United Overseas Bank Limited · SGX:U11
United Overseas Bank — Debt Investor Presentation (September 2024)
53 slides from United Overseas Bank's debt investor presentation, September 2024
Slide 1: UOB Group: Strong performance with stable balance sheet
UOB Group Strong performance with stable balance sheet Sep 2024 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 3. Resilience of the Singapore Housing Market & UOB’s Cover Pool Agenda Appendices: A. Macroeconomic Outlook B. Growth Drivers C. Latest Financials 2
Slide 3: 1. Overview of UOB Group
1. Overview of UOB Group 3
Slide 4: UOB Overview
UOB Overview Founding Key Statistics for 1H24 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD328b (USD241b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD389b (USD287b1) grandfather of the present UOB Group CEO, Mr. Wee ■ Loan / Deposit ratio : 83.2% 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 1H24 performance by segment Myanmar 1 branch Greater China1 20 branches UOB SGD182b 2 Assets under +10% Thailand Vietnam Open Income management YoY 5 branches 147 branches SGD2.7b Malaysia Philippines Group -1% YoY AUM from 55 bra
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 42%1 1.2%1 83% Aa1 AA– AA– OCBC a1 38% 1.6% 81% 1 1 Aa1 AA– AA– DBS a1 39
Slide 9: Capital and leverage ratios
Capital and leverage ratios Reported Common Equity Tier 1 CAR 15.5% 15.0% 15.0% 14.9% 14.8% 14.6% 13.6% 13.5% 13.4% 13.4% 12.8% 12.3% 12.2% 2 2 OCBC HSBC CIMB MBB DBS SCB Citi BOA UOB TD RBC CBA NAB Return on Average Equity 1 (annualised) 14.5% 19.8% 11.4% 10.8% 18.8% 1 14.0% 6.5% 9.7% 13.7% 14.3% 1
Slide 10: 2. Strong UOB Fundamentals
2. Strong UOB Fundamentals 10
Slide 11: Disciplined balance sheet management
Disciplined balance sheet management Return on risk-weighted assets Focus on Healthy 1.83% 2.29%1 2.20%1 1.27% 1.68% balance sheet portfolio FY20 FY21 FY22 FY23 1H24 efficiency quality Current Account Saving Account Balances (SGD b) 2.8% CAGR2 174 198 175 189 201 Proactive Robust liability FY20 FY21
Slide 12: Continued signs of recovery in loan demand, driven by trade and mortgages
Continued signs of recovery in loan demand, driven by both trade and mortgages By Industry By Geography +3% +2% 5% 4% 319 318 321 323 328 Rest of the world 44 45 45 47 49 24% 27% Greater China 52 51 49 51 52 68 67 69 69 69 $328b ASEAN-4 Jun-24 Singapore 156 155 158 157 158 9% Jun-23 Sep-23 Dec-23 Ma
Slide 13: Exposure to Greater China
Exposure to Greater China 75.4 78.2 71.6 71.7 72.5 9.1 9.0 Debt ($b) 10.5 11.3 10.7 52.2 ▪ ~$2b in loans to Chinese 50.7 developers (1% of group loans) Non Bank ($b) 51.6 51.2 49.2 Bank ($b) 12.6 15.6 17.0 9.5 9.2 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Mainland China Hong Kong SAR Bank exposure ($13.1b)
Slide 14: Exposure to Commercial Real Estate - Office
Exposure to Commercial Real Estate - Office Commercial Real Estate - Office exposure is 7.1% of loans By geography as % of loans 0.2% • Almost half of office Others 0.7% exposure is in Singapore 0.8% 0.8% United Kingdom 0.8% 0.9% • Overseas exposure backed Jun-24 1.5% United States 7.1% 1.0% by stro
Slide 15: Strong investment grade credit ratings
