United Overseas Bank Limited · SGX:U11

United Overseas Bank — Investor Presentation (August 2016)

53 slides from United Overseas Bank's investor presentation, August 2016

  1. Slide 1: UOB Group: Steady Performance and Resilient Balance Sheet amidst Volatile Markets

    UOB Group Steady Performance and Resilient Balance Sheet amidst Volatile Markets August 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 doe

  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 1H16 Founded in August 1935 by a group of Chinese ■ Total assets : SGD321.6b (USD238.3b1) businessmen and Datuk Wee Kheng Chiang, ■ Shareholder’s equity : SGD31.3b (USD23.2b1) grandfather of the present UOB Group CEO, Mr. Wee ■ Gross loans : SGD212.3b (USD157

  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.  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 and Intangibles by Region (SGD m) MYANMAR GREATER CHINA 2 offices 28 offices1 VIETNAM THAILAND 1 office 33% of 324 157 offices Group PBT 367 PHILIPPINES 21 252 305 366 1 office 222 272 99 61 MALAYS

  8. Slide 8: Macroeconomic Outlook

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  9. Slide 9: China's Growth Slower but Low Risk of Hard-Landing

    China’s Growth Slower but Low Risk of Hard-Landing  While China’s GDP growth rate is slowing, the annual increase in absolute GDP has been stable.  The Chinese economy has its underlying momentum, supported by rebalancing reforms and steady job market.  Low government debt underpins China’s fisca

  10. Slide 10: Brexit Impact On Asian Markets via Trade and Investment Channels

    Brexit Impact On Asian Markets via Trade and Investment Channels  It is a challenge to quantify Brexit effects with EU & UK Export Mix of Selected Partners (2015) certainty at this stage.  The immediate impact on Asian economies is likely 19% to be limited and shallow, considering the low export 1

  11. Slide 11: Implication on Regional Policy Rates

    Implication on Regional Policy Rates 3Q15 4Q15 1Q16 2Q16 3Q16f 4Q16f 1Q17f 2Q17f 3Q17f 4Q17f US Fed Funds 0.25 0.50 0.50 0.50 0.50 0.75 0.75 1.00 1.00 1.25 SG 3M SOR 1.24 1.70 0.81 0.81 0.90 1.10 1.35 1.50 1.55 1.70 MY Overnight 3.25 3.25 3.25 3.25 3.00 3.00 3.00 3.00 3.00 3.00 Policy Rate TH 1-Day

  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: We Expect Singapore GDP Growth Slightly Stronger at 2.2% in 2016

    We Expect Singapore GDP Growth Slightly Stronger at 2.2% in 2016  Singapore’s GDP grew 2.2% y/y in 2Q16, as the manufacturing sector finally registered a 1.1% y/y Neutral Stance Adopted In April 2016 growth, after contracting for the past six consecutive SGD NEER quarters. However, the services sec

  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  ASEAN banks have healthy capital and funding levels (Net interest margin and private-sector credit / GDP, in %) — Singapore banks have among the highest capital 6.7 ratios in the reg

  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 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

  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  Total income grew 2.8% yoy in 1H16, despite market volatil

  21. Slide 21: Diversified Loan Portfolio

    Diversified Loan Portfolio Gross Customer Loans by Geography 1 Gross Customer Loans by Currency Singapore Others Others 56% 11% IDR 12% SGD 2% 52% Greater THB China 5% 11% Indonesia MYR 5% 11% Thailand 5% Malaysia USD 12% 18% Gross Customer Loans by Maturity Gross Customer Loans by Industry Housing

  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 aa3 45.6% 0.97% 84.0% Aa1 AA– AA– OCBC aa3 45.2% 1.

  23. Slide 23: Strong Capitalisation and Low Gearing Ratio

    Strong Capitalisation and Low Gearing Ratio Reported Common Equity Tier 1 CAR, Tier 1 CAR, Total CAR 20.6 19.5 19.7 19.7 17.9 17.9 17.5 17.3 16.3 16.2 16.1 (Common Equity 16.0 16.0 15.9 15.8 15.5 14.9 14.7 14.4 14.3 14.2 14.1 14.1 14.1 13.4 13.3 13.2 13.1 13.1 13.0 Tier 1 CAR; 12.5 12.2 12.1 12.1 11

  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+  ‘Very strong buffers in terms of capital, loan  ‘Prudent management team… expect the bank to  ‘Ratings reflect its strong domestic franchise, loss provisions and pre-provision income’ continue its emph

  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; focus beyond long-term sustainability, beyond gains in short-term Robust  Focused on businesses which we understand and are well-equipped to manage R

