investments comprise investments in real estate, private equity, infrastructure and hedge funds.
The method for deriving sensitivity information and significant variables did not change from the previous year.
Operational and Compliance Risk
Operational risk is an event or action that may potentially impact partly or completely the achievement of the organisation's objectives
resulting from inadequate or failed internal processes and systems, human factors, or external events.
Compliance risk is any event or action that may potentially impact partly or completely the achievement of the organisation's objectives,
as a result of its failure to comply with the following applicable laws, regulations and standards:
– local laws, regulations and rules governing licensed activities undertaken by GEH Group;
– foreign laws, regulations and rules that have extraterritorial jurisdiction over GEH Group's licensed activities;
– codes of practice promoted by industry associations of which GEH Group are members of; and
– any other applicable regulations which do not specifically govern the licensed activities undertaken by GEH Group but can expose the
organisation to legal, regulatory or reputational loss.
220
38. Risk Management (continued)
38.4 Insurance-Related Risk Management (continued)
Operational and Compliance Risk (continued)
The day-to-day management of operational and compliance risk is through the maintenance of comprehensive internal control
frameworks, supported by an infrastructure of systems and procedures to monitor processes and transactions. GMC reviews operational
and compliance issues on a GEH Group basis at its monthly meetings while local level issues are managed and monitored by the local
SMTs. GEH Group Internal Audit team reviews the systems of internal controls to assess their ongoing relevance and effectiveness, and
reports at least quarterly to GEH Group Audit Committee.
Technology, Information and Cyber Risks
Technology risk is defined as risk related to any potential adverse outcome, damage, loss, disruption, violation, system/hardware failure,
capacity deficiency arising from the use of technologies such as electronic hardware/devices, software, online networks and
telecommunications systems.
Information risk is defined as risk related to confidentiality, integrity and availability of information (in physical or digital form).
Cyber risk is defined as risk related to acts perpetrated by malicious threat actors including internal sabotage, espionage, malicious
attacks, hacking incidents, fraudulent conduct using information and communication technologies.
GEH Group adopts a risk-based approach in managing technology risks relating to IT disruption, cyber threats, data loss and third parties.
Key risk indicators related to technology, information and cyber risks are reported to GEH Group Board on a regular basis. Independent
assessment is performed by GEH Group Internal Audit on the adequacy and effectiveness of the technology risk controls.
Sustainability Risk
Sustainability risk is defined as any environmental, social or governance (ESG) event or condition that, if it occurs, could cause an actual or
a potential material negative impact on the value of the investment and enterprise value. GEH Group has integrated ESG considerations
into the investment and underwriting activities.
At present, GEH Group manages social and governance-related risk through existing frameworks and policies. In order to build resilience
as the world transits to a low-carbon economy, GEH Group has formalised the Group Environmental Risk Management Policy which sets
forth guiding principles and minimum standards in managing environmental risk within GEH Group. Environmental risk arises from the
potential adverse impact of changes in the environment on economic activities and human well-being. Environmental issues that are of
concern include climate change, loss of biodiversity, pollution and changes in land use. Environmental risk can manifest in three
dimensions of risk as follows:
• Physical risk – impact of weather events and long-term or widespread environmental changes. It arises from acute (event-driven) and
chronic (long term shift) climate-related events that damage property, reduce productivity and disrupt trade.
• Transition risk – arises from the process of adjustment to an environmentally sustainable economy, including change in public
policies, disruptive technological developments, and shifts in consumer and investor preferences.
• Liability risk – arises from legal risk and claims on damages and losses incurred from inaction or lack of action that results in the
effects of physical and transition risks.
GEH Group's risk assessment considers the financial and non-financial impacts from physical and transition risks arising from climate
change. With this, GEH Group organisation has put in place processes, methodology, and both qualitative and quantitative tools to
identify and assess environmental risk for investment and underwriting portfolios.
For underwriting portfolio, risk transfer tool such as reinsurance is used to assist in managing environmental risk. For investment portfolio,
the objective is to build resilient investment portfolios whilst striking a balance between ESG considerations, impact and financial returns.
GEH Group has made its first disclosures on climate-related risks aligned to the Task Force on Climate-related Financial Disclosures (TCFD)
in May 2021 as part of GEH Sustainability Report 2021. The report provides some insights into the Group’s governance approach, strategy
and risk management, as well as key metrics and targets for climate-related financial risks.
OCBC Annual Report 2022
Notes to the Financial Statements 221
39. Financial Assets and Financial Liabilities Classification
GROUP
$ million
Mandatorily
measured at
FVTPL
Designated
as FVTPL
Amortised
cost FVOCI
Insurance
contracts Total
2022
Cash and placements with central banks – – 34,966 – – 34,966
Singapore government treasury bills and securities 2,193 – 537 14,366 – 17,096
Other government treasury bills and securities 1,194 10 419 20,648 – 22,271
Placements with and loans to banks 877 – 17,042 12,325 – 30,244
Loans to customers 23 – 291,444 – – 291,467
Debt securities 2,697 24 307 19,928 – 22,956
Equity securities and investment funds 3,924 – – 1,130 – 5,054
Debt and equity securities 6,621 24 307 21,058 – 28,010
Derivative receivables 15,605 – – – – 15,605
Other assets – – 5,428 – 463 5,891
Amounts due from associates – – 7 – – 7
Financial assets 26,513 34 350,150 68,397 463 445,557
Non-financial assets 16,404
461,961
Life insurance fund financial assets 33,090 40,292 15,861 6,776 – 96,019
Life insurance fund non-financial assets 1,976
Total assets 559,956
Deposits of non-bank customers – – 350,081 – – 350,081
Deposits and balances of banks – – 10,046 – – 10,046
Trading portfolio liabilities 212 – – – – 212
Derivative payables 16,048 – – – – 16,048
Other liabilities (1) – – 7,076 – 823 7,899
Debt issued – 1,040 20,898 – – 21,938
Financial liabilities 16,260 1,040 388,101 – 823 406,224
Non-financial liabilities 4,118
410,342
Life insurance fund financial liabilities 275 – 9,248 – 84,936 94,459
Life insurance fund non-financial liabilities 487
Total liabilities 505,288
(1) Other liabilities include amounts due to associates.
222
39. Financial Assets and Financial Liabilities Classification (continued)
GROUP
$ million
Mandatorily
measured at
FVTPL
Designated
as FVTPL
Amortised
cost FVOCI
Insurance
contracts Total
2021
Cash and placements with central banks – – 27,919 – – 27,919
Singapore government treasury bills and securities 1,230 – – 9,882 – 11,112
Other government treasury bills and securities 2,692 10 347 23,110 – 26,159
Placements with and loans to banks 758 – 17,595 7,109 – 25,462
Loans to customers 47 – 286,232 2 – 286,281
Debt securities 4,084 22 331 23,608 – 28,045
Equity securities and investment funds 4,596 – – 1,374 – 5,970
Debt and equity securities 8,680 22 331 24,982 – 34,015
Derivative receivables 9,267 – – – – 9,267
Other assets – – 5,270 – 467 5,737
Amounts due from associates – – 40 – – 40
Financial assets 22,674 32 337,734 65,085 467 425,992
Non-financial assets 16,099
442,091
Life insurance fund financial assets 34,381 46,544 11,262 5,995 – 98,182
Life insurance fund non-financial assets 1,914
Total assets 542,187
Deposits of non-bank customers – – 342,395 – – 342,395
Deposits and balances of banks – – 8,239 – – 8,239
Trading portfolio liabilities 393 – – – – 393
Derivative payables 9,070 – – – – 9,070
Other liabilities (1) – – 6,089 – 788 6,877
Debt issued – 1,092 19,023 – – 20,115
Financial liabilities 9,463 1,092 375,746 – 788 387,089
Non-financial liabilities 4,454
391,543
Life insurance fund financial liabilities 109 – 8,595 – 86,966 95,670
Life insurance fund non-financial liabilities 636
Total liabilities 487,849
(1) Other liabilities include amounts due to associates.
OCBC Annual Report 2022
Notes to the Financial Statements 223
39. Financial Assets and Financial Liabilities Classification (continued)
BANK
$ million
Mandatorily
measured at
FVTPL
Designated
as FVTPL
Amortised
cost FVOCI Total
2022
Cash and placements with central banks – – 27,812 – 27,812
Singapore government treasury bills and securities 1,836 – 537 13,516 15,889
Other government treasury bills and securities 816 – 419 6,930 8,165
Placements with and loans to banks 856 – 11,278 6,546 18,680
Loans to customers 23 – 201,087 – 201,110
Debt securities 1,894 – 307 11,434 13,635
Equity securities and investment funds 2,896 – – 90 2,986
Debt and equity securities 4,790 – 307 11,524 16,621
Placements with and advances to subsidiaries – – 18,844 – 18,844
Derivative receivables 13,742 – – – 13,742
Other assets – – 2,177 – 2,177
Amounts due from associates – – 6 – 6
Financial assets 22,063 – 262,467 38,516 323,046
Non-financial assets 20,931
Total assets 343,977
Deposits of non-bank customers – – 223,310 – 223,310
Deposits and balances of banks – – 7,691 – 7,691
Deposits and balances of subsidiaries – – 36,522 – 36,522
Trading portfolio liabilities 212 – – – 212
Derivative payables 14,300 – – – 14,300
Other liabilities (1) – – 2,556 – 2,556
Debt issued – 1,040 20,254 – 21,294
Financial liabilities 14,512 1,040 290,333 – 305,885
Non-financial liabilities 1,176
Total liabilities 307,061
(1) Other liabilities include amounts due to associates.
224
39. Financial Assets and Financial Liabilities Classification (continued)
BANK
$ million
Mandatorily
measured at
FVTPL
Designated
as FVTPL
Amortised
cost FVOCI Total
2021
Cash and placements with central banks – – 22,863 – 22,863
Singapore government treasury bills and securities 1,130 – – 8,976 10,106
Other government treasury bills and securities 1,671 – 347 7,692 9,710
Placements with and loans to banks 758 – 11,639 5,119 17,516
Loans to customers 47 – 189,354 – 189,401
Debt securities 3,369 – 331 13,063 16,763
Equity securities and investment funds 3,142 – – 126 3,268
Debt and equity securities 6,511 – 331 13,189 20,031
Placements with and advances to subsidiaries – – 21,930 – 21,930
Derivative receivables 7,812 – – – 7,812
Other assets – – 2,059 – 2,059
Amounts due from associates – – 40 – 40
Financial assets 17,929 – 248,563 34,976 301,468
Non-financial assets 20,754
Total assets 322,222
Deposits of non-bank customers – – 221,213 – 221,213
Deposits and balances of banks – – 6,708 – 6,708
Deposits and balances of subsidiaries – – 28,250 – 28,250
Trading portfolio liabilities 393 – – – 393
Derivative payables 7,656 – – – 7,656
Other liabilities (1) – – 1,769 – 1,769
Debt issued – 1,092 18,565 – 19,657
Financial liabilities 8,049 1,092 276,505 – 285,646
Non-financial liabilities 979
Total liabilities 286,625
(1) Other liabilities include amounts due to associates.
OCBC Annual Report 2022
Notes to the Financial Statements 225
40. Interest Rate Benchmark Reform (IBOR Reform)
The London Interbank Offered Rate (LIBOR), a key benchmark used in international financial markets, is being phased out and replaced by
Risk Free Rates (RFRs). On 5 March 2021, the UK Financial Conduct Authority (FCA) confirmed a two-phase discontinuation approach for
LIBOR. Specifically, all British pound, Euro, Swiss franc and Japanese yen LIBORs, as well as the 1-week and 2-month US dollar LIBOR were
discontinued after 31 December 2021. All remaining US dollar LIBORs will be discontinued after 30 June 2023.
The expected discontinuation of LIBOR directly impacts the viability of the Singapore Dollar Swap Offer Rate (SOR), which relies on US
dollar LIBOR in its computation. In addition, like LIBOR, the Singapore Interbank Offered Rate (SIBOR), a key benchmark widely used in retail
loans, is subject to expert judgement due to a lack of underlying transactions. The Singapore Overnight Rate Average (SORA) has been
identified as the alternative benchmark to SOR and SIBOR. MAS has established an industry-led Steering Committee for SOR & SIBOR
Transition to SORA (SC-STS), to oversee the coordination and implementation of the transition efforts.
To ensure a smooth transition from LIBOR to RFRs and SOR and SIBOR to SORA, the Group established an internal Steering Committee to
coordinate efforts across various business, control and support functions. Clear timelines and deliverables have been established to keep
pace with industry transition roadmaps and regulatory timelines.
The Group implemented the necessary system upgrades and modifications to ensure the readiness of our infrastructure and processes.
The Group have also assessed the adequacy of provisions relating to the permanent discontinuation of benchmarks in loan documentation,
derivatives contracts, debt issuances and other relevant contracts. With respect to the transition of SOR contracts, all retail loans
referencing SOR have transitioned to SORA, fixed rates or other benchmarks, with the last transition completed on 18 Oct 2022 in line
with the industry. As for corporate loans and derivatives referencing SOR, transition is in progress and expected to be completed by the
first half of 2023 in line with industry guidelines. Appropriate adjustments will be made as recommended by the industry to reflect the
differences between SOR and SORA. For SIBOR, the transition will be completed in 2024 in line with the roadmap established by the
industry. No significant impact is expected from the transition of SOR and SIBOR to SORA.
Hedge Accounting
The Group uses interest rate swaps, futures and cross currency swaps to hedge its exposure to changes in fair value of fixed rate debt
instruments and its foreign currency exposure in a fair value hedge. The Group also uses interest rate swaps to hedge the variability in the
cash flows that is related to a variable rate asset or liability resulting from changes in interest rate. With respect to hedge accounting, the
Group’s primary exposure is to USD LIBOR due to the extent of fixed rate debt instruments and subordinated debt denominated in USD
that are designated in fair value hedge relationships using interest rate swaps and cross currency swaps.
The Group has applied the following SFRS(I) 9 relief from hedge accounting requirements introduced as a result of IBOR reform:
• When considering the “highly probable” requirement, the Group assumed that the interest rate benchmark on which the hedged
cash flows are based is not altered as a result of IBOR reform.
• In assessing the economic relationship between the hedged item and the hedging instrument, the Group assume that the interest
rate benchmark on which the hedged item and hedging instruments are based is not altered as a result of IBOR reform.
• For fair value hedges of interest rate risk on fixed rate debt, the Group only assesses whether the designated benchmark is separately
identifiable at hedge inception and not revisited on reporting date.
In applying the amendments, the Group assumes that the uncertainty arising from IBOR reform is no longer present when contracts are
modified to reflect the new benchmark rates or are discontinued. The Group also assesses that when modifying contracts to reflect the
new benchmark rates, no other changes to the terms of the contracts are made.
As at 31 December 2022, the notional amount of hedging instruments referencing USD LIBOR is $4.21 billion (2021: $9.43 billion).
226
40. Interest Rate Benchmark Reform (IBOR Reform) (continued)
Exposures Impacted by IBOR Reform
The following table shows the total amount of non-derivative financial assets, non-derivative financial liabilities and derivative financial
instruments that have yet to transition to an alternative benchmark rate as at 31 December 2022 and 31 December 2021.
GROUP
$ million SOR USD LIBOR SIBOR Other LIBOR Total
2022
Gross carrying amount
Loans to customers 7,383 22,115 8,320 – 37,818
Non-derivative financial assets 7,383 22,115 8,320 – 37,818
Gross carrying amount
Deposits of non-bank customers – 1,462 – – 1,462
Deposits and balances of banks – 871 – – 871
Non-derivative financial liabilities – 2,333 – – 2,333
Notional amount
Derivative financial instruments 32,006 109,822 – – 141,828
Debt securities – 358 – – 358
2021
Gross carrying amount
Loans to customers 17,352 24,047 15,369 7,320 64,088
Non-derivative financial assets 17,352 24,047 15,369 7,320 64,088
Gross carrying amount
Deposits of non-bank customers – 2,621 – – 2,621
Deposits and balances of banks – 768 – – 768
Non-derivative financial liabilities – 3,389 – – 3,389
Notional amount
Derivative financial instruments 35,067 116,685 – 8,100 159,852
Debt securities – 285 – 117 402
OCBC Annual Report 2022
Notes to the Financial Statements 227
40. Interest Rate Benchmark Reform (IBOR Reform) (continued)
Exposures Impacted by IBOR Reform (continued)
BANK
$ million SOR USD LIBOR SIBOR Other LIBOR Total
2022
Gross carrying amount
Loans to customers 7,383 19,104 8,320 – 34,807
Non-derivative financial assets 7,383 19,104 8,320 – 34,807
Gross carrying amount
Deposits of non-bank customers – 1,462 – – 1,462
Deposits and balances of banks – 871 – – 871
Non-derivative financial liabilities – 2,333 – – 2,333
Notional amount
Derivative financial instruments 32,235 110,020 – – 142,255
Debt securities – 57 – – 57
2021
Gross carrying amount
Loans to customers 17,352 21,356 15,369 6,587 60,664
Non-derivative financial assets 17,352 21,356 15,369 6,587 60,664
Gross carrying amount
Deposits of non-bank customers – 2,621 – – 2,621
Deposits and balances of banks – 768 – – 768
Non-derivative financial liabilities – 3,389 – – 3,389
Notional amount
Derivative financial instruments 35,347 117,172 – 8,003 160,522
Debt securities – 52 – 117 169
The “Other LIBOR” balances contain positions that had the last interest fixing in 2021 based on GBP LIBOR, EUR LIBOR or JPY LIBOR. These
non-USD LIBOR positions were fixed using an alternative interest rate benchmark from the first interest fixing in 2022 onwards.
