United Overseas Bank Limited · SGX:U11
United Overseas Bank — BNP Paribas Yankee Bank Conference (March 2021)
49 slides from United Overseas Bank's conference presentation, March 2021
Slide 1: UOB Group Fixed Income Investor Presentation
UOB Group BNP Paribas Yankee Bank Conference Fixed Income Investor Presentation March 2021 Private and Confidential
Slide 2: Agenda
1. Strong UOB Fundamentals 2. Latest Financials Agenda Appendix A: Macroeconomic Outlook Appendix B: Our Growth Drivers 2
Slide 3: Strong UOB Fundamentals
Strong UOB Fundamentals 3
Slide 4: UOB Overview
UOB Overview Founding Key Statistics for FY20 Founded in August 1935 by a group of Chinese ■ Gross loans : SGD281b (USD213b1) businessmen and Datuk Wee Kheng Chiang, ■ Customer deposits : SGD325b (USD246b1) grandfather of the present UOB Group CEO, Mr. ■ Loan / Deposit ratio : 85.4% Wee 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 Strong player in credit cards and Seamless access to regional dollar 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
Slide 7: Comprehensive regional banking franchise
Comprehensive regional banking franchise Extensive regional footprint with ~500 offices FY20 performance by segment Myanmar Greater China1 2 offices 28 offices UOB SGD134b Operating Assets under +6% Thailand Open profit management YoY 153 offices Vietnam 4 offices Group SGD2.1b AUM from Malaysia –6%
Slide 8: Managing risks for stable growth
Managing risks for stable growth Prudent approach has been key to delivering Manage con- sustainable returns over the years centration risk Institutionalised framework through Group Risk Appetite Statement (GRAS): Maintain Nurture balance – Outlines risk and return objectives to guide core talen
Slide 9: Diversified loan portfolio
Diversified loan portfolio Professionals Housing loans and private 24% Others individuals 7% 10% Transport, General storage and commerce Industry communication 12% 4% FIs, investment and holding Building & Large companies construction corporates Others 11% 25% and 11% Manufacturing institutions 7% 5
Slide 10: Disciplined balance sheet management
Disciplined balance sheet management Return on risk-weighted assets Focus on Healthy 1.51% 1.63% 1.93% 1.90% balance 1.27% portfolio sheet FY16 FY17 FY18 FY19 FY20 quality efficiency Current Account Saving Account Balances (SGD b) 11% CAGR1 Proactive 174 Robust 114 124 130 141 liability capitalisati
Slide 11: Competitive against peers
Competitive against peers Standalone Efficient Cost Competitive Well-Maintained Strength Management returns Liquidity 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 46% 0.7% 85% Aa1 AA– AA– OCBC a1 4
Slide 12: Strong capital and leverage ratios
Strong capital and leverage ratios Reported Common Equity Tier 1 CAR, Tier 1 CAR and Total CAR 21.5 21.2 (Common Equity 18.9 18.7 18.7 18.4 17.9 17.6 15.9 16.8 16.7 16.6 16.6 16.5 16.0 15.8 15.8 15.7 15.5 15.3 15.2 15.0 15.0 14.7 14.6 14.6 14.4 14.4 Tier 1 CAR; 13.9 13.5 13.4 13.3 13.2 13.1 12.9 12.
