United Overseas Bank Limited · SGX:U11
United Overseas Bank — Investor Presentation (March 2015)
49 slides from United Overseas Bank's investor presentation, March 2015
Slide 1: UOB Group: Record Year of Earnings Supported by Strong Balance Sheet
UOB Group Record Year of Earnings Supported by Strong Balance Sheet March 2015 Disclaimer : This material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation. It is information given in summary form and does not purport
Slide 2: Agenda
Agenda 1 Overview of UOB Group 2 Macroeconomic Outlook 3 Strong UOB Fundamentals 4 Our Growth Drivers 5 Latest Financials 2
Slide 3: UOB Overview
UOB Overview Founding Key Statistics for FY14 Founded in August 1935 by a group of Chinese businessmen ■ Total assets : SGD306.7b (USD232.1b1) and Datuk Wee Kheng Chiang, grandfather of the present ■ Shareholder’s equity : SGD29.6b (USD22.4b1) UOB Group CEO, Mr. Wee Ee Cheong ■ Gross loans : SGD199.
Slide 4: A Leading Singapore Bank With Established Franchise In Core Market Segments
A Leading Singapore Bank With Established Franchise In Core Market Segments Group Retail Group Wholesale Banking Global Markets and Investment Management (GMIM) Best Retail Bank in Singapore1 Best SME Banking1 Strong player in Singapore dollar treasury instruments Strong player in credit car
Slide 5: Proven Track Record Of Execution
Proven Track Record Of Execution UOB Group’s management has demonstrated strong track record in steering the Group through various global events and crises. Achieved record NPAT of SGD3,249 million in 2014 Stability of management team ensures consistent execution of strategies Disciplined mana
Slide 6: Expanding Regional Banking Franchise
Expanding Regional Banking Franchise Extensive Regional Footprint with 500+ Offices Profit before Tax and Intangibles by Region (SGD m) MYANMAR 2 offices 39% of Group PBT GREATER CHINA 24 offices1 324 THAILAND 252 157 offices 21 305 222 272 184 99 159 VIETNAM 178 31% of 156 105 118 146 1 office1 180
Slide 7: Agenda
Agenda 1 Overview of UOB Group 2 Macroeconomic Outlook 3 Strong UOB Fundamentals 4 Our Growth Drivers 5 Latest Financials 7
Slide 8: Central Banks' Recent Easing Moves Spurred by Low/Negative Inflation & Weak Growth
Central Banks’ Recent Easing Moves Spurred by Low/Negative Inflation & Weak Growth Recent Central Banks’ Policy Decisions Date Of Change In Jan 2015 Country Key Target Rate Current Rate Amount Of Change Next meeting 7 Romania Key Policy Rate 2.50% -25bps 4 Feb 2015 15 (unscheduled) Switzerland Targe
Slide 9: Fed Expected to Hike Rates in 2015, With Conclusion of QE Tapering in 2014
Fed Expected to Hike Rates in 2015, With Conclusion of QE Tapering in 2014 Negative Implications • Reversal of capital flows and unwinding of • Increased liquidity on Markets carry trades • Lower interest rates • Depreciation of Asian currencies → and borrowing costs unhedged foreign exchange (FX) r
Slide 10: Singapore Interest Rates Lifted by Stronger US$; Further Upside When Fed Hikes
Singapore Interest Rates Lifted by Stronger US$; Further Upside When Fed Eventually Hikes Rates Singapore Interest Rates on an Uptrend % S$ 1.1 1.385 1.365 0.9 1.345 0.7 1.325 0.5 1.305 0.3 1.285 0.1 1.265 18-Dec-14 1-Jan-15 15-Jan-15 29-Jan-15 12-Feb-15 3M SOR (LHS) 3M SIBOR (LHS) SGD vs USD (RHS)
Slide 11: Southeast Asia − Resilient Key Markets
Southeast Asia − Resilient Key Markets The long-term fundamentals and prospects of key Southeast Asian markets have greatly improved since the Asian Financial Crisis in 1997. Compared with 1997, they have: ‒ Significantly higher levels of foreign reserves ‒ Healthier current account and balance
Slide 12: Singapore Expected to Grow 3.3% in 2015, While Restructuring Continues