  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% 1.4% 1.4% 6,000 144.1% 142.7% 130.5% 133.2% 200% 1.2% 1.3% 125.6% 3,500 100% 1.0% 1.4% 5,000 1.4% 1.4% 1.5% 1.5% 3,000 530 0% 651 586 2,500 648 635 350 4,000 0.0% -100% 160 217 77

  28. Slide 28: Disciplined Balance Sheet Management

    Disciplined Balance Sheet Management  Resilient balance sheet Assets – Stable NPL ratio: 1.4% Others; 8% – High general allowances-to-loans ratio Investments; Customer of 1.5% 3% loans; 65% – Strong NPL coverage: 125.6% Government; 6% Interbank;  Strong funding and capital base 10% – Liquidity Cov

  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: Steady Performance

    Wholesale Banking: Steady Performance Wholesale Banking Business  Wholesale banking’s loans and income Gross Loans ($bn) Total Income ($m) up in 1H16 despite weaker macro +13% environment +6% +5% 4000 YoY 4.00% YoY YoY 3500 3.50% 3000 +6% 3.00%  Financial Institutions segment doing 2500 YoY 2.50%

  32. Slide 32: Group Transaction Banking Continues to Grow

    Group Transaction Banking Continues to Grow Trade Loans Deposits  One of main pillars for 23% CAGR wholesale banking 15% CAGR +4% YoY +1% YoY 35% 36% 38%  Cash management grows with 37% significant mandates 39% 42% 39% 30% 33% 41% 63% 61% 65% 64% 62% 58% 61% 70% 67% 59%  Good traction from trade

  33. Slide 33: Retail Banking: Growing Income with Stable Asset Quality

    Retail Banking: Growing Income with Stable Asset Quality  Growth in retail banking1 income Group Retail Business outpaced loan growth in 1H16 Gross Loans ($bn) Total Income ($m) +11%  Singapore housing loan portfolio’s +5% 4000 YoY 4.00% +3% 3500 growth improved YoY in 1H16 YoY YoY 3000 +8% 3.00%

  34. Slide 34: Digitalisation: Enriching Customer Experience

    Digitalisation: Enriching 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- cen

  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: 1H16 Financial Overview

    1H16 Financial Overview Net Profit After Tax1 (NPAT) Movement, 1H16 vs 1H15 (SGD m) 71 12 50 92 43 42 16 1,563 +0.2% 1,566 +3.0% –1.2% +9.2% +5.3% –13.5% –96.0% +5.1% 1H15 net Net interest Fee income Other non- Expenses Total Share of Tax and 1H16 net profit after income interest allowances profit o

  38. Slide 38: 2Q16 Financial Overview

    2Q16 Financial Overview Net Profit After Tax1 (NPAT) Movement, 2Q16 vs 1Q16 (SGD m) 76 33 44 62 6 64 42 766 +4.6% 801 –5.0% +9.6% +29.3% +3.6% +37.3% >100.0% +3.7% 1Q16 net Net interest Fee income Other non- Expenses Total Share of Tax and 2Q16 net profit after income interest allowances profit of m

  39. Slide 39: Lower Net Interest Income on Tighter Margins but Partly Offset by Loan Growth

    Lower Net Interest Income on Tighter Margins but Partly Offset by Loan Growth Net Interest Income (NII) and Margin 9,000 2,500 3.00% 2.34% 2.36% 3.00% 2.29% 2.12% 2.26% 2.26% 2.27% 2.23% 2.06% 2,300 8,000 2.00% 2.00% 1.87% 2,100 1.79% 1.78% 1.72% 1.71% 1.77% 1.77% 1.77% 1.68% 1.00% 1.00% 7,000 1,900

  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% 40.8% 38.6% 40.2% 5,000 40.0%1400 37.0% 35.3% 40.0% 25.8% 23.5% 23.4% 30.0%1200 23.2% 24.2% 23.3% 23.1% 22.0% 23.4% 30.0% 4,000 20.0% 20.0% 1000 3,122 10.0% 850 10.0

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

    Broad-based Focus in Fee Income Breakdown of Fee Income (SGD m) (SGD m) 2,000 1,883 1,749 74 485 480 475 1,800 1,731 500 465 59 22 16 433 21 114 258 20 1,600 1,508 64 64 273 27 66 268 121 400 66 1,400 120 113 30 35 63 29 31 256 111 1,200 498 31 107 490 300 111 136 135 114 1,000 504 110 800 446 416 2