Slide 13: Strong UOB fundamentals
Strong UOB fundamentals Disciplined Strong management Consistent and management of Delivering on with proven track focused financial balance sheet regional strategy record management strengths Proven track record in Responsible yet prudent Strong Common Equity Holistic regional bank, steerin
Slide 14: Strong investment grade credit ratings
Strong investment grade credit ratings Debt Issuance History Debt Maturity Profile (SGD m) Aa1 / P-1 Issue Structure Call Amount Ratings (M/S/F) 2021 2022 2023 2024 2025 2026 2027 Date Capital good by global standards Jul-19 Perpetual 2026 SGD750m Baa1/BBB–/BBB+ - - - - - 750 - Deposit-funded an
Slide 15: Latest Financials
Latest Financials 15
Slide 16: 4Q20 financial overview
4Q20 financial overview Net Profit After Tax Movement, 4Q20 vs 3Q20 (SGD m) 37 8 57 40 81 10 18 +3% 668 688 +3% +2% –21% +4% –17% +40% +13% 3Q20 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- 4Q20 net profit after tax income commission interest expenses allowanc
Slide 17: FY20 financial overview
FY20 financial overview Net Profit After Tax Movement, FY20 vs FY19 (SGD m) 528 35 291 288 1,119 47 210 4,343 –33% 2,915 –8% –2% –20% –6% >100% +91% –25% FY19 net Net interest Net fee and Other non- Operating Total Share of profit Tax and non- FY20 net profit after tax income commission interest exp
Slide 18: Net interest margin lifted by proactive liability management
Net interest margin lifted by proactive liability management Net interest 3.50% 3.50% 11,500 margin (%) * 3 2.14% 2.19% 2.16% 10,5002.12% 2.08% ▬ Loans 2.50% 1.91% 2.50% 1.87% 1.83% 1.87% ▬ Overall 9,500 2 1.50% 1.50% 1.77% 1.82% 1.78% 1.76% 1.71% ▬ Interbank & 1.57% 8,500 1.48% 1.53% 1.57% securiti
Slide 19: Non-interest income supported by diversified revenue engines
Non-interest income supported by diversified revenue engines 1 % of total income 35.4% 34.6% 34.2% 40.0% 32.8% 33.8% 35.6% 34.8% 32.8% 40.0% 31.8% 5,100 ▬ Non-interest income 1 ▬ Net fee income 20.0% 4,600 20.0% 21.9% 21.6% 20.3% 21.8% 21.4% 19.7% 22.7% 23.2% 4,100 19.6% 1 0.0% 0.0% 3,467 3,600 319
Slide 20: Diverse fee base, with higher credit cards and fund management fees
Diverse fee base, with higher credit cards and fund management fees and steady wealth management fees 700 620 2,412 602 2,500 Fee income (SGD m) 2,303 2,313600 571 4 581 37 2 2,161 63 13 2 72 4 297 509 74 Total 80 280 77 71 296 41 5 37 2,000 272 156 142 500 41 64 33 Others 154 148 130 31 108 558
Slide 21: Pacing investments in staff and technology, while keeping CIR broadly stable
Pacing investments in staff and technology, while keeping CIR broadly stable 1 50.0% 6,50045.9% 45.6%50.0% 46.0% 46.7% 43.7% 43.9% 44.6% 45.1% 44.6% ▬ Costs / Income 1 ratio (CIR, %) 40.0% 40.0% 5,500 1 4,472 30.0% Operating expenses 4,500 1,116 4,18430.0% 1 4,003 1,086 1,049 (SGD m) 1,040 1,009 3,7
Slide 22: Overseas diversification provided some stability, as operating profit eased in Singapore
Overseas diversification provided some stability, as operating profit eased in Singapore FY20 FY19 YoY 4Q20 3Q20 QoQ +/(–) +/(–) Operating profit SGD m SGD m % SGD m SGD m % Singapore 2,592 3,276 –21 651 626 +4 Rest of Southeast Asia 1,302 1,220 +7 307 332 –8 Malaysia 675 649 +4 164 161 +2 Thailand
Slide 23: Lending activity subdued, but may gradually pick up
Lending activity subdued, but may gradually pick up with gradual improvements in macro conditions Dec-20 Sep-20 QoQ Dec-19 YoY +/(–) +/(–) Gross Loans SGD b SGD b % SGD b % Singapore 143 144 –1 139 +3 Rest of Southeast Asia 63 63 +0 63 +0 Malaysia 30 30 –2 30 +0 Thailand 21 19 +6 20 +5 Indonesia 10
