United Overseas Bank Limited · SGX:U11

United Overseas Bank — Investor Presentation (April 2016)

52 slides from United Overseas Bank's investor presentation, April 2016

  1. Slide 1: UOB Group: Sustained Growth in Core Income; Strong Balance Sheet Position

    UOB Group Sustained Growth in Core Income; Strong Balance Sheet Position April 2016 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 pur

  2. Slide 2: Agenda

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

  3. Slide 3: Overview of UOB Group

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  4. Slide 4: UOB Overview

    UOB Overview Founding Key Statistics for FY15 Founded in August 1935 by a group of Chinese ■ Total assets : SGD316.0b (USD223.5b1) businessmen and Datuk Wee Kheng Chiang, ■ Shareholder’s equity : SGD30.8b (USD21.8b1) grandfather of the present UOB Group CEO, Mr. Wee ■ Gross loans : SGD207.4b (USD146

  5. Slide 5: A Leading Singapore Bank with Established Franchise in Core Market Segments

    A Leading Singapore Bank with Established Franchise in Core Market Segments Global Markets and Group Retail Group Wholesale Banking Investment Management  Best Retail Bank in Singapore1  Best SME Banking1  Strong player in Singapore dollar treasury instruments  Strong player in credit cards and

  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. Achieved record NPAT of SGD3,249 million in 2014  Stability of management team ensures consistent execution of strategies  Disciplined management styl

  7. Slide 7: Expanding Regional Banking Franchise

    Expanding Regional Banking Franchise Extensive Regional Footprint with 500+ Offices Profit Before Tax and Intangibles by Region (SGD m) MYANMAR GREATER CHINA 2 offices 28 offices1 39% of Group VIETNAM PBT THAILAND 1 office 157 offices 32% of 324 367 21 252 PHILIPPINES Group PBT 305 366 1 office 222

  8. Slide 8: Macroeconomic Outlook

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  9. Slide 9: Weak Growth and Deflation Drove Monetary Easing while US Fed Began to Normalise Rates

    Weak Growth and Deflation Drove Monetary Easing while US Fed Began to Normalise Rates Central Banks’ Policy Decisions on Rates over 2015 and year-to-date 2016 Contractionary Expansionary Sources: Bloomberg, UOB Global Economics & Market Research 1. QE: Quantitative easing 2. NEER: Nominal effective

  10. Slide 10: Fed Finally Hiked Rates in Dec 2015, More Than 1 Year After Conclusion of QE Tapering

    Fed Finally Hiked Rates in Dec 2015, More Than 1 Year After Conclusion of QE Tapering Effects Of Low Interest Negative Implications on Impact Of Reversing QE Rates & QE Markets & Low Rates • Increased liquidity • Asset bubbles with influx of hot • Reversal of capital flows and • Lower interest rates

  11. Slide 11: Singapore Interest Rates Lifted by Stronger USD in 2015

    Singapore Interest Rates Lifted by Stronger USD in 2015 UOB’s SGD Floating-rate Loans to Benefit from Uptrend in Singapore’s Short-term Interest Rates SIBOR / SOR (%) SGD per USD 2.0 1.46 1.8 1.44 1.6 1.42 1.4 1.40 1.2 1.38 1.0 1.36 0.8 1.34 0.6 1.32 0.4 1.30 0.2 1.28 0.0 1.26 Oct- Nov- Dec- Jan- Fe

  12. Slide 12: Southeast Asia: Resilient Key Markets

    Southeast Asia: Resilient Key Markets Long-term fundamentals and prospects of key Southeast Asia have greatly improved since the 1997 Asian Financial Crisis. Compared with 1997, they have:  Significantly higher levels of foreign reserves  Healthier current account and balance of payment positions

  13. Slide 13: Singapore GDP Growth Slightly Stronger at 2.7% in 2016

    Singapore GDP Growth Slightly Stronger at 2.7% in 2016  Singapore’s GDP grew 2.1% in 2015, the slowest since the recession in 2009, as the lacklustre Economy Expected To Grow 2.7% In 2016 manufacturing sector was weighed down by a slowdown in biomedical and transport engineering (%) 10 clusters. Ho

  14. Slide 14: ASEAN Banking Sector: Strong Fundamentals Remain Intact

    ASEAN Banking Sector: Strong Fundamentals Remain Intact Key Banking Trends Higher NIM in Lightly Penetrated Markets  There has been a resurgence in loan demand after the (Net interest margin and private-sector credit / GDP, in %) deleveraging of ASEAN banks during the Global 6.9 6.7 Financial Crisi