228
41. Fair Values of Financial Instruments
41.1 Valuation Governance Framework
The Group has an established governance framework with respect to the measurement of fair values, which includes formalised processes
for the review and validation of fair values independent of the businesses entering into the transactions.
The Market Risk Management (MRM) function within the GRM is responsible for the model validation process. Financial models are used
to price financial instruments and to calculate value-at-risk (VaR). MRM ensures that the models used are fit for their intended purposes
through internal independent validation and periodic review. MRM sources market rates independently for risk measurement and valuation.
The Treasury Financial Control and Advisory – Valuation Control function within the Group Finance Division is responsible for the
establishment of the overall valuation control framework. This includes, but is not limited to, reviewing and recommending appropriate
valuation adjustment methodologies, independent price testing, and identifying valuation gaps.
Valuation policies are formulated and reviewed annually by the Valuation Control function, and approved by the Market Risk Management
Committee, the CEO and BRMC. Valuation adjustments are applied to account for input parameter uncertainties, known model
deficiencies and other factors that may affect valuation. The main valuation adjustments are described below.
Bid Offer Adjustments
When the position is marked at mid-price, bid offer adjustment is applied to account for close out cost.
Model Adjustments
Model adjustments are applied when there are inherent limitations in the valuation models used by the Bank.
Day 1 Profit or Loss Adjustments
Day 1 profit or loss adjustments are applied when the valuation technique involves the use of significant inputs which are not readily
observable. The difference between the fair value at initial recognition and the transaction price is deferred as an adjustment.
The Day 1 profit or loss adjustments are released to the income statement when the significant inputs become observable, when the
transaction is derecognised or amortised over the life of the transaction.
Credit Valuation Adjustments
Credit valuation adjustments are applied to account for the expected losses due to counterparty default on derivative positions.
Collateral Valuation Adjustments
Collateral valuation adjustments are applied when a derivative is denominated and discounted using a curve in the same currency but is
collateralised in another currency.
Parameter Uncertainty Adjustments
These valuation adjustments mainly include adjustments for illiquid prices or internal methodologies used to derive model inputs.
The Group’s internal audit provides independent assurance on the respective divisions’ compliance with the policy.
OCBC Annual Report 2022
Notes to the Financial Statements 229
41. Fair Values of Financial Instruments (continued)
41.2 Fair Values
Financial instruments comprise financial assets, financial liabilities and off-balance sheet financial instruments. The fair value of a
financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants. For financial assets and liabilities not carried at fair value on the financial statements, the Group has determined that
their fair values were not materially different from the carrying amounts at the reporting date. The carrying amounts and fair values of
financial instruments of the Group are described below.
Financial Assets
Fair values of cash and balances with central banks, placements with banks, interest and other short term receivables are expected to
approximate their carrying amounts due to their short tenor or frequent re-pricing.
Securities held by the Group, comprising government securities and debt and equity securities are substantially carried at fair value on the
balance sheet.
Non-bank customer loans are mainly carried at amortised cost on the balance sheet, net of allowances for impaired and non-impaired
loans. The Group deems that the carrying amounts of non-bank loans approximate their fair values as substantially all the loans are
subject to frequent re-pricing.
Financial Liabilities
Fair value of certain financial liabilities, which include mainly customer deposits with no stated maturity, interbank borrowings and
borrowings under repurchase agreements, are expected to approximate their carrying amounts due to their short tenor. For non-bank
customer term deposits, contractual or derived cash flows are discounted at market rates as at reporting date to estimate the fair values,
which approximate the carrying amounts.
The fair values of the Group’s subordinated term notes and covered bonds are determined based on quoted market prices and
independent broker offer prices. For other debts issued which are usually short term, the fair values approximate the carrying amounts.
41.3 Fair Value Hierarchy
The Group determines the fair values of its financial assets and liabilities using various measurements. The different levels of fair value
measurements are as follows:
• Level 1 – quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2 – inputs other than quoted prices included within Level 1 that are observable market data either directly (i.e. as prices) or
indirectly (i.e. derived from observable market data). The valuation techniques that use market parameters as inputs include, but are
not limited to, yield curves, volatilities and foreign exchange rates; and
• Level 3 – inputs for the valuation that are not based on observable market data.
230
41. Fair Values of Financial Instruments (continued)
41.3 Fair Value Hierarchy (continued)
The following table summarises the Group’s assets and liabilities measured at fair values subsequent to initial recognition by level of the
fair value hierarchy:
2022 2021
$ million Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
GROUP
Financial assets measured at fair value
Placements with and loans to banks 2,222 10,980 – 13,202 2,194 5,673 – 7,867
Debt and equity securities 18,453 5,869 3,381 27,703 24,813 7,699 1,172 33,684
Loans to customers – – 23 23 – 2 47 49
Derivative receivables 117 15,141 347 15,605 42 8,413 812 9,267
Government treasury bills and securities 34,096 4,315 – 38,411 30,834 6,090 – 36,924
Life insurance fund investment securities
and other assets 51,460 25,442 3,256 80,158 60,879 23,489 2,552 86,920
Total 106,348 61,747 7,007 175,102 118,762 51,366 4,583 174,711
Non-financial assets measured at fair value
Life insurance fund investment properties
and asset held for sale – – 1,954 1,954 – – 1,884 1,884
Associates – – 122 122 – – 95 95
Total – – 2,076 2,076 – – 1,979 1,979
Financial liabilities measured at fair value
Derivative payables 103 15,662 283 16,048 168 8,262 640 9,070
Trading portfolio liabilities 212 – – 212 393 – – 393
Debt issued – 1,040 – 1,040 – 1,092 – 1,092
Life insurance fund financial liabilities 22 253 – 275 3 106 – 109
Total 337 16,955 283 17,575 564 9,460 640 10,664
BANK
Financial assets measured at fair value
Placements with and loans to banks 1,532 5,870 – 7,402 1,324 4,553 – 5,877
Debt and equity securities 10,106 3,593 2,615 16,314 13,828 5,376 496 19,700
Loans to customers – – 23 23 – – 47 47
Derivative receivables 22 13,388 332 13,742 15 7,161 636 7,812
Government treasury bills and securities 19,703 3,395 – 23,098 14,693 4,776 – 19,469
Total 31,363 26,246 2,970 60,579 29,860 21,866 1,179 52,905
Financial liabilities measured at fair value
Derivative payables 32 13,992 276 14,300 133 7,075 448 7,656
Trading portfolio liabilities 212 – – 212 393 – – 393
Debt issued – 1,040 – 1,040 – 1,092 – 1,092
Total 244 15,032 276 15,552 526 8,167 448 9,141
During the financial year, the Group transferred financial assets from Level 2 to Level 1 as prices became observable arising from increased
market activity. Financial assets were also transferred from Level 1 to Level 2 when quoted prices become unobservable arising from
reduced market activity.
OCBC Annual Report 2022
Notes to the Financial Statements 231
41. Fair Values of Financial Instruments (continued)
41.3 Fair Value Hierarchy (continued)
Valuation Techniques and Unobservable Inputs for Level 3 Instruments
GROUP
$ million
Fair value at
31 December 2022 Classification Valuation techniques Unobservable inputs
Financial assets
Debt securities 222 FVTPL/FVOCI Discounted cash flows Yield
Equity securities 3,159 FVTPL/FVOCI Net asset value/
Multiples/Discounted
cash flows
Value of net asset/
Earnings and multiples/
Cash flows and
discount rate
Loans to customers 23 FVTPL Discounted cash flows Cash flows and
discount rate
Derivative receivables 347 FVTPL Option pricing model
Derivatives pricing
Volatility/Correlation
Long dated rate
Life insurance fund investment securities
and other assets
3,256 FVTPL/FVOCI Discounted cash flows/
Income approach/
Net asset value
Yield/Risk adjusted
discount rate/
Value of net asset
Total 7,007
Financial liabilities
Derivative payables 283 FVTPL Option pricing model
Derivatives pricing
Volatility/Correlation
Long dated rate
Total 283
Movements in Level 3 Financial Assets and Liabilities
2022
GROUP
$ million
Debt and
equity
securities
Loans to
customers
Derivative
receivables
Life
insurance fund
investment
securities and
other assets Total
Financial assets measured at fair value
At 1 January 1,172 47 812 2,552 4,583
Purchases 519 46 43 600 1,208
Settlements/disposals (14) (27) (41) (335) (417)
Transfers in (1) 1,729 – 51 549 2,329
Gains/(losses) recognised in
– profit or loss (24) (43) (520) (106) (693)
– other comprehensive income (1) # 2 (4) (3)
At 31 December 3,381 23 347 3,256 7,007
Unrealised (losses)/gains included in profit or
loss for assets held at the end of the year (24) (22) 152 (47) 59
(1) Relates to transfers from Levels 1 and 2 to Level 3 due to use of inputs not based on market observable data.
232
41. Fair Values of Financial Instruments (continued)
41.3 Fair Value Hierarchy (continued)
Movements in Level 3 Financial Assets and Liabilities (continued)
2021
GROUP
$ million
Debt and
equity
securities
Loans to
customers
Derivative
receivables
Life
insurance fund
investment
securities and
other assets Total
Financial assets measured at fair value
At 1 January 1,214 89 102 1,967 3,372
Purchases 11 – 42 541 594
Settlements/disposals (14) (26) (8) (243) (291)
Transfer in (1) 20 – 226 – 246
Gains/(losses) recognised in
– profit or loss (68) (16) 449 288 653
– other comprehensive income 9 (#) 1 (1) 9
At 31 December 1,172 47 812 2,552 4,583
Unrealised (losses)/gains included in profit or
loss for assets held at the end of the year (68) (16) 738 274 928
Gains/(losses) included in profit or loss are presented in the income statement as follows:
2022 2021
Trading
income
Other
income Total
Trading
income
Other
income Total
Total (losses)/gains included in profit or
loss for the year ended (588) (105) (693) 365 288 653
Unrealised gains/(losses) included in
profit or loss for assets held at the
end of the year 106 (47) 59 654 274 928
(1) Relates to transfers from Level 2 to Level 3 due to use of inputs not based on market observable data.
OCBC Annual Report 2022
Notes to the Financial Statements 233
41. Fair Values of Financial Instruments (continued)
41.3 Fair Value Hierarchy (continued)
Movements in Level 3 Financial Assets and Liabilities (continued)
2022 2021
BANK
$ million
Debt and
equity
securities
Loans to
customers
Derivative
receivables Total
Debt and
equity
securities
Loans to
customers
Derivative
receivables Total
Financial assets measured at fair value
At 1 January 496 47 636 1,179 443 84 98 625
Purchases 508 46 43 597 4 – 42 46
Settlements/disposals (14) (27) (41) (82) (9) (21) (7) (37)
Transfers in (1) 1,655 – 15 1,670 11 – – 11
Gains/(losses) recognised in
– profit or loss (26) (43) (321) (390) 16 (16) 503 503
– other comprehensive income (4) # – (4) 31 # – 31
At 31 December 2,615 23 332 2,970 496 47 636 1,179
Unrealised (losses)/gains included in
profit or loss for assets held at the
end of the year (25) (22) 114 67 16 (16) 557 557
Gains/(losses) included in profit or loss are presented in the income statement as follows:
2022 2021
Trading
income Total
Trading
income Total
Total (losses)/gains included in profit or loss for the year ended (390) (390) 503 503
Unrealised gains included in profit or loss for assets held at the end of the year 67 67 557 557
(1) Relates to transfers from Levels 1 and 2 to Level 3 due to use of inputs not based on market observable data.
234
41. Fair Values of Financial Instruments (continued)
41.3 Fair Value Hierarchy (continued)
Movements in Level 3 Financial Assets and Liabilities (continued)
GROUP BANK
2022 2021 2022 2021
$ million
Derivative
payables Total
Derivative
payables Total
Derivative
payables Total
Derivative
payables Total
Financial liabilities measured at fair value
At 1 January 640 640 69 69 448 448 55 55
Issues 59 59 144 144 59 59 144 144
Settlements/disposals (143) (143) (80) (80) (142) (142) (80) (80)
Transfers in (1) 39 39 226 226 3 3 – –
Losses/(gains) recognised in
– profit or loss (314) (314) 281 281 (92) (92) 329 329
– other comprehensive income 2 2 (#) (#) – – – –
At 31 December 283 283 640 640 276 276 448 448
Unrealised losses included in profit or loss for
liabilities held at the end of the year (351) (351) (542) (542) (359) (359) (369) (369)
(1) Relates to transfers from Level 2 to Level 3 due to use of inputs not based on market observable data.
Gains/(losses) included in profit or loss are presented in the income statements as follows:
GROUP BANK
2022 2021 2022 2021
$ million
Trading
income Total
Trading
income Total
Trading
income Total
Trading
income Total
Total gains/(losses) included in profit or loss for
the year ended 314 314 (281) (281) 92 92 (329) (329)
Unrealised losses included in profit or loss for
liabilities held at the end of the year (351) (351) (542) (542) (359) (359) (369) (369)
Movements in Level 3 Non-Financial Assets
GROUP
2022 2021
$ million
Life insurance
fund investment
properties and
asset held for sale (1) Associates (2) Total
Life insurance
fund investment
properties (1) Associates (2) Total
Non-financial assets measured at fair value
At 1 January 1,884 95 1,979 1,767 – 1,767
Purchases/net transfer from property, plant and equipment 1 – 1 39 – 39
Transfers in (3) – – – – 97 97
Gains/(losses) recognised in
– profit or loss 91 24 115 84 (2) 82
– other comprehensive income (22) 3 (19) (6) – (6)
At 31 December 1,954 122 2,076 1,884 95 1,979
(1) The fair value of investment properties and asset held for sale is determined based on a combination of income approach, comparison approach and capitalisation approach under Level 3
fair value measurements.
(2) The fair value of investment in associate is determined based on market approach under Level 3 fair value measurements.
(3) Relates to transfers from Level 2 to Level 3 due to use of inputs not based on market observable data.
OCBC Annual Report 2022
Notes to the Financial Statements 235
42. Offsetting Financial Assets and Financial Liabilities
The Group enters into master netting arrangements with counterparties in its normal course of business. The credit risk associated with
favourable contracts is reduced by the master netting arrangement to the extent that if an event of default occurs, all amounts with the
counterparty are settled on a net basis. These arrangements do not qualify for net presentation on the balance sheet as the right to offset
is enforceable only on the occurrence of future events such as default or other credit events.
The disclosures set out in the tables below pertain to financial assets and financial liabilities that are not presented net in the Group’s
balance sheet but are subject to enforceable master netting agreement or similar arrangement that covers similar financial instruments.
The disclosures enable the evaluation on the potential effect of netting arrangements as well as provide additional information on how
such credit risk is mitigated.
GROUP
Related amounts not offset
on balance sheet
Types of financial assets/liabilities
$ million
Carrying
amounts on
balance sheet
(A)
Amounts
not subject
to netting
agreement
(B)
Amounts
subject to
netting
agreement
(A – B = C + D + E)
Financial
instruments
(C)
Collateral
(D)
Net
amounts
in scope
(E)
2022
Financial assets
Derivative receivables 15,605 2,410 13,195 8,126 677 4,392
Reverse repurchase agreements 7,057 (1) 3,853 3,204 3,198 – 6
Securities borrowings 10 (2) 9 1 1 – –
Total 22,672 6,272 16,400 11,325 677 4,398
Financial liabilities
Derivative payables 16,048 2,259 13,789 8,126 1,365 4,298
Repurchase agreements 3,144 (3) 1,369 1,775 1,745 – 30
Securities lendings 2 (4) – 2 1 – 1
Total 19,194 3,628 15,566 9,872 1,365 4,329
2021
Financial assets
Derivative receivables 9,267 3,163 6,104 4,625 236 1,243
Reverse repurchase agreements 3,037 (1) 1,800 1,237 1,224 – 13
Securities borrowings 7 (2) 6 1 1 – –
Total 12,311 4,969 7,342 5,850 236 1,256
Financial liabilities
Derivative payables 9,070 1,731 7,339 4,625 1,283 1,431
Repurchase agreements 2,056 (3) 997 1,059 995 – 64
Securities lendings 5 (4) – 5 5 – –
Total 11,131 2,728 8,403 5,625 1,283 1,495
(1) Reverse repurchase agreements shown above are the aggregate of transactions recorded in separate line items on the balance sheet, namely placements with central banks, loans to banks
and non-bank customers and other assets. These transactions are measured either at fair value or amortised cost.
(2) Cash collateral placed under securities borrowings are presented under placements with and loans to banks and other assets on the balance sheet, and are measured at amortised cost.
(3) Repurchase agreements shown above are the aggregate of transactions recorded in separate line items on the balance sheet, namely deposits of banks and non-bank customers and other
liabilities, and are measured at amortised cost.
(4) Cash collateral placed under securities lendings are presented under other liabilities, and are measured at amortised cost.