Slide 24: Exposure to Greater China
Exposure to Greater China As at 31 December 2020: Mainland China exposure Hong Kong SAR exposure 77.2 ($25.8b or 6% of total assets) ($35.2b or 8% of total assets) 73.6 73.5 Bank exposure ($12.5b) 6.2 69.2 68.3 Bank exposure ($3.2b) 6.4 6.2 ~60% to top five domestic banks Majority to foreign ban
Slide 25: Exposure to oil and gas sector
Exposure to oil and gas sector Total Outstanding O&G Loans (SGD b) 11.8 As of 31 December 2020, oil and gas (O&G) loans represented 2.0% of total loans as compared with 4.7% at 30 June 2018 3.3 A significant portion of upstream exposure is to national oil 6.0 4.8 companies (NOCs) and internation
Slide 26: Portfolio remained sound as relief programmes unwound across the region
Portfolio remained sound as relief programmes unwound across the region Book under relief measures (SGD b) 25 Residual loan relief programmes on a targeted basis, as broad- 4 18 based government relief programmes have largely ended in 2020 10 5 Gradual reopening of economies will help to cushion
Slide 27: Increase in NPA from a few secured accounts
Increase in NPA from a few secured accounts (SGD m) 4Q19 1Q20 2Q20 3Q20 4Q20 NPAs at start of period 4,350 4,297 4,590 4,628 4,301 Non-individuals: New NPAs 437 573 131 74 622 Upgrades and recoveries (400) (101) (126) (216) (175) Write-offs (81) (208) (42) (63) (179) 4,307 4,561 4,553 4,423 4,569 In
Slide 28: Allowances for NPLs rising from historical lows
Allowances for NPLs rising from historical lows 80bp 80bp 3,000 67bp 68bp Average Gross Loans 57bp 55bp 1 60bp 60bp (basis points) * 61bp 2,500 36bp ▬ Allowances for NPLs 40bp 40bp 1 28bp 24bp ▬ Total allowances for 16bp 18bp 20bp 20bp 2,000 31bp 34bp 1 Loans 24bp 23bp 19bp 15bp 17bp 13bp 0bp 0bp 8
Slide 29: Reserve coverage already strengthened in anticipation of asset quality risk
Reserve coverage already strengthened in anticipation of asset quality risk 111% 107% 12 87% 88% 96% Coverage ratios (%) 100% ▬ Total allowances* / NPAs 39% 10 38% 36% 36% 37% 50% ▬ Allowances for NPAs / NPAs ▬ Allowance for non-impaired 0% 8,0 loans* / performing loans (%) 0.7% 0.8% 0.9% 1.0% 1.0%
Slide 30: Strong capital and leverage ratios
Strong capital and leverage ratios 20.00% ▬ Common equity Tier 1 capital 14.3% 14.1% 14.0% 14.0% 14.7% adequacy ratio (%) 15.00% ▬ Leverage ratio (%) 10.00% 7.7% 7.4% 7.3% 7.4% 7.4% ▬ Return on risk-weighted 5.00% assets (%) * 1.77% 1.49% 1.21% 1.17% 1.22% 226 232 232 231 225 Risk weighted assets
Slide 31: Sound funding and liquidity positions
Sound funding and liquidity positions 140% 125% 90 119% 122% ▬ Net stable funding ratio (%) 120% 111% 109% 80 ▬ Group loan-deposit ratio (%) 100% 85.4% 85.4% 85.8% 86.7% 85.4% 70 ▬ USD loan-deposit ratio (%) 80% 60 60% 61.2% 62.7% 50 59.6% 58.0% 58.2% 40% 40 20% 315% 330% Liquidity coverage ratio (%
Slide 32: 2020 dividend in line with MAS guidance, scrip dividend applied but at no discount
2020 dividend in line with MAS guidance, scrip dividend applied but at no discount Net dividend per ordinary share (¢) 20 20 Special 20 55 50 Final 45 39 50 55 Interim 35 39 2017 2018 2019 2020 Payout amount (SGD m) 1,660 2,000 2,170 1,303 Payout ratio (%) 49 50 50 451 Payout ratio (excluding
Slide 33: Appendix A: Macroeconomic Outlook
Appendix A: Macroeconomic Outlook 33
Slide 34: Projected economic rebound across Asia in 2021
Projected economic rebound across Asia in 2021 Trade volume returning to pre-COVID levels 2020 GDP growth +8.5 115 (Dec’19 = 100) 2021 GDP growth 100 +2.3 85 China 70 +7.1 Nov-18 Mar-19 Jul-19 Nov-19 Mar-20 Jul-20 Nov-20 +3.5 World trade Emerging Asia, ex China export +2.8 Advanced economies' export