Strong investment grade credit ratings A regular issuer in key debt capital markets globally Aa1 / P-1 ▪ Capital good by global standards GBP USD Additional Tier 1, Tier 2, SGD 28% ▪ Deposit-funded and liquid balance sheet 7% 13% 16% 13% (BBB+; Baa1; BBB–)1 (A; A2; BBB+)1 ▪ Traditional banking prese
Slide 16: 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 - 2022 2023 • Launched the Group • Enhanced ESG monitoring • Announced our net zero commitment. • Develo
Slide 17: 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 2022-2023 • Completed qualitative • Partnered an internationally • Conducted a pilot physical risk • Develop
Slide 18: Net zero by 2050 commitment with a focus on 6 priority sectors
In October 2022, we announced our commitment to achieving net zero by 2050, with a focus on 6 priority sectors Energy Built environment Net zero targets and commitments for six sectors We focused on two significant, high-emitting ecosystems, energy and built environment, spanning 6 sectors based on:
Slide 19: Progressing across all priority sectors, at least 7% below reference pathways
One year on, we are progressing across all priority sectors, and are at least 7% below the reference pathways 19
Slide 20: 3. Resilience of the Singapore Housing Market & UOB's Cover Pool
3. Resilience of the Singapore Housing Market & UOB’s Cover Pool 20
Slide 21: 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 (2Q14 = 100) (% of GDP) US, 190.5 CA, 183.0 SG, 40 AU, 163.7 HK, 26 SG, 135.7 AU, 25 HK, 123.1 CA, 23 US,18 1Q14 2Q15 3Q16 4Q17 1Q19 2Q20 3Q21 4Q22 1Q24 2019 2020 2021 2022
Slide 22: USD15,000,000,000 Global Covered Bond Programme
USD15,000,000,000 Global Covered Bond Programme Issuer United Overseas Bank Limited Issuer Long Term Rating Aa1 (stable) / AA- (stable) / AA- (stable) (Moody’s / S&P / Fitch) Issuer Short Term Rating P-1 / A-1+ / F1+ (Moody’s / S&P / Fitch) Programme Limit USD15,000,000,000 LCR Status / ECB Repo Eli
Slide 23: Covered Bond Structure
Covered Bond Structure Notwithstanding that CPF’s consent is required for the transfer or assignment of mortgages relating to CPF Loans, no such consent is required for a declaration of trust over mortgages relating to CPF Loans. The Seller is acting as the Assets Trustee and the CPF Loans are held
Slide 24: UOB's Cover Pool Profile
UOB’s Cover Pool Profile Overview of Cover Pool (as of Jul’24) Current Loan Balances Mainly <SGD1m Number of Mortgage Accounts 24,205 7% 6% 7% 6% 6% 6% 6% 6% 7% Total Current Balance (SGD) 15.8 billion 4% 4% 4% 4% 4% 4% 4% 4% 4% SGD’000 8% 8% 8% 8% 8% 8% 7% 7% 7% Average Current Loan Balance (SGD) 6
Slide 25: Cover Pool Has Been Stable
Cover Pool Has Been Stable Primarily Condominiums and Apartment Diversified Geographical Distribution 5% 5% 5% 5% 5% 5% 5% 5% 5% 11% 11% 10% 11% 11% 10% 10% 11% 11% 6% 6% 6% 6% 6% 6% 6% 6% 6% 5% 5% 5% 5% 5% 5% 5% 5% 5% 15% 15% 15% 16% 16% 16% 16% 14% 14% Others 15% 16% 15% 15% 15% 15% 15% 18% 18% Re
Slide 26: Cover Pool Has Been Stable (Cont'd)
Cover Pool Has Been Stable (Cont’d) Majority Owner Occupied Loans Mainly for Purchases 20% 20% 20% 20% 21% 21% 22% 19% 19% Refinance 25% Investment 80% 80% 80% 79% 79% 78% 78% 81% 81% Owner Occupied Purchase 74% Sep'22 Dec'22 Mar'23 Jun'23 Sep'23 Dec'23 Mar'24 Jun'24 Jul'24 Well Seasoned Portfolio (
Slide 27: Appendix A: Macroeconomic Outlook
Appendix A: Macroeconomic Outlook 27
