United Overseas Bank Limited · SGX:U11

United Overseas Bank — Investor Presentation (November 2019)

54 slides from United Overseas Bank's investor presentation, November 2019

  1. Slide 1: UOB Group: Sustained Profits Supported by Solid Balance Sheet

    UOB Group Sustained Profits Supported by Solid Balance Sheet November 2019 Discla imer: The mater ial in th is pre se ntat ion conta ins g enera l b ackgro und informat ion a bout Un it ed Overse as Ba nk L im ited (“UO B”) and it s act ivit ies as at the date of the presentat ion. The informat ion

  2. Slide 2: Agenda

    Agenda 1. Overview of UOB Group 2. Macroeconomic Outlook 3. Strong UOB Fundamentals 4. Our Growth Drivers 5. Latest Financials

  3. Slide 3: Overview of UOB Group

    Overview of UOB Group HtUOB

  4. Slide 4: UOB Overview

    UOB Overview Founding Key Statistics for 9M19 Founded in August 1935 by a group of Chinese ■ Total assets : SGD408b (USD296b1) businessmen and Datuk Wee Kheng Chiang, ■ Shareholders’ equity : SGD39b (USD29b1) grandfather of the present UOB Group CEO, Mr. Wee Ee Cheong ■ Gross loans : SGD275b (USD199

  5. 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 Singapore1  Best SME Banking1  Strong player in Singapore dollar treasury instruments  Strong player in credit cards and  Seamless access to regional

  6. 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

  7. Slide 7: Expanding Regional Banking Franchise

    Expanding Regional Banking Franchise Extensive Regional Footprint with c.500 Offices Profit Before Tax by Region (SGD m) MYANMAR CHINA1 2 offices 28 offices2 VIETNAM 39% of 39% of THAILAND 2 offices Group profit 507 Group profit 155 offices before tax before tax PHILIPPINES 443 469 77 1 office 367 2

  8. Slide 8: Why UOB?

    Why UOB?  Proven track record in steering the bank through various global events and Stable crises Management  Stability of management team ensures consistent execution of strategies  Entrenched local presence. Ground resources and integrated regional Integrated network allow us to better address

  9. Slide 9: Macroeconomic Outlook

    Macroeconomic Outlook {itt VOB

  10. Slide 10: Trade Tensions Cloud China's Outlook

    Trade Tensions Cloud China’s Outlook but Low Risk of Hard Landing  Despite ongoing structural slowdown, the Chinese economy has its underlying momentum, supported by rebalancing reforms and steady jobs market. Services sector will anchor growth as manufacturing bears brunt of trade downturn.  Base

  11. Slide 11: Global Trade Tension Negative for ASEAN but Some Silver Lining May Emerge

    Global Trade Tension Negative for ASEAN but Some Silver Lining May Emerge Exports growth slowed across Sustained strong foreign direct investment ASEAN countries in 20191 inflows into Southeast Asia Year on year growth (%) (USD billion) 25 20 Average: 40 15 10 5 0 -5 -7.2 -10 -12.3 -15 -20 42 35 47

  12. Slide 12: Implication on Regional Policy Rates

    Implication on Regional Policy Rates 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19f 1Q20f 2Q20f US 10-Year Treasury 2.74 2.86 3.06 2.68 2.41 2.00 1.66 1.75 1.50 1.50 US Fed Funds 1.75 2.00 2.25 2.50 2.50 2.50 2.00 1.75 1.50 1.50 SG 3M SIBOR 1.45 1.52 1.64 1.89 1.94 2.00 1.88 1.80 1.55 1.55 SG 3M SOR 1.48

  13. Slide 13: Southeast Asia: Resilient Key Markets

    Southeast Asia: Resilient Key Markets Significantly Higher Foreign Reserves Healthy Current Account Balances (USD billion) (% of GDP) 272 221 15.3 16.5 124 103 75 6.0 30 24 26 3.1 Singapore Thailand Indonesia Malaysia –2.0 –1.5 –2.9 –5.5 1998 Sep 2019 Singapore Malaysia Thailand Indonesia 1997 2019

  14. Slide 14: Southeast Asia Banking Sectors: Strong Fundamentals Remain Intact

    Southeast Asia Banking Sectors: Strong Fundamentals Remain Intact Robust Capital Positions Adequate Loan/Deposit Ratio Healthy Reserves (Common equity Tier 1 capital adequacy (Loan/deposit ratio, in %) (NPL reserve cover, in %) ratio, in %) Thailand 97 Singapore 20.8 96 149 Indonesia Thailand Indone