Singapore Expected to Grow 3.3% in 2015, While Restructuring Continues Singapore’s economy slowed in 2014 as external demand weakened amidst falling commodities’ prices. Within the External Sectors Slowed Considerably manufacturing sector, the electronics and transport (%) engineering clusters exp
Slide 13: SEA Banking Sector: Strong Fundamentals Remain Intact
SEA Banking Sector: Strong Fundamentals Remain Intact Key Banking Trends Robust Capital Positions There has been a resurgence in loan demand after the (Tier 1 CAR, in %) deleveraging of ASEAN banks during the Global Financial Crisis 14.6 14.6 13.8 13.5 ASEAN banks have healthy capital and fundin
Slide 14: Prospects for Asia Remain Optimistic Due to Growing Population and Consumer Affluence
Prospects for Asia Remain Optimistic Due to Growing Population and Consumer Affluence Growing Global Middle Class Spending by Global Middle Class Mln Billions of 2005 PPP ASEAN’s middle class: dollars 5,000 2009: 28% of global middle class 60,000 2030: 66% 4,000 50,000 40,000 3,000 30,000 2,000 20,0
Slide 15: Intra-Regional Trade Set to Thrive in ASEAN after AEC Kicks Off
Room For More Optimism As Intra-Regional Trade is Set to Thrive in ASEAN after AEC1 Kicks Off Share of Total Goods Trade, % Source: Comtrade; McKinsey Global Institute analysis 1. AEC: ASEAN Economic Community 15
Slide 16: Basel III Implementation across Jurisdictions
Basel III Implementation across Jurisdictions Particulars BCBS Singapore Malaysia Thailand Indonesia Hong Kong China Minimum CET1 4.5% 6.5%1 4.5% 4.5% 4.5% 4.5% 5.0% 1 Minimum Tier 1 6.0% 8.0% 6.0% 6.0% 6.0% 6.0% 6.0% Minimum Total Capital 8.0% 10.0%1 8.0% 8.5% 8.0% 8.0% 8.0% Full Compliance Jan-15
Slide 17: Resolution Regime Overview
Resolution Regime Overview Resolution Regime in Asia Public Factors influencing Country Existing Resolution Powers How Past resolution been handled Discussion views on bail-in * Role as an international financial centre; strength of system; good Crisis prevention tools: no record Singapore No Transf
Slide 18: Agenda
Agenda 1 Overview of UOB Group 2 Macroeconomic Outlook 3 Strong UOB Fundamentals 4 Our Growth Drivers 5 Latest Financials 18
Slide 19: Strong UOB Fundamentals
Strong UOB Fundamentals Strong Management Proven track record in steering the bank through various global events and crises with Proven Track Record Stability of management team ensures consistent execution of strategies Consistent and Delivered record NPAT of SGD3,249m in FY14, driven by broa
Slide 20: Diversified Loan Portfolio
Diversified Loan Portfolio Gross Customer Loans by Geography Gross Customer Loans by Currency 8% 2% 10% 13% SGD Singapore 5% Malaysia USD 6% Thailand 12% MYR Indonesia THB 55% 54% 5% Greater China IDR Others Others 13% 17% Gross Customer Loans by Maturity Gross Customer Loans by Industry Transport,
Slide 21: Competitive Against Peers
Competitive Against Peers Bank Financial Strength Efficient Cost Management 88.3% Bank Financial Strength B B B Cost/Income Ratio B- 67.3% 72.0% 45.0% 57.8% 63.1% 65.0% C C C 54.7% 48.3% C- C- C- C- 42.2% 41.0% 44.5% D+ OCBC CIMB JPM HSBC Citi UOB Maybank DBS SCB Bangkok BCA BOA Bank OCBC HSBC CIMB
Slide 22: Strong Capitalisation Levels and Low Leverage
Strong Capitalisation Levels and Low Leverage Total CAR, Tier 1 CAR, Common Equity Tier 1 18.3 17.6 16.9 15.9 15.6 15.3 16.0 16.5 17.3 13.9 16.6 16.0 15.0 13.1 (Total CAR, 16.0 16.5 13.4 13.1 13.8 12.5 13.1 11.0 12.7 11.8 13.9 13.8 13.1 11.6 11.4 Tier 1 CAR, 10.5 12.3 11.3 11.1 9.7 10.2 10.5 Common
Slide 23: Strong Investment Grade Credit Ratings
Strong Investment Grade Credit Ratings Ratings Aa1 / Stable / P-1 AA-/Stable/A-1+ AA- / Stable / F1+ ‘…Strong and valuable business franchise’ Prudent management team… expect the bank to ‘Ratings reflect its strong domestic franchise, ‘Long experience in serving continue its emphasis on fund