  15. Slide 15: Prospects for Asia Optimistic with Growing Population and Consumer Affluence

    Prospects for Asia Optimistic with Growing Population and Consumer Affluence Growing Global Middle Class Spending by Global Middle Class APAC’s middle class: (USD trillion APAC’s middle class spending: (Billion) of 2005 2009: 28% of global middle class 2009: 23% of global middle class 2030: 66% PPP

  16. Slide 16: Room for More Optimism on Intra-Regional Trade in the ASEAN region

    Room for More Optimism on Intra-Regional Trade in the ASEAN region Association of Southeast North American Free Trade European Union (EU) Asian Nations (ASEAN) Agreement (NAFTA) USD0.7 USD2.2 USD3.4 USD8.2 USD2.2 USD4.8 trillion trillion trillion trillion trillion trillion Share of total goods trade

  17. Slide 17: 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% Minimum Tier 1 6.0% 8.0%1 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 J

  18. Slide 18: Resolution Regime Overview

    Resolution Regime Overview Resolution Regime in Asia Public Existing resolution Factors influencing How past resolution Country discussion powers views on bail-in 1 been handled Statutory bail-in proposed Role as an global financial hub; Crisis prevention tools; Singapore Yes to apply to only streng

  19. Slide 19: Strong UOB Fundamentals

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  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  FY15 NPAT stable at SGD3,209m, despite volatile market and

  21. Slide 21: Diversified Loan Portfolio

    Diversified Loan Portfolio Gross Customer Loans by Geography 1 Gross Customer Loans by Currency Others Singapore Others 8% 56% SGD Greater IDR 13% 2% 52% China 12% THB Indonesia 5% 6% MYR Thailand 11% 6% Malaysia USD 12% 17% Gross Customer Loans by Maturity Gross Customer Loans by Industry Housing L

  22. Slide 22: Competitive Against Peers

    Competitive Against Peers Standalone Efficient Cost Competitive Well-Maintained Strength Management ROAA Liquidity Moody’s S&P Fitch Baseline credit Costs/income Return on average Loan/deposit assessment ratio assets1 ratio Aa1 AA– AA– UOB aa3 44.7% 1.03% 84.7% Aa1 AA– AA– OCBC aa3 42.0% 1.14% 84.5%

  23. Slide 23: Strong Capitalisation and Low Gearing Ratio

    Strong Capitalisation and Low Gearing Ratio Common Equity Tier 1 CAR, Tier 1 CAR, Total CAR 18.1 18.1 18.7 18.7 19.5 17.7 17.2 16.8 16.6 16.6 15.6 15.4 15.2 15.2 15.0 14.8 14.8 14.5 14.1 13.9 13.5 13.5 13.5 13.4 (Common Equity 13.2 13.0 13.0 12.8 12.6 12.0 11.9 11.8 11.7 11.3 10.3 10.2 Tier 1 CAR; T

  24. Slide 24: 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 funding a

  25. Slide 25: Robust Risk Management Framework

    Robust Risk Management Framework  Operate under strict regulatory regime; prudential rules 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-eq

  26. Slide 26: 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

  27. Slide 27: Resilient Asset Quality; High Allowances Coverage

    Resilient Asset Quality; High Allowances Coverage Stable NPL Ratio Consistently High Allowances Coverage 4,000 2.0% 1.4% 6,000 145.9% 147.0% 144.1% 142.7% 130.5% 200% 1.2% 1.2% 1.2% 1.3% 3,500 100% 1.0% 1.4% 5,000 1.4% 1.4% 1.4% 1.4% 3,000 0% 651 2,500 4,000 605 648 635 160 0.0% -100% 536 699 747 71

  28. Slide 28: Disciplined Balance Sheet Management

    Disciplined Balance Sheet Management  Slight uptick in NPLs buffered by Assets: Others diversified portfolio with Inner circle: 2008 8% Outer circle: 2015 Investments significant allowances 3% – NPL ratio largely stable at 1.4% Government 11% – High general allowances-to- 6% 9% 55% Customer loans r

  29. Slide 29: Our Growth Drivers

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  30. Slide 30: 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

  31. Slide 31: Wholesale Banking: Forging Ahead

    Wholesale Banking: Forging Ahead  Stronger wholesale banking income Wholesale Banking Business – Driven by stronger liability Gross Loans ($bn) Total Income ($m) management and cross-selling efforts +13% +6% 4000 +10% 4.00% +8% YoY +10% YoY 3500 YoY YoY  Investing and developing strong 3000 3.00%