Slide 35: Accommodative monetary policy stance
Accommodative monetary policy stance 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20 1Q21f 2Q21f 3Q21f 4Q21f US 10-Year Treasury 1.66 1.92 0.67 0.66 0.68 0.91 1.00 1.10 1.15 1.20 US Fed Funds 2.00 1.75 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25 SG 3M SIBOR 1.88 1.77 1.00 0.56 0.41 0.41 0.35 0.35 0.35 0.35 SG 3M SOR 1.68
Slide 36: Improved fundamentals in Southeast Asia
Improved fundamentals in Southeast Asia Significantly Higher Foreign Reserves Healthy Current Account Balances (USD billion) (% of GDP) 362 258 15.6 14.5 136 108 75 30 24 26 4.6 1.8 Singapore Thailand Indonesia Malaysia –2.0 –1.5 –2.4 –5.4 Dec 1998 Dec 2020 Singapore Malaysia Thailand Indonesia 1997
Slide 37: Singapore mortgages remains a low risk asset class
Singapore mortgages remains a low risk asset class Low Risk of Housing Bubble due to Cooling Measures High National Savings Rate (4Q10 = 100) (% of GDP) HK, 233 CN, 43 CN, 198 SG, 38 US, 161 HK, 23 AU, 139 AU, 22 SG, 113 US, 18 4Q10 4Q12 4Q14 4Q16 4Q18 4Q20 2011 2013 2015 2017 2019 2021F Sources: CE
Slide 38: 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 Full -- MCRMR6 | Start --
Slide 39: 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 in 2020 2 n/a 0% 0%
Slide 40: 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 to 5% from 10% QRRE4 and Other Retail Wholesale credit Unsecured corporate FIRB5 LGD2 cut CCF6 for unconditional cancellable Others to 40% from 45% commitments raised to 10%
Slide 41: Appendix B: Our Growth Drivers
Appendix B: Our Growth Drivers 41
Slide 42: 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 Grow fee income to offset Disciplined approach in serve expanding regional environment remains competi
Slide 43: 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 franchise • Third largest population among Singapore banks 581 656 726 6.6 globally, after China a
Slide 44: Strong retail presence in high potential regional markets
Strong retail presence in high potential regional markets High Vietnam 8 3 Philippines 2019 retail banking pool sizes USD b Indonesia ✓ Denotes UOB’s ✓ core markets in Banking penetration 21 Southeast Asia growth potential 12 Thailand UAE ✓ was launched 9 Malaysia 37 India in Thailand (March 2019) 9
Slide 45: 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 (2025) (SGD b) (SGD b) Markets where UOB has a presence c$66b CAGR c$14b Singapore Thailand c$51b +5% c$1b c$4b c$10b c$9b +5% Hong Wealth c$7b Kong c$3b Tra
Slide 46: Wholesale: Growing regional franchise, capturing cross-border opportunities
Wholesale: Growing regional franchise, capturing cross-border opportunities Strengthening Connectivity 29%1 +2%2 Cross-border income’s Non-Singapore Across our ASEAN footprint contribution to Group income growth and global network Wholesale Banking income Sector Specialisation Building capabilities
Slide 47: Consumers: Tapping on rising affluence in Southeast Asia
Consumers: Tapping on rising affluence in Southeast Asia Omni-channel 67%1 SGD134b1,2 Experience Digitally-engaged Assets under Serving affluent customers customers management (AUM) across various touchpoints 56% YoY3 Digital Bank: TMRW Specially for mobile-first +3x3 25% Increase in TMRW Highly act
Slide 48: 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 49: Thank You
Thank You tt UOB RIGHT BY YOU
United Overseas Bank — BNP Paribas Yankee Bank Conference (March 2021) on 6ix