Slide 24: Robust Risk Management Framework
Robust Risk Management Framework Operate under strict regulatory regime; prudential standards in line with global best practices Strong risk culture; do not believe in achieving short-term gains at the expense of long-term interests Robust Focused on businesses which we understand and are well
Slide 25: Managing Risks for Stable Growth
Managing Risks for Stable Growth Prudent approach has been key to Group Risk Appetite Statement (GRAS) delivering sustainable returns over the years Manage Institutionalised framework through concentration GRAS risk – Outlines risk and return objectives to guide strategic decision-making Maintai
Slide 26: Resilient Asset Quality; High Impairment Coverage
Resilient Asset Quality; High Impairment Coverage Stable NPL Ratio Consistently High Impairment Coverage (In SGD m) (In SGD m) 350.3% 316.3% 305.1% 311.4% 298.9% 150.5% 160.2% 149.2% 146.8% 145.9% 1.2% 1.2% 1.2% 1.1% 1.1% 834 659 657 779 536 798 570 548 587 598 197 143 541 462 474 2,701 2,783 2,548
Slide 27: Focusing on Preserving Balance Sheet Strength
Focusing on Preserving Balance Sheet Strength Strengthening our Balance Sheet Overall portfolio resilient in face of market uncertainties Assets 11% 4% 6% 6% 9% Diversifying funding sources and reducing reliance on interbank 6% 9% market 8% 55% 11% 64% 11% – Remain mainly deposit-funded 2008 201
Slide 28: Agenda
Agenda 1 Overview of UOB Group 2 Macroeconomic Outlook 3 Strong UOB Fundamentals 4 Our Growth Drivers 5 Latest Financials 28
Slide 29: Our Growth Drivers
Our Growth Drivers Realise Full Provides us with ability to serve expanding regional needs of our customers Potential of our Improves operational efficiency, enhances risk management, seamless customer Integrated Platform experience and faster time to market Global macro environment remains un
Slide 30: Milestone in Regionalisation
Milestone in Regionalisation ■ Harnessing potential of regional network through an integrated platform Full Rollout of Integrated Regional Platform – Completion of platform at end-2013 ■ Integrated regional platform to bring: – Improved productivity and operational efficiency – Quicker speed to mark
Slide 31: Capitalising on Rising Intra-Regional Flows
Capitalising on Rising Intra-Regional Flows ■ Building 3 growth pillars in Growing Intra-Regional Wholesale Business wholesale banking – Strengthen geographical footprint Intra-Regional Loan (S$) Breakdown by Origin Dec 2010 Dec 2014 – Develop integrated portfolio of product solutions Greater Others
Slide 32: Making Good Progress in Transaction Banking
Making Good Progress in Transaction Banking ■ Healthy growth in trade Trade Loans Deposits assets spurred by new and CAGR +12% deeper client acquisition CAGR 33% +31% 37% 30% 33% ■ Continue to invest in 26% 24% regional cash management 41% 67% 63% 67% 70% and liquidity management 49% 48% 76% 74% 45%
Slide 33: Capturing Rising Asian Consumer Affluence
Capturing Rising Asian Consumer Affluence Wealth management’s1 Growing Regional Wealth Management Profit Contribution FY2010 – 2014 performance: — AUM up from $48bn to $80bn CAGR +25% 30% — Customer base grew from 100,000 to 191,000 30% 27% — Widened regional wealth Region 26% 26% management footp
Slide 34: Tapping on Increasing Connectivity in ASEAN
Tapping on Increasing Connectivity in ASEAN Strong ASEAN-China and Intra-ASEAN Flows UOB: Towards a Multi-Channel Model China ASEAN-China 2013 Total trade: US$405bn 10-yr CAGR: 17% Myanmar MYANMAR Thailand 2 offices GREATER AEC1: New THAILAND CHINA 24 offices2 growth Malaysia 157 offices catalyst VI
Slide 35: Why UOB?
