United Overseas Bank Limited · SGX:U11
United Overseas Bank — Debt Investor Presentation (June 2023)
35 slides from United Overseas Bank's debt investor presentation, June 2023
Slide 1: Resilient earnings with strong balance sheet
UOB Group Resilient earnings with strong balance sheet June 2023 Discla imer: The mater ial in th is presentat ion conta ins gener al b ackgro un d informat ion a bout Un ite d Oversea s Bank L im ite d (“UOB”) and its act ivit ies as at the d ate of the pre sentat ion. The informat ion is g iven in
Slide 2: Agenda
1. Overview of UOB Group 2. Strong UOB Fundamentals Agenda Appendices: A. Macroeconomic Outlook B. Our Growth Drivers 2
Slide 3: Overview of UOB Group
Overview of UOB Group 3
Slide 4: UOB Overview
UOB Overview Founding Key Statistics for 1Q23 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD316b (USD238b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD374b (USD281b1) grandfather of the present UOB Group CEO, Mr. Wee ■ Loan / Deposit ratio : 83.3% Ee Cheong. ■
Slide 5: A leading Singapore bank; Established franchise in core market segments
A leading Singapore bank; Established franchise in core market segments Group Retail Group Wholesale Banking Global Markets ▪ Best Retail Bank in Singapore ▪ Best SME Bank in Singapore ▪ Strong player in Singapore dollar ▪ Strong player in credit cards and ▪ Seamless access to regional treasury inst
Slide 6: Proven track record of execution
Proven track record of execution ▪ UOB Group’s management has a proven track record in steering the Group through various global events and crises ▪ Stability of management team ensures consistent execution of strategies ▪ Disciplined management style which underpins the Group’s overall resilience a
Slide 7: Comprehensive regional banking franchise
Comprehensive regional banking franchise Extensive regional footprint with ~500 offices 1Q23 performance by segment Myanmar 2 offices Greater China1 27 offices UOB SGD160b 3 Operating Assets under +14% Thailand Vietnam management YoY Open profit 153 offices 5 offices Malaysia Philippines Group SGD0.
Slide 8: Comparison against peers
Comparison against peers Standalone Cost Returns Liquidity Strength Management Moody’s baseline Costs/income Return on average Loan/deposit Moody’s S&P Fitch credit assessment ratio assets (annualised) ratio Aa1 AA– AA– UOB a1 41%1 1.3%1 83% Aa1 AA– AA– OCBC a1 37% 1.6% 79% Aa1 AA– AA– DBS a1 38% 1.
Slide 9: Capital and leverage ratios
Capital and leverage ratios Reported Common Equity Tier 1 CAR 15.9% 15.5% 15.1% 14.7% 14.5% 14.4% 14.0% 13.7% 13.4% 12.9% 12.7% 11.5% 11.4% 2 2 OCBC TD MBB HSBC CIMB DBS UOB SCB Citi BOA RBC NAB CBA Return on Average Equity 1 (annualised) 14.7% 16.1% 10.7% 25.5% 10.2% 18.6% 14.9% 11.9% 9.5% 12.5% 12
Slide 10: Strong UOB Fundamentals
Strong UOB Fundamentals 10
Slide 11: Diversified loan portfolio
Diversified loan portfolio Housing loans 24% Others Professionals and Transport, 6% private individuals storage and 9% communication 4% General Industry commerce Exposure to office property in 11% developed markets (ex-SG & Building & HK) at ~2% of group loans construction FIs, investment 27% and ho
Slide 12: Exposure to Greater China
Exposure to Greater China 77.2 77.1 75.8 69.2 70.5 12.2 11.8 10.6 9.7 9.4 Debt ($b) ▪ ~$3b in loans to Chinese developers (1% of group loans) Non Bank ($b) 51.5 52.5 53.8 48.6 49.8 Bank ($b) 13.5 12.8 11.4 10.9 11.3 Mar Jun Sep Dec Mar 2022 2023 As at 31 Mar 2023: Bank exposure ($8.6b) • ~40% of tot
Slide 13: Exposure to Oil and Gas and other commodities