  15. Slide 15: Conducive Macro Conditions Underpin Singapore Property Market

    Conducive Macro Conditions Underpin Singapore Property Market Regional House Price Indices over Last 10 Years Low Unemployment vs Global Peers (2Q09 = 100) (%) HK, 327 MY, 216 EU, 6.3 TH, 159 US, 3.7 CH, 3.6 SG, 158 HK, 2.9 AU, 149 SG, 2.2 2Q09 2Q11 2Q13 2Q15 2Q17 2Q19 2009 2011 2013 2015 2017 2Q19

  16. Slide 16: Basel III across the Region

    Basel III across the Region BCBS Singapore Malaysia Thailand Indonesia Hong Kong China Minimum CET1 CAR 4.5% 6.5%1 4.5% 4.5% 4.5% 4.5% 5.0% Minimum Tier 1 CAR 6.0% 8.0%1 6.0% 6.0% 6.0% 6.0% 6.0% Minimum Total CAR 8.0% 10.0%1 8.0% 8.5% 8.0% 8.0% 8.0% Full Compliance Jan-15 Jan-15 Jan-15 Jan-13 Jan-14

  17. Slide 17: Banking Regulations Still Evolving

    Banking Regulations Still Evolving Year ’13 ’14 ’15 ’16 ’17 ’18 ’19 ’20 ’21 ’22 ’23 ’24 ’25 ’26 ’27 Basel III Phased-in Full capital ratios Leverage ratio Disclosure phase Start Revised7 LCR1 Phased-in Full NSFR2 Start SACCR3 Start MCRMR4 Start TLAC5 Phased-in Full Basel IV6 Phased-in Full IFRS 9 St

  18. Slide 18: Impact of Basel IV Likely to be Manageable

    Impact of Basel IV1 Likely to be Manageable Retail credit Wholesale credit Others LGD2 floor of Retail Mortgage cut LGD2 and PD3 floors introduced for to 5% from 10% QRRE4 and Other Retail Unsecured corporate FIRB5 LGD2 cut CCF6 for unconditional cancellable to 40% from 45% commitments raised to 10%

  19. Slide 19: Strong UOB Fundamentals

    tit UOB Strong UOB Fundamentals 19

  20. Slide 20: Strong UOB Fundamentals

    Strong UOB Fundamentals Strong  Proven track record in steering the bank through various global events and Management with crises Proven Track Record  Stability of management team ensures consistent execution of strategies Consistent and  Prudent income growth amid the subdued business environmen

  21. Slide 21: Managing Risks for Stable Growth

    Managing Risks for Stable Growth  Prudent approach has been key to delivering sustainable returns over the years Manage concentration risk  Institutionalised framework through Group Risk Appetite Maintain Statement (GRAS): Nurture core balance talent sheet – Outlines risk and return strength objec

  22. Slide 22: Competitive Against Peers

    Competitive Against Peers Standalone Efficient Cost Competitive Well-Maintained Strength Management ROAA1 Liquidity Moody’s S&P Fitch Moody’s baseline Costs/income Return on average Loan/deposit credit assessment ratio assets1 ratio Aa1 AA- AA- UOB a1 44.2% 1.11% 89.3% Aa1 AA- AA- OCBC a1 42.5% 1.27

  23. Slide 23: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios Reported Common Equity Tier 1 CAR, Tier 1 CAR and Total CAR 23.5 23.5 24.5 20.7 20.2 18.7 (Common Equity 17.7 17.7 17.3 17.2 17.0 16.9 16.6 16.2 16.0 15.9 15.9 15.5 15.1 15.1 15.0 15.0 14.7 14.5 14.4 14.3 Tier 1 CAR; 14.0 13.7 13.6 13.5 13.2 13.1 12.9 12.7 12.4 11.