  32. Slide 32: Cash Management Maintains Strong Momentum

    Cash Management Maintains Strong Momentum  Growth in transaction banking Trade Loans Deposits income in 2015, despite lower CAGR trade loans CAGR +14% +21% 35%  Strong cash management 37% 30% 33% 39% 33% performance 41% 65% – Invested in product solutions 48% 63% 61% 67% 70% 67% 59% and innovation

  33. Slide 33: Retail Banking: Healthy Contributions

    Retail Banking: Healthy Contributions  Healthy retail banking1 income despite Group Retail Business challenging environment Gross Loans ($bn) Total Income ($m) +11% +3% +9%  Growth of housing loan portfolio easing 4000 3.00% +9% YoY +8% YoY 3500 YoY 2.50% YoY – Overall asset quality expected to re

  34. Slide 34: Digitalisation - Enriched Customer Experience

    Digitalisation - Enriched Customer Experience 1 Seamless connectivity 2 Analytics-driven 3 Innovation within & across channels for customer insights collaboration with superior customer Increase & improve Eco-system partners & experience & access customer engagement FinTechs to deliver customer-cent

  35. Slide 35: 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 Regional network allow us to bette

  36. Slide 36: Latest Financials

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  37. Slide 37: FY15 Financial Overview

    FY15 Financial Overview Net Profit After Tax1 (NPAT) Movement, FY15 vs FY14 (SGD m) 368 134 87 451 37 59 84 –1.2% 3,249 3,209 +8.1% +7.7% +7.6% +14.3% +5.7% –40.0% +14.6% FY14 net Net interest Fee income Other non- Expenses Total Share of Tax and FY15 net profit after income interest allowances prof

  38. Slide 38: 4Q15 Financial Overview

    4Q15 Financial Overview Net Profit After Tax1 (NPAT) Movement, 4Q15 vs 3Q14 (SGD m) 42 5 42 60 30 10 35 858 –8.1% 788 +3.4% –1.0% –11.5% +6.7% +19.0% –36.7% –18.6% 3Q15 net Net interest Fee income Other non- Expenses Total Share of Tax and 4Q15 net profit after income interest allowances profit of m

  39. Slide 39: Net Interest Income Driven by Growth in Loans and Margins

    Net Interest Income Driven by Growth in Loans and Margins Net Interest Income (NII) and Margin 3,000 3.00% 2.34% 3.00% 2.29% 2.12% 2.26% 2.19% 2.26% 2.27% 2.06% 2.08% 10,000 2.00% 2.00% 2,500 1.87% 1.72% 1.71% 1.77% 1.69% 1.76% 1.77% 1.77% 1.79% 8,000 1.00% 1.00% 0.91% 0.76% 0.82% 2,000 0.71% 0.50%

  40. Slide 40: Steady Non-Interest Income Mix Underpins Diversity

    Steady Non-Interest Income Mix Underpins Diversity Non-Interest Income (Non-NII) and Non-NII Ratio 50.0% 50.0% 39.7% 38.7% 38.9% 38.8% 38.6% 40.8% 38.6% 5,000 40.0%1400 36.8% 37.0% 40.0% 25.8% 23.5% 23.4% 30.0%1200 23.2% 24.3% 23.2% 24.2% 23.3% 23.1% 30.0% 4,000 20.0% 20.0% 1000 3,122 10.0% 850 10.0

  41. Slide 41: Broad-based Growth in Fee Income

    Broad-based Growth in Fee Income Breakdown of Fee Income (SGD m) (SGD m) 2,000 1,883 1,749 74 485 480 1,800 1,731 500 465 450 453 22 59 258 16 114 20 1,600 1,508 16 16 273 64 64 268 121 400 64 66 120 69 1,400 30 35 113 29 111 32 28 256 1,200 498 107 490 300 111 136 135 1,000 116 504 129 800 446 416

  42. Slide 42: Maintain Costs Discipline while Investing in Long-term Capabilities

    Maintain Costs Discipline while Investing in Long-term Capabilities Operating Expenses and Expense / Income Ratio 5,000 50.0% 46.3% 50.0% 44.7% 45.5% 43.1% 1,400 43.5% 43.6% 43.4% 4,500 42.3% 42.2% 45.0% 45.0% 4,000 40.0%1,200 40.0% 3,597 3,500 35.0% 964 35.0% 3,146 1,000 877 904 3,000 2,898 30.0% 8