236
42. Offsetting Financial Assets and Financial Liabilities (continued)
BANK
Related amounts not offset
on balance sheet
Types of financial assets/liabilities
$ million
Carrying
amounts on
balance sheet
(A)
Amounts
not subject
to netting
agreement
(B)
Amounts
subject to
netting
agreement
(A – B = C + D + E)
Financial
instruments
(C)
Collateral
(D)
Net
amounts
in scope
(E)
2022
Financial assets
Derivative receivables 13,742 1,762 11,980 7,959 874 3,147
Reverse repurchase agreements 4,375 (1) 1,171 3,204 3,198 – 6
Securities borrowings 9 (2) 9 – – – –
Total 18,126 2,942 15,184 11,157 874 3,153
Financial liabilities
Derivative payables 14,300 1,992 12,308 7,959 974 3,375
Repurchase agreements 1,775 (3) – 1,775 1,745 – 30
Total 16,075 1,992 14,083 9,704 974 3,405
2021
Financial assets
Derivative receivables 7,812 1,689 6,123 4,458 359 1,306
Reverse repurchase agreements 2,169 (1) 932 1,237 1,224 – 13
Securities borrowings 6 (2) 6 – – – –
Total 9,987 2,627 7,360 5,682 359 1,319
Financial liabilities
Derivative payables 7,656 728 6,928 4,458 790 1,680
Repurchase agreements 1,059 (3) – 1,059 995 – 64
Total 8,715 728 7,987 5,453 790 1,744
(1) Reverse repurchase agreements shown above are the aggregate of transactions recorded in separate line items on the balance sheet, namely placements with central banks, loans to banks
and non-bank customers and other assets. These transactions are measured either at fair value or amortised cost.
(2) Cash collateral placed under securities borrowings are presented under placements with and loans to banks on the balance sheet, and are measured at amortised cost.
(3) Repurchase agreements shown above are the aggregate of transactions recorded in separate line items on the balance sheet, namely deposits of banks and non-bank customers and other
liabilities, and are measured at amortised cost.
OCBC Annual Report 2022
Notes to the Financial Statements 237
43. Contingent Liabilities
The Group conducts businesses involving acceptances, guarantees, documentary credits and other similar transactions. Acceptances are
undertakings by the Group to pay on receipt of bills of exchange drawn. The Group issues guarantees on the performance of customers to
third parties. Documentary credits commit the Group to make payments to third parties on presentation of stipulated documents. As the
Group will only be required to meet these obligations in the event of customer’s default, the cash requirements of these instruments are
expected to be considerably below their nominal contractual amounts.
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Guarantees and standby letters of credit:
Term to maturity of one year or less 6,352 6,770 4,756 5,592
Term to maturity of more than one year 2,984 2,472 2,220 1,544
9,336 9,242 6,976 7,136
Acceptances and endorsements 950 1,016 564 442
Documentary credits and other short term trade-related transactions 6,463 6,393 4,707 4,721
16,749 16,651 12,247 12,299
43.1 Analysed by Industry
Agriculture, mining and quarrying 153 198 58 22
Manufacturing 1,480 1,412 472 353
Building and construction 2,247 2,137 1,388 1,066
General commerce 9,238 10,287 7,554 8,757
Transport, storage and communication 561 359 408 254
Financial institutions, investment and holding companies 1,614 1,116 1,169 880
Professionals and individuals 158 113 37 40
Others 1,298 1,029 1,161 927
16,749 16,651 12,247 12,299
43.2 Analysed by Geography
Singapore 10,905 11,347 10,719 11,276
Malaysia 1,226 1,125 7 6
Indonesia 1,094 1,169 – –
Greater China 2,683 2,520 667 520
Other Asia Pacific 339 128 352 135
Rest of the World 502 362 502 362
16,749 16,651 12,247 12,299
Contingent liabilities analysed by geography is based on the country where the transactions are recorded.
238
44. Commitments
Commitments comprise mainly agreements to provide credit facilities to customers. Such credit facilities (cancellable and non-cancellable)
can either be made for a fixed period, or have no specific maturity.
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
44.1 Credit Commitments
Undrawn credit facilities:
Term to maturity of one year or less 150,236 141,648 67,418 70,699
Term to maturity of more than one year 33,468 29,414 41,039 25,640
183,704 171,062 108,457 96,339
44.2 Other Commitments
Capital commitment authorised and contracted 226 220 232 234
Forward deposits and assets purchase 83 359 716 1,990
309 579 948 2,224
44.3 Total Commitments 184,013 171,641 109,405 98,563
44.4 Credit Commitments Analysed by Industry
Agriculture, mining and quarrying 1,977 1,408 1,272 657
Manufacturing 11,297 8,025 5,220 2,637
Building and construction 26,766 17,338 22,607 13,540
General commerce 29,892 24,809 24,213 19,692
Transport, storage and communication 6,362 4,768 5,435 4,080
Financial institutions, investment and holding companies 41,278 53,570 24,912 33,967
Professionals and individuals 57,689 54,552 17,394 16,409
Others 8,443 6,592 7,404 5,357
183,704 171,062 108,457 96,339
44.5 Credit Commitments Analysed by Geography
Singapore 138,861 136,454 92,698 83,515
Malaysia 9,190 8,736 936 469
Indonesia 6,103 5,379 – –
Greater China 20,432 13,709 5,679 5,548
Other Asia Pacific 3,424 3,071 3,447 3,091
Rest of the World 5,694 3,713 5,697 3,716
183,704 171,062 108,457 96,339
Credit commitments analysed by geography is based on the country where the transactions are recorded.
OCBC Annual Report 2022
Notes to the Financial Statements 239
45. Unconsolidated Structured Entities
Unconsolidated structured entities refer to structured entities that are not controlled by the Group. The Group’s transactions in these
structured entities are for investment opportunities as well as to facilitate client transactions. The Group’s maximum exposure to loss is
primarily limited to the carrying amount on its balance sheet and loan and capital commitments to these structured entities.
The following table summarises the carrying amount of the assets and liabilities recognised in the Group’s financial statements relating to
the interests in unconsolidated structured entities undertaken by business segments.
GROUP ($ million)
Global
investment
banking Insurance Others Total
2022
FVOCI investments 73 – # 73
FVTPL investments 2 95 2 99
Other assets – 9 – 9
Total assets 75 104 2 181
Other liabilities – – – –
Total liabilities – – – –
Other commitments
Loan and capital commitments authorised and contracted (1) 37 – – 37
Income earned from sponsored structured entities (2) # 51 32 83
Assets of structured entities 652 6,728 403 7,783
2021
FVOCI investments 83 – # 83
FVTPL investments 1 125 # 126
Other assets – 6 – 6
Total assets 84 131 # 215
Other liabilities – – – –
Total liabilities – – – –
Other commitments
Loan and capital commitments authorised and contracted (1) 34 – – 34
Income earned from sponsored structured entities (2) # 55 34 89
Assets of structured entities 669 7,186 3,019 10,874
(1) These were also included in the Group's capital commitments authorised and contracted in Note 44.
(2) The income earned relates primarily to management fee, interest income or fair value gains or losses recognised by the Group arising from the interests held by the Group in the
unconsolidated investment funds.
The amount of assets transferred to sponsored entities during 2022 and 2021 were not significant.
240
46. Financial Assets Transferred
46.1 Assets Pledged
GROUP BANK
2022 2021 2022 2021
$ million $ million $ million $ million
Government treasury bills and securities
– Singapore 584 183 909 183
– Others 650 857 634 676
Placements with and loans to banks 16 – – –
Loans to customers 1,537 3,132 1,422 2,990
Debt securities 1,811 1,465 1,358 533
4,598 5,637 4,323 4,382
Obligations to repurchase assets pledged 2,083 2,056 1,657 1,059
(a) The amounts received from repurchase transactions are recognised as collaterised borrowings, “obligations to repurchase assets
pledged”, measured at amortised cost and included in deposits of banks and non-bank customers and other liabilities on the balance
sheet. The above assets pledged as collateral for repurchase transactions are not derecognised but are presented separately on the
balance sheet.
(b) The amounts paid in reverse repurchase transactions are recognised as collaterised lendings, measured at amortised cost and
included in loans to banks and non-bank customers as appropriate. The financial assets accepted as collateral for reverse repurchase
transactions are not recognised as assets on the balance sheet. The fair value of financial assets accepted as collateral, which the
Group is permitted to sell or re-pledge in the absence of default is $6.77 billion (2021: $3.05 billion), of which $0.05 billion (2021:
$0.06 billion) have been sold or re-pledged. The Group is obliged to return equivalent assets.
(c) Transactions are conducted under terms and conditions that are usual and customary to standard securities lending (equivalent to
repurchase transactions) and securities borrowing (equivalent to reverse repurchase transactions).
46.2 Assets Assigned as Security for Covered Bonds Issued (Note 21.5)
Pursuant to the Bank’s Global Covered Bond Programme, selected pools of Singapore housing loans originated by the Bank have been assigned
to a bankruptcy-remote structured entity, Red Sail Pte. Ltd. (Note 33.3). These housing loans continue to be recognised on the Bank’s balance
sheet as the Bank remains exposed to the risks and rewards associated with them.
As at 31 December 2022, the carrying amounts of the covered bonds in issue was $1.78 billion (2021: $3.52 billion), while the carrying amounts
of assets assigned was $9.23 billion (2021: $12.08 billion). The difference in values is attributable to an intended over-collateralisation required
to maintain the credit ratings of the covered bonds in issue, and additional assets assigned to facilitate future issuances.
OCBC Annual Report 2022
Notes to the Financial Statements 241
47. Related Party Transactions
Loans and deposits transactions with related parties arise from the ordinary course of business and are not treated any differently from
loans and deposits transactions with other customers of the Group. Credit facilities granted are subject to the same credit evaluation,
approval, monitoring and reporting processes. All transactions with related parties are conducted on commercial terms.
47.1 Material Related Party Transactions
Material related party balances at the reporting date and transactions during the financial year were as follows:
GROUP BANK
$ million Associates
Life
insurance
fund Subsidiaries Associates
Life
insurance
fund
(a) Loans, placements and other receivables
At 1 January 2022 41 600 21,929 40 9
Net change (34) 18 (3,085) (34) 58
At 31 December 2022 7 618 18,844 6 67
(b) Deposits, borrowings and other payables
At 1 January 2022 431 1,197 28,250 230 541
Net change (196) (247) 8,272 (33) 34
At 31 December 2022 235 950 36,522 197 575
(c) Off-balance sheet credit facilities (1)
At 1 January 2022 – 4 12,374 – 4
Net change – – 1,920 – –
At 31 December 2022 – 4 14,294 – 4
(d) Income statement transactions
Year ended 31 December 2022
Interest income # 9 286 # #
Interest expense 2 8 566 2 2
Rental income – 2 30 – #
Fee and commission and other income – 305 94 – 244
Rental and other expenses 20 33 574 20 #
Year ended 31 December 2021
Interest income # 13 90 # #
Interest expense 1 6 103 1 #
Rental income – 2 19 – #
Fee and commission and other income – 327 67 – 252
Rental and other expenses 19 21 452 18 #
(1) Off-balance sheet credit facilities refer to transaction-related and trade-related contingencies and commitments.
During the financial year, the Group had banking transactions with director-related and key management-related entities and personnel
of the Group. These transactions were not material.
242
47. Related Party Transactions (continued)
47.2 Key Management Personnel Compensation
BANK
2022 2021
$ million $ million
Key management personnel compensation is as follows:
Short-term employee benefits 38 42
Share-based benefits 13 13
51 55
Certain performance-related payments to key management personnel of the Bank in relation to the performance year 2022 included in
the above table are subject to the approval of the Remuneration Committee.
Comparatives have been updated following the approval of the performance-related payments to key management personnel of the Bank
in relation to the performance year 2021 by the Remuneration Committee.
48. Capital Management
The key objective of the Group’s capital management policy is to maintain a strong capital position to support business growth and
strategic investments, and to sustain investor, depositor, customer and market confidence. In line with this, the Group targets a minimum
credit rating of “A” and ensures that its capital ratios are comfortably above the regulatory minima, while balancing shareholders’ desire
for sustainable returns and high standards of prudence. The Group actively manages its capital composition with an optimal mix of
capital instruments in order to keep its overall cost of capital low.
A description of the key terms and conditions of the regulatory capital instruments can be found in Notes 13, 14 and 21 of the financial
statements, and the approaches adopted by the Group for the computation of risk-weighted assets can be found in the “Pillar 3
Disclosures” chapter.
The Group has complied with all externally imposed regulatory capital requirements. The table below shows the composition of the
Group’s regulatory capital and its capital adequacy ratios as of 31 December 2022 and 31 December 2021.
$ million 2022 2021
Ordinary shares 18,048 18,040
Disclosed reserves/others 26,254 25,782
Regulatory adjustments (9,123) (8,977)
Common Equity Tier 1 Capital 35,179 34,845
Additional Tier 1 capital 1,730 1,231
Regulatory adjustments – –
Tier 1 Capital 36,909 36,076
Tier 2 capital 4,028 3,497
Regulatory adjustments – –
Total Eligible Capital 40,937 39,573
Credit 202,713 197,164
Market 8,587 11,681
Operational 20,348 16,021
Risk Weighted Assets 231,648 224,866
Capital Adequacy Ratios
Common Equity Tier 1 15.2% 15.5%
Tier 1 15.9% 16.0%
Total 17.7% 17.6%
OCBC Annual Report 2022
Notes to the Financial Statements 243
49. New Accounting Standards and Interpretations
As of the reporting date, certain new standards, amendments and interpretations to existing accounting standards have been published.
The Group has not adopted the following relevant new/revised financial reporting standards and interpretations that have been issued
but not yet effective.
SFRS(I) Title
Effective for financial year
beginning on or after
SFRS(I) 17 Insurance Contracts 1 January 2023
Various Amendments to SFRS(I) 17 1 January 2023
Various Amendments to SFRS(I) 1-1 and SFRS(I) Practice
Statement 2: Disclosure of Accounting Policies
1 January 2023
SFRS(I) 1-8 (Amendments) Definition of Accounting Estimates 1 January 2023
SFRS(I) 1-12 (Amendments),
SFRS(I) 1 (Amendments)
Deferred Tax related to Assets and Liabilities arising
from a Single Transaction
1 January 2023
SFRS(I) 1-1 (Amendments) Classification of Liabilities as Current or Non-current 1 January 2024
SFRS(I) 16 (Amendments) Lease Liability in a Sale and Leaseback 1 January 2024
Various Amendments to SFRS(I) 1-1 Non-current Liabilities
with Covenants
1 January 2024
SFRS(I) 1-10 (Amendments),
SFRS(I) 1-28 (Amendments)
Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture
To be determined
Based on the Group’s preliminary analysis, the initial application of the above standards (including their consequential amendments) and
interpretations are not expected to have a significant impact on the Group’s financial statements, except as described below.
SFRS(I) 17 Insurance Contracts
GEH Group will apply SFRS(I) 17 for the first time on 1 January 2023. It is a comprehensive new accounting standard for insurance and
reinsurance contracts covering recognition, measurement, presentation and disclosure, and is expected to have a material impact on GEH
Group’s consolidated financial statements in the period of initial application.
A. SFRS(I) 17 Insurance Contracts
SFRS(I) 17 replaces SFRS(I) 4 Insurance Contracts and is effective for annual periods beginning on or after 1 January 2023. The nature and
effects of the changes in the GEH Group accounting policies are summarised below.
i. Identifying Contracts in the Scope of SFRS(I) 17
SFRS(I) 17 establishes specific principles for the recognition, measurement, presentation and disclosure of insurance contracts issued and
reinsurance contracts held by GEH Group.
Under the key principles of SFRS(I) 17, GEH Group is required to:
• Identify insurance contracts as those under which GEH Group accepts significant risk from another party (the policyholder) by
agreeing to compensate the policyholder if a specified uncertain future event (the insured event) adversely affects the policyholder;
• Separate specified embedded derivatives, distinct investment components and distinct non-insurance goods or services from
insurance contracts and accounts for them in accordance with other standards; and
• Divide the insurance and reinsurance contracts into groups they will recognise and measure.
ii. Level of Aggregation
Under SFRS(I) 17, insurance contracts are aggregated into groups for measurement purposes. Groups of insurance contracts are
determined by identifying portfolios of insurance contracts, each comprising contracts subject to similar risks and managed together, and
dividing each portfolio into quarterly cohorts (by quarter of issuance) for life insurance or annual cohorts (by year of issuance) for non-life
insurance, into three groups based on the expected profitability of the contracts:
(i) any contracts that are onerous at initial recognition;
(ii) any contracts that at initial recognition have no significant possibility of becoming onerous subsequently; and
(iii) any remaining contracts in the portfolio.
244
49. New Accounting Standards and Interpretations (continued)
SFRS(I) 17 Insurance Contracts (continued)
A. SFRS(I) 17 Insurance Contracts (continued)
ii. Level of Aggregation (continued)
These groups represent the level of aggregation at which insurance contracts are initially recognised and measured. The profitability
groupings are not reassessed under subsequent measurement.