  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% 45.8% 50.0% 44.7% 45.5% 45.4% 43.1% 1,400 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 1,000 927 877 904 894 3,000 2,898

  43. Slide 43: Stable Total Credit Costs

    Stable Total Credit Costs Allowances on Loans 996 50bps249 50bps 32bps 32bps 40bps 32bps 32bps 32bps 32bps 32bps 40bps 30bps 30bps 796 30bps199 30bps 30bps 31bps 20bps 25bps 20bps 22bps 23bps 19bps 10bps149 10bps 596 12bps 11bps 8bps 0bps 0bps 396 (10)bps99 (10)bps (20)bps 160 (20)bps 133 121 454 11

  44. Slide 44: Loan Growth was 1.9% QoQ in Constant Currency Terms

    Loan Growth was 1.9% QoQ in Constant Currency Terms QoQ YoY Gross loans breakdown: Jun-16 Mar-16 +/(–) Jun-15 +/(–) Inner circle: Mar-16 Gross Loans 1 SGD b SGD b % SGD b % Outer circle: Jun-16 Singapore 119.9 117.8 +1.8 115.0 +4.2 Others Regional: 72.8 72.4 +0.6 71.1 +2.4 9% Singapore Malaysia 25.4

  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 (%) 152% 138% 142% 139% 167% SGD LCR (%) 165% 179% 217% 169% 224% 100.0% 91.9% 91.7% 91.9% SGD LDR (%) 88.4% 88.1% 90.0% 80.0% 84.7% Group LDR (%) 82.3% 81.6% 84.0%

  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% 1.3% 1.4% 1.4% 1.4% NPLs1 (SGD m) 2,504 2,551 2,882 2,841 3,056 3,200 206 2,700 344 176 401 351 218 564 377 158 Others 2,200 149 166 569 564 264 Greater China 335 372 1,700 249 250 451 289 238 Indonesia 386 401 1,200 378 423 Thailand 700

  47. Slide 47: Exposure to China

    Exposure to China Total = SGD19.4b Bank exposure in China or 6.0% 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, SGD10.7b representing around half of bank exposure Debt, Non-bank ex

  48. Slide 48: Exposure to Commodities

    Exposure to Commodities Oil and gas Other As of Traders/ Upstream commodity Total 30 June 16 downstream industries segments industries Total SGD4.9b SGD9.1b SGD8.8b SGD22.8b exposure1 Outstanding SGD4.0b SGD5.3b SGD6.6b SGD15.9b loans 4% of total loans 7.5% of total loans  Total exposure, including

  49. Slide 49: Exposure to Europe

    Exposure to Europe As of As a % of Non-bank Bank Debt securities Total 30 Jun 2016 total assets Europe SGD3.4b SGD3.1b SGD1.2b SGD7.7b 2.4% of which UK SGD2.6b SGD0.8b SGD0.2b SGD3.6b 1.1% Minimal direct impact from Brexit  Bulk of UK non-bank exposure is secured and denominated in GBP  Consumer m

  50. Slide 50: High Allowances Coverage

    High Allowances Coverage Total 200.0% Allowances / 144.1% 142.7% 130.5% 133.2% Total NPL (%) 150.0% 125.6% 100.0% General Allowances / 50.0% Gross Loans 0.0% net of Specific 1.4% 1.5% 1.5% 1.4% 1.4% Allowances (%) -50.0% 4,500 4,000 Specific Allowances 3,500 773 751 770 747 712 (SGD m) 3,000 2,500 2

  51. Slide 51: Strong Capital and Leverage Ratios

    Strong Capital and Leverage Ratios 7.6% 7.2% 7.3% 7.4% 7.0% Leverage ratio 1 5.0% Total CAR 2 20.0% 16.8% 16.4% 15.6% 16.0% 15.9% 0% 18.0% Tier 2 CAR 2 16.0% -20000% 2.8% 2.8% 14.0% 2.6% 3.2% 2.7% Tier 1 CAR 2 0.1% 12.0% -40000% 10.0% 8.0% -60000% CET1 CAR 2 14.0% 13.6% 13.0% 13.1% 6.0% 12.8% 4.0% -

  52. Slide 52: Stable Dividend Payout

    Stable Dividend Payout 20 5 5 35 50 50 35 35 20 20 2013 2014 2015 1H16 Net dividend per ordinary share (¢) Interim Final Special UOB 80th Anniversary Payout amount (SGD m) 1,182 1,201 1,442 563 Payout ratio (%) 39 37 45 36 Note: The Scrip Dividend Scheme was applied to the final and special dividend

  53. Slide 53: Thank you

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