Slide 28: ASEAN Economic Growth To Stay Resilient As External Trade Cycle Bottomed
ASEAN Economic Growth To Stay Resilient As External Trade Cycle Bottomed External Trade Cycle Has Started to Turn ASEAN6: Trade Performance (12-month moving average) 2023 GDP growth 2024F GDP growth +5.2 40 2025F GDP growth +4.9 +4.7 20 0 China -20 +6.0 +6.4 Jun-10 Jun-12 Jun-14 Jun-16 Jun-18 Jun-20
Slide 29: Maintaining Our Call For Fed To Cut Rates In Late 3Q
Maintaining Our Call For Fed To Cut Rates In Late 3Q 3Q22 4Q22 1Q23 2Q23 3Q23 4Q23 1Q24 2Q24 3Q24F 4Q24F 1Q25F 2Q25F US 10-Year Treasury 3.83 3.87 3.47 3.84 4.57 3.88 4.20 4.40 4.10 4.00 3.90 3.80 US Fed Funds 3.25 4.50 5.00 5.25 5.50 5.50 5.50 5.50 5.25 5.00 4.75 4.50 SG 3M SIBOR 3.17 4.25 4.19 4.0
Slide 30: 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) 372 19.8 15.6 224 140 114 75 1.2 1.3 30 24 26 –2.0 –1.5 –0.1 –5.4 Singapore Thailand Indonesia Malaysia Singapore Malaysia Thailand Indonesia Dec 1998
Slide 31: Singapore has implemented Basel IV
Singapore has implemented Basel IV5 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 -- Leverage ratio Dis
Slide 32: 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 33: 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 34: Appendix B. Growth Drivers
Appendix B. Growth Drivers 34 ## RESTRICTED ##
Slide 35: 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 36: 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 685 723 6.0 banks 581 globally, after China a
Slide 37: Strong retail presence in high potential regional markets
Strong retail presence in high potential regional markets High Vietnam 8 2022 retail banking pool sizes 4 Philippines USD b Denotes UOB’s core markets in Southeast Asia Banking penetration Indonesia ✓ ✓ was launched growth potential ✓ in Thailand, 14 Indonesia, Singapore and Malaysia. ✓ 14 Thailand
Slide 38: 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 39: Healthy growth across business franchise
Healthy growth across business franchise Group Retail Income by business segment Tapping on rising affluence in Southeast Asia on enlarged franchise 1H24 1H23 YoY $'m $'m +18% +11% +27% increase1 in CASA pickup1 in card growth1 in wealth balance billings across management income4, Group Retail 2,695
Slide 40: Appendix C. Latest Financials
Appendix C. Latest Financials 40 ## RESTRICTED ##
Slide 41: 2Q24 financial overview
2Q24 financial overview Core Net Profit After Tax Movement, 2Q24 vs 1Q24 1 (SGD m) 39 38 124 23 70 5 11 1 1 1,566 -5% 1,489 +2% +7% –21% –2% +43% +21% –3% 1Q24 core net Net interest Net fee and Other non- Operating Total Share of profit Tax, 2Q24 core net profit after tax income commission interest
Slide 42: 1H24 financial overview
1H24 financial overview Core Net Profit After Tax Movement, 1H24 vs 1H23 (SGD m) 83 123 106 381 139 6 64 1 1 3,084 3,054 -1% –2% +11% –9% +1% –26% +11% +11% 1H23 core net Net interest Net fee and Other non- Operating Total Share of profit Tax, 1H24 core net profit after tax income commission interes
Slide 43: NIM improved 3bps to 2.05% as loan margin widened
NIM improved 3bps to 2.05% as loan margin widened 2.61 2.49 2.62 2.64 2.55 2.47 2.51 Loan Margin (%) Net Interest Margin (%) 2.13 2.04 2.12 2.09 2.02 2.02 2.05 Interbank & Securities Margin (%) 1.11 1.11 1.10 0.93 0.94 1.11 1.10 -2% 4,846 4,763 NII from Interbank & Securities 803 848 ($m) +2% 2,437
