United Overseas Bank Limited · SGX:U11
United Overseas Bank — FY2003 Earnings Presentation
23 slides from United Overseas Bank's earnings presentation, Feb 20, 2004
Slide 1: UOB - Premier Regional Bank Analysts' Briefing Full Year 2003 Results
UOB - Premier Regional Bank Analysts’ Briefing Full Year 2003 Results Address by Kuek Tong Au Executive Vice President Corporate Services 20 February 2004 Disclaimer : This material that follows is a presentation of general background information about the Bank’s activities current at the date of th
Slide 2: Quarter-on-Quarter Profits Trending Upwards
Quarter-on-Quarter Profits Trending Upwards Net Net Profit Profit After After Tax Tax ($m) 400 366 335 304 300 262 263 239 228 % 212 9.2 200 100 0 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03
Slide 3: Higher Profits in 4th Quarter 2003
Higher Profits in 4th Quarter 2003 4Q03 3Q03 Inc / (Dec) $m $m $m % Net Interest Income 540 503 37 7.4 Non-Interest Income 291 251 40 16.1 Total Income 831 754 77 10.3 Less: Operating Expenses 290 269 21 7.6 Operating Profit before Goodwill and Provisions 542 542 485 57 11.7 Less: Goodwill Amortisat
Slide 4: Higher Profits despite Difficult Economic Conditions in 2003
Higher Profits despite Difficult Economic Conditions in 2003 2003 2002 In c / (D e c ) $m $m $m % N e t In te re s t In c o m e 2 ,0 7 1 2 ,1 2 8 (5 7 ) (2 .7 ) N o n -In te re s t In c o m e 1 ,0 8 9 906 183 2 0 .2 T o ta l In c o m e 3 ,1 6 0 3 ,0 3 4 126 4 .1 L e s s : O p e ra tin g E x p e n s
Slide 5: Change in Accounting Policy – Impact to Profits
Change in Accounting Policy – Impact to Profits Old Old Policy Policy New New Policy Policy Inc Inc // (Dec) (Dec) Net Profit After Tax - $m 2003 1,169 1,202 33 2002 1,064 1,006 (58) Inc / (Dec) 9.9% 19.5% Note: The change in accounting policy has been applied retrospectively and the 2002 figures in
Slide 6: Lower Net Interest Income from Inter-bank Money Market Activities
Lower Net Interest Income from Inter-bank Money Market Activities Net Net Interest Interest Income Income Net Net Interest Interest Margin Margin ($m) (%) 2,500 2.8 2,128 2,071 2,000 2.5 2.34 1,429 2.22 2.25 1,500 2.3 1,133 1,198 2.22 1,000 2.0 2.06 500 1.8 1.5 0 1999 2000 2001 2002 2003 1999 2000 2
Slide 7: Robust Growth in Non-Interest Income
Robust Growth in Non-Interest Income Non -Interest Income Non-Interest Income (Non -NII) (Non-NII) ($m) 2% 1,200 20. 1,089 906 133 1,000 795 115 800 655 704 159 113 110 254 94 146 110 600 136 83 79 217 400 143 149 588 501 200 336 330 355 0 1999 2000 2001 2002 2003 Non-NII / Total Income : 36.6% 37.0
Slide 8: Stronger Fee and Commission Income
Stronger Fee and Commission Income 2003 2002 Increase / (Decrease) $m $m $m % Credit card 94 96 (2) (2.3) Fund management 78 74 4 4.6 Futures broking & stockbroking 35 49 (14) (27.5) Investment-related 98 29 69 235.9 235.9 Loan-related 97 86 11 12.0 Service charges 49 44 5 12.0 Trade-related 111 101
Slide 9: Effective Cost Management
Effective Cost Management 2003 2002 Inc / (Dec) $m $m $m % Staff Costs 532 536 (4) (0.9) Other Operating Expenses 564 538 26 4.8 Total 1,095 1,074 21 2.0 Expense-to-Income Expense-to-Income Ratio Ratio (%) 40.0 39.5 39.3 38.0 35.4 36.0 34.7 34.0 32.5 32.0 30.0 1999 2000 2001 2002 2003
Slide 10: Lower Provision Charges
Lower Provision Charges Provisions Provisions Charged Charged to to Income Income Statement Statement ($m) 465 1999 2000 2001 2002 2003 500 $m $m $m $m $m 362 400 Specific provisions for loans 239 69 165 422 345 253 300 22 Specific provisions for 165 .2 % 200 investments and other assets (4) 74 70 4
Slide 11: Higher Return on Average Shareholders' Funds (ROE)
Higher Return on Average Shareholders’ Funds (ROE) (%) 14.0 13.5 12.6 12.0 11.3 Cash ROE 10.9 10.0 10.8 9.5 ROE 9.3 8.0 7.9 6.0 1999 2000 2001 2002 2003