  24. Slide 24: Disciplined Balance Sheet Management

    Disciplined Balance Sheet Management  Sustained balance sheet efficiency RoRWA1 – Healthy RoRWA1  Healthy portfolio quality 1.93% 2.02% 1.94% – Non-performing loan ratio stable at 1.5% – 17bp credit cost on loans FY18 9M18 9M19 – Adequate non-performing assets reserve Current Account Saving Accoun

  25. Slide 25: Diversified Loan Portfolio

    Diversified Loan Portfolio Gross Customer Loans by Geography 1 Gross Customer Loans by Currency Others Others 11% Singapore 16% SGD China2 China 2 IDR 46% 16% 51% 2% THB 7% Indonesia 4% MYR Thailand 9% 7% Malaysia USD 11% 20% Gross Customer Loans by Maturity Gross Customer Loans by Industry Professi

  26. Slide 26: Strong Investment Grade Credit Ratings

    Strong Investment Grade Credit Ratings Aa1 / Stable / P-1 AA– / Stable / A-1+ AA– / Stable / F1+  Capital good by global standards  Well-established market position, strong  Sound capital and high loan-loss buffers  Deposit-funded and liquid balance sheet funding and prudent management record 

  27. Slide 27: Our Sustainability Milestones

    Our Sustainability Milestones Supporting Sustainable Development Notable Recognitions 1. FTSE4Good ASEAN 5 Index Financing Green Real Estate UOB was ranked second by market capitalisation in 2019 • Oct 19: SGD140m green loans to Lucrum Capital and Teambuild Engineering & Construction to finance 2. B

  28. Slide 28: Our Growth Drivers

    itt UOB Our Growth Drivers 28

  29. Slide 29: Our Growth Drivers

    Our Growth Drivers  Provides us with ability to serve expanding regional needs of our Realise Full customers Potential of our Integrated Platform  Improves operational efficiency, enhances risk management, seamless customer experience and faster time to market  Global macro environment remains un

  30. Slide 30: Southeast Asia's Immense Long-term Potential

    Southeast Asia’s Immense Long-term Potential Population GDP1 Trade2 FDI3 (Million persons) (USD trillion) (USD trillion) (USD billion) 726 6.6 4.5 328 654 581 2.8 2.8 1.9 156 1.5 51 2008 2018 2030 2008 2018 2030 2008 2018 2030 2008 2018 2030 • Third largest globally, • Fifth largest economic • Fourt

  31. Slide 31: Strong Retail Presence in High Potential Regional Markets

    Strong Retail Presence in High Potential Regional Markets High 2017 retail banking pool sizes 6 Vietnam USD bn 3 Philippines Denotes UOB’s core markets in Southeast Asia ✓ TMRW launched in Indonesia Mar 2019 Banking penetration 15 growth potential 12 Thailand UAE 7 Malaysia 32 India 9 Taiwan 14 Hong

  32. Slide 32: 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 (2020) (SGD b) c$55b (SGD b) CAGR Markets where UOB has a presence c$14b +11% c$44b Singapore Thailand c$3b c$2b c$10b c$6b +4% Hong Wealth Kong c$6b c$4b Ot

  33. Slide 33: Group Wholesale Banking: Tapping Intra-Regional Flows through Diversification

    Group Wholesale Banking: Tapping Intra- Regional Flows through Diversification Steady income growth… … supported by diverse sources Group Wholesale Banking income (SGD b) +11%2 growth in non-Singapore income +9% 1.9 2.1 +9%2 growth in non-real estate income 1H18 1H19 RoRWA1 2.1% 1.8% +14%2 growth in

  34. Slide 34: Group Wholesale Banking: Strategic Initiatives to Tap Intra-Regional Flows

    Group Wholesale Banking: Strategic Initiatives to Tap Intra-Regional Flows Strengthen Sector Products Connectivity Specialisation and Platforms Tapping Greater China / Offering tailored Building new Southeast Asian flows solutions for customers capabilities • Support regional needs of • Improve cust

  35. Slide 35: Group Retail: Serving the Rising Affluent via Our Extensive In-country Presence

    Group Retail: Serving the Rising Affluent via Our Extensive In-country Presence Gross Loans (Group Retail1): +2% YoY in 1H19 Income (Group Retail1) +7% YoY in 1H19 SGD b SGD b 108 108 4.0 106 1.9 2.1 FY18 1H18 1H19 FY18 1H18 1H19 ~60% of AUM from overseas customers2 Segment RoRWA3 +0.2%pt YoY in 1H1

  36. Slide 36: Group Retail: Leveraging Digitalisation & Partnerships for Stronger Customer Franchise

    Group Retail: Leveraging Digitalisation & Partnerships for Stronger Customer Franchise Digital Bank: Omni-Channel Ecosystem TMRW Experience Partnerships Targeting Mobile-First & Traditional & affluent Forging collaborations to Mobile-Only Generation customers with universal widen distribution reach