Portfolios of reinsurance contracts held are assessed for aggregation separately from portfolios of insurance contracts issued. Applying the
grouping requirements to reinsurance contracts held, GEH Group aggregates reinsurance contracts into quarterly cohorts (by quarter of
issuance) for life reinsurance contracts or annual cohorts (by year of issuance) for non-life reinsurance contracts into groups of:
(i) contracts for which there is a net gain at initial recognition, if any;
(ii) contracts for which, at initial recognition, there is no significant possibility of a net gain arising subsequently; and
(iii) remaining contracts in the portfolio, if any.
Reinsurance contracts held are assessed for aggregation requirements on an individual reinsurance contract basis.
The level of aggregation requirements of SFRS(I) 17 limits the offsetting of gains on groups of profitable contracts, which are generally
deferred as a Contractual Service Margin (CSM), against losses on groups of onerous contracts, which are recognised immediately.
iii. Contract Boundary
Under SFRS(I) 17, the measurement of a group of insurance contracts includes all the future cash flows within the boundary of each
contract in the group. Cash flows are within the boundary of an insurance contract if they arise from substantive rights and obligations
that exist during the reporting period in which GEH Group can compel the policyholder to pay the premiums, or in which GEH Group has a
substantive obligation to provide the policyholder with insurance contract services. A substantive obligation to provide insurance contract
services ends when:
• GEH Group has the practical ability to reassess the risks of the particular policyholder and, as a result, can set a price or level of
benefits that fully reflects those risks, or
• Both of the following criteria are satisfied:
– GEH Group has the practical ability to reassess the risks of the portfolio of insurance contracts that contain the contract and, as a
result, can set a price or level of benefits that fully reflects the risk of that portfolio; and
– The pricing of the premiums up to the date when the risks are reassessed does not take into account the risks that relate to
periods after the reassessment date.
Fulfilment cash flows relating to expected premiums or claims outside the boundary of the insurance contract are not recognised. Such
amounts relate to future insurance contracts.
For life insurance contracts with renewal periods, GEH Group assesses whether premiums and related cash flows that arise from the renewed
contract are within the contract boundary. The pricing of the renewals is established by GEH Group by considering all the risks covered for
the policyholder by GEH Group, that GEH Group would consider when underwriting equivalent contracts on the renewal dates for the
remaining service. Therefore, the cash flows related to renewals of insurance contracts will not be included in the contract boundary.
For groups of reinsurance contracts held, cash flows are within the contract boundary if they arise from substantive rights and obligations
of GEH Group that exist during the reporting period in which GEH Group is compelled to pay amounts to the reinsurer or in which GEH
Group has a substantive right to receive insurance contract services from the reinsurer. A substantive right to receive services from the
reinsurer ends either when the reinsurer can reprice the contract to fully reflect the reinsured risk, or when the reinsurer has a substantive
right to terminate coverage.
GEH Group reassesses contract boundaries of each group at the end of each reporting period.
Cash flows that are not directly attributable to a portfolio of insurance contracts, are recognised in other operating expenses as incurred.
OCBC Annual Report 2022
Notes to the Financial Statements 245
49. New Accounting Standards and Interpretations (continued)
SFRS(I) 17 Insurance Contracts (continued)
A. SFRS(I) 17 Insurance Contracts (continued)
iv. Measurement – Overview
SFRS(I) 17 introduces a measurement model based on the estimates of the present value of future cash flows that are expected to arise as
GEH Group fulfils the contracts, an explicit risk adjustment for non-financial risk and a CSM.
Contracts are subject to different requirements depending on whether they are classified as direct participating contracts or contracts
without direct participation features. Insurance contracts with direct participation features are insurance contracts that are substantially
investment-related service contracts under which GEH Group promises an investment return based on underlying items; they are
contracts for which, at inception:
• the contractual terms specify that the policyholder participates in a share of a clearly identified pool of underlying items;
• GEH Group expects to pay to the policyholder an amount equal to a substantial share of the fair value returns on the underlying
items; and
• GEH Group expects a substantial proportion of any change in the amounts to be paid to the policyholder to vary with the change in
fair value of the underlying items.
All other insurance and all reinsurance contracts are expected to be classified as contracts without direct participation features.
Some of these contracts are measured under the Premium Allocation Approach (PAA). The PAA is an optional simplified measurement
model in SFRS(I) 17 that is available for insurance and reinsurance contracts that meet the eligibility criteria. This approach will be used for
non-life insurance yearly renewable contracts, because each of these contracts have a coverage period of one year or less or meets the
eligibility criteria.
v. Measurement – Contracts Not Measured Under the PAA
On initial recognition, GEH Group measures a group of insurance contracts as the total of (a) the fulfilment cash flows, and (b) the CSM.
The fulfilment cash flows of a group of insurance contracts do not reflect GEH Group’s non-performance risk.
The risk adjustment for non-financial risk is applied to the present value of the estimated future cash flows, and it reflects the
compensation that GEH Group requires for bearing the uncertainty about the amount and timing of the cash flows from non-financial risk
as GEH Group fulfils insurance contracts.
On initial recognition of a group of insurance contracts, if the total of (a) the fulfilment cash flows, (b) any cash flows arising at that date
and (c) any amount arising from the derecognition of any assets or liabilities previously recognised for cash flows related to GEH Group is a
net inflow, then it is not onerous to GEH Group. In this case, the CSM is measured as the equal and opposite amount of the net inflow,
which results in no income or expenses arising on initial recognition.
If the total is a net outflow, then it is onerous to GEH Group. A loss from onerous insurance contracts is recognised in profit or loss
immediately, with no CSM recognised on the balance sheet on initial recognition, and a loss component is established in the amount of
loss recognised.
Fulfilment Cash Flows (FCF)
The FCF are the current estimates of the future cash flows within the contract boundary of a group of contracts that the group expects to
collect from premiums and pay out for claims, benefits and expenses, adjusted to reflect the timing and the uncertainty of those amounts.
The estimates of future cash flows:
(a) are based on a probability-weighted mean of the full range of possible outcomes;
(b) are determined from the perspective of the group provided that the estimates are consistent with observable market prices for
market variables; and
(c) reflect conditions existing at the measurement date.
The estimates of future cash flows are adjusted using the current discount rates to reflect the time value of money and the financial risks
related to those cash flows, to the extent not included in the estimates of cash flows. The discount rates reflect the characteristics of the
cash flows arising from the groups of insurance contracts, including timing, currency and liquidity of cash flows.
246
49. New Accounting Standards and Interpretations (continued)
SFRS(I) 17 Insurance Contracts (continued)
A. SFRS(I) 17 Insurance Contracts (continued)
v. Measurement – Contracts Not Measured Under the PAA (continued)
Contractual Service Margin (CSM)
The CSM is a component of the carrying amount of the asset or liability for a group of insurance contracts issued representing the
unearned profit that GEH Group will recognise as it provides insurance contract services in the future.
At initial recognition, the CSM is an amount that results in no income or expenses (unless a group of contracts is onerous or insurance
revenue and insurance service expenses are recognised as in (d) below) arising from:
(a) the initial recognition of the FCF;
(b) cash flows arising from the contracts in the group at that date;
(c) the derecognition of any insurance acquisition cash flows asset; and
(d) the derecognition of any other pre-recognition cash flows. Insurance revenue and insurance service expenses are recognised
immediately for any such assets derecognised.
Subsequent Measurement
Subsequently, the carrying amount of a group of insurance contracts at each reporting date is the sum of the liability for remaining
coverage and the liability for incurred claims. The liability for remaining coverage (LRC) comprises (a) the fulfilment cash flows that relate
to services that will be provided under the contracts in future periods and (b) any remaining CSM at that date. The liability for incurred
claims (LIC) includes the fulfilment cash flows for incurred claims and expenses that have not yet been paid, including claims that have
been incurred but not yet reported.
• The fulfilment cash flows of groups of contracts are measured at the reporting date using current estimates of future cash flows,
current discount rates and current estimates of the risk adjustment for non-financial risk. Changes in fulfilment cash flows are
recognised as follows:
Changes relating to future service Adjusted against CSM (or recognised in the insurance service result in
profit or loss if it is onerous to the group)
Changes relating to current or past services Recognised in the insurance service result in profit or loss
Effects of the time value of money, financial risk and
changes therein on estimated cash flows
Recognised as insurance finance income or expenses in profit or loss,
except for certain portfolios measured using the General
Measurement Model (GMM) where the OCI option is applied
• The CSM is adjusted subsequently only for changes in fulfilment cash flows that relate to future services and other specified amounts
and is recognised in profit or loss as services are provided. The CSM at each reporting date represents the profit in the group of
contracts that has not yet been recognised in profit or loss because it relates to future services.
Reinsurance Contracts
GEH Group will apply the same accounting policies to measure a group of reinsurance contracts, with the following modifications.
The carrying amount of a group of reinsurance contracts at each reporting date is the sum of the asset for remaining coverage and the
asset for incurred claims. The asset for remaining coverage comprises (a) the fulfilment cash flows that relate to services that will be
received under the contracts in future periods and (b) any remaining CSM at that date.
GEH Group will measure the estimates of the present value of future cash flows using assumptions that are consistent with those used to
measure the estimates of the present value of future cash flows for the underlying insurance contracts, with an adjustment for any risk of
non-performance by the reinsurer. The effect of the non-performance risk of the reinsurer is assessed at each reporting date and the effect
of changes in the non-performance risk is recognised in profit or loss.
The risk adjustment for non-financial risk represents the amount of risk being transferred by GEH Group to the reinsurer.
OCBC Annual Report 2022
Notes to the Financial Statements 247
49. New Accounting Standards and Interpretations (continued)
SFRS(I) 17 Insurance Contracts (continued)
A. SFRS(I) 17 Insurance Contracts (continued)
v. Measurement – Contracts Not Measured Under the PAA (continued)
Reinsurance Contracts (continued)
For groups of reinsurance contracts held, any net gain or loss at initial recognition is recognised as the CSM unless the net cost of
purchasing reinsurance relates to past events, in which case GEH Group recognises the net cost immediately in profit or loss. For
reinsurance contracts held, the CSM represents a deferred gain or loss that GEH Group will recognise as a reinsurance income or expense
as it receives insurance contract services from the reinsurer in the future.
A loss-recovery component is established or adjusted within the remaining coverage for reinsurance contracts held for the amount of
income recognised above. This amount is calculated by multiplying the loss recognised on underlying insurance contracts by the
percentage of claims on underlying insurance contracts that GEH Group expects to recover from the reinsurance contracts held that are
entered into before or at the same time as the loss is recognised on the underlying insurance contracts.
Insurance Acquisition Cash Flows
Insurance acquisition cash flows arise from the costs of selling, underwriting and starting a group of insurance contracts that are directly
attributable to the portfolio of insurance contracts to which the group belongs. If insurance acquisition cash flows are directly attributable
to a group of contracts, then they are allocated to that group.
Insurance acquisition cash flows are allocated to groups of insurance contracts on a systematic and rational basis. Insurance acquisition
cash flows that are directly attributable to a group of insurance contracts are allocated to that group; and to groups that will include
insurance contracts that are expected to arise from renewals of the insurance contracts in that group.
Insurance acquisition cash flows not directly attributable to a group of contracts but directly attributable to a portfolio of contracts are
allocated to groups of contracts in the portfolio or expected to be in the portfolio.
Under SFRS(I) 17, only insurance acquisition cash flows that arise before the recognition of the related insurance contracts are recognised
as separate assets and tested for recoverability, whereas other insurance acquisition cash flows are included in the estimates of the
present value of future cash flows as part of the measurement of the related insurance contracts.
SFRS(I) 17 will require GEH Group to assess at each reporting date whether facts and circumstances indicate that an asset for insurance
acquisition cash flows may be impaired.
Impact Assessment
Under SFRS(I) 17, all profits will be recognised in profit or loss over the life of the contracts, and this will primarily be driven by the timing
of the recognition in profit or loss of the CSM as services are provided and the risk adjustment for non-financial risk as the related risk
expires. GEH Group expects that, even though the total profit recognised over the lifetime of the contracts will not change, the pattern of
recognition across different financial periods will be different under SFRS(I) 17.
The increase in liabilities for Life contracts on transition to SFRS(I) 17 can mainly be attributed to the following.
Key changes from SFRS(I) 4 Impact on equity on
transition to SFRS(I) 17
at 1 January 2022
The estimates of the present value of future cash flows will increase as a result of a reduction in the
discount rates because of the SFRS(I) 17 requirements to measure future cash flows using current
discount rates.
Decrease
The risk adjustment for non-financial risk under SFRS(I) 17 will be lower than the risk margin under
SFRS(I) 4 as a result of (a) recalibration of the measurement techniques to conform with the SFRS(I) 17
requirements, and (b) exclusion of financial risk from the SFRS(I) 17 risk adjustment for non-financial
risk for certain entities with GEH Group.
Increase
A CSM will be recognised for the unearned profit for these contracts. Decrease
248
49. New Accounting Standards and Interpretations (continued)
SFRS(I) 17 Insurance Contracts (continued)
A. SFRS(I) 17 Insurance Contracts (continued)
vi. Measurement – Contracts Measured Under the PAA
For insurance contracts issued, on initial recognition, GEH Group measures the liability for remaining coverage at the amount of premiums
received, less any acquisition cash flows paid and any amounts arising from the derecognition of the insurance acquisition cash flows
asset and the derecognition of any other relevant pre-recognition cash flows.
For reinsurance contracts held, on initial recognition, GEH Group measures the remaining coverage at the amount of ceding premiums
paid net of commission, plus broker fees paid to a party other than the reinsurer.
The carrying amount of a group of insurance contracts issued at the end of each reporting period is the sum of the LRC and the liability for
incurred claims (LIC), comprising the FCF related to past service allocated to the group at the reporting date.
The carrying amount of a group of reinsurance contracts held at the end of each reporting period is the sum of the asset for remaining
coverage and the asset for incurred claims, comprising the FCF related to past service allocated to the group at the reporting date.
For insurance contracts issued, at each of the subsequent reporting dates, the LRC is:
(a) increased for premiums received in the period, excluding amounts that relate to premium receivables included in the LIC;
(b) decreased for insurance acquisition cash flows paid in the period;
(c) decreased for the amounts of expected premium receipts recognised as insurance revenue for the services provided in the period;
(d) increased for the amortisation of insurance acquisition cash flows in the period recognised as insurance service expenses; and
(e) increased for net insurance finance expenses recognised during the period.
For reinsurance contracts held, at each of the subsequent reporting dates, the remaining coverage is:
(a) increased for ceding premiums, net of commission, paid in the period;
(b) increased for broker fees paid in the period;
(c) decreased for the expected amounts of ceding premiums and broker fees recognised as reinsurance expenses for the services received
in the period; and
(d) increased for net reinsurance finance income recognised during the period.
For contracts measured under the PAA, the LIC is measured similarly to the LIC’s measurement under the GMM. Future cash flows are
adjusted for the time value of money and the effect of financial risk.
Impact Assessment
Although the PAA is similar to GEH Group’s current accounting treatment when measuring liabilities for remaining coverage, the
following changes are expected in the accounting for contracts under PAA.
Changes from SFRS(I) 4 Impact on equity on
transition to SFRS(I) 17
on 1 January 2022
Under SFRS(I) 17, GEH Group will discount the future cash flows when measuring liabilities for incurred
claims, unless they are expected to occur in one year or less from the date of which the claims are
incurred. GEH Group generally does not currently discount such future cash flows for non-life contracts.
Increase
GEH Group’s accounting policy under SFRS(I) 17 to recognise separately eligible insurance acquisition
cash flows when they are incurred as deferred acquisition costs differs from current practice.
Increase
OCBC Annual Report 2022
Notes to the Financial Statements 249
49. New Accounting Standards and Interpretations (continued)
SFRS(I) 17 Insurance Contracts (continued)
A. SFRS(I) 17 Insurance Contracts (continued)
vii. Measurement – Significant Judgements and Estimates
GEH Group makes estimates, assumptions and judgements in its estimates of future cash flows, discount rates used, risk adjustments for
non-financial risk, and CSM. At the date of these financial statements, GEH Group is still in the midst of finalising the judgements and
estimation techniques employed, which are subject to change until GEH Group reports SFRS(I) 17 for the first time in calendar year 2023.
Discount Rates
Insurance contract liabilities are calculated by discounting expected future cash flows at a risk-free rate, plus an illiquidity premium where
applicable. Risk free rates are determined by reference to the observable market yields of Government Securities in the currency of the
insurance contract liabilities. The illiquidity premium is determined by reference to observable market rates.
Risk Adjustment for Non-Financial Risk
The risk adjustment for non-financial risk is the compensation that is required for bearing the uncertainty about the amount and timing of
cash flows that arises from non-financial risk as the insurance contract is fulfilled. Because the risk adjustment represents compensation
for uncertainty, estimates are made on the degree of diversification benefits and expected favourable and unfavourable outcomes in a
way that reflects GEH Group’s degree of risk aversion. GEH Group estimates an adjustment for non-financial risk separately from all
other estimates. GEH Group does not consider the effect of reinsurance in the risk adjustment for non-financial risk of the underlying
insurance contracts.
The confidence level technique was used to derive the overall risk adjustment for non-financial risk. Applying a confidence level technique,
GEH Group will estimate the probability distribution of the expected present value of the future cash flows from the contracts at each
reporting date and calculate the risk adjustment for non-financial risk as the excess of the value at risk at the target confidence level over
the expected present value of the future cash flows allowing for the associate risks over all future years. The target confidence level will be
at 85th percentile.