Slide 12: Improved Loans Demand
Improved Loans Demand Net Net Customer Customer Loans Loans ($b) 80.0 60.9 58.9 59.3 60.0 40.0 30.0 27.3 20.0 0.0 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03
Slide 13: Increase in Customer Deposits
Increase in Customer Deposits Customer Customer Deposits Deposits ($b) 80.0 74.5 67.9 69.9 60.0 40.7 43.4 40.0 20.0 0.0 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 % of Total Deposits 86.3% 76.4% 80.4% 77.9% 78.8%
Slide 14: Lower L/D Ratio
Lower L/D Ratio Loans Loans // Deposits Deposits Ratio Ratio (%) 100.0 86.7 90.0 84.9 81.8 80.0 66.9 69.2 70.0 60.0 50.0 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03
Slide 15: Declining Non-Performing Loans (NPLs)
Declining Non-Performing Loans (NPLs) Total NPLs ($m) 2,834 2,462 5,968 5,679 5,160 ($m) (%) 6,000 12 3,851 3,619 3,306 10 4,000 9.8% 9.3% 9.0% 8 7.8% 8.1% 1,855 6 2,000 1,537 497 447 396 4 229 174 1,620 1,613 1,458 750 751 0 2 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Loss Doubtful Substandard NPLs / Gros
Slide 16: Reduction in NPLs across Regions
Reduction in NPLs across Regions Total NPLs ($m) 2,834 2,462 5,968 5,679 5,160 ($m) 6,000 187 104 362 182 91 161 1,600 1,458 1,378 4,000 52 135 58 1,005 121 2,000 3,819 3,935 3,530 929 1,642 1,354 0 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Singapore 5 Regional Countries Greater China Other
Slide 17: Reduction in NPLs across Sectors
Reduction in NPLs across Sectors NPLs NPLs By By Industrial Industrial Classification Classification Dec-03 Dec-02 Inc / (Dec) $m $m $m % Transport, storage and communication 105 124 (19) (15.3) Building and construction 756 843 (87) (10.3) Manufacturing 745 874 (129) (14.8) Non-bank financial insti
Slide 18: Improved NPLs Ratio for Major Sectors
Improved NPLs Ratio for Major Sectors NPLs NPLs Ratio Ratio By By Industrial Industrial Classification Classification Dec-03 Dec-02 Inc / (Dec) % % % pts Transport, storage and communication 5.0 6.0 (1.0) Building and construction 10.3 9.2 1.1 Manufacturing 12.7 16.2 (3.5) Non-bank financial institu
Slide 19: Decrease in Cumulative Provisions in Tandem with the Drop in NPLs
Decrease in Cumulative Provisions in Tandem with the Drop in NPLs Total Provisions ($m) 1,774 1,664 3,334 3,504 3,332 ($m) (%) 3,500 3.0 1,425 3,000 2.9% 1,435 1,422 2.5% 2.4% 2,500 2.3% 2.3% 2.0 2,000 1,500 819 768 1.0 1,000 1,899 2,079 1,910 500 955 896 0 0.0 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Spe
Slide 20: Increase in Provision Coverage
Increase in Provision Coverage Cumulative Cumulative Provisions Provisions // Cumulative Cumulative Provisions Provisions // Total Total NPLs NPLs Ratio Ratio Unsecured Unsecured NPLs NPLs Ratio Ratio (%) (%) 70 150 67.6 145.2 64.6 141.4 65 62.6 61.7 140 138.3 60 55.9 136.6 136.6 130 55 50 120 Dec-9
Slide 21: Strong Capital Position
Strong Capital Position Capital Capital Adequacy Adequacy Ratio Ratio (BIS) (BIS) ($b) (%) 90 25 21.7 19.8 18.5 18.2 20 15.3 60 18.6 17.1 15 12.8 11.8 12.2 10 30 5 Risk Weighted Assets 0 0 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Risk Weighted Assets Total CAR Tier 1 CAR
Slide 22: Higher Dividend Payout to Reward Shareholders
Higher Dividend Payout to Reward Shareholders (%) 60 50 18.8% 40 40% 25% 30 25% 25% 25% 20 12% 10 20% 15% 15% 15% 8% 0 1999 2000 2001 2002 2003 Dividend Amount $416m $316m $426m $720m $736m Dividend Payout Ratio 54.7% 34.6% 46.0% 71.6% 61.2% Interim Final Dividend in Specie Special
Slide 23: In Conclusion...
In Conclusion... NPAT grew 19.5% to reach $1,202 million in 2003 ROE (excluding goodwill) increased to 10.9% from 9.5% in 2002 Expense-to-income ratio improved 0.7% point to 34.7% NPLs ratio declined to 8.1% in 2003 from 9.0% in 2002 Dividend rate of 60.0% for 2003 is higher compared to 58