  37. Slide 37: Latest Financials

    itt UOB Latest Financials 37

  38. Slide 38: 9M19 Financial Overview

    9M19 Financial Overview Net Profit After Tax (NPAT) Movement, 9M19 vs 9M18 (SGD m) 325 315 57 337 24 74 16 3,092 +8% 3,338 +7% +4% +41% +11% +9% –70% +3% 9M18 net Net interest Net fee and Other non- Operating Total Share of Tax and 9M19 net profit after income commission interest expenses allowances

  39. Slide 39: 3Q19 Financial Overview

    3Q19 Financial Overview Net Profit After Tax (NPAT) Movement, 3Q19 vs 2Q19 (SGD m) 33 25 14 29 32 24 95 1,168 –4% 1,118 +2% +5% –8% +2% + >100% + >100% –12% 2Q19 net Net interest Net fee and Other non- Operating Total Share of Tax and 3Q19 net profit after income commission interest expenses allowan

  40. Slide 40: Net Interest Income Rose as Asset Growth Help Offset Thinner Margins amid Lower Rates

    Net Interest Income Rose as Asset Growth Help Offset Thinner Margins amid Lower Rates Net Interest Income and Net Interest Margin 2,400 3.00% 3.00% 9,500 2.26% 2.20% 2.14% 2.19% 2.19% 2.15% 2.16% 2.19% 2.18% 2,200 2.00% 2.00% 8,500 1.77% 1.71% 1.77% 1.82% 1.81% 1.80% 1.79% 1.81% 1.77% 2,000 1.00% 1.

  41. Slide 41: Broad-based Increase in Loan Portfolio

    Broad-based Increase in Loan Portfolio Sep-19 Jun-19 QoQ Sep-18 YoY SGD b SGD b +/(–) SGD b +/(–) Gross Loans % % By Geography Singapore 141 142 – 133 +6 Regional: 105 101 +4 95 +10 Malaysia 29 29 +2 29 +2 Thailand 19 18 +5 16 +16 Indonesia 12 11 +3 11 +6 China 1 45 43 +5 39 +15 Others 29 30 –5 27 +

  42. Slide 42: Non-Interest Income Supported by Resilient Wealth Management Flows

    Non-Interest Income Supported by Resilient Wealth Management Flows Non-Interest Income and as a % of Total Income 50.0% 1500 50.0% 5,300 36.9% 35.9% 35.4% 36.0% 40.0% 34.0% 35.4% 40.0% 31.8% 31.3% 4,800 27.4% 1300 30.0% 30.0% 4,300 20.0% 20.0% 3,800 21.0% 21.3% 21.9% 21.6% 1100 20.8% 21.1% 21.1% 19.

  43. Slide 43: Broad-based Focus in Fee Income

    Broad-based Focus in Fee Income Breakdown of Fee Income (SGD m) (SGD m) 2,500 2,303 2,161 63 700 652 80 621 296 12 2,000 1,883 1,931 11 272 600 568 569 78 93 551 72 74 154 15 12 148 14 38 258 263 74 70 38 500 76 1,500 121 134 545 37 39 471 43 152 162 400 498 482 135 154 121 1,000 543 300 547 183 160

  44. Slide 44: Pacing Growth in Operating Expenses, with Maintaining a Stable CIR

    Pacing Growth in Operating Expenses, with Maintaining a Stable CIR Operating Expenses and Costs / Income Ratio (CIR) 5,500 50.0% 50.0% 5,000 44.0% 43.7% 43.9% 1,400 44.4% 44.6% 43.7% 44.2% 43.0% 45.0% 43.4% 45.0% 4,500 4,003 1,200 40.0% 1,129 1,154 40.0% 4,000 3,739 1,073 1,011 984 3,356 3,425 35.0%

  45. Slide 45: IT Investments Towards "Changing the Bank"

    IT Investments Towards “Changing the Bank” Connectivity and Digital for Focus Centralisation and Standardisation Growth Cumulative 2009 to 2013 2014 to 2018 IT investments (cSGD0.6 b) (cSGD1.6 b) Total IT investments Global Market Platform: Customer flow income +9%1 Cash Management Platform: 36% 34%