Estimates of Future Cash Flows
In estimating future cash flows, GEH Group will incorporate, in an unbiased way, all reasonable and supportable information that is
available without undue cost or effort at the reporting date. This information includes both internal and external historical data about
claims and other experience updated to reflect current expectations of future events.
The estimates of future cash flows will reflect GEH Group’s view of current conditions at the reporting date, as long as the estimates of
any relevant market variables are consistent with observable market prices.
When estimating future cash flows, GEH Group will take into account current expectations of future events that might affect cash flows.
Cash flows within the boundary of a contract are those that relate directly to the fulfilment of the contract, including those for which GEH
Group has discretion over the amount or timing. These include payments to (or on behalf of) policyholders, insurance acquisition cash
flows and other costs that are incurred in fulfilling contracts. Insurance acquisition cash flows and other costs that are incurred in fulfilling
contracts comprise both direct costs and an allocation of fixed and variable overheads.
Cash flows will be attributed to acquisition activities, other fulfilment activities and other activities at local entity level using activitybased costing techniques. Cash flows attributable to acquisition and other fulfilment activities will be allocated to groups of contracts
using methods that are systematic and rational and will be consistently applied to all costs that have similar characteristics.
250
49. New Accounting Standards and Interpretations (continued)
SFRS(I) 17 Insurance Contracts (continued)
A. SFRS(I) 17 Insurance Contracts (continued)
viii. Presentation and Disclosure
Under SFRS(I) 17, for presentation in the balance sheet, GEH Group will aggregate portfolios of insurance and reinsurance contracts held
and present separately:
• Portfolios of insurance contracts that are assets;
• Portfolios of reinsurance contracts held that are assets;
• Portfolios of insurance contracts that are liabilities; and
• Portfolios of reinsurance contracts held that are liabilities.
The portfolios referred to above are those established at initial recognition in accordance with the SFRS(I) 17 requirements.
The descriptions of the line items in GEH Group’s Consolidated Profit or Loss Statement will change significantly compared with GEH
Group’s current practice. Under SFRS(I) 4, GEH Group reports the following line items: premiums, claims, maturities, surrenders and
annuities and change in insurance contract liabilities. SFRS(I) 17 requires separate presentation of:
• Insurance revenue;
• Insurance service expense;
• Insurance finance income or expense; and
• Income or expenses from reinsurance contracts held.
GEH Group will provide disaggregated qualitative and quantitative information in the notes to the financial statements about:
• The amounts recognised in its financial statements from insurance contracts and reinsurance contracts; and
• Significant judgements, and changes in those judgements made when applying the standard.
Insurance service result comprises insurance revenue and insurance service expenses.
Insurance Revenue
As GEH Group provides insurance contract services under the insurance contracts, it reduces the LRC and recognises insurance revenue.
The amount of insurance revenue recognised in the reporting period depicts the transfer of promised services at an amount that reflects
the portion of consideration that GEH Group expects to be entitled to in exchange for those services.
The requirements of SFRS(I) 17 to recognise insurance revenue over the coverage period will result in slower revenue recognition compared
with GEH Group’s current practice of recognising revenue when the related premiums are written. Many insurance premiums include an
investment (that is, deposit) component – an amount that will be paid to policyholders or their beneficiaries in all circumstances,
regardless of whether an insured event occurs. The receipt and repayment of these non-distinct investment components do not relate to
the provision of insurance services; therefore, such amounts are not presented as part of GEH Group’s revenue or insurance service
expenses.
Insurance Service Expense
For contracts not measured under the PAA, amortisation of insurance acquisition cash flows is reflected in insurance service expenses in
the same amount as insurance acquisition cash flows recovery reflected within insurance revenue, as described above.
For contracts measured under the PAA, amortisation of insurance acquisition cash flows is based on the passage of time.
Other expenses that relate directly to the fulfilment of insurance contracts will be recognised in profit or loss as insurance service expenses,
generally when they are incurred. Expenses that do not relate directly to the fulfilment contracts are included in other operating expenses
in the consolidated statement of profit or loss.
OCBC Annual Report 2022
Notes to the Financial Statements 251
49. New Accounting Standards and Interpretations (continued)
SFRS(I) 17 Insurance Contracts (continued)
A. SFRS(I) 17 Insurance Contracts (continued)
viii. Presentation and Disclosure (continued)
Insurance Finance Income or Expenses
Insurance finance income or expenses comprise the change in the carrying amount of the group of insurance contracts arising from:
(a) the effect of the time value of money and changes in the time value of money; and
(b) the effect of financial risk and changes in financial risk.
GEH Group disaggregates changes in the risk adjustment for non-financial risk between insurance service results and insurance finance
income or expenses for life insurance. For non-life insurance, the entire change in the risk adjustment for non-financial risk is included in
insurance service results.
For conventional life and non-life insurance contracts, GEH Group includes all insurance finance income or expenses for the period in
profit or loss, except for certain portfolios measured using the GMM where the OCI option is applied. This is expected to reduce accounting
mismatches in profit or loss, considering that many of the supporting financial assets will be debt investments measured at FVOCI.
GEH Group systematically allocates expected total insurance finance income or expenses over the duration of the group of contracts to
profit or loss using discount rates determined on initial recognition of the group of contracts.
In the event of transfer of a group of insurance contracts or derecognition of an insurance contract, GEH Group reclassifies the insurance
finance income or expenses to profit or loss as a reclassification adjustment to any remaining amounts for the group (or contract) that
were previously recognised in other comprehensive income.
Disclosure
SFRS(I) 17 requires extensive new disclosures about amounts recognised in the financial statements, including detailed reconciliations of
contracts, effects of newly recognised contracts and information on the expected CSM emergence pattern, as well as disclosures about
significant judgements made when applying SFRS(I) 17. There will also be expanded disclosures about the nature and extent of risks from
insurance contracts and reinsurance contracts. Disclosures will generally be made at a more granular level than under SFRS(I) 4, providing
more transparent information for assessing the effects of insurance contracts on the financial statements.
B. Transition
GEH Group will restate the comparative information based on the transition approaches taken on adoption of SFRS(I) 17 with effect from
1 January 2023.
Changes in accounting policies resulting from the adoption of SFRS(I) 17 will be applied using the full retrospective approach to the extent
practicable. The full retrospective approach will be applied to insurance contracts that were originated less than one year prior to the
effective date. The modified retrospective approach will be applied to certain groups of insurance contracts that were originated less than
10 years prior to the transition date. The fair value approach will be applied to the remaining insurance contracts in force at transition date.
252
Class of Shares
Ordinary Shares
Voting Rights
One vote per share (other than treasury shares and subsidiary holdings, which are treated as having no voting rights)
Distribution of Shareholders
Size of Holdings
Number of
Shareholders %
Number of
Shares Held %
1 – 99 12,448 9.90 449,485 0.01
100 – 1,000 33,851 26.94 18,651,113 0.41
1,001 – 10,000 61,578 49.00 216,048,318 4.78
10,001 – 1,000,000 17,673 14.06 781,324,769 17.31
1,000,001 and above 120 0.10 3,498,348,229 77.49
Total 125,670 100.00 4,514,821,914 100.00
Number of issued shares (including treasury shares): 4,514,821,914
Number of treasury shares held: 20,138,382
Number of subsidiary holdings held: Nil
Percentage of the aggregate number of treasury shares and subsidiary holdings held against the total number of issued shares: 0.45%
Note:
“Subsidiary holdings” is defined in the Listing Manual of the Singapore Exchange Securities Trading Limited (SGX-ST) to mean shares referred to in Sections 21(4), 21(4B), 21(6A) and 21(6C) of the
Companies Act 1967.
Twenty Largest Shareholders
Shareholders
Number of
Shares Held %*
1. Citibank Nominees Singapore Pte Ltd 723,206,401 16.09
2. Selat (Pte) Limited 467,604,264 10.40
3. Raffles Nominees (Pte.) Limited 317,728,639 7.07
4. HSBC (Singapore) Nominees Pte Ltd 298,797,042 6.65
5. DBSN Services Pte. Ltd. 295,555,267 6.58
6. Lee Foundation 200,851,953 4.47
7. Herald Investment Pte Ltd 181,721,294 4.04
8. DBS Nominees (Private) Limited 165,679,378 3.69
9. Singapore Investments Pte Ltd 157,007,526 3.49
10. Lee Rubber Company Pte Ltd 141,656,364 3.15
11. United Overseas Bank Nominees (Private) Limited 49,173,937 1.09
12. Kallang Development (Pte) Limited 44,007,742 0.98
13. BPSS Nominees Singapore (Pte.) Ltd. 33,420,269 0.74
14. DB Nominees (Singapore) Pte Ltd 31,083,719 0.69
15. Lee Pineapple Company (Pte) Limited 30,595,980 0.68
16. Kew Estate Limited 28,430,489 0.63
17. Phillip Securities Pte Ltd 22,319,978 0.50
18. OCBC Nominees Singapore Private Limited 20,336,287 0.45
19. OCBC Securities Private Limited 17,873,036 0.40
20. UOB Kay Hian Private Limited 12,813,311 0.29
Total 3,239,862,876 72.08
* Percentage is calculated based on the total number of issued shares (excluding treasury shares) as at 3 March 2023.
Approximately 72.2% of the issued shares (excluding treasury shares) are held in the hands of the public. Rule 723 of the Listing Manual of
the SGX-ST has accordingly been complied with.
OCBC Annual Report 2022
253
Shareholding Statistics
As at 3 March 2023
Shareholding Statistics
Substantial Shareholders
(As shown in the Register of Substantial Shareholders)
Substantial shareholders
Direct interest
No. of Shares
Deemed interest
No. of Shares
Total
No. of Shares %*
Lee Foundation 189,310,098 (1) 31,835,411(2) 221,145,509 5.13
Selat (Pte) Limited 467,604,264 181,721,294 (3) 649,325,558 14.44
* Percentage is calculated based on the total number of issued shares (excluding treasury shares) as at the date of the latest notification given by the relevant substantial shareholder under the
Securities and Futures Act 2001 (SFA).
(1) Does not include shares acquired pursuant to OCBC’s Scrip Dividend Scheme in October 2019, October 2020 and June 2021. As the acquisitions did not result in
any overall percentage level changes in Lee Foundation’s total interest in OCBC, no notification of the changes was required to be given under the SFA.
(2) Represents Lee Foundation’s deemed interest in (a) the 29,222,140 shares held by Lee Pineapple Company (Pte) Limited, and (b) the 2,613,271 shares held by
Peninsula Plantations Sendirian Berhad (Peninsula Plantations). Lee Foundation has, however, informed the Bank in writing that it has ceased to have a deemed
interest in the shares held by Peninsula Plantations following a corporate restructuring exercise but that, as the cessation did not result in an overall percentage
level change in Lee Foundation’s total interest in OCBC, no notification of the change was required to be given under the SFA.
(3) Represents Selat (Pte) Limited’s deemed interest in the 181,721,294 shares held by Herald Investment Pte Ltd.
254
Number of ordinary shares (million)
Year Particulars Issued
Held in
treasury
In
circulation
2018 Shares issued to non-executive directors #
Shares issued in lieu of dividend 63
Share buyback (17)
Issue of shares pursuant to Share Option Scheme 4
Issue of shares pursuant to Employee Share Purchase Plan 8
Issue of shares pursuant to Deferred Share Plan 5
Shares sold for cash #
Year end balance 4,257 (7) 4,250
2019 Shares issued to non-executive directors #
Shares issued in lieu of dividend 152
Share buyback (17)
Issue of shares pursuant to Share Option Scheme 3
Issue of shares pursuant to Employee Share Purchase Plan 6
Issue of shares pursuant to Deferred Share Plan 7
Year end balance 4,409 (8) 4,401
2020 Shares issued to non-executive directors #
Shares issued in lieu of dividend 67
Share buyback (7)
Issue of shares pursuant to Share Option Scheme 2
Issue of shares pursuant to Employee Share Purchase Plan #
Issue of shares pursuant to Deferred Share Plan 11
Year end balance 4,476 (2) 4,474
2021 Shares issued to non-executive directors #
Shares issued in lieu of dividend 32
Issue of shares pursuant to Deferred Share Plan 7
Issue of shares pursuant to Share Option Scheme # 7
Share buyback (34)
Issue of shares pursuant to Employee Share Purchase Plan 6
Year end balance 4,515 (23) 4,492
2022 Shares issued to non-executive directors #
Share buyback (21)
Issue of shares pursuant to Share Option Scheme 6
Issue of shares pursuant to Employee Share Purchase Plan 10
Issue of shares pursuant to Deferred Share Plan 8
Year end balance 4,515 (20) 4,495
(1) # represents less than 500,000 shares.
OCBC Annual Report 2022
255
Five-Year Ordinary Share Capital History
(OCBC Group – As at 31 December 2022)
Five-Year Ordinary Share Capital History
Appointed as Director: 18 February 2022
Last Re-elected as a Director: 22 April 2022
Ms Chong spent over 29 years at Accenture
where she held senior leadership roles covering
various industries and countries in Asia Pacific.
She was the Chairman and CEO of Accenture
Greater China from 2015 to 2018 and a
member of the Global leadership council. In the
past three years, she has been actively involved
in sustainability and innovation initiatives at
a private equity portfolio company in China.
Other Directorships and Principal
Commitments/Appointments
• Boost Holdings Sdn Bhd, Board Director
• iShine Cloud Ltd, Board Director
• Lion Global Investors Ltd, Board Director
• MODA Solutions (BCR Shanghai),
Board Director
• Raffles Medical Group Ltd*, Board Director
• SIA Engineering Company Ltd*,
Board Director
• Partners Group, Operating Director
* Listed company
Directorships and Principal Commitments/
Appointments for the past 5 years
• Aimazing Pte Ltd, Board Director
• Accenture Pte Ltd, Board Director
• Graduate Investment Pte Ltd,
Board Director
• Newspage Pte Ltd, Board Director
• vKirirom Pte Ltd, Board Director
• National Volunteer and Philanthropy
Center, Adviser of Digital Task Force
• NUS Innovation & Enterprise, Executive
Council Member
Academic and Professional Qualifications
• Bachelor of Science (Computer Science
and Mathematics), National University of
Singapore
• Management and Executive Programs in
Business and Leadership, IMD Lausanne,
Switzerland
OCBC Board Committees Served On
Chairman, Board Sustainability Committee
Member, Audit Committee
Member, Ethics and Conduct Committee
Length of Service as a Director
1 year 2 months
Country of Principal Residence
Singapore
Ms Chong Chuan Neo (60)
Non-Executive and Independent Director
Mr Lee is a veteran banker with more than
30 years of financial services experience in
Standard Chartered Bank, OCBC Bank, Great
Eastern Life Assurance and BCS Information
System as its Executive Chairman.
Other Directorships and Principal
Commitments/Appointments
• Nordic Group Ltd*, Board Director
• OCBC Al-Amin Bank Berhad, Board
Director
• OCBC Management Services Pte Ltd,
Board Director
* Listed company
Directorships and Principal Commitments/
Appointments for the past 5 years
• Lakeworks Ltd, Board Director
Academic and Professional Qualifications
• Bachelor of Arts, University of Singapore
• Bachelor of Social Science (Honours in
Economic), University of Singapore
OCBC Board Committees Served On
Chairman, Risk Management Committee
Member, Board Sustainability Committee
Member, Ethics and Conduct Committee
Member, Executive Committee
Member, Nominating Committee
Member, Remuneration Committee
Length of Service as a Director
1 year 2 months
Country of Principal Residence
Singapore
Appointed as Director: 18 February 2022
Last Re-elected as a Director: 22 April 2022
Appointed as Chairman: 1 February 2023
Mr Andrew Lee (70)
Chairman, Non-Executive and
Independent Director
Mr Chua Kim Chiu (68)
Non-Executive and Independent Director
Appointed as Director: 20 September 2017
Last Re-elected as a Director: 29 April 2021
Mr Chua is Professor (Practice) in Accounting,
NUS Business School, National University of
Singapore since 2016, after retiring as a partner
from PricewaterhouseCoopers where he had a
long and distinguished career of over 35 years.
Other Directorships and Principal
Commitments/Appointments
• Department of Accounting, NUS Business
School, National University of Singapore,
Professor (Practice)
• MPACT Management Ltd#
, Board Director
• Institute of Valuers and Appraisers,
Singapore – Singapore Intellectual Property
Strategy 2030 (SIPS 2030) Task Force,
Member
• National University Health System Pte Ltd,
Audit and Risk Committee, Member
# Manager of Mapletree Pan Asia Commercial
Trust – listed on SGX Mainboard
Directorships and Principal Commitments/
Appointments for the past 5 years
• Greenland (Singapore) Trust Management
Pte. Ltd., Board Director
• Mapletree North Asia Commercial Trust
Management Ltd, Board Director
• ACRA Financial Reporting Technical
Advisory Panel, Member
• NUS Business School, Executive Education
Advisory Board, Member
Academic and Professional Qualifications
• Bachelor of Commerce and Administration
(Honours), Victoria University of
Wellington, New Zealand
• Bachelor of Commerce, Nanyang
Technological University (formerly
Nanyang University), Singapore
• Fellow Chartered Accountant of Singapore
• Fellow of Chartered Accountants Australia
and New Zealand
• Fellow Chartered Certified Accountant,
United Kingdom
OCBC Board Committees Served On
Chairman, Audit Committee
Member, Risk Management Committee
Length of Service as a Director
5 years 7 months
Country of Principal Residence
Singapore
256
Further Information on Board of Directors
Appointed as Director: 8 March 2021
Last Re-elected as a Director: 29 April 2021
Dr Khoo spent 22 years in the Monetary
Authority of Singapore holding several key
positions. He retired as its Deputy Managing
Director (Corporate Development).