Oil and Gas (O&G) Exposure to Other Traders / Commodities Mar 23 Upstream downstream Commodity Total industries1 Segments2 Segment industries Outstanding S$1.9b S$7.7b S$8.3b S$17.9b • As of 31 March 2023, loans outstanding loans to the Percentage of commodities segment total loans 3% 3% 6% remain m
Slide 14: Singapore mortgages remain a low-risk asset class
Singapore mortgages remain a low-risk asset class Low risk of housing bubble due to cooling measures High national savings rate (2Q12 = 100) US, 206 (% of GDP) AU,177 SG, 40 HK, 163 CA, 137 AU, 24 SG, 129 HK, 21 CA, 21 US, 19 4Q12 4Q14 4Q16 4Q18 4Q20 4Q22 2018 2020 2022 2024 2026 2028F Sources: CEIC
Slide 15: Strong investment grade credit ratings
Strong investment grade credit ratings Aa1 / P-1 A regular issuer in key debt capital markets globally ▪ Capital good by global standards GBP USD Additional (BBB+; Baa1; Tier 2, (A; A2; Tier 1, BBB–)1 ▪ Deposit-funded and liquid balance sheet SGD 9% 32% 20% BBB+)1 15% 15% ▪ Traditional banking prese
Slide 16: UOB Seoul – Overview
UOB Seoul – Overview Gross Loan Outstanding by Industry Long Term Commitment to South Korea Transportation ▪ UOB Seoul was founded in 1985; operating in South Korea as 13% Real Estate a fully licensed wholesale banking branch; Construction & Materials 12% 35% ▪ Support the largest Korean conglomerat
Slide 17: UOB Seoul – Balance Sheet
UOB Seoul – Balance Sheet Funding Mix Total Assets Intragroup placement Capital 8% Credit investment 1% ECD/NCD 1% 5% Deposits 9% HQLA Loans to 19% customers UOB Group 60% Interbank 55% Liquidity 23% management 10% Reverse Repo 9% Total Funding / Assets: KRW 3 trillion Source: UOB Seoul Branch Note:
Slide 18: Why UOB?
Why UOB? Integrated regional Balance growth with Stable management Strong fundamentals platform stability ▪ Proven track record in ▪ Entrenched domestic ▪ Sustainable revenue ▪ Continue to diversify steering the bank through presence and deep local channels as a result of portfolio, strengthen vario
Slide 19: Appendix A: Macroeconomic Outlook
Appendix A: Macroeconomic Outlook 19
Slide 20: Growth Seen Holding Up Across Asian Economies in 2023 Amid Growing External Risks
Growth Seen Holding Up Across Asian Economies in 2023 Amid Growing External Risks 2020 GDP growth 2022 GDP growth +5.6 Tourism Rebound In Asia To Support Consumption Demand 2023F GDP growth +2.2 +3.0 Amid Weaker Trade China +8.0 +6.0 +2.6 +3.1 +2.9 Thailand Vietnam –6.2 +8.7 +4.0 +3.6 Malaysia +0.7
Slide 21: Fed's monetary policy tightening has likely reached terminal rate
Fed’s monetary policy tightening has likely reached terminal rate in May 1Q21 2Q21 3Q21 4Q21 1Q22 2Q22 3Q22 4Q22 1Q23 2Q23F 3Q23F 4Q23F US 10-Year Treasury 1.74 1.47 1.49 1.51 2.34 3.01 3.83 3.87 3.47 3.80 3.70 3.50 US Fed Funds 0.25 0.25 0.25 0.25 0.50 1.75 3.25 4.50 5.00 5.25 5.25 5.25 SG 3M SIBOR
Slide 22: Macro resilience across key Southeast Asian markets
Macro resilience across key Southeast Asian markets Significantly Higher Foreign Reserves Improved Current Account Balances (USD billion) (% of GDP) 312 15.6 15.5 224 145 116 2.6 75 1.2 30 24 26 –2.0 –1.5 –0.3 –5.5 Singapore Thailand Indonesia Malaysia Singapore Malaysia Thailand Indonesia Dec 1998
Slide 23: Global regulators delayed capital rules by a year
Global regulators delayed capital rules by a year Year ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 ’24 ’25 ’26 ’27 Basel III Phased-in Full capital ratios IFRS 9 | Start LCR1 Phased-in Full NSFR2 | Start SACCR3 | Start date (pending) TLAC4 Phased-in Full Basel IV5 Phased-in -- MCRMR6 | Start -- Leve
Slide 24: Basel III across the region