Why UOB? Stable Proven track record in steering the bank through various global events and crises Management Stability of management team ensures consistent execution of strategies Entrenched local presence. Ground resources and integrated regional network Integrated allow us to better address
Slide 36: Agenda
Agenda 1 Overview of UOB Group 2 Macroeconomic Outlook 3 Strong UOB Fundamentals 4 Our Growth Drivers 5 Latest Financials 36
Slide 37: FY14 Financial Overview
FY14 Financial Overview Net Profit After Tax1 (NPAT) Movement, FY14 vs FY13 (SGD m) 281 438 18 0 3,249 3,008 248 206 42 +10.6% +1.1% +32.3% +8.6% +48.1% -21.9% -0.1% +8.0% FY13 NPAT Net Interest Fee income Other non- Expenses Impairment Share of profit Tax & Minority FY14 NPAT Income interest income
Slide 38: 4Q14 Financial Overview
4Q14 Financial Overview Net Profit After Tax1 (NPAT) Movement, 4Q14 vs 3Q14 (SGD m) -9.3% 866 13 44 786 25 6 109 4 5 +1.1% -5.3% -32.0% +0.7% +2.4% +16.5% -24.4% 3Q14 NPAT Net Interest Fee income Other non- Expenses Impairment Share of profit Tax & Minority 4Q14 NPAT Income interest income Charges o
Slide 39: Record NII driven by Healthy Loans Growth
Record NII driven by Healthy Loans Growth Net Interest Income (NII) and Margin 2.41% 2.29% 2.12% 2.06% 2.10% 2.06% 2.05% 2.06% 2.08% 1.92% 1.87% 1.72% 1.71% 1.74% 1.73% 1.71% 1.71% 1.69% 0.97% 0.91% 0.76% 0.82% 0.85% 0.90% 0.84% 0.81% 0.71% 4,558 1,155 1,168 1,095 1,110 1,124 4,120 153 143 3,917 620
Slide 40: FY14 Non-Interest Income Boosted by Trading & Invt
FY14 Non-Interest Income Boosted by Trading & Invt Non-Interest Income (Non-NII) and Non-NII Ratio 39.7% 38.7% 38.9% 35.5% 40.3% 41.4% 37.1% 36.7% 36.8% 25.8% 23.1% 23.2% 23.5% 25.0% 23.6% 24.1% 24.3% 21.8% 2,900 816 2,578 2,600 760 647 682 642 2,021 1,151 341 1,070 870 350 232 212 228 703 1,508 1,7
Slide 41: Broad-based Growth in FY14 Fee Income
Broad-based Growth in FY14 Fee Income Breakdown of Fee Income (SGD m) (SGD m) 1,749 1,731 56 47 1,508 268 273 1,318 66 475 111 113 62 256 450 435 410 414 11 249 107 11 70 14 442 448 12 11 69 100 70 28 66 69 389 30 32 27 26 131 370 113 118 101 99 420 431 208 321 172 156 101 97 118 102 98 129 114 39 3
Slide 42: Disciplined Cost Management
Disciplined Cost Management Operating Expenses and Expense / Income Ratio 43.8% 43.1% 43.5% 43.0% 42.3% 43.1% 42.2% 41.7% 40.6% 3,146 2,898 2,747 2,450 1,321 1,186 1,151 1,047 787 800 805 762 755 315 301 331 339 351 1,712 1,825 1,597 1,403 447 454 456 461 454 2011 2012 2013 2014 4Q13 1Q14 2Q14 3Q14