Other Directorships and Principal
Commitments/Appointments
• OCBC Wing Hang Bank Ltd,
Board Chairman
• National Environment Agency,
Board Member
• Stroke Support Station, Director
Directorships and Principal Commitments/
Appointments for the past 5 years
• Competition and Consumer Commission
of Singapore, Commissioner
Academic and Professional Qualifications
• Doctor of Philosophy, University
of Melbourne
• Bachelor of Economics (Honours), Monash
University
• Member, CPA Australia
OCBC Board Committees Served On
Chairman, Nominating Committee
Member, Executive Committee
Member, Remuneration Committee
Length of Service as a Director
2 years 1 month
Country of Principal Residence
Singapore
Dr Andrew Khoo (60)
Non-Executive and Independent Director
Dr Lee Tih Shih (59)
Non-Executive and Non-Independent Director
Dr Lee, an Associate Professor at the
Duke-NUS Medical School Singapore, has
held senior roles in OCBC Bank and the
Monetary Authority of Singapore.
Other Directorships and Principal
Commitments/Appointments
• Duke-NUS Medical School (Singapore),
Associate Professor
• Lee Foundation, Singapore, Board Director
• Selat (Pte) Ltd, Board Director
• Singapore Investments (Pte) Ltd,
Board Director
Directorships and Principal Commitments/
Appointments for the past 5 years
• Neuropsychiatry Associates Pte. Ltd.,
Board Director
Academic and Professional Qualifications
• MBA with Distinction, Imperial College,
London
• MD and PhD, Yale University, New Haven
• Fellow, Royal College of Physicians
of Edinburgh
OCBC Board Committee Served On
Chairman, Executive Committee
Length of Service as a Director
20 years
Country of Principal Residence
Singapore
Appointed as Director: 4 April 2003
Last Re-elected as a Director: 18 May 2020
Ms Christina Ong (71)
Non-Executive and Independent Director
Appointed as Director: 15 February 2016
Last Re-elected as a Director: 22 April 2022
Ms Ong, a lawyer specialising in corporate and
financial services, is the Chairman and Senior
Partner of Allen & Gledhill LLP as well as the
Co-Head of its Financial Services Department.
Other Directorships and Principal
Commitments/Appointments
• Allen & Gledhill LLP, Chairman and
Senior Partner
• Allen & Gledhill Regulatory & Compliance
Pte Ltd, Board Director
• Eastern Development Holdings Pte Ltd,
Board Director
• Eastern Development Pte Ltd, Board Director
• Epimetheus Ltd, Board Director
• Hongkong Land Holdings Ltd*,
Board Director
• OCBC Management Services Pte Ltd,
Board Director
• Singapore Telecommunications Ltd*,
Board Director
• ABF Singapore Bond Index Fund,
Supervisory Committee, Member
• Civil Aviation Authority of Singapore,
Member
• MAS Corporate Governance Advisory
Committee, Member
• SGX Catalist Advisory Panel, Member
• The Stephen A Schwarzman Scholars
Trust, Trustee
* Listed company
Directorships and Principal Commitments/
Appointments for the past 5 years
• SIA Engineering Company Ltd, Board
Director
• Trailblazer Foundation Ltd, Board Director
• Singapore Tourism Board, Board Member
Academic and Professional Qualifications
• Bachelor of Laws (Second Upper Class
Honours), University of Singapore
• Member, Law Society of Singapore
• Member, International Bar Association
OCBC Board Committees Served On
Chairman, Ethics and Conduct Committee
Chairman, Remuneration Committee
Member, Nominating Committee
Length of Service as a Director
7 years 2 months
Country of Principal Residence
Singapore
OCBC Annual Report 2022
Further Information on Board of Directors 257
Appointed as Director: 7 February 2023
Appointed as Group Chief Executive Officer:
15 April 2021
Mr Pramukti Surjaudaja (60)
Non-Executive and Non-Independent Director
Appointed as Director: 1 June 2005
Last Re-elected as a Director: 29 April 2021
Mr Pramukti has held key positions at Bank
OCBC NISP, for 35 years, including President
Director, and is presently its Board President
Commissioner.
Other Directorships and Principal
Commitments/Appointments
• PT Bank OCBC NISP Tbk*, Board President
Commissioner
• PT Biolaborindo Makmur Sejahtera,
Commissioner
• IOA Association, Board of Supervisors,
Deputy Chairman
• Karya Salemba Empat Foundation, Board
of Trustees, Member
• Parahyangan Catholic University, Board of
Advisors, Member
• San Francisco State University, Lam
Family College of Business, Dean’s
Development Council, Member
* Listed company
Directorships and Principal Commitments/
Appointments for the past 5 years
• INSEAD, Southeast Asia Council, Member
Academic and Professional Qualifications
• Bachelor of Science (Finance & Banking),
San Francisco State University
• Master of Business Administration
(Banking), Golden Gate University,
San Francisco
• Participant in Special Programs in
International Relations, International
University of Japan
OCBC Board Committees Served On
Member, Nominating Committee
Member, Remuneration Committee
Length of Service as a Director
17 years 10 months
Country of Principal Residence
Indonesia
Ms Tan Yen Yen (57)
Non-Executive and Independent Director
Appointed as Director: 1 January 2020
Last Re-elected as a Director: 18 May 2020
Ms Tan is a highly regarded IT practitioner for
many years with vast experiences from SAS
Institute, Oracle Corporation, Hewlett-Packard
Singapore and Vodafone Enterprise Singapore.
She now focuses on non-executive roles on
boards and corporate advisory roles.
Other Directorships and Principal
Commitments/Appointments
• ams OSRAM AG*, Board Director
• Barry Callebaut AG*, Board Director
• EdgeConnex Inc, Board Director
• In.Corp Global Pte Ltd, Board Director
• Jardine Cycle & Carriage Ltd*,
Board Director
• The Y Journey Pte Ltd, Board Director
• Ministry of Culture, Community and Youth
(High Performance Sports), SpexBusiness
Network Advisory Board, Chairman
• Singapore Science Centre, Chairman
* Listed company
Directorships and Principal Commitments/
Appointments for the past 5 years
• Cap Vista Pte Ltd, Board Director
• Galboss Asia Pte Ltd, Board Director
• Singapore Press Holdings Ltd, BoardDirector
• Gemalto NV, Board Director
• XY Maxwell Pte Ltd, Board Director
• Vodafone group of companies in
Asia Pacific, Board Director
• Vodafone Enterprise Singapore Pte Ltd,
President
• National University of Singapore (School
of Computing), Board of Advisors, Member
• Singapore Institute of Directors, Board of
Advisors, Member
• TNF Ventures Pte Ltd, Advisor Mentor
Academic and Professional Qualifications
• Executive MBA, Helsinki School of
Economics Executive Education
• Bachelor of Science (Computer Science),
National University of Singapore
OCBC Board Committees Served On
Member, Audit Committee
Member, Nominating Committee
Member, Risk Management Committee
Length of Service as a Director
3 years 3 months
Country of Principal Residence
Singapore
Ms Helen Wong (61)
Group Chief Executive Officer, Executive and
Non-Independent Director
Ms Wong has 40 years of banking experience
with deep knowledge of Greater China. She
spent 27 years at HSBC where her last held
role was the Chief Executive for Greater China.
Other Directorships and Principal
Commitments/Appointments
• OCBC Wing Hang Bank (China) Ltd,
Board Chairman
• Bank of Singapore Ltd, Board Director
• Dr Goh Keng Swee Scholarship Fund,
Board Director
• Enterprise Singapore, Board Director
• Great Eastern Holdings Ltd*, Board Director
• OCBC Bank (Malaysia) Berhad, Board Director
• OCBC Overseas Investments Pte Ltd,
Board Director
• OCBC Wing Hang Bank Ltd, Board Director
• PT Bank OCBC NISP Tbk*, Board Commissioner
• Institute of Banking and Finance Singapore,
Council Member
• The Association of Banks in Singapore,
Council Member
• The Institute of International Finance, Board
Member
• Advisory Board of the Asian Financial Leaders
Programme, Member
• CNBC ESG Council, Member
• MAS Payments Council, Member
• MAS Financial Centre Advisory Panel, Member
• MAS Financial Sector Tripartite Committee,
Member
* Listed company
Directorships and Principal Commitments/
Appointments for the past 5 years
• HSBC Bank (Taiwan) Ltd, Chairman
• HSBC Global Asset Management
(Hong Kong) Ltd, Chairman
• HSBC Bank (China) Company Ltd, Deputy
Chairman
• HSBC Qianhai Securities Ltd, Vice Chairman
• Bank of Communications Company Ltd,
Non-executive Director
• HSBC Bank Canada, Director
• The Shanghai Committee of the Chinese
People’s Political Consultative Conference,
Member
Academic and Professional Qualifications
• Bachelor of Social Sciences – University of
Hong Kong
OCBC Board Committee Served On
Member, Board Sustainability Committee
Member, Risk Management Committee
Length of Service as a Director
2 months
Country of Principal Residence
Singapore
258
Ms Helen Wong
Group Chief Executive Officer
Ms Helen Wong was appointed Group
Chief Executive Officer of OCBC Bank on
15 April 2021 and Executive Director on
7 February 2023. She is also Chairman of
OCBC Wing Hang Bank (China), a Board
Commissioner of Bank OCBC NISP and a
Director of Bank of Singapore, Great Eastern
Holdings, OCBC Bank (Malaysia), OCBC Wing
Hang Bank and the Dr Goh Keng Swee
Scholarship Fund. Ms Wong is currently
a council member of the Association of
Banks in Singapore (ABS) and the Institute
of Banking & Finance (IBF) Singapore. She
also serves as a Board member at Enterprise
Singapore (ESG), and as a member of the
Monetary Authority of Singapore (MAS)
Financial Centre Advisory Panel, MAS
Payments Council and MAS Financial Sector
Tripartite Committee.
Ms Wong joined OCBC Bank in February 2020
as Deputy President and Head of Global
Wholesale Banking. She has 40 years of
banking experience, having started out as
a Management Trainee in OCBC Bank and
was its first China Desk Manager, based
at the Hong Kong Branch. She has vast
experience in Greater China, covering a wide
range of roles in capital markets, syndicated
finance and corporate banking. Before
returning to OCBC Bank, Ms Wong spent
27 years at HSBC, where her last role was as
its Chief Executive for Greater China, which
she was appointed to in 2015. She became
the President and CEO of HSBC China based
in Shanghai in 2010, and was promoted
to be Group General Manager in 2011 to
recognise her responsibility for the business
operations and strategic expansion in China.
She also held non-executive directorships
at Baoshan Iron & Steel from 2012 to 2015,
and at Bank of Communications from 2016
to 2019. Ms Wong holds a Bachelor of Social
Sciences from the University of Hong Kong.
Ms Goh Chin Yee
Group Chief Financial Officer
Ms Goh Chin Yee was appointed Group
Chief Financial Officer in November 2022,
with global responsibility over financial,
regulatory and management accounting,
treasury financial control and advisory,
corporate planning and development,
corporate treasury, capital management
and investor relations.
Prior to this appointment, Ms Goh was the
Head of Group Audit since March 2013,
overseeing the full spectrum of internal audit
activities in OCBC Group. She has also worked
in diverse functions in the Group, covering
strategic management, investment research,
fund management, finance, risk management
and treasury business management.
Ms Goh graduated with First Class Honours
in Bachelor of Engineering from the National
University of Singapore and holds the
professional qualifications of Chartered
Financial Analyst, Certification in Risk
Management Assurance and Certified
Internal Auditor. She also serves as a
Governor and Vice President of The Institute
of Internal Auditors Singapore.
Mr Noel Gerald DCruz
Group Chief Risk Officer
Mr Noel Gerald DCruz was appointed Group
Chief Risk Officer (GCRO) on 1 January 2023.
As GCRO, he has overall responsibility for
the management of risk, including Credit,
Market, Liquidity, Operational, and
Environmental Social Governance (ESG) for
OCBC’s businesses in Singapore, Malaysia
and other overseas markets. In addition, he
was concurrently appointed as Group Chief
Information Security Officer responsible for
Cyber & Information Security. He reports
jointly to both Group CEO and the Board
Risk Committee of OCBC Bank.
Mr DCruz joined the Bank in 1989 after a
stint in the Monetary Authority of Singapore
and rose through the ranks to head both
the Group Risk Portfolio Management
department as well as the Group Data
Management Office. He has been closely
involved in the re-organisation and
reinforcement of the Bank’s credit risk
management function with dedicated
policy, underwriting, analytics, remediation
and data units, and the establishment of
the Credit Risk Management Committee.
Mr DCruz led the OCBC Group Basel
programme to develop internal ratingsbased approaches for credit management
and capital adequacy assessments and
later the modelling approaches for
Expected Credit Loss portfolio allowances.
In 2017, he also established the Group
Data Management Office to drive
implementation of a Group-wide data
governance and management framework.
Mr DCruz holds a degree in Economics
from the London School of Economics and
Political Science.
Mr Lim Khiang Tong
Group Chief Operating Officer
Mr Lim Khiang Tong was appointed Group
Chief Operating Officer (GCOO) in June
2021. As GCOO, he develops and drives
transformation efforts in modernising the
Bank’s technology architecture, streamlining
processes and instituting a data-driven and
customer-centric culture across the Group.
He has oversight over operations and
technology, technology architecture,
operational excellence, customer experience,
data and analytics, transformation and
property management functions. Mr Lim
joined the Bank’s IT Management team
in 2000 and was appointed Head of IT
Management in January 2002. He was
promoted to Executive Vice President and
Head of Group Information Technology in
December 2007. In May 2010, he assumed
the role of Head of Group Operations and
Technology. Mr Lim has over 30 years of
management experience in strategic
technology development, information
technology, process-reengineering, project
management and banking operations.
In 2020, Mr Lim was named Digital
Transformation Leader in Singapore by the
International Data Corporation, a global
market intelligence firm in information
technology, in recognition of his role in
accelerating the Bank’s digital transformation
efforts. Currently, Mr Lim is a member of
IBM Services Client Advisory Board (Asia
Pacific), Huawei Financial Industry Advisory
Board and Ministry of Finance – The
Info-comm Technology Projects Advisory
Panel. He holds a Bachelor of Science in
Computer Science and Economics from the
National University of Singapore and is an
IBF Distinguished Fellow (Technology).
OCBC Annual Report 2022
Further Information on Management Committee 259
Further Information on Management Committee
Mr Kenneth Lai
Global Treasury
Mr Kenneth Lai was appointed Head of
Global Treasury in October 2020. He has
global responsibility for OCBC Bank’s
financial market businesses and asset
liability management in Singapore,
Malaysia, Indonesia, Hong Kong, China
and seven other overseas centres.
Mr Lai joined OCBC Bank in February 2012
as Head of Global Treasury International.
Since 2015, he has also been responsible for
the Bank’s Asset and Liability Management
(ALM) globally. He was appointed Executive
Vice President in May 2019. Mr Lai has over
33 years of experience in different functions
across trading, sales and asset liability
management and across different countries
in Asia. Currently, he serves on the boards
of Bank of Singapore, OCBC Securities,
and Clearing and Payment Services Pte Ltd
(CAPS). Mr Lai also serves on Great Eastern
Group’s Asset/Liability Committee and
Investment Committee. He is a member of
the Singapore Foreign Exchange Market
Committee, and member of the Institute
of Banking and Finance Singapore (IBF),
Standards Committee and Chairman of the
Capital and Financial Markets Workgroup.
Mr Lai also serves as a member on the ABS
Standing Committee on Financial Market
and Benchmark Co Oversight Committee.
Before joining OCBC Bank, he was the
Head of Financial Markets at Ta Chong
Bank in Taiwan and has held several key
appointments with ABN AMRO Bank.
He started his career at Bankers Trust
Company. Mr Lai holds a Bachelor of
Science in Finance from Virginia Polytechnic
Institute and State University and is an
IBF Fellow.
Mr Tan Teck Long
Global Wholesale Banking
Mr Tan Teck Long was appointed Executive
Vice President and Head of Global
Wholesale Banking on 15 March 2022.
As the Head of Global Wholesale Banking,
he has global responsibility for all banking
relationships with small and medium-sized
enterprises, large corporates and financial
institutions, global transaction banking as
well as the investment banking business.
Mr Tan has more than 29 years of banking
experience overseeing Corporate Banking,
Investment Banking and Risk Management.
He joined OCBC Bank from DBS Bank, where
his last appointment was Chief Risk Officer.
During his tenure at DBS Bank, he had
served in a number of senior roles including
Group Head of DBS’ corporate banking
business, Head of Institutional Banking
Group (China), Group Head of Special Assets
Management and Group Head of Corporate
Real Estate Strategy and Administration.
Mr Tan is a Chartered Financial Analyst
charter holder and a Fellow Chartered
Accountant of Singapore. He holds a
Master of Business Administration from the
University of Manchester and a Bachelor
of Accountancy with First Class Honours
from the National University of Singapore.