  43. Slide 43: Stable Total Loan Charge-off Rate

    Stable Total Loan Charge-off Rate Allowances on Loans 996 50bps249 50bps 32bps 32bps 40bps 32bps 32bps 32bps 32bps 32bps 40bps 30bps 30bps 796 30bps199 30bps 30bps 31bps 20bps 20bps 22bps 19bps 10bps149 10bps 596 14bps 12bps 12bps 11bps 8bps 0bps 0bps 396 (10)bps99 (10)bps (20)bps 160 (20)bps 454 11

  44. Slide 44: Loan Growth was 5.4% YoY in Constant Currency Terms

    Loan Growth was 5.4% YoY in Constant Currency Terms QoQ YoY Gross loans breakdown: Dec-15 Sep-15 +/(–) Dec-14 +/(–) Inner circle: Dec-14 Gross Loans 1 SGD b SGD b % SGD b % Outer circle: Dec-15 Singapore 116.1 114.3 +1.6 109.7 +5.8 Others Regional: 72.8 70.7 +3.1 73.0 –0.2 8% Singapore Malaysia 24.6

  45. Slide 45: Stable Liquidity Position

    Stable Liquidity Position Customer Loans and Deposits; Loan/Deposit Ratios (LDR); and Liquidity Coverage Ratios (LCR) All-currency LCR (%) 140% 152% 138% 142% SGD LCR (%) 150% 165% 179% 217% 100.0% 93.0% 94.5% 91.9% 91.7% SGD LDR (%) 88.4% 90.0% 80.0% 84.7% Group LDR (%) 83.8% 83.4% 82.3% 81.6% 70.0

  46. Slide 46: Robust Credit Quality; NPL Ratio Stable at 1.4%

    Robust Credit Quality; NPL Ratio Stable at 1.4% NPL ratio 1.2% 1.2% 1.2% 1.3% 1.4% NPLs1 (SGD m) 2,358 2,442 2,504 2,551 2,882 3,000 344 2,500 351 218 377 Others 400 419 166 2,000 149 569 127 124 372 Greater China 313 335 298 249 1,500 289 238 Indonesia 292 267 386 378 388 423 Thailand 1,000 386 Mal

  47. Slide 47: Exposure to China

    Exposure to China Total = SGD21.1b Bank exposure in China or 6.6% of total assets  99% with <1 year tenor  Around 75% accounted for by top 5 domestic banks and policy banks Bank,  Trade exposures mostly with bank counterparties, SGD11.0b representing about 65% of bank exposure Debt, Non-bank expo

  48. Slide 48: Exposure to Commodities

    Exposure to Commodities Oil and gas Other As of Traders/ Upstream commodity Total 31 Dec 15 downstream industries segments industries Total SGD5.0b SGD7.1b SGD8.9b SGD21.0b exposure1 Outstanding SGD3.8b SGD3.9b SGD7.1b SGD14.8b loans 3.6% of total loans 7% of total loans  Total exposure, including

  49. Slide 49: High Allowances Coverage

    High Allowances Coverage Total 200.0% Allowances / 145.9% 147.0% 144.1% 142.7% 130.5% Total NPL (%) 150.0% 100.0% General Allowances / 50.0% Gross Loans 0.0% net of Specific 1.4% 1.4% 1.4% 1.4% 1.4% Allowances (%) -50.0% 4,000 3,500 Specific 699 712 773 657 747 Allowances 3,000 (SGD m) 2,500 2,000 G

  50. Slide 50: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios 7.6% 7.6% 7.2% 7.3% Leverage ratio 1 5.0% Total CAR 2 18.0% 16.9% 17.1% 16.8% 16.4% 15.6% 0% 16.0% 2.8% 3.0% 2.8% 2.8% Tier 2 CAR 2 14.0% 2.6% -20000% 12.0% -40000% 10.0% 8.0% 13.9% 14.3% 14.0% 13.6% -60000% Tier 1 / CET1 CAR 2 6.0% 13.0% 4.0% -80000% Proforma CET1

  51. Slide 51: Stable Dividend Payout

    Stable Dividend Payout 20 5 5 10 35 50 50 40 35 20 20 20 2012 2013 2014 2015 Net dividend per ordinary share (¢) Interim Final Special UOB 80th Anniversary Payout amount (SGD m) 1,102 1,182 1,201 1,442 Payout ratio (%) 39 39 37 45 51

  52. Slide 52: Thank you

    i} UOB Thank you

United Overseas Bank — Investor Presentation (April 2016) on 6ix