Slide 43: Total Loans Charge-off Rate Relatively Stable
Total Loans Charge-off Rate Relatively Stable Impairment Charges on Loans 30bps 30bps 30bps 32bps 30bps 32bps 32bps 32bps 32bps 11bps 30bps 12bps 12bps 19bps 15bps 14bps 8bps (0)bps 93 454 75 73 51 238 163 136 -2 2011 2012 2013 2014 4Q13 1Q14 2Q14 3Q14 4Q14 Individual Impairment Charges on Loans (SG
Slide 44: Healthy Loans Growth
Healthy Loans Growth Dec-14 QoQ YoY Dec-14 Sep-14 +/(-) Dec-13 +/(-) Gross Loans * SGD b SGD b % SGD b % 8% Singapore 109.7 109.1 0.5 103.7 5.8 13% Regional: 73.0 71.4 2.3 62.8 16.2 6% Malaysia 25.8 26.1 -1.2 24.2 6.5 55% 5% 10.8 10.5 3.6 9.9 9.6 13% Thailand Indonesia 11.1 10.7 4.0 9.6 15.5 Greater
Slide 45: Stable Liquidity Position
Stable Liquidity Position Customer Loans, Deposits and L/D Ratio 93.6% 93.7% 98.2% 94.1% 93.0% 87.8% 85.5% 85.8% 83.8% 83.4% 70.2% 70.5% 70.6% 65.2% 67.7% 224.4 233.8 214.5 216.6 216.1 185.3 189.7 192.6 195.9 178.9 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Net Customer Loans (SGD b) Customer Deposits (SGD
Slide 46: Robust Credit Quality; NPL Ratio Stable at 1.2%
Robust Credit Quality; NPL Ratio Stable at 1.2% NPL* ($m) 2,074 2,077 2,309 2,289 2,358 NPL Ratio 1.1% 1.1% 1.2% 1.2% 1.2% 419 432 738 124 118 669 686 298 275 120 126 117 244 259 267 147 167 203 256 386 211 400 408 407 419 805 864 521 489 532 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Singapore Malaysia Tha
Slide 47: Strong Impairment Coverage
Strong Impairment Coverage Consistently High Impairment Coverage 350.3% 316.3% 305.1% 311.4% 298.9% 150.5% 160.2% 149.2% 146.8% 145.9% 834 659 657 779 798 2,611 2,701 2,783 2,548 2,323 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Collective Impairment ($m) Individual Impairment ($m) Cumulative Impairment / To
Slide 48: Capital Ratios Remained Strong
Capital Ratios Remained Strong Basel III 16.6% 17.7% 17.8% 17.0% 16.9% Total CAR 3.7% 3.9% 3.0% 3.0% 3.4% Tier 2 CAR 14.0% 13.9% 14.0% 13.9% 13.2% Tier 1 / CET1 CAR Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 SGD b Common Equity Tier 1 Capital 22 23 23 24 25 Tier 1 Capital 22 23 23 24 25 Total Capital 27 29
Slide 49: Stable Dividend Payout
Stable Dividend Payout 5 5 10 50 50 40 40 20 20 20 20 2011 2012 2013 2014 Net dividend per ordinary share (¢) Interim Final Special Payout amount (SGD m) 944 1,102 1,182 1,202 Payout ratio (%) 41 39 39 37 49
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