Mr Sunny Quek
Global Consumer Financial Services
Mr Sunny Quek was appointed Head of
Global Consumer Financial Services in
October 2022 and has been the Head of
Consumer Financial Services Singapore
since November 2019. He joined OCBC
Bank in December 2012 as Head of Branch
and Premier Banking. In the six years,
Mr Quek was responsible for formulating
and executing the sales and distribution
strategy for the consumer banking branch
network in Singapore, and supporting the
OCBC Premier Banking network in the region.
He made significant contributions to
the transformation and growth of the
retail banking business and led the OCBC
Premier Banking business to become a
leader in the affluent segment space. In
2018, he spearheaded the transformation
of the OCBC Premier Private Client segment
to launch an Accredited Investor (AI)
platform that offers bespoke wealth
solutions to high net worth individuals in
Singapore and the region. Mr Quek started
his banking career at Tokai Bank in 1997
before joining Citibank Singapore in 2000.
He has more than 25 years of experience
spanning branch management, treasury
sales and trading. Mr Quek currently serves
as a board member of OCBC Securities
Private Limited and Network for Electronic
Transfers (Singapore). He graduated with
a Bachelor of Science in Economics from
the National University of Singapore.
Mr Tan Wing Ming
Greater China
Mr Tan Wing Ming was appointed acting
Head of Greater China on 1 October 2021,
overseeing OCBC Group’s Greater China
business, including the formulation and
implementation of the Group’s Greater
China strategy. Mr Tan was previously
Regional General Manager of North East
Asia and the Chief Executive of OCBC Bank
Hong Kong Branch since September 2009.
In this role, he assumed oversight of the
Bank's branches in Hong Kong, Japan,
Korea and Taiwan. In November 2016, he
was promoted to Executive Vice President.
Mr Tan joined OCBC Bank in January 2005
as Senior Vice President and Country
Head of OCBC Bank’s operations in China.
Following the local incorporation of
OCBC Bank in China in July 2007, he was
appointed Director and President of
OCBC Bank (China) until his assignment to
Hong Kong in 2009. Mr Tan had worked for
major American and European investment
and commercial banks in Singapore for
10 years. He then started and managed his
own private business in China for 11 years
before joining OCBC Bank. Mr Tan holds a
Bachelor of Arts (Economics) with Honours
from Georgetown University and a Master
of Business Administration (Finance) from
the University of Chicago.
Mr Tan Chor Sen
CEO, OCBC Bank Malaysia
Mr Tan Chor Sen was appointed Chief
Executive Officer on 1 January 2023.
His over 35 years of banking experience
began in commercial banking with postings
in consumer banking and later several
positions in corporate and offshore banking.
260
Mr Tan joined OCBC Bank in Singapore
in 2005 as Head of Emerging Business and
led the formation of the unit. During this
time, he redefined the Bank’s coverage of
small businesses, positioning OCBC Bank as
a leading SME bank in Singapore serving
one in every two SMEs. He was instrumental
in expanding the SME business regionally
in Malaysia, Indonesia and Hong Kong,
introducing new business models, digital
solutions and service innovations tailored
for SMEs. For Malaysia, he oversaw the
launch of the SME cash business and digital
account opening for businesses.
In 2012, Mr Tan was appointed Head
of International, Global Commercial
Banking. In addition to overseeing the
growth of the emerging business segment
in OCBC Bank’s core markets, he became
responsible for developing cross-border
capabilities and business within the region,
leveraging the OCBC network and partner
banks in key markets. In the decade under
his leadership, he progressively led the
Bank’s strategic thrust in capturing the
cross-border trade and investment flows
within ASEAN and with Greater China.
He holds a Bachelor of Business
Administration from the National
University of Singapore and is an IBF
Fellow (Corporate Banking).
Ms Parwati Surjaudaja
President Director and CEO, Bank OCBC NISP
Ms Parwati Surjaudaja was appointed as
President Director and CEO of Bank OCBC
NISP in December 2008 and was last
re-elected as President Director in 2020.
Prior to this appointment, she joined
Bank OCBC NISP as a Director in 1990
and served as a Deputy President Director
from 1997. Ms Surjaudaja, who has more
than 30 years of experience in the banking
industry, has led the Bank to be among the
10 biggest banks in Indonesia with the
highest credit rating.
She is a pioneer in ESG initiatives in the
region through the deployment of green
and gender financing. For her strong
commitment, she is elected as one of G20
EMPOWER Advocates for gender equality as
well as spoke in various international forums
such as the World Bank Annual Meeting on
Gender Equality, Washington DC and
Bloomberg Sustainability Business Summit,
London. She was named Fortune Indonesia’s
Businessperson of the Year in 2021.
Under her leadership, the Bank has received
prestigious awards including the Bank of
the Year Country Award for five consecutive
years since 2018 from The Banker, London,
Honourable Mention by the UN Women-WEPs
Awards 2020 on the Gender Inclusive
Workplace and Gender-Responsive
Marketplace in 2021, and Top 5 Workplace
– Linkedin Top Companies Indonesia in 2022.
Ms Surjaudaja had previous corporate
experience with SGV Utomo-Arthur
Andersen and holds a Master of Business
Administration (Accounting) and a
Bachelor of Science Cum Laude
(Accounting and Finance) from San
Francisco State University.
Ms Ivy Au-Yeung
CEO, OCBC Wing Hang Bank
Ms Ivy Au-Yeung was appointed Chief
Executive Officer of OCBC Wing Hang Bank
on 20 May 2021. She joined OCBC Wing
Hang Bank as Deputy Chief Executive in
December 2019, overseeing the Retail
Banking Group of the Bank in Hong Kong,
Banco OCBC Weng Hang, S.A in Macau
and OCBC Wing Hang Credit.
Ms Au-Yeung has had more than 30 years
of experience across global banks in
corporate and commercial banking covering
relationship management, product
management as well as credit and sales.
Prior to joining OCBC Wing Hang, she was
the Chief Executive Officer of the Hong
Kong Branch of an Australian bank.
Ms Au-Yeung holds a Master of Business
Administration degree from University
of Sydney, Australia, a Bachelor of Social
Science degree from the University of
Hong Kong, and is a Fellow of CPA Australia
(FCPA).
Mr Wang Ke
CEO, OCBC Wing Hang Bank (China)
Mr Wang Ke was appointed Chief Executive
Officer of OCBC Wing Hang Bank (China)
on 9 December 2019 and was approved to
expand his role as the Director of OCBC
Wing Hang Bank (China) in February 2020.
He joined OCBC Wing Hang Bank (China)
(previously OCBC Bank (China)) as Chief
Information Officer and Head of IT
Department in 2012, and assumed the
expanded role as Head of Operations
and Technology afterwards.
Prior to his current role, Mr Wang was
the Regional General Manager of the Pearl
River Delta region and was appointed as
the Deputy President of OCBC Wing Hang
Bank (China) in March 2015. Mr Wang is
conversant with foreign companies’
business models in China and has intimate
knowledge of the local market and
regulations. As an indispensable member of
the Bank’s top management, he participated in
strategy formulation, led the implementation
of many strategic projects and achieved
fruitful results. He has over 20 years of
international banking working experience
spanning a wide spectrum of fields in China,
United States and Singapore.
Before joining OCBC Wing Hang Bank
(China), Mr Wang held several senior
positions in JPMorgan Chase & Co.,
McKinsey & Company and United
Overseas Bank (China) Limited, where
he oversaw the operations, technology
and Risk Management and accumulated
rich and comprehensive experience in
the international financial business
management and people engagement.
Mr Wang holds a Master of Business
Administration degree from Kellogg School
of Management at Northwestern University
and a bachelor’s degree in Computer
Science from Peking University.
OCBC Annual Report 2022
Further Information on Management Committee 261
Mr Linus Goh
Global Commercial Banking
Mr Linus Goh was appointed Head of Global
Commercial Banking in April 2012. He
presently has global responsibility for
OCBC Bank’s commercial and institutional
banking businesses, serving start-ups,
SMEs, mid-cap corporates and financial
institutions globally. He joined OCBC Bank
in April 2004 as Executive Vice President and
Head of International, and in August 2008,
assumed responsibility for Global Enterprise
Banking and Financial Institutions. Mr Goh
has over 30 years of banking experience,
including 17 years at Citibank, N.A.
Singapore, where he held several senior
management positions overseeing
corporate banking, financial institutions,
e-business and transaction banking.
Mr Goh is a member of the Pro-Enterprise
Panel under the Ministry of Trade and Industry,
and actively supports the development of
start-ups and SMEs in Singapore having
served in Seeds Capital Private Limited and
the SME Committee of the Singapore
Business Federation. Mr Goh holds a
Bachelor of Arts (Philosophy) with Honours
from the National University of Singapore
and is an IBF Distinguished Fellow.
Ms Elaine Lam
Global Corporate Banking
Ms Elaine Lam was appointed Head of
Global Corporate Banking in April 2016.
She has global responsibility for OCBC
Bank’s global corporate banking business
which spans industry groups including real
estate, infrastructure, energy, utilities,
transportation, technology, conglomerates,
industrials, the public sector, regional
coverage groups and Greater China Business
Office as well as OCBC Bank’s corporate
banking business in the overseas branches
and subsidiaries. She is also responsible
for driving the Structured Finance and
Partnership & Innovation groups within
Global Corporate Banking.
With more than 26 years of experience
in corporate banking, Ms Lam is currently
a steering committee member of the
Monetary Authority of Singapore’s Finance
Centre Advisory Panel Green Finance
Workgroup, and a member of the Institute
of Banking and Finance (IBF) Sustainable
Finance Workgroup. She presently serves as
Singapore’s APEC Business Advisory Council
(ABAC) member in championing Singapore’s
business interests at the ABAC.
She also served in the IBF Corporate Banking
Workgroup and the Financial Industry
Competency Standards’ Corporate Banking
Working Group. Ms Lam holds a Bachelor of
Accountancy (Honours) from the Nanyang
Technological University and is an IBF Fellow
(Corporate Banking).
Mr Jason Moo
CEO, Bank of Singapore
Mr Jason Moo was appointed Chief
Executive Officer of Bank of Singapore in
March 2023. He joined Bank of Singapore
from Julius Baer, where he was Head
Private Banking Southeast Asia and Branch
Manager Singapore.
Prior to joining Julius Baer in 2020, Jason
worked at Goldman Sachs for more than
two decades and has held several senior
roles, including CEO of Goldman Sachs
Singapore and Head of Southeast Asia and
Australia for Private Wealth Management
(PWM). Before relocating back to Singapore,
he was based in Hong Kong as Head of
Market Solutions Group and Head of
Alternative Capital Markets Asia Pacific.
Prior to that, he worked in the Equities
Merchandising Group in New York. He
joined Goldman Sachs as a financial analyst
in PWM in Singapore upon graduation.
Mr Moo earned a BA in Economics and East
Asia Studies, with a focus on Japan, from
Brown University, USA. He serves on the
Board of Governors of Raffles Institution.
Mr Gan Kok Kim
Global Investment Banking
Mr Gan Kok Kim was appointed Executive
Vice President and Head of Global
Investment Banking in February 2012. As
the Head of Global Investment Banking,
he oversees OCBC Bank’s loans syndication,
debt capital markets, corporate finance,
merger and acquisition and mezzanine/
private equity investment businesses.
Mr Gan joined OCBC Bank in 2004 as the
Head of Treasury at OCBC Bank (Malaysia).
In February 2011, he was also appointed
Head of International Treasury.
In August 2011, he was given the additional
role of Head of Asset Liability Management
in Singapore and gave up his Malaysian role.
Mr Gan has more than 33 years of treasury
and markets, investment banking, and
management experience and has held
various positions in a global bank. He holds
a Bachelor of Science in Economics from the
Massachusetts Institute of Technology.
Mr Melvyn Low
Global Transaction Banking
Mr Melvyn Low has responsibility for OCBC
Bank’s transaction banking business serving
SMEs, large corporations, financial institutions
and government entities across the Bank’s
core markets of Singapore, Malaysia, China,
Hong Kong and Indonesia.
He is an industry veteran with more than
30 years of experience and has held senior
positions in cash management, trade, and
securities services in regional and global
banks. Mr Low also served as Director of
the Singapore Clearing House Association
from 2010 to 2013, where he was a key
contributor to the launch of Fast and Secure
Transfers, or FAST, platform.
As the Chair of the PayNow Steering
Committee of the Association of Banks in
Singapore (ABS) from 2019 to 2021, he
co-led Singapore banks in the launch
of PromptPay-PayNow, the world’s first
cross-border faster payment system. Mr Low
is currently the Payment Co-Chair of the
Digital Standing Commitee for ABS and the
Corporate Banking Workgroup Chair for
IBF. He also serves as a board member of
Network for Electronic Transfers (Singapore)
and the Singapore Trade Data Exchange
(SGTraDex). Mr Low is an IBF Distinguished
Fellow and holds a Master of Business
Administration from the University of
British Columbia, Canada.
262
Ms Lee Hwee Boon
Group Human Resources
Ms Lee Hwee Boon was appointed Head
of Group Human Resources in June 2022.
Being Head of Group Human Resources, she
is responsible for the management, training
and development of our human capital.
Prior to this appointment, Ms Lee has
worked in diverse functions in OCBC Group,
covering strategy, risk management as well
as corporate and commercial banking. She
holds a Bachelor of Business with Honours
from Nanyang Technological University
and is an IBF Fellow.
Mr Praveen Raina
Group Operations and Technology
Mr Praveen Raina was appointed Head of
Group Operations and Technology in June
2021. He has more than 20 years of
experience and was instrumental in leading
the Bank’s innovation and transformation
efforts in the technology sphere.
Mr Raina joined OCBC Bank in August 2008
and has held various senior management
positions in Group Operations and
Technology. He was appointed Executive
Vice President in May 2019 and assumed
the role of Global Head of Operations
and Technology at OCBC Bank’s private
banking subsidiary, Bank of Singapore,
in December the same year. Mr Raina has
a Master of Business Administration from
the University of Windsor and a Bachelor of
Applied Science in Computer Science from
the Memorial University of Newfoundland.
Ms Loretta Yuen
Group Legal and Compliance
Ms Loretta Yuen was appointed General
Counsel and Head of Group Legal and
Compliance in September 2010 and
Executive Vice President in June 2015.
She oversees the full spectrum of legal
and regulatory risks, including anti-money
laundering, across OCBC Bank and its
subsidiaries, and provides advice on
regulatory risks and legal issues involved
in decisions to management, so that
management can make informed strategic
choices within an acceptable legal and
regulatory risk profile.
Ms Yuen has over 20 years of legal and
regulatory experience in banking and
finance. She graduated with Second
Class Honours in Law from the National
University of Singapore and is an IBF
Distinguished Fellow. In 2017, Ms Yuen
was conferred the Outstanding Singapore
Chief Legal Officer Award by the Singapore
Corporate Counsel Association.
Ms Koh Ching Ching
Group Brand and Communications
As the Head of Group Brand and
Communications, Ms Koh Ching Ching
oversees OCBC Bank’s branding and
communications initiatives with the media,
employees, customers, shareholders and
the general public across its core markets.
She has been heading the division since
November 2004 and was appointed
Executive Vice President in March 2012.
Prior to her current role, she led OCBC
Bank’s franchise expansion efforts in trade
finance in Malaysia. Ms Koh has 16 years
of corporate and retail banking experience,
having held various senior customer and
product positions in local and foreign
financial institutions. She graduated
with First Class Honours in Business
Administration from the National University
of Singapore.
Mr Harry Lim
Group Audit
Mr Harry Lim was appointed Acting Head
of Group Audit in November 2022. He
oversees the full spectrum of internal audit
activities for OCBC Bank and its subsidiaries.
He reports directly to the Audit Committee
and administratively to the Group CEO.
Mr Lim joined OCBC Bank in May 2012 as
Head of Internal Audit of the former OCBC
Bank (China) (based in Shanghai), where he
oversaw the smooth integration of the audit
teams in the former OCBC Bank (China) and
OCBC Wing Hang Bank (China). He was then
appointed as Head of Greater China Audit in
2017 (based in Hong Kong), where he
managed the Mainland China, Hong Kong
and Macau audit teams, and expedited the
full adoption of Group Audit’s methodology
and standards by the Hong Kong and
Macau audit teams.
Prior to joining OCBC Bank, Mr Lim
spent seven years in the Singapore and
Hong Kong offices of JP Morgan Chase
covering internal audit for various trading
business units including commodities,
equities and emerging markets. He also
spent five years in Credit Suisse First Boston
in a regional oversight and governance role
and in market risk reporting and analysis.
He graduated with a Bachelor of Business
Administration in Finance from the National
University of Singapore and holds the
professional qualifications of Chartered
Financial Analyst and Certification in Risk
Management Assurance.
Ms Sylvia Ng
Strategic Planning Office
Ms Sylvia Ng joined OCBC Bank in June
2021 as Head of Strategic Planning. In this
role, she supports the Group CEO in the
formulation and planning of the Group’s
strategy and monitoring of strategic and
thematic business opportunities.