Basel III across the region BCBS Singapore Malaysia Thailand Indonesia Minimum CET1 CAR 4.5% 6.5%1 4.5% 4.5% 4.5% Minimum Tier 1 CAR 6.0% 8.0%1 6.0% 6.0% 6.0% Minimum Total CAR 8.0% 10.0%1 8.0% 8.5% 8.0% Capital Conservation Buffer 2.5% 2.5% 2.5% 2.5% 2.5% Countercyclical Buffer 2 n/a 0% 0% 0% 0% D-
Slide 25: Impact of Basel IV likely to be manageable
Impact of Basel IV1 likely to be manageable Retail credit LGD2 floor of Retail Mortgage cut LGD2 and PD3 floors introduced for QRRE4 Wholesale credit to 5% from 10% and Other Retail Others Unsecured corporate FIRB5 LGD2 cut CCF6 for unconditional cancellable to 40% from 45% commitments raised to 10%
Slide 26: Appendix B: Our Growth Drivers
Appendix B: Our Growth Drivers 26
Slide 27: Our growth drivers
Our growth drivers Realise full potential Sharpen regional Reinforce fee income Long-term growth of our integrated focus growth perspective platform ▪ Provides us with ability to ▪ Global macro environment ▪ Grow fee income to offset ▪ Disciplined approach in serve expanding regional remains uncerta
Slide 28: Southeast Asia's immense long-term potential
Southeast Asia’s immense long-term potential Population GDP1 Southeast Asia’s … that UOB is uniquely (Million persons) (USD trillion) immense growth placed to capture prospects… ▪ Most diverse regional ▪ Third largest population franchise among Singapore 667 726 6.3 banks 581 globally, after China a
Slide 29: Strong retail presence in high potential regional markets
Strong retail presence in high potential regional markets High Vietnam 8 2019 retail banking pool sizes 3 Philippines USD b Denotes UOB’s core markets in Southeast Asia Banking penetration Indonesia ✓ was launched growth potential ✓ in Thailand (March 2019) and ✓ 12 Thailand 21 Indonesia (August 202
Slide 30: Revenue potential from 'connecting the dots' in the region
Revenue potential from ‘connecting the dots’ in the region Industry’s potential connectivity revenue Industry’s potential connectivity revenue (2026) (SGD b) (SGD b) Markets where UOB has a presence c$79b CAGR c$23b c$59b +10% Singapore Thailand Vietnam c$4b c$1b c$2b c$15b c$13b +10% Malaysia Wealt
Slide 31: Retail growth: digital acquisition and ecosystem partnerships
Consumers Scale Acquisition with Digital Scale UOB TMRW across ASEAN to digitally acquire at >7m >225k • Tapping on rising low cost Retail customers 77% are New to bank customers acquired in 1Q23, affluence and growing digitally enabled 59% digitally acquired digitalisation in Southeast Asia Deepen
Slide 32: Wholesale banking: strengthening connectivity
+19% Wholesale Strengthening Cross border income1; customers Connectivity Formed 24% of GWB income +30% Across our ASEAN Suppliers and distributors2 within footprint and global • Growing regional network Financial Supply Chain Management (FSCM) solution franchise, capturing cross-border Sector +41%
Slide 33: UOB's responsible financing journey: pragmatic and progressive
UOB’s responsible financing journey: pragmatic and progressive Overview of UOB Group’s Responsible Financing Journey Establishing Improving Strengthening and Evolving 2015 - 2016 2017 - 2018 2019 - 2021 2022 • Launched the Group • Enhanced ESG • Strengthened due diligence process • Announced our net
Slide 34: TCFD Implementation - Climate Scenario Analysis
TCFD Implementation - Climate Scenario Analysis Qualitative Transition Risk Transition Risk Scenario Physical Risk Pilot Analysis Improved Methodology Assessment Analysis Pilot 2019 2020 2021 2022 • Completed qualitative • Partnered an internationally • Conducted a pilot physical risk • Partnered wi
Slide 35: Right By You
@ Right By You
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