  46. Slide 46: Exposure to China

    Exposure to China 1 100.0 78.1 80.0 70.7 69.6 72.2 73.1 6.6 5.0 5.2 5.6 6.1 Debt (SGD b) 60.0 38.9 42.9 42.7 44.9 40.0 Non-bank (SGD b) 40.1 20.0 Bank (SGD b) 26.8 24.3 23.7 24.3 26.6 0.0 Sep-18 Dec-18 Mar-19 Jun-19 Sep-19 As at 30 Sep 2019: Mainland China exposure (SGD 34b or 8% of total Hong Kong

  47. Slide 47: NPL Ratio Stable at 1.5%

    NPL Ratio Stable at 1.5% NPL ratio 1.6% 1.5% 1.5% 1.5% 1.5% NPLs (SGD m) 4,185 3,994 4,055 4,030 4,191 4,400 Others 290 3,900 223 421 138 230 416 120 107 101 China1 China1 106 3,400 531 511 749 545 497 Indonesia 2,900 485 503 416 456 495 Thailand 2,400 558 571 590 629 553 1,900 Malaysia 2,085 2,138

  48. Slide 48: Lower New NPA Formation

    Lower New NPA Formation (SGD m) 3Q18 4Q18 1Q19 2Q19 3Q19 NPA at start of period 4,404 4,374 4,166 4,215 4,185 Group wholesale and small enterprise customers: New NPA 275 370 230 357 180 Upgrades, recoveries (229) (257) (139) (182) (38) and translations Write-offs (29) (392) (17) (229) (26) 4,421 4,0

  49. Slide 49: Credit Costs Trending to More Normalised Level

    Credit Costs Trending to More Normalised Level Allowances for Loans 2,000 80bp 600 23bp 25bp 61bp 22bp 1,800 60bp 19bp 45bp 18bp 20bp 500 21bp 1,600 32bp 40bp 20bp 1,400 16bp 15bp 20bp 400 11bp 32bp 28bp 15bp 1,200 19bp 13bp 15bp 0bp 10bp 1,000 300 (20)bp 8bp 5bp 800 200 (40)bp 600 0bp 400 (60)bp 65

  50. Slide 50: Adequate Reserve Coverage Ratios

    Adequate Reserve Coverage Ratios 250% 1 210% Total Allowances / 202% 203% 189% 191% Unsecured NPAs200%(%) 1 150% Total Allowances / NPAs (%) 90% 87% 89% 84% 85% 100% 50%/ Allowances for NPAs NPAs (%) 44% 40% 40% 37% 0% 36% 4,500 3,935 3,687 4,000 3,635 3,732 3,523 47 105 3,500 49 Regulatory Loss All

  51. Slide 51: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios 7.4% 7.6% 7.6% 7.5% 7.6% Leverage ratio 1 5.0% Total CAR 2 19.0% 17.4% 17.0% 17.0% 17.2% 16.9% 0% Tier 2 CAR 2 17.0% 2.3% 2.1% 2.1% 2.3% 1.9% -20000% Tier 1 CAR 2 15.0% 1.0% 1.0% 1.0% 1.0% 1.3% 13.0% -40000% 11.0% -60000% CET1 CAR 2 9.0% 14.1% 13.9% 13.9% 13.9% 13.

  52. Slide 52: Stable Liquidity and Funding Position

    Stable Liquidity and Funding Position Net stable funding115% ratio (%) 110% 109% 108% 107% 107% 105% SGD loan-deposit ratio 93.5% 92.5% 93.7% 95% 91.6% 90.3% (LDR) (%) 85% 88.5% 89.3% 88.2% 86.6% Group LDR (%) 85.7% 75% 65% 72.2% USD LDR (%) 69.5% 70.1% 64.5% 65.8% 55% Sep-18 Dec-18 Mar-19 Jun-19 Se

  53. Slide 53: Higher Interim Dividend for 1H19

    Higher Interim Dividend for 1H19 20 20 50 45 35 50 55 35 35 2016 2017 2018 1H19 Net dividend per ordinary share (¢) Interim Final Special Payout amount (SGD m) 1,135 1,661 2,000 918 Payout ratio (%) 37 49 50 41 Payout ratio (excluding 37 39 42 41 special/one-off dividends) (%) Note: The Scrip Divide

  54. Slide 54: Thank You

    Thank You tt UOB RIGHT BY YOU

United Overseas Bank — Investor Presentation (November 2019) on 6ix