Ms Ng began her banking career with
HSBC in 2002 as a graduate talent in
investment banking, and has held
various corporate planning and business
development roles in HSBC’s Hong Kong,
China and United Kingdom offices. She
has an established track record in leading
strategic development and implementation,
with her last held position at HSBC
Hong Kong being its Head of Business
Development for Greater China.
Prior to joining OCBC Bank, she was the
General Manager of Corporate Strategy
for the MTR Corporation in Hong Kong.
Ms Ng graduated with First Class Honours
in Investment and Financial Risk Management
from City University Business School,
London, United Kingdom. She also holds
an MBA from the Kellogg-HKUST Executive
MBA Programme.
OCBC Annual Report 2022
Further Information on Management Committee 263
Southeast Asia
Singapore
OCBC Bank Limited
Head Office
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514
Tel: (65) 6363 3333
Fax: (65) 6534 3986
www.ocbc.com
OCBC Bank has 34 branches
in Singapore.
Bank of Singapore Limited
Head Office
63 Market Street #22-00
Bank of Singapore Centre
Singapore 048942
Tel: (65) 6559 8000
www.bankofsingapore.com
Great Eastern Holdings Limited
The Great Eastern Life
Assurance Company Limited
Great Eastern General
Insurance Limited
Head Office
1 Pickering Street
#01-01 Great Eastern Centre
Singapore 048659
Tel: (65) 6248 2888
www.greateasternlife.com
www.greateasterngeneral.com
Great Eastern Financial
Advisers Private Limited
1 Pickering Street
#01-01 Great Eastern Centre
Singapore 048659
Tel: (65) 6248 2121
Fax: (65) 6327 3073
www.greateasternfa.com.sg
Lion Global Investors Limited
65 Chulia Street
#18-01 OCBC Centre
Singapore 049513
Tel: (65) 6417 6800
www.lionglobalinvestors.com
OCBC Securities
Private Limited
18 Church Street
#01-00 OCBC Centre South
Singapore 049479
Tel: (65) 6338 8688
Fax: (65) 6538 9115
www.iocbc.com
BOS Trustee Limited
63 Market Street #14-00
Bank of Singapore Centre
Singapore 048942
Tel: (65) 6818 6478
Fax: (65) 6818 6487
OCBC Property Services
Private Limited
63 Chulia Street
#08-03/04
OCBC Centre East
Singapore 049514
www.ocbcproperty.com.sg
Brunei
The Great Eastern Life
Assurance Company Limited
Units 17/18, Block B
Bangunan Habza
Spg 150, Kpg. Kiarong Bandar
Seri Begawan BE1318
Negara Brunei Darussalam
Tel: (673) 223 3118
Fax: (673) 223 8118
www.greateasternlife.com/bn
Lion Global Investors Limited
Brunei Branch
Unit 3A, Level 5
Retail Arcade
The Empire Hotel &
Country Club
Jerudong BG3122
Negara Brunei Darussalam
Tel: (673) 261 0925/261 0926
www.lionglobalinvestors.com
Indonesia
PT Bank OCBC NISP Tbk
Head Office
OCBC NISP Tower
Jl. Prof. Dr. Satrio Kav. 25
Jakarta 12940
Indonesia
Tel: (62) 21 2553 3888
Fax: (62) 21 5794 4000
www.ocbcnisp.com
PT Bank OCBC NISP Tbk has
200 branches and offices
in Indonesia.
PT Great Eastern Life Indonesia
Head Office
Menara Karya, 5th Floor
JI. H.R. Rasuna Said
Blok X-5 Kav. 1-2
Jakarta Selatan 12950
Indonesia
Tel: (62) 21 2554 3888
www.greateasternlife.com/id
PT Great Eastern General
Insurance Indonesia
MidPlaza 2, 23rd Floor
Jalan Jenderal Sudirman
Kav. 10-11
Jakarta 10220
Indonesia
Tel: (62) 21 5723737
www.greateasterngeneral.
com/id
PT Great Eastern General
Insurance Indonesia has
12 branches and/or servicing
offices in Indonesia.
PT OCBC Sekuritas Indonesia
Head Office
Indonesia Stock Exchange
Building Tower 2
29th Floor
Suite 2901
Jl. Jend. Sudirman Kav. 52-53
Jakarta 12190
Indonesia
Tel: (62) 21 2970 9300
Fax: (62) 21 2970 9393
www.ocbcsekuritas.com
Malaysia
OCBC Bank (Malaysia) Berhad
Head Office
Menara OCBC
18 Jalan Tun Perak
50050 Kuala Lumpur
Malaysia
www.ocbc.com.my
OCBC Contact Centre:
Tel: (603) 8317 5000
(Personal)
Tel: (603) 8317 5200
(Corporate)
OCBC Bank (Malaysia) Berhad
has 31 branches in Malaysia.
OCBC Al-Amin Bank Berhad
Head Office
25th floor
Wisma Lee Rubber
1 Jalan Melaka
50100 Kuala Lumpur
Malaysia
General Enquiries:
Within Malaysia
Tel: (603) 8314 9310
(Personal)
Tel: 1300 88 0255
(Corporate)
Outside Malaysia
Tel: (603) 8314 9310
(Personal)
Tel: (603) 8314 9090
(Corporate)
OCBC Al-Amin Bank Berhad
has 7 branches in Malaysia.
OCBC Bank Limited
Labuan Branch
Licensed Labuan Bank
(940026C) Level 8 (C)
Main Office Tower
Financial Park Labuan
Jalan Merdeka
87000 Labuan
Federal Territory
Malaysia
Tel: (60-87) 423 381/82
Fax: (60-87) 423 390
BOS Wealth Management
Malaysia Berhad
09-02 Level 9, Imazium
No. 8 Jalan SS 21/37
Damansara Uptown
47400 Petaling Jaya
Selangor, Malaysia
Tel: (603) 7712 3000
Great Eastern Life Assurance
(Malaysia) Berhad
Head Office
Menara Great Eastern
303 Jalan Ampang
50450 Kuala Lumpur
Malaysia
Tel: (603) 4259 8888
Fax: (603) 4259 8000
www.greateasternlife.com/my
Great Eastern Life Assurance
(Malaysia) Berhad has
21 branch offices in Malaysia.
Great Eastern General
Insurance (Malaysia) Berhad
Head Office
Level 18
Menara Great Eastern
303 Jalan Ampang
50450 Kuala Lumpur
Malaysia
Tel: (603) 4259 8888
Fax: (603) 4813 0055
www.greateasterngeneral.
com/my
Great Eastern General Insurance
(Malaysia) Berhad has 13
branches and 5 servicing offices
in Malaysia.
Great Eastern Takaful Berhad
201001032332 (916257-H)
Level 3
Menara Great Eastern
303 Jalan Ampang
50450 Kuala Lumpur
Malaysia
Tel: (603) 4259 8338
Fax: (603) 4259 8808
www.greateasterntakaful.com
Great Eastern Takaful Berhad
has 2 agency offices.
OCBC Advisers (Malaysia)
Sdn Bhd
13th Floor Menara OCBC
18 Jalan Tun Perak
50050 Kuala Lumpur
Malaysia
Tel: (603) 2034 5696
Fax: (603) 2691 6616
Pac Lease Berhad
Level 12 & 13
Menara Haw Par
Jalan Sultan Ismail
50250 Kuala Lumpur
Malaysia
Tel: (603) 2035 1000
Fax: (603) 2032 3300
OCBC Properties (Malaysia)
Sdn Bhd
27th Floor
Wisma Lee Rubber
1 Jalan Melaka
50100 Kuala Lumpur
Malaysia
Tel: (603) 2054 3844
Fax: (603) 2031 7378
Myanmar
OCBC Bank Limited
Yangon Branch
Suite Nos. #21-01 to 05
Junction City Tower, No. 3/A
Corner of Bogyoke Aung San
Road and 27th Street
Pabedan Township, Yangon
Myanmar
Tel: (951) 925 3488
Fax: (951) 925 3366
The Great Eastern Life
Assurance Company Limited
Great Eastern General
Insurance Limited
(Myanmar Representative Office)
Suite No. #06-05A, Level 6
Junction City Tower, No. 3/A
Corner of Bogyoke Aung San
Road and 27th Street
Pabedan Township, Yangon
Myanmar
Tel: (95) 9254 054 093
Philippines
Bank of Singapore Limited
(Philippines Representative
Office)
34/F Ayala Triangle Gardens
Tower 2
Paseo de Roxas Makati City
1226
Philippines
Tel: (63) 2 8479 8988
Thailand
OCBC Bank Limited
Bangkok Branch
Unit 2501-2, 25th Floor
Q House Lumpini
1 South Sathorn Road
Tungmahamek Sathorn
Bangkok 10120
Thailand
Tel: (66) 2 287 9888
Fax: (66) 2 287 9898
Vietnam
OCBC Bank Limited
Ho Chi Minh Branch
Unit 708-709, Level 7
Saigon Tower
29 Le Duan Street
District 1
Ho Chi Minh City
Vietnam
Tel: (84) 8 3823 2627
Fax: (84) 8 3823 2611
264
International Network
East Asia
Japan
OCBC Bank Limited
Tokyo Branch
Sanno Park Tower
5th Floor 11-1
Nagata-cho 2 chome
Chiyoda-ku
Tokyo 100-6105
Japan
Tel: (81) 3 5510 7660
Fax: (81) 3 5510 7661
South Korea
OCBC Bank Limited
Seoul Branch
25th Floor
Seoul Finance Center
(Taepyung-ro 1-ka)
136 Sejong-daero
Jung-gu
Seoul 04520
Republic of Korea
Tel: (82) 2 2021 3900
Fax: (82) 2 2021 3908
Greater China
China
OCBC Wing Hang Bank
(China) Limited
Head Office
OCBC Bank Tower
No. 1155 Yuanshen Road
Pudong New District
Shanghai 200135
People’s Republic of China
Tel: (86) 21 5820 0200
Fax: (86) 21 5830 1925
www.ocbc.com.cn
As at end December 2022,
including its head office,
OCBC Wing Hang China has
19 branches and sub-branches
in 14 cities, namely Beijing,
Shanghai, Xiamen, Tianjin,
Chengdu, Guangzhou, Shenzhen,
Chongqing, Qingdao, Wuhan,
Shaoxing, Suzhou, Zhuhai
and Foshan.
The Great Eastern Life
Assurance Company Limited
(Beijing Representative Office)
Room 901
China Garments Mansion
No. 99 Jianguo Rd
Beijing 100020
People’s Republic of China
Tel: (86) 10 6581 5501
Fax: (86) 10 6583 8727
Bank of Ningbo Co., Ltd
Head Office
No. 345, Ning Dong Road
Ningbo Zhejiang 315042
People’s Republic of China
Tel: (86) 574 8705 0028
Fax: (86) 574 8705 0027
www.nbcb.com.cn
Bank of Ningbo is OCBC Bank’s
strategic partner in China.
As at end December 2022, it
has 479 branches, sub-branches
and offices, covering the cities of
Ningbo, Shanghai, Hangzhou,
Nanjing, Shenzhen, Suzhou,
Wenzhou, Beijing, Wuxi, Jinhua,
Shaoxing, Taizhou, Jiaxing, Lishui,
Huzhou, Quzhou and Zhoushan.
Hong Kong SAR
Bank of Singapore Limited
Hong Kong Branch
1 Harbour View Street
34th Floor
One International Finance
Centre
Central
Hong Kong SAR
Tel: (852) 2846 3980
OCBC Wing Hang Bank Limited
Head Office
161 Queen’s Road Central
Hong Kong SAR
Tel: (852) 2852 5111
Fax: (852) 2851 7127
www.ocbcwhhk.com
OCBC Wing Hang Bank
Limited has a total of
29 branches in Hong Kong.
OCBC Wing Hang Credit
Limited
Head Office
14/F Tai Yau Building
181 Johnston Road
Wanchai
Hong Kong SAR
Tel: (852) 2201 7712
Fax: (852) 2191 5144
www.ocbcwhcr.com
OCBC Wing Hang Credit
Limited has a total of
9 offices in Hong Kong.
Macau SAR
OCBC Wing Hang Bank Limited
Head Office
241 Avenida de Almeida
Ribeiro
Macau
Tel: (853) 2833 5678
Fax: (853) 2857 6527
www.ocbcwhmac.com
OCBC Wing Hang Bank
Limited has a total of
11 branches in Macau.
Taiwan
OCBC Bank Limited
Taipei Branch
41 Floor, No. 68, Sec. 5
Zhongxiao East Road
Xinyi District
Taipei City 11065
Taiwan (R.O.C)
Tel: (886) 2 8726 8100
Fax: (886) 2 2722 8908
North America
United States
of America
OCBC Bank Limited
Los Angeles Agency
801 South Figueroa Street
Suite 970
Los Angeles California 90017
United States of America
Tel: (1) 213 624 1189
Fax: (1) 213 624 1386
OCBC Bank Limited
New York Agency
1700 Broadway 18/F New York
NY 10019
United States of America
Tel: (1) 212 586 6222
Fax: (1) 212 586 0636
Oceania
Australia
OCBC Bank Limited
Sydney Branch
Level 2
75 Castlereagh Street
Sydney NSW 2000
Australia
Tel: (61) 2 9235 2022
Fax: (61) 2 9223 5703
Europe
United Kingdom
OCBC Bank Limited
London Branch
The Rex Building, 3rd Floor
62 Queen Street
London EC4R 1EB
United Kingdom
Tel: (44) 20 7653 0900
Fax: (44) 20 7489 1132
Bank of Singapore is the trading
name of Oversea-Chinese
Banking Corporation Limited’s
private banking business
in London.
BOS Wealth Management
Europe S.A., UK Branch
The Rex Building, 3rd Floor
62 Queen Street
London EC4R 1EB
United Kingdom
Tel: (44) (0) 207 029 5850
Luxembourg
BOS Wealth Management
Europe S.A.
33, Rue Ste Zithe
L-2763 Luxembourg
Tel: (352) 28 57 32 2000
BOS Wealth Management
Europe is a wholly owned
subsidiary of Bank of Singapore,
dedicated to providing wealth
management services to
European clients.
Middle East
United Arab
Emirates
Bank of Singapore Limited
Dubai International Financial
Centre Branch
Office 30-34, Level 28
Central Park Tower
Dubai International
Financial Centre
P.O. Box 4296
Dubai U.A.E
Tel: (971) 4427 7100
Regulated by the Dubai
Financial Services Authority.
OCBC Annual Report 2022
International Network 265
February
24 February 2023 Announcement of full year results for 2022
April
25 April 2023 Annual General Meeting
May
May 2023 Announcement of first quarter results for 2023
On or about
19 May 2023*
Payment of 2022 final dividend on ordinary shares
(subject to shareholders’ approval at Annual General Meeting)
August
August 2023 Announcement of first half results for 2023
August 2023* Payment of 2023 interim dividend on ordinary shares
(subject to approval by the Board)
November
November 2023 Announcement of third quarter results for 2023
* The dividend payment dates are indicative and subject to change. Please refer to OCBC website, www.ocbc.com for latest updates.
266
Financial Calendar
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Corporate Profile Corporate Information
Board of Directors
Mr Andrew Lee
Chairman
Ms Chong Chuan Neo
Mr Chua Kim Chiu
Dr Andrew Khoo
Dr Lee Tih Shih
Ms Christina Ong
Mr Pramukti Surjaudaja
Ms Tan Yen Yen
Ms Helen Wong
Secretaries
Mr Peter Yeoh
Ms Sherri Liew
Registered Office
63 Chulia Street
#10-00 OCBC Centre East
Singapore 049514
Tel: (65) 6363 3333
(Personal Banking)
(65) 6538 1111
(Business Banking)
Website: www.ocbc.com
OCBC Bank is the longest established Singapore bank,
formed in 1932 from the merger of three local banks,
the oldest of which was founded in 1912. It is now the
second largest financial services group in Southeast
Asia by assets and one of the world’s most highly-rated
banks, with Aa1 by Moody’s and AA- by both Fitch and
S&P. Recognised for its financial strength and stability,
OCBC Bank is consistently ranked among the World’s
Top 50 Safest Banks by Global Finance and has
been named Best Managed Bank in Singapore by
The Asian Banker.
OCBC Bank and its subsidiaries offer a broad array of
commercial banking, specialist financial and wealth
management services, ranging from consumer,
corporate, investment, private and transaction banking
to treasury, insurance, asset management and
stockbroking services.
OCBC Bank’s key markets are Singapore, Malaysia,
Indonesia and Greater China. It has more than 420
branches and representative offices in 19 countries and
regions. These include over 190 branches and offices in
Indonesia under subsidiary Bank OCBC NISP, and over
60 branches and offices in Mainland China, Hong Kong
SAR and Macau SAR under OCBC Wing Hang.
OCBC Bank’s private banking services are provided by
its wholly-owned subsidiary, Bank of Singapore.
OCBC Bank’s insurance subsidiary, Great Eastern
Holdings, is the oldest and most established life
insurance group in Singapore and Malaysia. Its asset
management subsidiary, Lion Global Investors, is one
of the largest private sector asset management
companies in Southeast Asia.
For more information, please visit www.ocbc.com
Share Registration Office
Boardroom Corporate &
Advisory Services Pte. Ltd.
1 Harbourfront Avenue
#14-07 Keppel Bay Tower
Singapore 098632
Tel: (65) 6536 5355
Auditor
PricewaterhouseCoopers LLP