Slide 44: 2Q24 fees near record high, backed by strong pick up in loan and wealth
2Q24 fees near record high, backed by strong pick up in loan and wealth Fee Income 15 17 17 17 16 18 15 Fee / Total Income (%) +11% 1,198 1,075 161 Others ($m) 160 187 Credit Card (Net) ($m) 153 +7% 336 591 618 Wealth ($m) 298 569 580 524 72 78 74 82 83 104 97 125 90 72 146 164 173 142 151 Loan / Tr
Slide 45: Customer-related treasury income sustained momentum
Customer-related treasury income sustained momentum, while non- customer T&I eased from last quarter all-time high 51 50 54 47 41 36 39 Customer related / T&I (%) -6% 988 927 Others ($m) 604 492 -24% 505 527 389 400 364 309 322 190 183 180 Customer Related ($m) 384 435 182 198 184 219 216 1H23 1H24
Slide 46: Marginal increase in 1H24 core expenses on tight cost discipline
Marginal increase in 1H24 core expenses on tight cost discipline Cost-to-income Ratio (%) 46.8 43.7 44.4 44.1 44.4 44.6 44.1 - incl one-off Citi - excl one-off Citi 41.8 43.2 40.9 40.9 41.0 41.9 41.8 2,889 2,926 Other expenses ($m) 708 687 - 3% IT-related expenses ($m) 464 467 + 1% 1,448 1,416 1,473
Slide 47: Asset quality broadly stable with NPL ratio unchanged at 1.5%
Asset quality broadly stable with NPL ratio unchanged at 1.5% ($m) 2Q23 3Q23 4Q23 1Q24 2Q24 NPAs at start of period 5,150 5,192 5,011 4,946 5,051 Non-individuals New NPAs _ 364 267 389 249 438 Less: Upgrades and recoveries 137 298 288 183 289 Write-offs 65 150 218 34 238 5,312 5,011 4,894 4,979 4,96
Slide 48: Prudent reserve build with total credit costs at 24bps
Prudent reserve build with total credit costs at 24bps 30 29 Total credit costs (bps) 27 24 26 23 24 Specific credit costs (bps) 23 26 20 25 20 21 19 430 General allowance on loans ($m) 64 380 53 238 151 36 202 186 194 Specific allowance on loans ($m) 366 25 328 28 229 212 202 158 169 (9) (78) 1H23
Slide 49: Provision coverage remains healthy
Provision coverage remains healthy 34 33 32 Specific allowance/NPA (%) 32 32 General allowance on loans include 1.0 0.9 0.9 0.9 0.9 RLAR/Performing loans (%) 5,134 5,109 4,976 4,993 379 4,851 RLAR ($m) 379 379 379 379 General allowance ($m) 3,058 3,042 3,007 3,000 2,901 Specific allowance ($m) 1,697
Slide 50: Sound liquidity and funding base with CASA growth
Sound liquidity and funding base with CASA growth supported by successful promotional campaigns 167 160 All-currency LCR (%) 153 157 149 121 121 120 121 Net Stable Fund Ratio (NSFR) (%) 118 83.5 82.3 82.2 82.0 83.2 Loan/Deposit Ratio (LDR) (%) 448 457 448 450 437 61 67 71 60 61 Wholesale Funding ($b
Slide 51: CET1 ratio remains healthy at 13.4%
CET1 ratio remains healthy at 13.4% 13.6 13.0 13.4 13.9 13.4 CET1 ratio (%) 2.31 2.23 2.18 2.27 RORWA ratio (%) 2.14 272 276 276 284 263 RWA ($b) Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Leverage ratio (%) 7.0 6.8 6.9 7.0 7.1 51
Slide 52: Interim dividend increased to 88 cents per share
Interim dividend increased to 88 cents per share Net dividend Per ordinary share (¢) 170 135 120 85 Final 60 75 88 85 88 Interim 60 60 2021 2022 2023 1H24 Payout amount ($m) 2,011 2,263 2,846 1,473 Payout ratio (%) 49 49 50 51 52
Slide 53: Right By You
@ Right By You
United Overseas Bank — Debt Investor Presentation (September 2024) on 6ix